Arizona has an affordable housing crisis. Here's how legislative candidates plan to fix it

Arizona is in need of 270,000 more housing units to meet demand, according to the Arizona Department of Housing. And Phoenix-area rents jumped almost 30% in 2021, pricing out many low-income residents.

Arizonans say they want elected officials to take action.

According to an August voter survey by the Center for the Future of Arizona, 80% of voters from across the political spectrum agreed that housing costs are "out of control." Nearly as many agreed that “Arizona must do more to make sure that housing options are affordable and available to middle- and low-income earners throughout the state.”

Yet there are multiple state-level barriers to creating more affordable housing, including one law that forbids cities from regulating vacation rentals and limiting rent increases.

The Arizona Republic spoke with candidates in several competitive legislative races about how they plan to address the housing crisis if elected.

While candidates on both sides of the aisle agreed on the importance of building more housing and beefing up the state’s Housing Trust Fund, their views diverged when it came to regulating vacation rentals.

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Build more housing

Candidates in both parties agreed: Arizona needs more housing.

“You have to keep building. And you have to build multi-family [homes],” said State Rep. Steve Kaiser, who is running for State Senate in north Phoenix's Legislative District 2. Kaiser co-chairs the state’s Housing Supply Study Committee.

He plans to draft new legislation on policy solutions identified by the study committee, which will release its report by the end of the year. Fixes could include streamlining municipal processes to allow developers to build faster and with fewer pricey design standards, Kaiser said. In the study committee, elected officials, housing advocates and developers have discussed how long wait times for building permits and strict design requirements, such as requiring homes to have garages, drive up the cost of housing.

Jeanne Casteen, Kaiser’s Democratic opponent, also supports increasing Arizona’s housing supply. The state should consider ways to incentivize developers to include low-income and workforce housing in their new developments, she said.

Christian Lamar, a Republican House candidate in Legislative District 2, said in an email that his affordable housing plans include deregulating zoning “where it reasonably makes sense” and allowing developers to build more homes.

“Get the government out of the way as much as possible," Lamar said.

State Rep. Justin Wilmeth, who is running for re-election in Legislative District 2, said he would seek to zone more areas for residential development where possible.

“There are some areas that are zoned incorrectly that we could flip to residential, probably pretty quickly,” he said.

State Rep. Judy Schwiebert, a Democrat who is running against Wilmeth and Lamar, said in an email that the affordable housing crisis “is an all-hands on deck moment that requires many solutions.” She said she supports zoning reform that encourages infill development of "low-density courtyard apartments, duplexes, and other units that are inherently more affordable than single-family homes on big lots."

For subscribers: Affordable apartments at center of challenge from residents in Surprise

Increase for Housing Trust Fund

Several Democrats and Republicans said the Legislature should replenish the Arizona Housing Trust Fund, which funds affordable housing developments and programs.

In years past, the fund brought in $10 to $20 million annually from the sale of unclaimed property in Arizona. But in 2012, the Legislature capped the amount the fund could receive from unclaimed property at $2.5 million annually.

The fund received an infusion of $60 million in state funds from the state budget this year. But some candidates want more.

“$60 million, we’ll take it, right?” said Lorena Austin, Democratic House candidate in Mesa’s Legislative District 9. “But we’re so behind that we have to be infusing for the long term.”

Seth Blattman, who is running alongside Austin, agreed. Mary Ann Mendoza and Kathy Pearce, the Republican House candidates for Legislative District 9, did not respond to requests for comment.

Casteen and Kaiser also said they would support expanding the Housing Trust Fund. In February, Kaiser introduced HB 2674, which would have allocated $89 million to the fund. The bill, which would have also imposed statewide zoning rules, was amended and instead created the Housing Supply Study Committee.

Related: Housing, climate are top issues in Flagstaff mayoral race 

Addressing short-term rentals

Candidates disagreed on whether to more strictly regulate short-term vacation rentals, which are often booked through online companies such as Airbnb and Vrbo.

Research shows that short-term rentals drive up house prices and rents while reducing the housing supply available for residents. The number of short-term rentals has increased exponentially in some Arizona communities over the past few years.

But a 2016 state law prohibits cities and towns from regulating the number of vacation rentals in their jurisdiction. Several Democrats said they support giving municipalities the power to cap that number.

“We need to stop tying the hands of municipalities to make those decisions of what is needed in their own backyards,” Casteen said.

Republicans Kaiser and Wilmeth disagreed with allowing local regulation. Doing so would impede on personal property rights, Kaiser said.

“If you own that home and you want to rent it out, you shouldn’t have the city telling you that you can or cannot,” he said.

For subscribers: Scottsdale's proposed short-term rental regulations 'very limited' by state, officials say

Limiting rent increases

Democratic candidates in Mesa said they would consider legislation to limit how much landlords can raise rents each year.

California and Oregon already have such laws in place. California’s 2019 rent stabilization law, sometimes called a “rent gouging” law, caps annual rent increases on certain types of properties at 5% plus the inflation rate, with a maximum of 10%.

While rent control typically limits rents to a set dollar amount, rent stabilization allows for modest increases based on a set percentage.

“Having a price increase of 5 or 10% versus 40 or 50% is the difference between whether they’re going to lose their home,” said Eva Burch, Democratic Senate candidate for Legislative District 9.

Burch’s opponent, Republican Robert Scantlebury, did not respond to requests for comment.

Arizona law bars cities and towns from controlling rents unless the property is owned, financed, subsidized or insured by the state or local government.

Attempts to curb rents have had mixed results elsewhere. One San Francisco study found that rent control helped many tenants but also resulted in more landlords selling their rental properties, decreasing the rental housing supply by 15% and causing a 5% citywide rent increase.

Austin, running in Mesa, said she would look into how legislation similar to California’s might work in Arizona. She’s spoken to many longtime Arizonans who are considering leaving the state because of unmanageable rent increases, she said.

“It’s not perfect, and I’m sure it would upset some people ... but we have to do something,” she said of regulating rents. “Because we’re seeing so many people get up and go.”

Juliette Rihl covers housing insecurity and homelessness for The Arizona Republic.

Coverage of housing insecurity on azcentral.com and in The Arizona Republic is supported by a grant from the Arizona Community Foundation.

This article originally appeared on Arizona Republic: Affordable housing is divisive issue for AZ House, Senate candidates