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Market Exacerbate Shortage of Afford. Housing

Credit: Opticos

By Rebekah Morris for AZBEX

The Arizona Planning Association hosted a two panel, half-day symposium discussing housing in Arizona on Thursday, November 21st, 2019. The aim of the event was to encourage dialogue about the state of housing in Arizona and potential solutions to creating a diverse mix of all forms of housing that are attainable to all who want to reside here.

First Panel-Trends and Policies

  • Ambika Adhikari, AICP-City of Tempe Principal Planner, Long Range Community Development
  • Maria Laughner, Economic Development Program Manager
  • Mike James, AICP-Civtech, Transportation Planning Director
  • Meagan Ehlenz-Arizona State University, Assistant Professor School of Geographical Sciences & Urban Planning
  • Carolyn Oberholtzer-Partner, Bergin, Frakes, Smalley & Oberholtzer

Second Panel-Housing Options and Strategies

  • Jaime Jacobs, CCM-Katerra, VP of Business Development/Affordable Housing Renovations
  • Deirdre Pfeiffer-Arizona State, Assistant Professor School of Geographical Sciences & Urban Planning
  • Elizabeth Singleton-Build Us HOPE/Singleton Community, President
  • Megan Neal-Toll Brothers Land Entitlement Manager

Diverse Mix of Housing Drives Economic Development

Housing solutions that enable residents to work near their places of employment, healthcare and education would reduce traffic congestion, lower healthcare costs and boost the economy.

Maria Laughner, Economic Development Manager for the City of Tempe stated that Arizona is short 500K housing units, and that the cost of providing healthcare to persons experiencing homelessness tops $128B annually. Additionally, the new opportunity zone law that is meant to encourage development in less affluent areas specifically excludes residential uses.

If we can acknowledge the need for affordable housing, why aren’t we building it?

Issue #1 – Regulation or the Lack Thereof

From outdated and inflexible zoning rules and building codes to permit and impact fees, municipalities are not helping development of affordable housing by and large. Laughner also explained that Arizona cannot force affordable housing into part of the requirements of development.

Zoning Attorney Caroline Oberholzer described the impasse of developers who want to maximize land use with 35’ wide lots but are routinely denied by city planners who desire wider lots and decreased density. She went on to praise the City of Phoenix with their flexible zoning laws and push for higher quality development.

At a similar event hosted by the Phoenix Chapter of ULI in October 2019, several speakers bemoaned the city ordinances that increase development cost including wider streets, sidewalks on both sides of the street, unduly burdensome fire codes and setback requirements. The accumulation of all these regulations are placing developers in a tougher spot, reducing their ability to build affordable or attainable housing in most cases.

Cities recognize the need for affordable and attainable housing. They recognize that they can incentivize what they want through tax rebates and other models. They can proactively overlay favorable zoning into areas where housing would make the most impact for their community.

Issue #2 – Market Forces

Banks prefer to lend on proven models. Developers often choose to build projects with the highest ROI. Landowners will elect to sell when they can make the highest dollar for their asset.

Innovation is stifled when these three forces combined with the local municipality regulations make for a path of least resistance for the market to deliver higher end multifamily product, in locations with favorable zoning in place, with plenty of surface parking and a design aesthetic that is already in use and can be replicated easily.

The Risk Takers: From Tiny and Manufactured Homes to Apartments Without Parking

There are developers out there who see the need and are willing to take on the challenges of developing an untested, novel, innovative project. Among those are Elizabeth Singleton of Build Us Hope and Venue Projects. Singleton, a nationally recognized expert in tiny homes, took on what would, on the surface, appear to be a plausible project – provide three tiny home units on a parcel for homeless veterans in Phoenix. Three and a half years later, tens of thousands of dollars in attorneys’ fees and countless hours of time investment, she will tell you it was much harder than one would think. Only her persistence, patience and determination brought the project across the finish line.

Lorenzo Perez from Venue Projects is similarly independent and driven to be a part of the solution to housing needs in Arizona. A local, independent developer, Venue Projects focuses on the challenges that need an inordinate amount of patience and innovation to deliver success.

Venue Projects is currently working on a project located near Highland and 14th Street which will utilize manufactured homes. Perez harped on a topic not often discussed – a push for higher quality design. He stated that the manufactured homes available on the market are not keeping pace with the shift in consumer tastes, he thinks better design will change that perception.

Perez is currently having discussions with multiple firms that manufacture homes to increase the quality of the design in homes that are modern and functional. He added that the cities he develops projects in are much more likely to approve a project with a well thought out functional design. Considerations of good design to Perez include scale, proportions, sensitivity to the neighborhood, putting thorough thought into the auto – should it be front and center or can it be tucked away into the design of the site, use of better quality building materials, and an emphasis on the exterior of the site with increased landscaping and an empathetic approach to who will actually live and work in the spaces.

There are innovative developments planned in Tempe that include: HILO Tempe and the much publicized Culdesac, a $140M multifamily development that recently held a ceremonial groundbreaking on Apache and River Road. That project will go vertical in 2020 when the land purchase transaction, plan review and permitting process are complete.

All Players Need to Step Up to Solve Housing Crisis

From municipalities to developers and neighbors, all members of the community have a part to play in solving the housing crisis. Encouraging removal of burdensome regulation that will enable affordable and attainable housing solutions that pencil for developers is needed. Funding for innovative projects is needed. Approval by city council members is crucial, even in spite of neighborhood opposition. NIMBY opposition often comes from well-funded property owners who do not want to see the neighborhoods change and keep pace with the growing community. City leaders have to see the needs of the entire community and encourage housing for all. City staff and locally elected officials have the most influence on approving individual projects. Efforts at a state level are underway as well with a land use bill being proposed this upcoming 2020 legislative session specifically aimed at encouraging development of more diverse housing options.

The development team including planners and architects can also play a part in increasing the quality of housing products available. This multifaceted housing crisis deserves a multifaceted and nuanced set of solutions in order to keep Arizona as a leader in economic growth and prosperity.

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