By Roland Murphy for AZBEX
As more and more people move to Arizona (and as opposition to new development gets more organized and entrenched) the need for advocacy to deliver new housing units, particularly for multifamily, keeps growing.
While not a household name to most people outside of the policy and development world, HOME Arizona is diligently working behind the scenes to improve the state’s housing situation.
HOME Arizona’s specific mission is educating policymakers and elected officials about the relationship between housing prices, labor availability and economic development.
The group’s board of business leaders, former elected officials and economists coalesced in 2021 after observing two trends in their own businesses.
First, the price of housing across the Phoenix metro area has been rising at an unsustainable rate for the last several years.
Second, it is getting harder to hire good people.
“We compiled a lot of really good data around these two issues,” said HOME Arizona’s Nico Howard in a recent interview. “These are really the same issue at different stages in the lifecycle. If you look at how employers choose to relocate to or expand in a municipality, they’re looking at what drives their costs, and one of their biggest drivers is labor, attracting and retaining key talent.”
He went on to say, “What employees are looking at is the cost of living, specifically the cost of housing. If they can find cheaper or more quality housing with similar wages than they can in Phoenix, they will go to those other places. We’ll lose that labor force, and if we lose enough of our labor force, we’ll lose major employers. What starts as a housing affordability and fairness issue really evolves pretty quickly into a labor availability and economic development issue.”
For several years, Phoenix and the rest of Arizona have benefitted from cumbersome regulation, excessive costs of operation and prohibitive living expenses driving people and companies out of California, New York and Chicago. Unfortunately, these new arrivals have brought with them a willingness and ability to pay much higher housing prices than Arizona was traditionally used to.
That price insensitivity, coupled with a chronic undersupply that has only started to get addressed in the last two years, has led to massive escalations in rents and mortgages and has taken the state from an attractively affordable market to one of the least affordable, functionally overnight.
“Now we need to be really thoughtful about how we plan for the next five years,” Howard said. “What we’ve seen, specifically, is we need to be thoughtful in our policies to encourage the development and delivery of new (housing) supply. Ultimately, that’s the thing that’s going to keep pricing in check—having enough housing for the people moving here.”
Evangelizing that message begins with compiling research and data. Board member Elliot D. Pollack, one of the area’s most prominent economists, has delivered multiple presentations to various city councils, public agencies and other outlets showing the impacts of housing supply scarcity across several economic development scenarios.
In addition to the research and government presentations, Howard and his fellow members routinely take part in presentations and debates hosted by development organizations, such as Urban Land Institute’s Trends Day and their own recent symposium in association with the W.P. Carey School of Business.
“We’ve presented at the League of Arizona Cities and Towns. We’ve been featured on NPR twice. We’ve been in the Arizona Republic, and we’ve been very fortunate to have made the front page of AZBEX,” he said with a chuckle.
“What we’re trying to do is to get all the right stakeholders together and start examining these issues. I think the goal is to educate policymakers and elected officials, but the hope is that in doing so we can begin to reexamine some of these policies and their impact on housing supply and the affordability of housing.
“We are not an affordable housing group,” he emphasized. “We are looking at supply across the board. We’re getting stakeholders together to begin addressing this and really starting to take action that we think will have a tangible impact on housing prices.”
In the next year, HOME Arizona’s focus will be on working with municipalities to reform the zoning, entitlement, design review and approval processes to make them simpler, more efficient and less costly for developers looking to deliver more housing.
Howard said the group believes zoning should stay at the local level and does not support recent legislative efforts to bring entitlements under state control. “We’re asking municipalities to work with us to begin to reform and streamline these processes to remove regulation to make it easier to deliver the housing supply Arizona so desperately needs.”
HOME Arizona is working to create a class for municipal officials to learn about the development process. “Zoning is only one stage of the construction process. We spend months and months and then the city says, ‘Okay, you can do this,’ but then you have to get the project permitted. That might be another six to 12 months depending on the municipality. You have to do all your plans. You have to do everything else. Then you have to actually build the thing.”
“We want to create a class where people can learn about every stage of the project, all the way from underwriting sites to water challenges, infrastructure, and what does the capital stack look like? We want to educate folks so they can, maybe, see things from a different perspective.”
Howard actually expressed appreciation for how well the various neighborhood opposition groups have delivered their messages to local governments. “I think the neighborhood groups have actually done a really good job educating electeds about what their issues are and why they don’t like development,” he said. “They’re wrong. On the merits, they’re wrong, but it’s easy to digest their issues,” referencing items like congestion, traffic, et cetera.
“Our issues tend to be economic by nature, not as easy to understand. We haven’t done as good of a job spending time educating people about these issues. As a result, people don’t understand them, and they’ve only heard one side of the issue. I believe that when folks really spend the time to understand our issues and understand how complex and difficult it really is to develop in a modern environment… I think we’re going to have people seeing from a new perspective. I think we’re going to get people that really want to help and really want to change the way we’re currently doing things. There really is a better way to do it.”
“We just need things to be simpler, easier, shorter and less costly,” Howard said. “The more regulation and time you add on, the cost gets added on. That’s decreased affordability. I don’t think (opponents) that are fighting these projects really understand how much they’re hurting their kids, their families, their coworkers that are having a hard time finding housing.”