Please call or write every Arizona legislative senator to Oppose SB 1117. See the email from the League of Cities and Towns, outlining the dangers of this housing/zoning bill.
From: Jane Ahern <jane@ha-firm.com>
Sent: Friday, March 10, 2023 4:02 PM
To: Senator Mitzi Epstein <mepstein@azleg.gov>; Senator Lela Alston <lalston@azleg.gov>; Senator Juan Mendez <jmendez@azleg.gov>; Senator Raquel Teran <rteran@azleg.gov>; Senator Eva Burch <eburch@azleg.gov>; Senator Catherine Miranda <cmiranda@azleg.gov>; Senator Brian Fernandez <bfernandez@azleg.gov>; Senator Anna Hernandez <anna.hernandez@azleg.gov>; Senator Theresa Hatathlie <thatathlie@azleg.gov>; Senator Priya Sundareshan <psundareshan@azleg.gov>; Senator Eva Diaz <eva.diaz@azleg.gov>; Senator Christine Marsh <cmarsh@azleg.gov>; Senator Sally Ann Gonzales <sgonzales@azleg.gov>; Senator Rosanna Gabaldon <rgabaldon@azleg.gov>
Cc: Tom Savage <tsavage@azleague.org>; Paulino Valerio <pvalerio@azleg.gov>; Talonya Adams <tadams@azleg.gov>
Subject: League of Arizona Cities and Towns SB1117 Floor Amendment Analysis and Opposition
Good afternoon, Leader Epstein and members, I am reaching out to share some analysis and response from the League of Arizona Cities and Towns regarding the proposed floor amendment to Senator Kaiser’s SB1117.
Unfortunately, this amendment does not address the breadth of issues with this bill. The most significant concern with the bill, even with the amendment, is that it continues to codify "by-right" zoning, which means all rezonings would be completed administratively, without public notification or a public process. This means that any applications to rezone to ANY residential use (i.e., single-family to high-density multi-family, commercial to multi-family, industrial to residential) would be subject to mandatory administrative approvals, without a public hearing or a public process, and without consideration of impacts to infrastructure and the surrounding residents.
Despite the assertion the floor amendment allows public notification to residents, this is not the case. The public notification outlined in the amendment only applies to the ordinance that the city or town must adopt to comply with SB1117. For example, on page 11 of the bill, subsection K adds a new exemption for rezonings from the public notification and hearing process outlined in the current law.
The floor amendment doesn't include the concepts the League was told would be modified in the stakeholder meeting preceding the amendment; and the parking preemption is one example. The language around historic designations does not entirely solve the problem with historic neighborhoods or even apply to historical areas that do not have such a designation. There are many historic neighborhoods and buildings that fall into this category. This leaves these areas unprotected from by-right development, despite the concerns or objections of residents and historic preservation groups. There are also additional changes in the amendment that were never discussed, which are included in our summary.
Lastly, this bill will still implicate Prop 207, by upzoning the entire state in cities above 30,000, which cannot be undone without significant liabilities to the state or cities and towns. And it still removes public involvement in rezoning/development decisions.
For this reason and many others, the League of Arizona Cities and Towns must remain opposed to this bill, due to the severe unintended consequences that will likely result from its implementation. This will bill will negatively impact our residents and the planning and development of our cities and towns. We believe our residents expect us to continue to oppose legislation like this.
Attached please find a summary of the amendment, and a broader analysis of the issues with the bill.
Please feel free to reach out with any questions, and I hope everyone has a great weekend.
SB1117 Overview
▪ Nothing in this bill requires affordability. The bill conveniently relieves developers from any responsibility regarding affordability.
▪ Nothing in this bill removes the existing prohibition against inclusionary zoning.1 This means Arizonans can only (continue to) hope that developers will provide affordable housing.
▪ The bill is based on the fallacy of the “trickle-down”2 economic theory of housing - that increases in the supply of market rate and luxury housing will automatically “trickle- down” to create more affordable housing at some point in the future. This theory is not supported by econometric modeling3 and has not been shown to work.4
▪ While funding for subsidized housing has been proven to work,5 no funding is appropriated under SB1117.6
▪ The bill removes the citizen review process7 and mandates administrative approvals8 of (1) “by right” multifamily developments and (2) “by right” rezonings within a specific timeframe. This includes a mandate to approve of luxury projects that may accelerate gentrification in once-affordable neighborhoods.9
1 The existing prohibition against inclusionary zoning is found in 9-461.16.
2 This “trickle-down” economics theory is also referred to as “supply side” economics, “Reaganomics”, and (by former President George H.W. Bush) “voodoo” economics. More recently, it has also been referred to as “filtering” and “housing as opportunity.” 3 See, e.g., “The Maze of Urban Housing Markets: Theory, Evidence, and Policy” by Jerome Rothenberg et al. For one thing, there isn’t a single unified housing market. To the contrary, supply and demand are different in different price ranges of housing. The "housing market" consists of multiple, non-intersecting submarkets delineated by price.
4 “While there is some evidence new housing production does eventually help lower median rent in the neighborhoods where construction occurred compared to other areas, these effects take decades to surface (Zuk and Chapple 2016; Rosenthal 2014). Worse, by the time such price effects register, large numbers of low-income residents have likely already been pushed out.”
5 The citizen review process is described in 9-462.03 and 9-462.04. Among other things, it address the requirement for a public hearing and requires municipalities to provide the following (at a minimum): (1) Adjacent landowners and other potentially affected citizens must be notified of the application; (2) the municipality must inform adjacent landowners and other potentially affected citizens of the substance of the proposed rezoning; and (3) adjacent landowners and other potentially affected citizens must be provided an opportunity to express any issues or concerns that they may have with the proposed rezoning before the public hearing.
6 See 41-3951 and 41-3958. Even if funding had been appropriated under this bill, there is nothing in this bill that ties funding to constructing affordable housing. Instead, the grant funding would serve to relieve developers of paying impact fees.
7 The sponsor has indicated the bill continues to require a citizen review process; however, the bill specifically exempts “by right” rezonings and “by right” multifamily projects from the citizen review requirements under 9-462.03 and 9-462.04. See 9-462.03(B) (“EXCEPT FOR MODIFICATIONS MADE PURSUANT TO SECTION 9-462.10, a zoning ordinance that changes any property from one zone to another, that imposes any regulation not previously imposed or that removes or modifies any such regulation previously imposed must be adopted following the procedure prescribed in the citizen review process and in the manner set forth in section 9-462.04); 9-462.04(K) (“EXCEPT AS OTHERWISE PROVIDED, THIS SECTION DOES NOT APPLY TO ANY ZONING ORDINANCE OR PART OF A ZONING ORDINANCE ADOPTED PURSUANT TO SECTION 9-462.10.”). In addition to avoiding any notice or hearing requirement, 9-462.10(G)(2) specifically prohibits review by any board or commission – and municipalities cannot require any use permit or amendment to the voter-approved general plan. See e.g., A.R.S. 9- 462.10(G)(2) (“NOTWITHSTANDING ANY OTHER LAW, INCLUDING ANY ORDINANCE OR CHARTER PROVISION, ON OR BEFORE JANUARY 1, 2024, A MUNICIPALITY SHALL ALLOW THE FOLLOWING BY RIGHT: . . . AN APPLICANT TO CONSTRUCT HOUSING PURSUANT TO THIS SECTION WITHOUT THE MUNICIPALITY REQUIRING A GENERAL PLAN AMENDMENT, USE PERMIT OR REVIEW BY A BOARD OR COMMISSION.”)
8 See 9-462.10(B)(2) (e.g.: “AFTER A DETERMINATION THAT THE APPLICATION IS ADMINISTRATIVELY COMPLETE, THE MUNICIPALITY SHALL APPROVE THE APPLICATION WITHIN NINETY DAYS . . .”).
9 This bill will allow for the unchecked flow of new market rate residences – but “studies show that market-rate housing development is linked to the mass displacement of neighboring low-income residents.” (Davidson and Lees 2005, 2010; Pearsall 2010).
▪ Any changes to zoning laws in the state will have a layer of protection because of Prop 207, meaning that these laws cannot be undone or modified without diminution of value claims from property owners. This could create significant liabilities for the State.
▪ Allowing wealthy for-profit developers to bypass the public process means they have zero obligation to work with the community and have a “free pass” to ignore the legitimate concerns of the neighborhood.
▪ Eliminating public processes is a simplistic scapegoat that ignores the real impediments to housing: the lack of affordable land zoned for housing, shortages in labor and materials, limited funding for affordable housing, and the boom-bust nature of economic cycles.
▪ This “one-size-fits-all” bill thwarts local planning efforts to create more inclusive neighborhoods, including voter-approved general plans that citizens develop to reflect community goals, such as walkability, sustainability, water conservation, and economic development.
▪ Wealthier areas with private CC&Rs will be protected by the bill.10 As a result, areas without CC&Rs (often the poorer communities) will bear the brunt of this bill.
▪ While the bill creates certain arbitrary exceptions for municipalities under a certain population threshold, smaller municipalities are not exempted from everything under the existing version of the bill. For example, all cities and towns are preempted from establishing requirements for off-street parking and loading.11 The bill also preempts all municipalities regarding requirements for setbacks, yard sizes, and minimum lot coverage. Moreover, all municipalities are prohibited from denying any permit that is necessary for “land development or building construction.”12
▪ The bill severely restricts design review authority.13 These communities will be prevented from preserving the character of their neighborhoods, including historical areas.
▪ Unless cities can make upzoning conditional on providing affordable housing using appropriate incentives, this bill will only serve developers at the expense of existing communities.
Infrastructure Impacts
▪ Arizona has a long history of requiring growth to pay for itself (i.e., impact fees, half street improvements). Municipalities also use their voter-approved general plans to develop impact fees, which are assessed to recover the costs associated with providing infrastructure and improvements necessitated by the development.
10 See 9-462.01(N) and 9-500-49(D).
11 9-462.01(A)(4). The Kaiser outline indicates that a future floor amendment may revise the parking preemption to allow a municipality to require up to 1 parking space per unit. This is an arbitrary number and continues to ignore the fact that a “one- size-fits-all” approach does not work, especially in communities where there is little or no public transportation. Parking requirements should provide flexibility considering a project’s location in relation to transit, bicycle and pedestrian facilities, and the surrounding diversity of land uses.
12 See 9-835(G) (“ . . . A MUNICIPALITY MAY NOT DENY A LICENSE APPLICATION THAT IS NECESSARY FOR LAND DEVELOPMENT OR BUILDING CONSTRUCTION UNLESS THE MUNICIPALITY CONSIDERS THE APPLICATION WITHDRAWN.”)
13 The existing bill refers to populations of 25,000 or more. It is our understanding that a future floor amendment may increase the population threshold to 30,000.
▪ SB1117 ignores these voter-approved general plans and long-term infrastructure plans that help a municipality ensure it has adequate water, infrastructure, and services to serve existing residents and support future growth (e.g., water, sewer, streets, public transportation, etc.)
Water Impacts
▪ Since SB1117 mandates approval and prohibits mitigation requirements that unduly burden developers. SB1117 raises serious concerns about the impacts on water capacity and conservation efforts.
▪ With respect to mandated approvals of “by right” multifamily projects, SB1117 is especially concerning because the current assured water supply requirements do not apply to multi-family projects and build-to-rent housing developments.
Impacts to Schools
▪ SB1117 disregards infrastructure plans and removes the ability of school districts to get notice about proposed projects and plan for the future growth.14
▪ This impedes efforts to ensure there is adequate elementary, middle, and high school capacity to serve new students – and to ensure schools are near applicable neighborhoods.
Environmental Impacts
▪ The bill has several provisions that raise serious concerns about potential environmental impacts.
▪ First, the bill mandates approval of rezonings and multifamily projects, regardless of whether there is adequate public infrastructure and services to support them.
▪ Second, the bill relieves developers from obligations to mitigate the impacts of their proposed developments. Mitigation can only be required if a neighbor15 meets an impossible test (assuming the neighbor would even know about a proposed project because the bill removes public notice and hearings). In particular, the neighbor must present clear and convincing evidence that a proposed project will create an objective16
14 See, e.g., 9-461.01(C)(2) (“The governing body shall . . . consult with, advise and provide an opportunity for official comment by . . . school districts, associations of governments, . . . other appropriate government jurisdictions, public utility companies, civic, educational, professional and other organizations, property owners and citizens generally to secure maximum coordination of plans and to indicate properly located sites for all public purposes on the general plan.”).
15 The right to require mitigation is limited to property owners within the “zoning area” only. "Zoning area" means (1) the area within 150 feet, including all rights-of-way, of the affected property subject to the proposed amendment or change, and (2) The area of the proposed amendment or change. See 9-462.10(B)(2); 9-462.10(D). Note: To protest a rezoning application, surrounding property owner would first need to know about the application. It is unclear how these property owners would know about these applications without public notice or a public hearing.
16 "Objective" is defined as “involving no personal or subjective judgment by a municipal employee or official and being uniformly verifiable by reference to an external and uniform benchmark, standard or criterion available and knowable by both an applicant or proponent and a municipal employee or official."
externality17 that has not been mitigated.18 The reason why this test is impossible to meet is because a developer is automatically deemed to have satisfied any mitigation requirement related to water runoff, traffic or parking if the municipality has requirements for grading, drainage and required street improvements under 9-463.05.19 All municipalities have these requirements, which means projects can never be required to mitigate these impacts. Even if a property owner somehow met this impossible test, SB1117 takes it a step farther and specifically prohibits creating any undue burden20 on these “by right” developers.21
▪ Third, landscaping requirements are preempted and prohibited under the current version of the bill in cities above the population threshold (excludes requirements for drought- tolerant trees, plants, and shrubs).22 This prohibition frustrates efforts toward urban heat mitigation. Trees and green space are among community members' most sought-after environmental amenities, and the direct incentives to developers and builders to provide an adequate amount are not always there. Communities should have the ability to require landscaping that:
does not exacerbate regional air pollution challenges (ozone in particular), which could jeopardize access to federal funding and ultimately make Arizona a less appealing state for new investment/business (due to a stricter regulatory environment)
does not exacerbate regional water supply challenges, which could increase the costs and risks of operating a business and investing in Arizona.
is compatible with the desert ecosystem.
does not create significant conflicts with above and below-ground utilities,
construction, etc.
provides enough trees in the appropriate locations to provide shade for
pedestrians, as well as buildings (to improve energy efficiency and conservation).
17 "Externality" is defined as "the effect beyond the property lines of the proposed development on property owners within the zoning area while on the owner's property related to light, noise, odor, water runoff, traffic and parking." "Externality" excludes "any of the effects pursuant to subdivision (a) of this paragraph that are wholly contained within the property lines of the area of the proposed development." "Light" means “the proportion of natural light that a building should expect to receive.”
18 9-462.10(B)(2). The potential impacts of a proposed developments are currently evaluated by city engineers and other professionals.
19 9-462.10(B)(2). Note: Most cities have these requirements, which means all applications in these cities will automatically be deemed to meet the mitigated requirement in #2. As a result, any right to protest would be illusory since owners protesting applications could never meet their burdens of proving #2.
20 Note: Undue burden is not defined.
21 9-462.10(C). 9-462.10(B)(2) (“THE MUNICIPALITY'S IDENTIFIED OBJECTIVE EXTERNALITIES, INCLUDING ANY MITIGATION MEASURES PRESCRIBED BY CODE, ORDINANCE, STANDARD, REGULATION OR OTHER LEGAL REQUIREMENT MAY NOT CREATE AN UNDUE BURDEN ON THE DEVELOPMENT AND CONSTRUCTION OF NEW HOUSING UNITS.”). Undue burden is not defined.
22 9-500.49(A); 9-500.49(F)(1). It is our understanding that a future floor amendment may “allow cities to regulate landscaping,” but it is unclear what this amendment will look like. It is also unclear whether such an amendment would have any meaningful impact considering the broad preemptions (e.g., setbacks, lot coverage), mandated administrative approvals, and prohibition against mitigation requirements that “unduly burden” developers. 9-462.10 (describing mandated approval of rezonings and housing projects, including multifamily, in municipalities above the population threshold); 9-462.01(C) (describing preemptions that apply to all cities and towns).
▪ Fourth, SB1117 impedes community efforts to promote walkable, promote accessible communities, and reduce the dependance on vehicles. It preempts and prohibits requirements for sidewalk placement or sidewalk design.23 SB1117 gives developers rights to construct with very with very short setbacks and maximum lot coverage and mandates approval. These rights to build combined with the sidewalk preemption likely means that developers can no longer be required to dedicate a strip of their property for the construction of sidewalks.
23 9-500.49(A); 9-500.49(F)(1) (the preemption applies to cities above the population threshold). Where sidewalks are constructed, municipalities could require compliance with the ADA.