By Catherine Reagor| December 01st, 2021
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Arizona needs as many as 270,000 additional homes with rents and prices below what apartments and houses are going for now to keep the state’s growing affordable housing problem from becoming a crisis.

That’s an estimate from the Arizona Department of Housing — and a much higher one from a few years ago — because of rising housing costs and the state’s fast-growing population.

Most of the affordable apartments and homes are needed in metro Phoenix.

But big roadblocks to building the much-needed housing include not-in-my-backyard-ism, zoning issues and political backlash. These hurdles are shutting the door on apartment and smaller home developments across the Phoenix area.

“Valley rents are among the fastest growing in the nation, and wages aren’t growing that fast,” said Mark Stapp, director of the Master of Real Estate Development program at Arizona State University. “The experience of trying to get one affordable project built feels almost seemingly impossible to many developers.”

Stapp, who moderated an ASU meeting in September on how to incentivize local jurisdictions to get more affordable housing built, said there’s a disconnect between rising demand for affordable housing and how to deliver what’s needed to stanch the growing shortage.

What it takes to afford a Valley home

A home is considered affordable for renters and owners if they are paying 30% or less of their incomes for their monthly payments and utilities.

“Anyone paying more than 40 to 50% of their income is severely cost-burdened,” said Cindy Stotler, deputy director of the Arizona Department of Housing. “Any one big unexpected bill, such as a car repair, can cause someone to lose their home.”

She offers these examples of who is most in need of affordable housing in Arizona:

  • Retirees on fixed income typically bring in about $16,000 a year, and that means they can afford $415 a month in rent or to buy a house for $50,000 or less.
  • Service-industry workers making minimum wage earn about $27,000 a year. They can afford $690 in rent and a house selling for less than $95,000.
  • Single parents with two children earn on average $56,000 a year, which means they can afford $1,420 a month for rent or a house costing $190,000.
  • A family of four making the Valley’s median household income of $79,000 can afford $1,975 a month in rent and to buy a $280,000 home.

But the average rent for a one-bedroom in metro Phoenix is about $1,400, and the median house price is $410,000.

Not in my backyard neighbors

“We have to work on the fear-mongering toward affordable housing,” Owen Metz, vice president of Minnesota-based housing developer Dominium, said during a September meeting of LAI Phoenix, a land economics group, to discuss how to get more workforce housing in the state.

“It’s a daunting thing for city council members hearing from people who don’t want to live near multifamily development."

The developer had been working on three affordable housing developments proposed for Buckeye, Goodyear and Surprise that could provide about 1,500 apartments for households earning between $27,000 and $51,000.

But a backlash from neighbors and lack of political support is jeopardizing the much-needed apartments.

Surprise Mayor Skip Hall told my colleague Taylor Seely residential backlash to Dominium's proposed complex on the southwest corner of Waddell Road and Cotton Lane has been unlike anything he's seen in his 13 years on the City Council. 

Some area residents launched petitions to stop the "low income and high density" apartments and took to social media to spread the word. 

“NIMBYism is not new in Arizona,” said Tom Simplot, director of the Arizona Housing Department. “But we can’t expect elected officials to fight for increased density and apartment zoning, if the development community doesn’t galvanize a neighborhood about a project early on.”

The former Phoenix City Council member said for politicians, if “five people complain from a neighborhood, it feels like a tidal wave of protest.”

Dominium has pulled out of its Buckeye workforce apartment project.

"Unfortunately, there did not seem to be enough political will in Buckeye to overcome NIMBY concerns and we were forced to move on," said Sarah Shambrook, Dominium's government relations associate.

Single-family vs. multifamily development

“We have economic diversity now, and the next thing we need is housing diversity,” said real estate attorney Manjula Vaz with Gammage & Burnham. “Not everyone in Arizona needs to live in a single-family home. We need apartments now.”

Arizona’s land use is heavily weighted toward single-family home development over multifamily construction.

About 878,000 acres of vacant land across the state is zoned or set aside for single-family homes, according to the Maricopa County Association of Governments.

Only about 17,000 acres are zoned or entitled for apartments.

Dan Klocke, project manager with the affordable housing developer Gorman & Co., said apartments and attached housing cost taxpayers less than single-family houses.

He gave the example of a north Phoenix neighborhood with 38 single-family homes next to 79 townhomes. Both are on similar-sized parcels.

The single-family homes require much more street, sewer and infrastructure to maintain than the townhomes.

The 38 houses bring in a total of $170,000 in annual property taxes, which doesn’t cover the municipality costs of maintaining the subdivision, Klocke said.

The townhomes bring in $320,000 in property taxes annually.

“We have a huge opportunity to build much-needed affordable housing with federal funds now,” said Sheila Harris, founding director of the state’s housing agency and the Phoenix Revitalization Corp. “We need to collectively come together to make communities for everyone.”

Reach the reporter at [email protected]narepublic.com or 602-444-8040. Follow her on Twitter @catherinereagor.

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