Arizona Gov. Katie Hobbs vetoes bipartisan housing bill, citing 'unclear outcomes'

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Arizona Gov. Katie Hobbs has vetoed a controversial housing bill that won bipartisan support in the Legislature, saying the measure would put Arizona “at the center of a housing reform experiment with unclear outcomes.”

Hobbs' veto of the Arizona Starter Homes Act on Monday was her second veto of the year. Perhaps reflective of intense debate over the bill and its efficacy at alleviating the state's housing crisis, the governor waited until the last day allowed in the Arizona Constitution to act on the bill.

“I was elected on a promise to bring thoughtful leadership to the Governor’s Office and always do the right thing for the people of this state, even when it’s hard,” Hobbs said in a statement. “Unfortunately, this expansive bill is a step too far and I know we can strike a better balance."

With her veto, the governor aligned with many municipal leaders and the League of Arizona Cities and Towns, but also found herself under fire from some fellow Democrats who joined with GOP majorities to get the bill through the Legislature.

The bill "was a historic bipartisan solution to our state's housing crisis and it would have created a pathway to the American dream of homeownership that too many Arizonans find themselves locked out of," state Rep. Analise Ortiz, D-Phoenix, said in a statement. She said Arizona "continues to kick the can down the road" — a catchphrase Hobbs often used, and pledged to change, while running for governor in 2022.Over 90% of people who shared feedback on the measure called for a veto, according to Hobbs' office. Her office said the Department of Defense and the Professional Fire Fighters Association of Arizona asked her to veto the bill. Those groups cited concerns about development in noisy or "accident potential zones" near Arizona's military installations, and difficulty in responding to emergencies if density is increased, respectively.

The bill would have prevented Arizona municipalities from requiring homeowners associations, minimum home sizes and certain building setbacks, among many other provisions. The bill effectively allowed the state a greater say in a process that is typically reserved for local jurisdictions.

The bill passed the House with a 33-26 vote in February and the Senate with a 16-13 vote earlier this month, picking up bipartisan support in each chamber.

Supporters of House Bill 2570 argued local zoning regulations set by municipalities have infringed on private property rights and fueled the current housing shortage. By cutting red tape, building would be easier and increase the housing supply, supporters said.

Supporters included Republicans in the Legislature, who were joined by a handful of Democrats and social justice advocacy groups including the People First Economy Coalition.

Last week, the Neighborhood Coalition of Greater Phoenix called for a veto of the bill, objecting to its quick passage through the Legislature and calling it "one-sided legislation" that pandered to developers while undercutting municipal zoning. The bill, according to opponents including the mayors and vice mayors of Phoenix, Mesa, Goodyear and Yuma, would do little to require affordable housing, a crisis the bill purports to address.

Yuma Mayor Doug Nicholls, the president of the League, said the veto "preserves the valuable resident input in planning and development decisions" and avoids irreversible harm to "years of thoughtful urban planning."

Hobbs calls for other solutions

The veto immediately put political pressure on Hobbs to find other solutions to the state's housing crisis, which she has addressed as a top priority in her tenure in office.

"I hope the governor takes this moment to reaffirm her commitment to solving the housing crisis rather than stand as another obstacle in the way of solutions," Sen. Anna Hernandez, D-Phoenix, said in a statement. "My hope is that Governor Hobbs and her staff, learn from their mistake today, and ensure that decisions on policy are made for the betterment of all Arizonans."

After an unrelated press conference on Monday, Hobbs addressed her veto of the bill.

She repeatedly called on municipal leaders and the League of Arizona Cities and Towns to be present for negotiations on other bills at the Legislature, which she put forward as better alternatives. Those would allow accessory dwelling units and allow multi-unit housing on lots zoned for single-family homes.

Cities and affordable housing advocates "can come to the best solution together. I don't necessarily think that it needs my involvement. They're the ones most closely involved in this issue."

But Rep. Leo Biasiucci, a Lake Havasu City Republican who was the bill’s sponsor, said Hobbs was not at the negotiating table, either. He said lawmakers got no guidance from Hobbs, which might have made the bill acceptable to her.

“It’s highly disappointing, especially when it’s the most pressing issue we have in Arizona,” Biasiucci said.

He said there is still time to pass legislation that would give Arizonans the opportunity to buy a home.

“The momentum is here, let’s do something,” he said.

Rep. Matt Gress, R-Phoenix, applauded the veto. While there is much work to do, Arizona cities and towns have already done a lot, Gress said. He ticked off policy changes such as allowing non-traditional construction methods and reducing setback requirements.

Senate President Warren Petersen, R-Gilbert, said in a statement that Hobbs ultimately sided with bureaucrats instead of Arizonans.

"Every day, we hear from active-duty military, veterans, young families, young professionals, firefighters, teachers, police officers, service workers, and seniors on fixed incomes that they are either facing the grim reality of becoming homeless or are being prevented from participating in the American dream of homeownership because of outrageous prices, partly due to reckless big government regulations imposed by cities and towns," Petersen said.

The veto "will certainly go down as one of her biggest failures," Petersen said.

Reporter Mary Jo Pitzl contributed to this story.

Reach reporter Stacey Barchenger at stacey.barchenger@arizonarepublic.com or 480-416-5669.

This article originally appeared on Arizona Republic: Arizona Gov. Katie Hobbs vetoes bipartisan housing bill HB 2570