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Southwest cities can continue freeing their housing markets through deregulation - Pacific Research Institute

Southwest cities can continue freeing their housing markets through deregulation

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This piece continues a two-part series review of the housing landscape in southwest cities. Part one linked here takes a look at the housing landscape in the states of Arizona and Colorado. Part two below looks to New Mexico and Utah, followed by the review’s conclusion.

New Mexico

In New Mexico, all eyes have been on the city of Albuquerque, which for the past year has seen a strong push from Mayor Tim Keller to overhaul the city’s housing policies to allow more housing to be built.

Keller’s reform effort, dubbed “Housing Forward,” called for the legalization of accessory dwelling units and duplexes in parts of the city zoned for single-family housing, the lifting of height restrictions and relaxed parking requirements on multifamily developments, among other things.

The need for these reforms is straightforwardly described in the city’s analysis of the proposal, which first went before the City Council on June 5: “The city is experiencing a rapidly worsening housing shortage that is contributing to increased homelessness, record high rents and inflationary housing prices. In addition, the shortage is causing an alarming and growing gap between the shrinking affordable housing supply and the expanding demand. These amendments are needed to promptly remove regulatory barriers to increase the supply of market rate and affordable housing in Albuquerque.”

Further, the majority of the city – 68% of it – is currently zoned for single-family homes, hence the push by Mayor Keller to facilitate construction by making it easier for property owners to build ADUs and duplexes in such areas.

The June 5 council meeting reportedly drew large numbers of residents to sign up to speak about the plan. The Albuquerque Journal reports that 30 of the speakers opposed the plan and 52 spoke in support.

Critics brought up the usual objections one sees to these reforms. “Representatives from neighborhood associations have called the process rushed, criticized associations’ lack of involvement in the planning process and raised concerns about increased traffic in their neighborhoods,” reported the Albuquerque Journal. One neighborhood association leader insisted, “she’d like to see legislation that would allow for moderated meetings between neighbors before a casita or duplex was built.”

But, again, most supported the plan at the June 5 meeting. Even so, the council decided to punt on making a decision for two weeks. On Wednesday, June 21, the Albuquerque City Council approved it – but with major amendments gutting key provisions.

The council took a half-step forward by agreeing to allow ADUs in areas of the city currently zoned for single-family housing, but removing duplexes from the plan. It also voted to add new setback requirements for ADUs as well as height limits. And while initially voting 5-4 to require ADUs to be subject to time-consuming conditional use permit processes, one council member flipped their vote to revert to allow them to be built permissively.

The council wasn’t done there, further striking a provision allowing reduced parking requirements for multifamily housing and removing more expansive height “bonuses” for certain types of housing.

On the one hand, Albuquerque, home to a quarter of New Mexico’s population, has taken a much needed step in the right direction. But the liberalization of restrictive housing policies was much less than the city needs, with NIMBYism watering down what was otherwise a sensible plan.

Utah

Numerically, Utah’s housing shortage doesn’t sound too daunting compared to Arizona or Colorado – 31,000 units – but the practical impact is the same. Where there is a shortage of housing and rising demand, there will be increased costs which economically harm those who need to pay such high costs for a place to live.

At the state level, the Utah Legislature this year approved a few bills deregulating the housing market. This has largely entailed requiring simpler or reduced city government barriers to development. Senate Bill 174, for example, is aimed at streamlining local government subdivision processes.

“[C]ities would only hold one initial public hearing for an application to subdivide land,” explained the Deseret News. “If the application complies with existing zoning requirements city officials would need to approve it. It would also make clear the implementation of an approved plan is an administrative function, and therefore not subject to subsequent public hearings.”

None of the bills were more sweeping or novel compared to Utah’s 2019 legislation, Senate Bill 34, which sought to strike a balance between top-down deregulation and appeals for “local control.”

That legislation requires cities to plan for affordable housing. In order to receive state funding for moderate-income housing units, though, the state requires cities to pursue at least three reforms from “an expanded menu of nearly 25 strategies they can pursue to encourage affordable housing, ranging from waiving development fees, allowing so-called mother-in-law apartments and revamping aging homes to adopting zoning that encourages construction of high-density housing near transit lines.”

Given the flexibility of the law, cities have chosen different combinations of reforms to encourage housing constructions.

Salt Lake City, for example, is pursuing a plan which city officials hope will facilitate the construction of 10,000 new units of housing by the end of 2027. Unsurprisingly, many of the key ideas for getting more housing built include proposals for the city to simply get out of the way.

The ideas in the plan, called Housing SLC, include making “ the development of ADUs easier and more widespread throughout the city,” facilitating the construction of tiny homes “through zoning, funding, and streamlined plan and design review,” increasing height and density limits for housing, reducing or eliminating parking mandates where it makes sense and reducing or eliminating impact fees for moderate income housing.

Consistent with this, the Salt Lake City Council recently approved new ADU rules expanding where ADUs can be built and eliminating conditional use permit requirements for eligible ADU construction. Notably, like Denver, the Salt Lake City Council did retain requirements that property owners must live on the property where ADUs are built, which some critics described as a “ball and chain.”

Even so, Utah and Salt Lake City are making key steps in the right direction.

Conclusions: Taking slow steps in the right direction

The four states mentioned in this two-part series have a couple of things going for them. Unlike some of the Northwestern states I’ve previously written about, they have laws on the books preventing cities from pursuing counterproductive rent control or inclusionary zoning policies.

The focus, then, can be on how to deregulate or otherwise encourage housing markets to operate. However, NIMBYism and the desire of local governments to retain control remain potent forces slowing down or spiking the most sweeping of proposals.

While major cities in the region are still taking some steps worth acknowledging, cities serious about easing the financial burden of housing costs and facilitating more housing construction need to embrace freedom and allow property owners to build.

Sal Rodriguez is opinion editor for the Southern California News Group and a senior fellow with the Pacific Research Institute. He is the author of “Dynamism or Decay? Getting City Hall Out of the Way,” published by the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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