Arizona’s Housing Revolution: Understanding HB 2720 and HB 2721

Arizona has taken bold steps toward addressing its housing crisis with the passage of House Bills 2720 and 2721. These bills aim to increase housing options, promote affordability, and adapt urban living spaces by introducing accessory dwelling units (ADUs also known as casita’s) and middle housing. Here’s a comprehensive look at what these bills entail, their potential impacts, and the concerns they’ve raised.

House Bill 2720: The ADU Expansion

• Purpose: HB 2720 mandates that cities with populations over 75,000 must allow at least one ADU on lots zoned for single-family homes. This is to combat housing shortages by utilizing existing residential spaces more efficiently.
• Key Provisions:
• ADUs are to be permitted in single-family zones.
• If not adopted by municipalities by January 1, 2025, ADUs are automatically allowed.
• Aims to favor long-term rentals to prevent an overabundance of short-term rentals.
• Potential Upsides:
• Increases housing density without significant land use change.
• Provides homeowners with an income source or space for family.
• Could help in making housing more affordable.
• Downsides:
• Community character might change, affecting neighborhood aesthetics.
• Potential parking and traffic issues.
• Concerns over short-term rentals overshadowing long-term housing.
• Strain on existing infrastructure if not managed.

House Bill 2721: Embracing Middle Housing

• Purpose: This bill pushes for the inclusion of duplexes, triplexes, fourplexes, and townhomes in cities over 75,000, aiming for a more diverse housing landscape.
• Key Provisions:
• Middle housing must be permitted by January 1, 2026, in single-family zones.
• Limits on how restrictive regulations can be compared to single-family homes.
• Potential Benefits:
• Diversifies housing options, potentially lowering costs.
• Addresses housing scarcity by utilizing urban space more effectively.
• Could lead to more sustainable urban development.
• Challenges:
• Loss of local zoning control, potentially leading to community backlash.
• Density might lead to overcrowding and infrastructure strain.
• Questions about whether this will truly benefit low-income residents.

Impact on Taxes

• Property Taxes:
• Increased property assessments due to new constructions or conversions might lead to higher property taxes for affected properties.
• Broader tax base might distribute tax burden differently, but this depends on local fiscal policy.
• Other Tax Considerations:
• Rental income from ADUs could influence personal income taxes.
• Short-term rental taxes might apply if ADUs are used for such purposes.
• Potential for tax incentives or exemptions to encourage certain housing developments.

While HB 2720 and HB 2721 represent a progressive approach to housing in Arizona, they come with a mix of promise and potential pitfalls. The success of these policies will hinge on how well they are implemented, the community’s response, and whether they truly make a dent in the housing affordability crisis. For homeowners, developers, and residents, understanding these changes is crucial as they could impact neighborhood dynamics, property values, and local tax policies.

As Arizona moves forward, keeping an open dialogue with all stakeholders – from city planners to residents – will be key in navigating these significant shifts in housing policy. Whether you’re considering building an ADU or are curious about how your community might change, staying informed and engaged will be essential in shaping Arizona’s housing future.