Arizona bill to exempt historic neighborhoods from middle housing rules gets new life

A measure to protect historic neighborhoods from new development stalled in the Arizona Senate, a fate normally sealing their fate.

But it got new life, could now get a Senate vote and if approved, a trip to Gov. Katie Hobbs’ desk for her to consider.

Changes to the measure to placate Tucson city officials and win their backing may help with both.

The bill allows cities to exempt historic neighborhoods from provisions of a 2024 "middle housing'' law that requires cities and towns to allow construction of duplexes, triplexes, fourplexes and townhomes within a mile of city central business districts.

Residents of historic districts in Phoenix, Tucson and other affected cities cried foul over the law, worried that developers would buy older homes, demolish them and then build multi-family homes, changing the character of their neighborhoods forever.

Rep. Matt Gress, R-Phoenix, used a legislative maneuver last week to get around the fact that his bill never got a Senate committee vote after passing the House in March. He used a Senate-passed bill in the last regular House Appropriations Committee meeting of the session as a vehicle to attach that stalled measure and tee it up for a new House vote and clear the path to the Senate and Hobbs.

It wasn’t easy — several Democrats in the Legislature who embraced the law requiring cities to let new housing be built in the center of larger Arizona cities argued on Tuesday that it would limit new affordable housing.

Every Tucson House Democrat voted against Gress’s original measure during a vote of the full House last month. But the new changes got one of three Tucson Democrats, Rep. Stephanie Stahl Hamilton, to support it during Tuesday’s Appropriations Committee hearing.

The proposal from Gress leaves the bulk of that 2024 law requiring middle housing in place. What Senate Bill 1118 does do is return to cities their ability to exempt historic neighborhoods from the requirements and limit demolitions. Tucson and Phoenix have about 70 neighborhoods with that designation.

Opal Wagner, a member of a group representing those areas known as Save Historic Arizona, noted that in Phoenix, they make up just 2 square miles out of the 520 square mile city.

She said that under the 2024 law, which went into full effect this January, cities are not allowed to deny demolition permits sought by developers — even if they target a historic home. That's despite city designations or guidelines that some lawmakers say protect them.

"Even though there are historic preservation guidelines in many of our cities, we are told that is just that,'' Wagner told the committee Tuesday evening.

"We are told these are city of Phoenix Historic Preservation guidelines, which translates to recommendations,'' she said. "One of the things that SB 1118 does is offer cities the opportunity to adopt standards which are stronger than guidelines, not as much of a gray area and hopefully are legally enforceable.''

Tucson officials say their city has stronger protections against tearing down historic homes, so they pushed for changes to Gress' proposal to limit its reach.

Advocates from other housing groups also opposed Gress's carveout, as did Phoenix City Councilwoman Anna Hernandez. She was in the state Senate when the 2024 bill passed and strongly backed it as a way to boost affordable housing stock.

Hernandez said fears of demolition of historic structures to allow builders to create fourplexes or townhomes are overblown.

"I represent historic neighborhoods in Phoenix's District 7, and those neighborhoods have fully embraced middle housing,'' Hernandez said.

"SB 1118 is not addressing any real problems here.'' she said. "There is no mass demolition. There is no problem at the city level. So by supporting this bill, you would also be putting Arizona at risk as the first state to gut a very needed bipartisan (housing) bill.''

The rest of the Phoenix council as a whole supports Gress' bill. Laura Pastor, another councilwoman, said the city is listening to its residents by approving middle housing in many parts of the city while backing the measure allowing it to protect historic neighborhoods.

"The version does not exempt historic districts from middle housing requirements, but instead shifts to allowing cities to set comparable development standards and discourages demolition,” Pastor said.

"Neighbors aren't opposed to increased density,'' she said. "They are worried about demolition of our state's history, culture, and, most importantly, a lot of our Latino history, which I represent as a Latina.''

Gress struggled to get the measure out of the House initially, where it stalled for weeks. Pro-business Republicans joined with pro-housing Democrats in opposition — including every Tucson Democrat — even though their neighborhood groups wanted the bill to pass.

During that original House vote, Rep. Alma Hernandez, D-Tucson, said she understood the residents' concerns but thought passing the measure would slow or halt the development of badly needed new housing.

She said Tucson’s rules are helping to protect historic neighborhoods.

"We have something that's working,'' she said on March 18, when the House passed Gress’s measure by one vote. "This is a very difficult issue, I will admit, but I also think that when we're talking about housing, creating more housing, when we have bills like this, it does make it a little more difficult, and it takes us backward a bit.''

To win backing from the city of Tucson and potentially House Democrats representing the city, Gress said Tuesday he's removed exemptions that would make it easier to block new housing in those neighborhoods, including carveouts for homes on the historic register. Phoenix also backed those changes.

It seemed to work. Although the entire Tucson House delegation opposed the measure in last month’s vote, one of the three Tucson Democrats on the appropriations committee voted for it Tuesday: Stahl Hamilton, who lives in a historic Tucson neighborhood, said the bill protects historic structures from demolition while still allowing development so that needed housing gets built.

"This bill gets us much closer to a by-right system than what we have today,'' she said.

"It sets clear expectations, reduces uncertainty and allows housing to move forward without discretionary barriers,'' Stahl Hamilton said. "It's not perfect, but I believe is the best step it forward, and one that we can continue to refine.''

The changes pushed by Tucson and Phoenix eliminated the blanket exemptions from the middle housing law for historic districts. And a change allowing — but not requiring — design reviews helped the city decide to support this week’s revised bill, said Laura Dent, Tucson’s director of federal & state relations.

Dent said the city council and mayor strongly support middle housing – they expanded the 2024 rules to cover most of the city – as well as historic neighborhoods. The city has robust demolition protections for historic homes that have remained effective.

With the changes, the city’s five historic preservation zones will get added protections but they won’t extend to all 42 historic neighborhoods.

Matt Hamada, a Phoenix spokesman, said the city worked to narrow the bill to protect both middle housing and historic neighborhoods.

"The latest version of the bill strikes that balance: it allows middle‑ housing options within historic districts while protecting against the demolition of historically significant homes and ensuring redevelopment doesn’t come at the expense of the City’s history and culture,'' he said in a statement.

With the approval of the new version, Gress’s bill now goes back for another vote of the full House and then to the Senate for consideration.