Following the high-profile failure of previous "starter-home" legislation, the Arizona State Legislature is currently advancing a pair of significant bills designed to curtail municipal authority over residential development. Senate Bill 1431 and Senate Bill 1670 represent a renewed legislative strategy to address the state’s chronic housing shortage by stripping away what proponents describe as costly and unnecessary local regulations. These measures specifically target municipal design standards, the mandatory formation of homeowners associations (HOAs), and redundant contractor licensing requirements—areas that developers and housing advocates argue have contributed to the skyrocketing cost of entry-level housing across the Grand Canyon State.
The legislative push comes at a critical juncture for Arizona’s real estate market. As the state continues to experience some of the highest population growth rates in the nation, the supply of affordable, single-family homes has failed to keep pace. By shifting the balance of power from city halls to the state level, lawmakers are attempting to create a more uniform regulatory environment that favors rapid construction and lower "soft costs." However, the move has reignited a fierce debate over "local control," with city officials and neighborhood advocates warning that the bills could lead to a degradation of community aesthetics and a loss of essential local oversight.
A Multi-Year Chronology of Arizona’s Housing Legislative Efforts
The current legislative session is not the first time Arizona lawmakers have attempted to intervene in local zoning and building regulations. The state’s housing crisis began to intensify in the wake of the COVID-19 pandemic, as remote work trends and a general migration toward the Sun Belt caused home prices in the Phoenix metropolitan area to surge by more than 40% in some sectors.
In 2023, lawmakers introduced the first iteration of the "Arizona Starter Homes Act," which sought to allow for smaller lot sizes and the construction of accessory dwelling units (ADUs) by right. That effort stalled due to intense lobbying from municipal leaders. In early 2024, a second attempt, House Bill 2570, successfully cleared the House and Senate with bipartisan support. However, Governor Katie Hobbs ultimately vetoed the bill, citing concerns from the Department of Defense regarding building heights near military bases and echoing the League of Arizona Cities and Towns’ stance that the bill overreached into local planning.
Recognizing that broad zoning reform faced significant political hurdles, sponsors pivoted in the current session toward more specific "cost-drivers." SB 1431 and SB 1670 were drafted to address specific financial barriers—design mandates and licensing fees—rather than wholesale changes to density or lot sizes. This incremental approach is designed to peel away opposition by focusing on individual regulatory burdens that are harder to defend on the grounds of "public safety."
SB 1431: Dismantling Design Standards and Mandatory HOAs
The most contentious of the two measures is Senate Bill 1431. This bill targets the aesthetic requirements that many Arizona municipalities currently impose on developers as a condition for project approval. These requirements often dictate specific architectural styles, roof pitches, facade materials, window placements, and even color palettes. While cities argue these rules preserve property values and neighborhood character, builders contend they can add between $10,000 and $30,000 to the price of a new home.
Under SB 1431, municipalities would be prohibited from enforcing such aesthetic standards for single-family homes and ADUs. The bill’s primary sponsor, Republican Senator Shawnna Bolick, argues that local governments should be restricted to enforcing health and safety codes rather than acting as "architectural police." According to Bolick, the cumulative effect of these "unnecessary" requirements has effectively priced a generation of first-time buyers out of the market.
Perhaps more significantly, SB 1431 would end the practice of municipalities requiring developers to form homeowners associations (HOAs) as a condition of subdivision approval. In many Arizona cities, HOAs are mandated because they shift the financial burden of maintaining neighborhood infrastructure—such as small parks, drainage basins, and private roads—from the city’s general fund to the residents.
Housing advocates point out that HOA dues represent a significant monthly expense that impacts a buyer’s debt-to-income (DTI) ratio, often the deciding factor in whether a family qualifies for a mortgage. Democratic Senator Analise Ortiz, a vocal supporter of the bill, has noted that for younger buyers, an additional $100 to $300 in monthly HOA fees can be the barrier that prevents homeownership.
SB 1670: Streamlining Contractor Licensing
While SB 1431 focuses on the physical product, Senate Bill 1670 targets the labor and administrative side of construction. The bill seeks to prevent cities and counties from requiring additional municipal journeyman licenses for contractors who are already licensed and in good standing with the Arizona Registrar of Contractors (ROC).
Currently, a contractor may be licensed by the state but still required to pay for and pass separate exams in various individual cities to perform work within those jurisdictions. SB 1670 would pre-empt local authority over several specialty trades, including:
- Drywall and plastering
- Roofing and siding
- Masonry and concrete work
- Floor covering and fencing
The bill does, however, carve out exceptions for high-risk trades. Municipalities would retain the right to require local journeyman licenses for plumbing, electrical work, HVAC installation, and alarm systems. The goal of the legislation is to mirror a 2021 Florida law that successfully consolidated occupational licensing, a move that supporters say increased workforce mobility and reduced the "red tape" that leads to construction delays.
Supporting Data: The Economic Reality of Arizona’s Housing Gap
The push for these bills is underpinned by stark economic data. According to the Common Sense Institute (CSI), a non-partisan research organization, Arizona faces a trailing housing deficit of approximately 121,000 units. To keep pace with projected population growth and close the existing gap, the state would need to produce roughly 270,000 new housing units by 2030.
The financial burden of regulation is a central theme in the legislative debate. A study by the National Association of Home Builders (NAHB) suggests that, on average, government regulations account for 23.8% of the final price of a new single-family home. In Arizona, where land and material costs have stabilized, "soft costs"—including permitting, impact fees, and compliance with design standards—have continued to rise.
Furthermore, data from the Arizona Regional Multiple Listing Service (ARMLS) indicates that the median sales price for a single-family home in the Phoenix metro area has hovered around $450,000 to $475,000, while the median household income has not kept pace. This "affordability gap" has made the production of "missing middle" housing—smaller, simpler homes without the bells and whistles required by modern municipal codes—an economic necessity for many developers.
Stakeholder Reactions: Local Control vs. State Pre-emption
The legislative advancement of these bills has drawn sharp criticism from the League of Arizona Cities and Towns. The organization, which represents the interests of the state’s 91 incorporated municipalities, views the bills as an erosion of the "home rule" principle.
Opponents, such as Democratic Senator Lauren Kuby, argue that design standards are not merely about aesthetics but about creating "healthy, social communities." During Senate floor debates, Kuby argued that by stripping cities of the ability to require shared amenities and thoughtful design, the state risks creating "barren" neighborhoods that lack the greenery and communal spaces essential for Arizona’s desert climate.
Conversely, some lawmakers who traditionally favor local control have switched sides on this issue. Senator Theresa Hatathlie and Senator Warren Petersen have argued that current municipal standards have led to a "sameness" in construction, where every subdivision looks identical due to rigid city mandates. They contend that by removing these mandates, the market will actually produce more architectural variety and provide consumers with more choices at different price points.
Broader Impact and Implications for the Construction Industry
If SB 1431 and SB 1670 are signed into law, the impact on the Arizona construction industry could be immediate. For large-scale homebuilders, the ability to bypass the HOA mandate would allow for the development of "fee-simple" neighborhoods where residents are responsible for their own lots without the oversight of a board or the burden of monthly dues. This could lead to a resurgence of the traditional "starter home" neighborhoods seen in the mid-20th century.
For trade contractors, the licensing reform in SB 1670 would simplify operations for companies that work across multiple jurisdictions in the sprawling Phoenix and Tucson metro areas. A drywall contractor based in Mesa, for instance, would no longer need to maintain separate paperwork and pay separate fees to work in Scottsdale, Glendale, or Chandler. This reduction in administrative overhead is expected to be passed down to builders, and eventually, to homebuyers.
However, the ultimate fate of these measures rests with Governor Katie Hobbs. While the bills have garnered some bipartisan support, the Governor has previously shown a preference for solutions that involve consensus between cities and developers. If the League of Arizona Cities and Towns maintains its hardline opposition, another round of gubernatorial vetoes remains a distinct possibility.
As the bills move to the House for further deliberation, the debate will likely focus on whether the state’s need for housing supply outweighs the historical right of cities to shape their own communities. For Arizona’s prospective homebuyers, the outcome of this legislative session will determine whether the next generation of housing is defined by municipal design or by market-driven affordability.