Legislative Update

Rental housing industry on the frontlines of pandemic

For a year, Arizona property owners have labored mightily on the frontlines of the COVID-19 pandemic, working with the state’s 1 million renters to keep people in their homes despite steep challenges: Eviction relief funding that has trickled to those in need; the stratospheric cost of creating safe living spaces and workplaces during a pandemic; and governmental bans on eviction that have left property owners unable to collect rent for months.

With COVID-19 transmission rates fluctuating, property owners have little choice but to “keep multiple plates spinning” amid chaos. Mom-and-pop rental owners and large apartment communities alike face similar challenges, albeit on different scales. Some examples: ■ How do we pay property loans, property taxes and maintenance costs when rent isn’t being paid and when eviction relief is dwarfed by our bills? ■ How do we run a revenue-starved business while following best practices for constantly sanitizing common areas, amenities, and public spaces to protect the health of residents? ■ How do we preserve the safety and peacefulness of our premises when multiple levels of government have suspended property owners’ constitutional right to evict problem residents?

At the Arizona Multihousing Association, our philosophy has never been to simply accept that times are tough and government solutions are imperfect. Rather, we believe in persistence, proactivity and political advocacy. With a new Administration and Congress in Washington, the state Legislature in session and municipal governments taking a larger role in relief efforts, the AMA is working at all levels to help property owners, renters and our industry.

What plates do we have in the air?

To date, Arizona has received over $30 billion in aid from Washington. The most recent aid package included about $500 million for rental assistance — a number that remains insufficient in the face of widespread need. While our efforts to advocate for more relief are primary, so is our push to change the rules invoked by the federal government. About 80 percent of Arizona’s 7.4 million residents live in Phoenix, Tucson and the surrounding urban counties. The remaining 20 percent — 1.4 million Arizonans — live in rural settings where rental housing is less common. Unfortunately, this relief package has apportioned 55 percent of its funding to rural areas, leaving 45 percent to serve 6 million Arizonans. That math does not work, and we are pushing hard to allow the state to provide assistance regardless of geography, so long as there is no duplication of benefits.

The pandemic also has highlighted Arizona’s need to build more affordable housing. As those of us in the rental industry know, the best way to accomplish this isn’t by government mandate; rather, we need to incentivize affordable housing through a robust public-private partnership. Last year, the AMA, in partnership with other housing groups, was close to creating an Arizona Low Income Housing Tax Credit before the pandemic shuttered the Legislature. This year’s LIHTC bills — SB1327 sponsored by Sen. David Gowan and HB2562 sponsored by Rep. Regina Cobb — are moving smoothly through the process. This legislation is modeled after a federal program that originated with President Ronald Reagan in 1986. Federal LIHTC has supported the building of nearly 3 million units of affordable housing nationally — including 47,000 units in Arizona.

State LIHTC programs exist in 20 states, with a legion of successes. Colorado’s LIHTC program, for example, has created about 5,000 new affordable housing units since 2015.

The AMA is also working to make the courts more accessible to residents and owners by supporting SB1322, a measure sponsored by Sen. Warren Petersen to allow parties to virtually attend eviction proceedings. This bill would entrench in statute a practice made commonplace by the pandemic, and, once eviction proceedings resume, it would help alleviate court backlogs.

Speaking of eviction — which the media has done at length for a year, often without accurate facts and context — we believe that reports of an “eviction tsunami” are greatly exaggerated. Credible national rental payment analyses suggest that about 94 percent of renters paid their rent in December 2020, down from about 96 percent in December 2019. In Maricopa County, the number of evictions filed in January 2021 was down 45 percent from January last year. Writs of restitution are down 93 percent year over year — to be expected given the federal eviction moratorium recently extended by the Biden Administration until March 31st.

These numbers underscore how hard property owners have worked with residents over the past year to keep roofs over the heads of anyone and everyone. That story may rarely make news, but it remains a foundational element of the rental housing industry, a fundamental principle that should be a source of well-earned pride.

Courtney Gilstrap LeVinus

AMA

Courtney Gilstrap LeVinus is the executive director of the Arizona Multihousing Association.

NAIOP Arizona Receives National Legislative Award; Pursues Policies to Aid Economic Recovery

The Arizona Chapter of NAIOP, the Commercial Real Estate Development Association, was honored to receive the Chapter Merit Award for Legislative/Government Relations for a Large Chapter from NAIOP Corporate in recognition of the advocacy work we did last year.

This award acknowledges our efforts to elect pro-business legislators, keep our members informed about the elections through numerous virtual programs and advocate on behalf of our members throughout the challenges brought about by the COVID pandemic.

With the legislative session now in full swing, we are focused on public policies that will help businesses recover from the pandemic and position our state for further economic growth.

The passage of Proposition 208 in the November 2020 election vaulted Arizona into the less-than-envious position of having among the highest income taxes in the region for small businesses. At the time of this writing, Prop. 208 is being litigated with an uncertain outcome.

Fortunately, legislators are wasting no time in coming up with proposals to make our income tax system fairer and more competitive again. These discussions include broader tax reform concepts, importantly a reduction in the commercial property tax assessment ratio.

Reducing commercial property taxes has long been a legislative priority for NAIOP. Addressing this issue would go a long way in making our market more attractive to potential investors and tenants. Sen. J.D. Mesnard (R-Chandler) is once again taking the lead in advancing a tax reform package that could meaningfully improve Arizona’s competitive position.

With the wounds of Prop. 208 still fresh, legislators and other stakeholders, including NAIOP, are considering ways to reduce the influence of out-of-state funders in our election process.

The most impactful reforms, such as raising the threshold required for passage, modifying requirements for petition signatures needed to qualify for the ballot, adding a sunset provision, and increasing the ability for the state legislature to address unintended consequences of ballot initiatives, would require changes to the state Constitution. These changes would need a referral to the 2022 ballot.

COVID liability legislation is necessary to get the economy fully functioning again. Sen. Vice Leach (R-SaddleBrooke) is championing a bill to protect employers, building owners and landlords that follow CDC guidelines and applicable laws to protect the health of employees, tenants and clients, from frivolous lawsuits. With these assurances, more businesses will be able to get back to work providing the products and services that customers want and need.

Although the first session of the 55th legislature is operating under truly unique circumstances due to the ongoing COVID pandemic, NAIOP is navigating these changes to serve the needs of our members.

Suzanne Kinney

NAIOP

Suzanne Kinney is the President & CEO of NAIOP