Flagstaff Property Owners Win an Important Fight—but the Battle is Far from Over

October 25, 2021
By Christina Sandefur

Flagstaff property owners have scored a major victory against efforts by city officials to impose a sweeping new land-use restriction called the High Occupancy Housing (HOH) Plan that would eliminate their right to use their property. After the Goldwater Institute helped dozens of property owners submit legal demands under the Arizona Private Property Rights Protection Act, which would have required the city to compensate them for some $50 million in legal losses, the city voted to waive the ordinance with respect to those property owners who sought relief against the restrictions.

The HOH Plan, which went into effect in March, deprives thousands of city residents of their property rights and could devastate Flagstaff’s economy. In a time where demand for housing is on the rise, the Plan would severely curtail the way Flagstaff residents can improve and develop their residential and mixed-use properties—including homeowners who want to update or improve older homes, build on empty lots, or even those who seek to convert shuttered motels and gas stations into sought-after houses and apartments.

Under Arizona’s Private Property Rights Protection Act (also known as Proposition 207), cities can’t prohibit their citizens from renovating, improving, or developing their properties unless they pay for taking away people’s rights. So far, Flagstaff’s leaders have chosen to restore the rights of the property owners who brought claims, rather than pay legal compensation. But given the breathtaking scope of the HOH Plan, the city might be faced with thousands of additional claims going forward, totaling hundreds of millions of dollars.

And that’s just the legal liability. If implemented, the HOH ordinance would impose other costs, potentially enormous ones, on Flagstaff residents—by devaluing their properties, discouraging development and improvement, and blocking the development of affordable housing. Flagstaff’s land-use policies make it impossible for the city’s housing supply to keep up with growing demand, which means the HOH Plan would put the city on track to rival California’s housing shortages. For decades, that state’s cities have made it prohibitively difficult to build new homes, by imposing burdensome regulations, delays, and costs. That’s one reason many Californians are now seeking refuge in Arizona. Flagstaff’s growing assault on property rights won’t help Arizonans accommodate new residents, recover from the economic burdens of the pandemic, or improve their neighborhoods.

But there may be hope on the horizon. Thanks to Flagstaff residents’ overwhelming response to the HOH Plan, the city has scheduled a discussion of the ordinance for the council meeting on Tuesday, October 26. Anyone troubled by the severe financial and economic consequences of the ordinance should attend and voice those concerns. The city has an opportunity to reduce its costly burdens on citizens, encourage economic growth, and avoid financial liability of hundreds of millions of dollars.

Christina Sandefur is the Executive Vice President at the Goldwater Institute.