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Flagstaff homeowners challenge historic district with prop 207

By Daniel Kraker

Flagstaff, AZ – Last week, the city of Flagstaff officially created its second historic district. The ordinance is designed to protect the character of the Townsite neighborhood just west of the downtown district, where many homes built by Flagstaff's founding families date back to the turn of the 20th century. But some homeowners argue the new law illegally reduces their property values. And they're challenging the city in what could be the first test case of a new state law that has potentially huge implications on how Arizona grows over the next several decades. Arizona Public Radio's Daniel Kraker reports.

Last November, Arizona voters overwhelmingly approved proposition 207; billed as a way to restrict governments from taking private property.

SFX1: post radio ad, your homes and businesses are at risk, by using the power of eminent domain the government can take your private property and sell it to a developer for his private use duck under track

But the law's biggest impacts likely won't have anything to do with eminent domain. Prop 207 also requires governments to compensate owners for land use regulations that reduce their property values. Regulations like, potentially, the new Townsite historic overlay.

SFX2: bring up sound from Duffie's walking tour bed under track

Duffie Westheimer has lived in the neighborhood for twenty years, in a house built in the 1940s out of ammunition boxes from the Navajo Army Depot. She's one of the most vocal supporters of the new district. She walks briskly down the blocks of modest sized homes, pointing out some of the common historic features: front porches, small garages behind the homes, malpais stone walls.

Sfx: sneak up a bit more sound here

Then she stops in front of a home that stands out and literally above the rest. The owners have built a huge second story on top of the garage in back.

So this is the biggest second structure that's gone in, it dwarfs the one in front, it affects all the neighbors, it's really quite shocking. There's about six feet between these two buildings, they're both rentals, that was their intent, it was income producing, but by doing that, they've affected everyone behind.

Including Westheimer, who lives directly behind this property. The building is 35 feet high, the maximum allowed under the old zoning rules. The new historic district now restricts construction to 25 feet. But it won't undo what's already built.

We're stuck with this, we're trying to stop this from happening anymore, it's permanent. That's not what this neighborhood looks like. That's not what we wanted to live around when we bought here.

So two years ago Westheimer and a handful of her neighbors began meeting in their living rooms to draw up what they felt were appropriate building guidelines. They drafted a petition, which was signed by more than 60 percent of the neighborhood's residents. The city council voted twice to approve the historic overlay district, and it became law last Thursday despite the concerns of residents like John Regner. (sneak up ambi here) Regner bought his property last year not knowing about the proposed zoning change.

2:00 Backyard ambi, birds chirping, standing on his back doorstep looking at his back house.

3:25 I paid $380,000, I took out an interest only loan, because my intentions were three years from now to refinance and build 4:50 I definitely was banking on that. With this new overlay, it's going to make it in my opinion a lot more difficult to maximize the potential of this property.

The 29 year old stands on his back step, looking at the tiny carriage house built in the backyard in the 1940s. He admits he stretched to buy this property in Flagstaff's booming housing market. But Regner planned to replace the back house with a two story duplex for rental income, while he renovated the main home.

When I bought the property I was also buying the rights to the property. Not just what was already on here, not just these two homes, but I was buying the rights to build within the current restrictions.

When those restrictions changed, Regner filed a Prop 207 claim against the city of Flagstaff for 168 thousand dollars, the amount he estimates his property has been devalued. The city hasn't yet responded to the claim. But earlier this year, Phoenix repealed a new historic district when an apartment complex owner threatened a 40 million dollar lawsuit. And Tempe cited prop 207 when it decided not to go forward with an historic district of its own. Now all eyes are on Flagstaff.

If you're asking me to bet? Right now I think everyone will sit tight and see what happens to Flagstaff.

Karl Eberhard manages planning and community design for the city of Flagstaff. He helped the Townsite residents draw up their building guidelines. He's also a former developer in California, and says neighborhoods across the country have formed historic districts as the price of land skyrockets.

When land values reach a certain level, it becomes cheaper to go into an existing neighborhood to get land, so besides their character, walkability, all the other traits that we like about older neighborhoods, at some point the land actually quite reasonable to buy a house and bulldoze it.

Or put on large additions, like what's happening in Flagstaff's Townsite neighorhood. It's a process often called McMansionization.

When you pay that kind of money for a piece of real estate, you want a house that goes with it. And in today's world, today's thinking, thousand square foot houses don't cut the mustard for most people.

While the appropriate size for homes is the key issue in the Townsite neighborhood, the impact of the prop 207 claims against the city of Flagstaff could be much broader. Ken Strobeck directs the Arizona League of Cities and Towns, which advocated against the measure last November.

Prop 207 at it's macro level says the individual property owner is supreme rather than the community is supreme, so it's really a change in philosophy, instead of saying we want to do this change because it's going to be beneficial for the community or the city in general, things are now looked at in terms of what's best for an individual property owner.

Strobeck says many Arizona cities are now asking every citizen who would be affected by a proposed land use law to sign a waiver promising not to file a prop 207 claim. That's a near impossible standard for most proposed regulations. Tim Sandefur, an attorney with the Pacific Legal Foundation who's representing John Regner and the other Townsite claimants, argues the law will make for better public policy.

When the government has to compensate people out of taxpayer money, then the taxpayers can sit back and say, is this a good policy, is it worth the money to inflict this law on people or is it not, that allows for a lot more intelligent decision making by the government.

Kyle Eberhard with the city of Flagstaff says it won't lead to much decision making at all, at least when it comes to land use.

We can't simultaneously say we want to protect the trees and the world and develop reasonably and smart growth and traditional neighborhood design and do all those kinds of things we think will preserve the environment of Flagstaff, at the same time tell the city, sorry you can't pass those laws unless you pay for it.

Flagstaff has until mid September to compensate the Townsite landowners. If it doesn't, the landowners can then take the city to court.

For Arizona Public Radio, I'm Daniel Kraker in Flagstaff.