PHOENIX — A bill that would make it a lot harder for investors to take over condominium complexes in Arizona was passed out of the House Commerce Committee last week.
For the second year in a row, Representative Jeff Weninger (R-Chander) introduced the bill to increase the threshold to disband a condo association to 100%.
Currently, Arizona's condo termination law only requires 80%. Once that is met, the other 20% of owners are forced to sell their units at a fair market value determined by an appraiser that is hired by the investor-run association.
"In this market, you can't make lateral moves at what they're getting. And you're taking someone's home, it's wrong," Weninger told ABC15.
Investors use the law to convert condominium complexes with individual owners to apartment complexes with one owner who rents out the units.
It's an issue ABC15 has been exposing since 2015. Since then we have reported on 6 complexes around the Valley that have received letters informing them they would have to sell their homes.
Most recently in May 2021, ABC15 told the story of 91-year-old condo owner Ziba who had been living in her home at Citi on Camelback for 12 years with her son who has disabilities.
"I think it's just fundamental to this nation that you can't have your property taken away from you," Weninger told ABC15.
During the House Commerce Committee meeting on February 1, investors and attorneys tried to convince lawmakers that changing the law is a bad idea.
Doug Fisher with Chicago-based investment firm Rockwell Property Company made public comment during the meeting. State records show the firm is the company that bought Ziba's complex. He argued that the current law is necessary to fix fractured condo complexes where a developer only sold a portion of the units and the rest of the units are rentals.
Attorney Greg Patterson who represents investors said requiring that 100% of owners agree will force a condo complex to remain one even if it falls into disrepair.
"One person has a veto. You lose your liquidity. You lose your ability to sell the entire property and make it into something else," he said.
But another reason for the opposition is that these condo deals can mean big money for investors.
Scott Knauer with Orion Residential said if the law changes investors will stop coming to Arizona for condo conversions.
"Our partners include some of the largest institutional capital partners in the world: Blackstone, Starwood, GE Capital," Knauer told lawmakers. "They invested hundreds of millions of dollars based on that representation and you want to take that away from them."
Weninger told ABC15 he tried to come to a consensus with stakeholders when drafting the bill but no one would budge.
"They want the status quo, where they can come in from Chicago, and buy up people's homes and turn around and make millions of dollars, taking people's homes from them," he said.