Maricopa Association of Governments Agrees: Cities Should Reform Home-Based Business Laws

The Free Enterprise Club and The Goldwater Institute have been investigating cases around Arizona of home-based businesses (HBB) being harassed or shut down by local government.

But this isn’t a new issue.  In fact, the Maricopa Association of Governments (MAG), an organization comprised of member-cities in Maricopa County, issued a comprehensive study on the home-based business landscape.

Their conclusion?  Home-based business regulatory reform is long overdue.

According to the MAG Study issued in 2003, almost every city in Maricopa County has overly burdensome ordinances that unnecessarily restrict home-based employment. The study urged cities to reconsider their regulatory regime in order to “create a positive environment that assures their [home based businesses] future operation and place within the community.”

A major factor in MAGs conclusion in relaxing home-based business regulations was their observation of evolving work trends in the US, finding that over 3.4 million workers (and growing) worked from home, of which over half being self-employed home-based business owners.

Most notable from that figure is that only 19% of these home-based businesses were in the production, operations or fabrication sectors.  Most HBBs were in the managerial or professional (41.6%), technical, sales and admin support (24.6%), and service occupations (14.9%). In other words, most home-based businesses in today’s economy are service occupations that can operate without any disruption in a residential neighborhood.  Businesses that create a great deal of noise and exhaust are no longer the typical home-based business.

Yet the zoning ordinances governing HBBs remain stuck in the post-industrial economy of the 1950s. One area highlighted by MAG for reform was how much of a house may be used for a home-based business.  According to the report, five cities restrict the use to 25 percent of the gross space – Glendale sets a maximum of 5% of the living area.  How would a city even propose they enforce this regulation?  Considering that it is already required that a home-based business be a secondary use of the property, all logical methods of enforcement would result in a massive invasion of privacy.

Other arbitrary and unenforceable restrictions include limits on using a garage or accessory space, hours of operation, storing products or selling any goods on premises.

Unfortunately, not a lot has changed since the study was published 14 years ago.  Though some cities such as Phoenix and Maricopa County have reformed their HBB regulations, other cities have become more restrictive.

Take for instance the City of Chandler: a decade ago the city did not restrict homeowners from operating their business from their garage, or limit their hours of operation.  Now the same city that desires to be the tech hub of Arizona currently prohibits a business from working from their garage, an irony highlighted by how many antelope tech firms started their ventures from a home garage.  Tolleson went from having very few restriction to allowing no home businesses to be permitted by right.  Every home occupation requires the issuance of a special Use Permit – a process that is unpredictable and costs thousands in time and money.

Over a decade ago MAG identified HBB reform as “the next wave of necessary changes in municipal zoning” and that Arizona communities should follow the lead of other states and jurisdictions enacting reform. Instead, the situation has only grown worse. Considering only a couple cities have found the motivation to heed the advice of MAG, the time is ripe for the state to do more to create simplicity, uniformity, and flexibility for home-based businesses in Arizona.