An apartment complex with more affordable rent is planned in Glendale using COVID-19 related federal funds and a new Arizona low-income housing tax credit.
It’s an example of the local, state and national tools some cities and private developers are using to add more affordable housing. Rent increases in metro Phoenix continue to outpace the rest of the nation, and apartment rents increased an average of 30% in 2021.
“The need is huge and it’s going to continue to grow,” said Dan Klocke, project development manager for affordable housing developer Gorman & Company.
Gorman has about 2,500 affordable units in the works around the state. These include the rehabilitation and expansion of Phoenix’s public housing and various projects in Tucson, Chandler and Flagstaff. Gorman is also working with the Department of Veterans Affairs to create supportive housing for veterans at Fort Whipple in Prescott.
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The company is planning a 107-unit affordable housing development in Tempe, and construction is starting on a 66-unit development in Phoenix near Grand Canyon University’s campus, according to Sally Schwenn, market president for Gorman.
Klocke said Arizona is the largest market for Gorman. “We were looking to have a larger impact, the need is enormous,” he said.
Gorman’s portfolio in Arizona includes both privately owned and managed affordable housing, as well as public housing that is owned by a city or government entity. In the privately owned developments, renters must qualify based on their income. Their income is then used to determine rent prices. Housing is generally considered affordable if a person or family spends 30% of their income or less per month on it.
Affordable for person earning $18K to $37K
Gorman plans to build a 368-unit affordable apartment complex, called Centerline on Glendale, on a 15-acre site near 67th and Glendale avenues.
The complex is expected to open in 2024.
The $90 million to $100 million project will be the first to use an Arizona low-income housing tax credit created in 2021, Klocke said. The company also will use grant funds allocated from the American Rescue Plan, which is federal money provided during the pandemic.
Glendale waived $49,000 in fees, and city officials said they anticipate an investment from the Community Development Block Grant program, a federal program addressing needs of low-income communities.
The apartment complex will cater to people with a range of incomes from 30% of the area median income to about 60%, he said. An individual earning about $37,000 a year earns about 60% of the area median income, and someone earning $18,500 earns about 30% of the area median income.
The apartment is just west of downtown Glendale, an area the city calls Centerline district and has sought to revitalize with denser developments and a walkable neighborhood.
“There is a lot going on in this whole stretch,” Klocke said. “Downtown Glendale is right in the middle, and this represents what Glendale wants to accomplish in this overlay.”
The company has been working on the plans for nine to 10 months, and spent time holding meetings with the neighborhood and other stakeholders to answer questions.
“There are two key things with affordable housing, design and management,” Klocke said. “If you do those well, you’d never know the difference between an affordable apartment and a market rate one.”
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Growing its affordable housing options
Glendale’s average monthly apartment rent is $1,439, according to RentCafe data.
Jean Moreno, the city’s director of community services, said Glendale has a 17% poverty rate, and there are about 1,500 families in city-owned and operated housing, or on the voucher program.
People who receive housing vouchers from the city can use them to live in a privately operated housing development, as long as they find a place that will accept the vouchers, she said.
Residents at Gorman’s development do not have to be receiving public assistance to qualify.
Gorman approached the city about the Centerline on Glendale project, but Moreno said she is hoping to seek out more affordable development for the city.
“I want to do more in terms of attracting affordable development,” she said. “We have not, as a city previously, been actively pursuing affordable development, but it is something I want to do.”
The city has applied with the U.S. Department of Housing and Urban Development to offer project-based vouchers, which would allow the city to allocate some of its housing choice vouchers to specific projects to incentivize development. All housing authorities that operate a housing choice voucher program, which is designed to allow very low-income people to lease or buy housing, can apply to do project-based vouchers. Glendale was one of the few cities in the Valley that had not used the program yet.
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The city has also been working with Mercy Housing for a 144-unit development for seniors, and Moreno said there are two other affordable developments in the pipeline. If all four developments come to fruition, they would add about 1,200 units of affordable housing to the city.
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Tempe has also seen rent increases, and according to RentCafe is one of the most expensive cities in the Phoenix area for rentals, behind Scottsdale and Queen Creek, respectively. Tempe’s average monthly apartment rent is $1,868.
Nonprofit organization Copa Health was chosen by Tempe as a successful respondent to a request for qualifications to develop affordable housing on a city-owned property on Apache Boulevard and Price Road.
The project will be the first for Copa Health in that it will be available to all people of qualifying incomes, not only people receiving services from Copa Health, according to Norm Duve, vice president of marketing for the organization. The organization provides services to people with developmental, intellectual or behavioral disabilities.
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The project will be a mixed-use development that likely will include a small clinic, a sandwich shop operated by people receiving services from Copa Health and community space in addition to the housing, Duve said.
Copa Health plans to develop about 104 rental units, and a partner, called Newtown, plans to develop 19 for-sale units on the site, which will remain affordable through a land trust. Between 25 and 30 rental units will be reserved for people served by Copa Health.
“There is a chasm between people who can afford housing and those who cannot,” Duve said. The organization will be able to offer “wraparound services” at the site, including health care at the on-site clinic and other health and wellness offerings.
The plans are in the works after the organization was selected as the successful respondent, and Duve said Copa Health is hoping to have the development application submitted to the city next year.
Reach the reporter at cvanek@arizonarepublic.com. Follow her on Twitter @CorinaVanek.
AUTHOR: Corina Vanek
