Affordable housing coming to south Phoenix, but some residents say it’s not affordable enough

A developer plans to build 161 mixed-income apartments and 64 townhomes in south Phoenix where residents can work toward ownership, but critics say the homes aren't affordable enough.

The project, by Chicanos Por La Causa, has promised that 10 of the units will go to residents earning 30% to 60% of Maricopa County's median income of $77,800 for a single family.

Eligible renters are capped at 60% of this area median income, making it 100% affordable according to U.S. Department of Housing and Urban Development standards.

But the median income in the 85040 ZIP code, where the project is located near Broadway Road and Sixth Avenue, is $38,543, according to the 2018 American Community Survey.

Some residents and housing advocates say the development was not designed with the community in mind. The fear: Gentrification will displace residents who have long lived in the area of Phoenix south of Broadway. A light rail line is slated to open in the area in 2024, which often is a catalyst for development.

“Until you put the people first, if you don’t humanize the people and their needs, how do you develop without displacement?” said Victor Vidales, a realtor in south Phoenix and a member of SoPho Convening. “We have to find solutions and provide resources.”

SoPho Convening, a community organization dedicated to equitable economic development, and residents asked the Phoenix City Council in July to delay approval to allow Chicanos Por La Causa to work with stakeholders in the project.

The main criticism is that Chicanos Por La Causa will use the county's median income, as opposed to the area's much lower median income, to determine eligibility for the affordable units. 

The formula is based on guidelines used by the U.S. Department of Housing and Urban Development. Chicanos Por La Causa, a nonprofit that began in the 1970s to combat discrimination, is using a federal low-income housing tax credit to complete the project.

The council unanimously approved the project in July.

Making the project pencil out

President and CEO of Chicanos Por La Causa David Adame said that 60% and below a county’s area median income is standard practice in the development of affordable housing nationwide.

Because renters in affordable housing units only pay 30% of their income on rent, the lower their income level, the more of a subsidy there is. If a developer cannot find a way to offset that cost, it falls on the developer to pay the difference.

Advocates are concerned that this will discourage CPLC from catering to families far below the 60% area median income ceiling.

Adame said offering more units for renters whose income is 30% and below the area's median income wouldn't pencil out, considering construction costs, city fees and the costs to offer rent subsidies. 

“Our maximum is 60%, so we can’t go any higher than that. Every time you go down, that just means there’s more subsidy of some sort that needs to be provided for that particular family,” Adame said. “We can’t have all 30% and below because then the numbers don’t work."

He said "free money" is not building the housing. "It’s debt. We have to pay it back. CPLC is not going to get rich off these projects.”

The nonprofit is looking for ways to accommodate residents with housing vouchers to address some of the concerns.

Vouchers are provided to very low-income families, homeless veterans or elderly and disabled people to subsidize their housing costs. The local public housing authority pays the subsidy directly to the landlord.

Affordable vs public housing?

Critics say this is not enough.

The South Mountain Village Planning Committee in May recommended by a 9-3 vote that the project be denied. The Planning Commission, however, recommended its approval.

“I’m actually left wondering where CPLC is getting their guidance from,” Parris Wallace, a member of the Black Phoenix Organizing Collective, said at the City Council meeting. “It’s definitely not from the people who actually live in this community or the people who will be most directly impacted by this project.”

Wallace said the group collected almost 550 signatures from residents and 17 organizations like Black Lives Matter Phoenix Metro and Mass Liberation Arizona in opposition to the development.

“The City Council cannot approve of a project that lacks community support and reinforces anti-Blackness in their development policies and practices,” she said.

SoPho Convening outlined suggestions for how the city could support housing that was affordable for those earning 0 to 59% percent of the county median income. The group presented the suggestions in a letter to the mayor and council before the meeting where they approved the development.

Stipulations in the letter included:

• Requiring a minimum of 48 units restricted to tenants making 0 to 59% of the area median income.
• Employing the community and economic development director to identify and obtain funding needed to provide a deeper level of affordability.
• Requiring the applicant to commit to a design that reflects the character and culture of the community.

Adame said the type of housing the group seeks is different from the type CPLC wants to provide.

“They (the village planning committee) said ‘We would like you to do housing at 30% and below (county median income),’” Adame said. “And I said, ‘Well that becomes very challenging.’ Because at 30% and below, that’s typically public housing.”

Public housing is specifically for low-income families and individuals, people with disabilities and the elderly. Eligibility is based on annual gross income and if the applicant qualifies as disabled, elderly or a family.

Affordable housing is an apartment or home where the total cost is less than 30% of a resident’s total income.

'Nothing with teeth' from the city

Affordable housing is a growing problem in metro Phoenix, where home prices and monthly rents have climbed.

South Phoenix's 85040 ZIP code is a hot area for home sales because it's considered affordable when compared with the region. That's driving up prices. The median home price jumped 22 percent to $201,000 in 2018 from from $165,200 in 2017.

Housing affordability has become a louder refrain in Phoenix and around the Valley. 

South Phoenix residents use two-thirds of their incomes on housing and transportation, according to the Center for Neighborhood Technology, a Chicago-based nonprofit dedicated to sustainable development. This leaves many people stretched thin and with minimal financial cushion when emergencies crop up.

Phoenix identified a shortfall of 163,067 housing units, almost 100,00 of which would need to be subsidized, according to a study released in April.

The city released the Housing Phoenix Plan on July 27 that outlines a plan for addressing those needs, including:

• Prioritize housing in areas of opportunity, designated low-income areas where developers are incentivized to build and invest in.
• Redevelop city-owned land with mixed-income housing, such as CPLC's project.
• Support affordable housing legislation that will increase the amount of funding available for the construction of affordable housing.

City Council member Michael Nowakowski, in whose district the development would be built, praised the project, citing the need for affordable housing and the nonprofit’s history of “empowering the community.”  

He said the city needs more partners like CPLC and the nonprofit Native American Connections, which recently opened an affordable housing apartment complex in downtown Phoenix. 

Nowakowski said the nonprofits struggle to find funding to build affordable housing in the city. 

“I know we, as the city of Phoenix, we’re struggling right now to find those funds, and hopefully in the future, we’ll find that pot of gold, so we can build all those . . . units that we need to catch up to all the needs in the city of Phoenix," he said. 

Residents who spoke in favor of the project said the need for affordable housing is a pressing concern and that issues like housing discrimination have compounded their difficulty in finding a stable place to live.

Advocates say revitalization plans for south Phoenix have been neglected for decades. They say that needs to be addressed before making way for developers that may not have the community’s interests in mind.  

Vidales said it is up to the city to create policies to incentivize developers to consider the needs of the community and build housing that is accessible to the communities they build in.

“Right now there is nothing with teeth to hold CPLC accountable to provide the units that they promised,” Vidales said. “Until the mayor and city council begin to address some of these issues, it’s not going to change.”