A legal fight over affordability concerns at the South Pier at Tempe Town Lake development, the appropriate extent of citizen involvement in project approval, Tempe’s unique affordable housing funding program and the issue of affordable housing, itself, is continuing to roil City policy and development efforts.
Following City Council’s approval in March, affordable housing advocacy group Central Arizonans for a Sustainable Economy launched a signature drive to put the South Pier project on a Tempe ballot. CASE’s primary complaints are that there are no designated affordable housing units as part of the project and an allegation that there was not enough community involvement in the process leading up Council’s unanimous approval.
CASE collected thousands of signatures from Tempe residents in support of a referendum, but the City rejected the petition, alleging the project and its approval did not meet the criteria for a public referendum.
Tempe’s argument was rejected by the Maricopa County Superior Court, but the judge also rejected the petition, saying the way it was organized did not meet state rules.
Both the City and CASE are appealing the decisions.
In addition to taking issue with CASE’s legal methods, Tempe officials argue the project and payments from South Pier Tempe Holdings – the project developer – contribute far more to addressing overall affordability in Tempe than would the designation of some percentage of the project’s units as affordable.
Tempe implemented a program known as Hometown for All last year. The program takes contributions from developers to fund dedicated and permanent affordable housing efforts.
A referendum on South Pier would likely end up as an indirect referendum on the program, as well, which Mayor Corey Woods has said is far more effective than negotiating with or requiring developers to dedicate a set percentage or number of units as affordable in their developments to qualify for development incentives, such as Government Property Lease Excise Tax programs.
A GPLET is in place for South Pier that would save the development from paying property taxes for an eight-year term.
Officials also say the associated costs with developing affordable housing at Town Lake make the notion unrealistic, as there are extra fees assessed to developers and the City would lose the economic benefits associated with attracting new businesses, since most affordable housing developers are non-profits.
The goal of the Hometown for All program was to navigate away from all those associated issues. Funds developers donate go from the City to non-profit developer Tempe Coalition for Affordable Housing, which then uses the money to develop hundreds of permanent affordable housing units to revitalize blighted or vacant properties. In addition, Tempe contributes half of the project permitting fees it collects to the program.
South Pier’s developer is donating $10M to Hometown for All, which will more than double the program’s funds. The company is also paying for other improvements and program funding, including a $12M pedestrian bridge, $5M to municipal transit, and $250K to local schools.
In all, the approximately $27M in public donations will total roughly $2M more than the tax breaks the developer will receive under the incentive agreement.
CASE, however, says the public benefits are insufficient and that the tax breaks associated with the project must include dedicated affordable housing units.
Along with the absence of affordable units on site, CASE has alleged since as far back as March there was insufficient opportunity for public engagement. CASE representatives cited the fact the developer did not give a full presentation about the project during the initial public hearing in February.
Alleged lack of engagement and input was a key factor behind the petition and referendum drive.
Tempe, however, claims the approval and agreement are administrative issues, rather than legislative matters that would qualify for referendum consideration.
The Court disagreed with that claim, but it also said the forms CASE submitted did not follow state requirements, even though CASE says the form template was provided to it by the City.
With both the Court’s decisions currently under appeal, CASE will have the option to recreate its petition on the correct forms if Tempe’s claim is denied.
If CASE wins in court, future development agreements could also become subject to referendum, which could threaten the Hometown for All program if donations began to routinely encounter delays from putting the matters before the public
The City may also be concerned about the delay and resulting economic impacts of delaying the South Pier project, itself, which could hold back or even prevent millions in development.
Court watchers expect rulings on both appeals in the next several months. (Source)