Tempe Rejects Affordable Housing Density Bonus Program Amid Consensus Against Unviable Incentive Structure

Good afternoon. Welcome to the Tempe City Council and Tempe Development Review Commission joint meeting. Council meetings can be watched in real time via Cox Cable Channel 11 and at temp.gov/temp1. Members of the public may also attend the meeting virtually through Microsoft Teams. Just as a note here, we're having a little bit of technical difficulty with our audio video uh equipment.

So, uh if you are one of the council members online and you need to ask a question, uh just feel free to text me cuz I know you have my number. Uh and so feel free to send me a note and then I can recognize you and then you can offer any kind of comments or questions. Also, if you are one of the commissioners online as well and you have a question uh because of the technical difficulties, you can text me if you have my number or text someone else on the commission.

We'll make sure to recognize you as well uh so you can be heard for your comments and or questions. Just as a note here too before we do introductions, want to note that uh Council Member uh Keading is online. Uh, Council Member Garland is also online. Uh, Commissioner Richter is online. Uh, I know our chair, uh, Johnson is is running a little bit late, but will be here as well. And Commissioner Wagner's online as well.

So, just wanted to make sure to, uh, get kind of a proper headcount for those sitting here in the audience and for those watching this meeting at home either now or later. With that said, then we'll go into item number two, which is a welcome by myself and some introductions here. I I think the best way we can do this is just to go around the table in order and I'll just uh go ahead and start. Dr.

Redmond, let's see if we can start with you and we'll kind of go around and introduce ourselves and make sure to please use your microphones. I'm Chuck Redmond, uh longtime resident of Tempe and retired from ASU. Thank you. I'm Linda Spears. I'm Robert Miller. Barbara Lloyd. I've been a resident of Tempi for over 30 years. Kenan Young, resident over 30 years. I'm commission vice chair Michelle Schwarz. Corey Woods, mayor. Arlene Chin, vice mayor. Nikki Amber, council member. Brook St.

George, council member. Bobby Nichols, council member. Good afternoon. Rosenchy, city manager. Good afternoon, Eric Anderson, city attorney. Cara Darcia, city clerk and mayor uh chair Johnson is online. Okay, wonderful. Okay, so our chair from the uh commission is also joined as well. So once again, thank you each and every one of you for being here this afternoon. All right, so we're going to go on then to item number three, which is uh presentation and discussion items.

First up, item 3A, video presentation of approved development projects. And I'm assuming I'm going to look right here to Ryan Leake and Jac Jacob Payne for that presentation. So I'll turn it over to you. Thank you, Mayor. Uh first off, thank you, mayor, city council, and development review commission members.

Uh we just have a quick less than three minute video that we wanted to show you all some recent past few years of development projects that have either gone through the process one way or another, either through uh city council and our DRC, and would like to just showcase Ah, ah. Heat. Heat. N. Ah, hey. Heat. Heat. N. Hey, hey hey. Hey, hey hey. let you continue. Thank you.

And a quick special thanks to Diana Kaminsky and the planning staff for putting that together and Jason Wolf and the media for showcasing the video. Now we'll move to item 3B which is uh the draft affordable housing development bonus program update. And I want to introduce uh Jacob Payne here with me, principal planner with the planning division who will co-host this presentation. So just frame a little briefly here. We've got the update to the affordable housing bonus program.

This was a concerted effort. Uh when we last met with you all at a joint meeting back in October, uh some of the goals and efforts in in that um effort was to go over specifically putting together a draft affordable housing bonus program specific to bonus density and specific to the affordable housing components and desired for the city. Next slide. So we'll go over quickly a background how the bonus bonus program works.

um the proposal, public feedback, uh the developer feedback and then next steps and our recommendations. Um as mentioned before, we had uh worked with you all to um deliver this uh discussion and proposal.

It was back in May of 2025 where we had the the discussion um and specifically we had direction on concerted effort again to work on a design program that was for affordable housing and could be introduced through a density bonus program and that was the effort that culminated in this approximately year-long review process and uh Jacob's going to go over those details and backgrounds for where we got to this point. Thanks Ryan.

Uh, as Ryan mentioned, I'm Jacob Payne, principal planner with the city of DB's community development department. Uh, before I get into the details of the affordable housing bonus program, uh, I have a couple slides here that preface um, you know, why we're looking at this and some statistics about housing in city of Tempe. Um, so these two charts uh, and the charts that you'll see on the following slide are taken from the city's uh, 2022 housing affordability uh, inventory.

Uh and what these are capturing is uh on our renter and homeowners uh what's known as cost burden uh which refers to households that are spending more than 30% of their income into housing. Um so you can see on the one to the left representing renters in the city of Tempee collectively those that are burdened or severely burdened makes up 51% of renters. Uh and then for homeowners uh the total of burdened and severely burdened makes up about 23% of all homeowners within Tempe.

Uh these charts are representative of uh which of our housing stock uh falls into affordability categories. So the chart at the top uh you'll see the uh bar that's all the way on the left that's representative of city of temp and then the five bars to the right of those are some peer cities of similar size and demographics.

Um so the way to read this chart uh is that those blue bars on the top one are representing how many units are considered affordable for a family making 80% of the median income. The yellow bar being those uh units that are affordable to a family making 50% of the median income and the purple one uh representing 30% of the median income. The chart on the bottom uh is the same information but it's representative of uh for sale housing product.

Uh and the difference there being that the orange um bars that you see are representative of 120% of the median income. Um so you can see with the for sale products uh there's a higher threshold on what those bars represent. Um but you can see compared to uh these other cities um and the Maricopa County is the one right next to Tempee um there's some deficits that we're seeing in certain ranges of affordability in both renter and for sale product.

Uh before we talk about uh bonus programs, I have a reference to uh Arizona's revised statutes uh where explicitly uh municipalities are prohibited from doing what's known as inclusionary zoning uh which would be requiring private development to include affordable housing uh or conditioning that private development include affordable housing. Um so this is important information for us as we look into a bonus program and trying to design one that complies with state law.

Uh but what this uh statute does allow municipalities in Arizona to do is to develop incentive or bonus programs to support the supply of affordable housing. And then before we talk about specifically our program um in general what a development bonus program is. Uh it's a voluntary process in which uh a developer provides public benefit with their project in order to receive additional bonuses uh in the form of residential density, floor space, or building height beyond what they could build.

um under typical zoning. So these two graphics kind of give an example. Uh the one on the right you can see the bonus that's being afforded is that extra height for the building and then those green units would be the public bonus uh in the form of uh affordable housing. Um same kind of thing shown on the right there the extra height bonus density and then those shaded units are being designated uh as the public benefit in affordable housing.

So, um the specifics of the program uh for affordable housing uh development bonus that we've drafted um over the past year as Ryan mentioned um some highlights is uh that this program uh could be applicable citywide uh and it's uh subject to compliance with the general plan. So, I'll explain a little bit more uh how the eligibility uh would work for the bonus program.

uh as mentioned in a previous slide, we're talking about a voluntary program um that you know project developers could choose to enter into with the the time of their submitt for their uh project application. Uh an important thing to note is it still leaves the option for current zoning map amendments, general plan amendments, pads uh in order to seek those additional building heights and residential densities.

This is just would be an optional program um that provides an alternative pathway um for development. Uh so this uh bonus program would be incorporated into the zoning and development code by way of an ordinance. It would exist as an overlay uh that could be opted into uh and then uh this process would be an administrative process to opt into the overlay.

Uh that's part of the bonus of the program uh in order to save money, time uh and the uncertainty that comes with uh a reasonzoning process through public hearings. Um so a key uh objective in developing this particular program was to come up with some formula that was uh simple uh easy to follow uh and provided pretty direct uh measurements for the outcomes um in the uh affordability.

So as I mentioned um the kind of way this stacks on top of your existing zoning uh zoning allows uh you know a maximum density and then in places where the general plan projects densities that are higher uh than the zoning of the property allow for that difference is what the bonus amounts to per property. Um and I'll explain that uh in a couple of worked examples to show practically uh how that math comes out.

So um this is the table um from the program that would explain how um the tiers of bonus uh and the tiers of affordability designation um calculate to. Um so the way uh we've designed this is that there's three brackets of affordability uh for units that a project could offer. Uh they could offer affordable units that are up to 50% of the area median income, up to 65% of the area median income, or up to 80% of the area median income.

And based on which ranges of affordability are being offered in the project, the percentage of the percentage of units that would be designated affordable uh varies. So, um, for a project that would be looking to opt into a bonus program, if they're, uh, looking to designate those 50%, uh, area median income units, which are, you know, the lowest ranges of affordability, um, it's only, uh, required to designate 25% of the bonus units as affordable.

Whereas, if they were looking to do um, units that were up to 80% of the area median income, uh, they would be looking at 75% of the bonus units to be designated as affordable. So, uh, you know, you have the standard density that's allowed.

Um, and then with the difference of what your general plan allows, um, you take that extra as the bonus and multiply by the percentage of whatever affordability, uh, ranges you're looking to offer with the project for a total number of units allowed and a total number of affordable units to be included with the project.

Um, since we're throwing around a lot of percentages, um, this is a table to help contextualize what the area median income percentages look like for units of different bedroom sizes in the city of Tempee. Um, the programs based on, uh, the fair market rates as defined by the federal department of housing and urban development for the Phoenix metropolitan region.

So, uh, you know, for context, that first row shows what a one-bedroom apartment goes for fair market value for the Phoenix, uh, metro area. It's about a little shy of $1,700. So, when you take the percentages, it would be those numbers. Uh, and these are updated, uh, regularly. So, uh, it would be the intention that the program uh, continues to evolve with these rates as as things change in in the Phoenix metro area.

So to kind of reiterate, um this is our land use and development or land use and density map uh from our general plan. Um you know, you'd look to this map, see where the projected density lies, and then properties that have zoning that allow less density than the general plan is calling for become eligible for the bonus. Um the bonus for the developers, there's greater densities, heights, and reductions in parking that we'll go over in future slides.

Uh and then the public benefit that Tempe is receiving is those guaranteed affordable housing units um that would be assured through a covenant on the property for a duration of 30 years. Um so as I mentioned uh the way that the affordability is guaranteed is through a covenant recorded uh against the property guaranteeing those units affordability for 30 years.

Um we uh we look to our community health and human services department to help us with verifying some initial affordability requirements and income u criteria for potential uh you know residents of the affordable units uh and then the onus upon the uh property management of the project um for selfboarding and you know audits to verify compliance with this agreement moving forward.

So, uh this is the development standards table uh with it the added yellow uh cells representing the changes um that you could see through an affordable housing bonus program. Um so the first white row uh underneath the zoning districts represents the current allowed dwell uh density and dwelling units per acre. Uh and then under underneath of it the density bonus where it's based on the general plan.

Um so you can follow on the first column those are our uh general plan land use projection categories uh with their associated densities and dwelling units per acre. Um so you know if you have an R2 zone property and you look at your general plan and you see you're an area that's projected 25 dwelling units per acre, you become eligible for a bonus. So it's you kind of follow along the chart to find out which property lies where and what bonus is available uh at that particular site.

Uh and then at the bottom uh you can see in uh in tandem with the increases in density for a bonus program there's uh an equivalent increase uh to a building height standard to allow for higher densities to be constructed um by making the building taller to accommodate those units. Uh similarly um the bonus program would be designed to be applicable to commercial and industrial zoning districts where they have projected density in the general plan.

Um so this might be a commercially zoned property that's projected mixed use or an industrial property that's projected mixed use industrial. Um so a very similar um way of reading the charts here. Um some commercial districts in the city of Tempe already allow residential uh through a use permit process and you can see that noted in our table is uh the letter U in a parenthesy.

So uh one thing to note uh that's a little different on the commercial table is that there would be an option for a commercially zoned property that's designated commercial in the general plan to opt into the bonus program. um although they would need to uh acquire a use permit and it's just to maintain that the projection for the site being commercial is still considered uh when looking at the eligibility for this program.

Uh and then for our industrial districts, the table on the right, um thing to point out here is that of course industrial zoning doesn't allow residential by right. Um but if they're projected mixed use, uh they could become eligible. Um but you know, the entirety of the project density is considered the bonus in this case since all of it is uh beyond what zoning would allow. Uh also included in the program are some reductions to vehicle parking spaces. This is another uh piece of the bonus.

Um so you can see here this is uh in striketh through our standard multif family parking requirements based on the number of bedrooms in each unit. Um so this represents you know uh a reduction in those to help accommodate um some of the um potential you know revenue foregone for designating affordable units. This is kind of a a bonus to try and um help make the projects still um pencil out.

Um so practically um what the what it looks like when you overlay our zoning districts with our general plan and identify sites that have a difference in projected density. uh you get this map um where you can see uh the purples are representative of those areas in our general plan that are calling for 65 uh dwelling units per acre and in some cases higher. Um in the in drafting this bonus program, we have to come up with the ceiling.

Um so we place that at 80 dwelling units per acre for that darkest purple. uh and then the the the gradient of blues down to um those lightest blue which represent those commercial zoned areas with commercial uh general plan designations. So, uh, I know there was a lot.

Um, so I have the next couple slides to, um, throw out some examples of very common, uh, lot configurations, lot sizes with, uh, standard zoning that we might see, uh, become eligible for a program, um, to help visualize what some of these outcomes might be. U,, so our first one, uh, as an example would be an 8,000 ft, uh, lot that's zoned R2. Um, so you know, a lot of times this is like a two or three unit um, small apartment complex.

Um, so you can see two units currently if it's located in where a general plan is uh, projecting 25 dwelling units per acre. Uh, with opting into this bonus program, you could see five units on that lot. And then depending on if they're designating these as a 50% area median income or an 80% area median income, one or two of those units would end up being designated as an affordable unit. on a 2 acre R4 lot. Um currently, uh the zoning allows for 25 dwelling units per acre.

So on a 2acre lot, there would be 50 units allowed by right. Um if this were in an area, say to the east of ASU's campus where our general plan is projecting, you know, urban densities, um they could be eligible for the bonus program up to 80 bowling units per acre. Um, so, uh, with the, uh, designation, uh, of the affordable units, the site that was, uh, 2 acres R4 could have up to 160 units allowed.

And then with the bonus, depending on if they were designating them in the lowest 50% area median income or up to the 80% area median income, uh, the city would be getting 28 to 83 designated affordable units. Uh similar case uh this is a commercially zoned lot planned commercial uh center on two acres. Um right now there's uh an allowance for residential in this zoning with a use permit of up to 15 dwelling units per acre. Um so that's represented by the uh 30 units allowed on the top.

If they were located in an area, the general plan projects 45 dwelling units per acre, they could uh develop with up to 90 dwelling units with 15 to 45 of those designated affordable based on the ranges. And then finally, uh for an industrial lot, um there would be no dwelling units allowed currently by Wright uh in that zoning district.

Um, but if the parcel is located in an area that's projecting density in our general plan of up to 45 dwelling units per acre, they could develop 45 dwelling units on one acre. Uh, and then depending on those ranges, 12 to 34 of those uh would be designated as affordable. Uh, and this is uh our earlier example of our 2acre R4 lot. Um, just to compare some of the math uh as far as the cost of the units um, and what's that difference.

uh and it's represented at the bottom there and it's called annual cost uh annual rent cost savings. So that's representative of the uh year-over-year money that residents of that apartment complex would be saving in rent um due to the um guaranteed affordability of some units in the project.

So, we've compared it against, you know, developing what's currently allowed in their zoning, uh, as well as comparing it against if they were to, uh, apply for a reszone and develop a similar project without having to designate affordable units. Okay. Uh, I'm going to go over um some public input uh that we've received on the program proposal. So, uh, we, uh, went, uh, public with this back in January of this year.

We hosted uh two public meetings uh one of which uh was at the library, the other of which was virtual uh and then hosted an online survey that was open throughout the month of January. Um so we received 210 responses on that online survey. Uh and just to kind of contextualize some of the um responses we'll see later on this first question, you know, asking respondents of our survey if they support the creation of more affordable housing uh in Tempe. We see 58% say yes.

Uh and then the second question is do you support this draft affordable housing development bonus program that could incentivize private development to build affordable housing or we see you know 56% no. Um so in the follow-up questions you know we we asked what is it that um you think needs to be improved or modified about this program that you know would make it reach the expectation um that you're looking for in a program like this.

Um so our overall comment themes on you know what could be improved or modified about the program. Um majority kind of fall into this um category of that they feel that there needs to be a little bit more guard rails um about the program. Um looking for things like retaining public hearing and notification processes um before these things happen. Uh looking for potentially maybe even more restrictions on where um that eligibility is located.

uh as well as looking, you know, for more asurances that developers see through um to the commitment of affordable housing in the project for the duration of the term. Um some common, you know, responses and questions that we've we've gotten from the public about the program. Um as I mentioned in the previous slide, there's there's a strong desire to retain some public hearing processes or notifications that for you know, opting into a bonus program.

um you know and part of the challenge but part of the bonus of is that it is a expedited process that you know occurs quicker and is a little bit more uh certain in the outcomes. Um you know if there were public hearing requirements for opting into a bonus program, it wouldn't be more attractive than just going through the standard avenues and not needing to um you know go into a covenant agreement for 30 years for uh controlled rent.

Um, we also had um some suggestions to try and revisit where eligibility is. And in addition to maybe restricting it, we've also heard some people interested in maybe expanding where it could be eligible um to places where, you know, even the general plan isn't projecting density that high. Uh, and of course, the general plan is a voter approved document that guides us in in land use decisions. So, uh, you know, we it's the upper limit of where we can um propose to increase densities.

we want to keep in line with that document. The next couple slides are um some response we've received um from the development community and property multif family property managers. Um so we worked with the urban land institute of Arizona uh ULI. They have a membership base of multif family developers and property managers. Um so through ULI they helped us distribute the program materials to um to their members.

uh and then uh received thoughts uh from them and comments on our program uh via a survey uh which was done anonymously so that they could be very candid with what they're telling us. Um since a lot of these people probably work in Tempe and you know they um they uh wanted to share their thoughts um you know in a in a way that um they can detach themselves from. Um so we worked with ULI to um compile and analyze these um survey results.

So uh in their summary of the results uh we got responses that you know were generally very skeptical that this bonus actually does outweigh the foregone uh income that the development would you know see over the 30 years of the covenant um that the affordability is guaranteed. Uh there was also um some questions whether or not the height and uh density bonuses make the project more expensive.

um you know there's some thresholds where if you go over a certain number of stories your construction type changes and that might make your project more expensive uh than otherwise.

Uh there was also hesitancy to take on the responsibility for reporting and tracking occupants uh as well as you know some concern that if they do enter into this agreement you know a couple years down the road if they're looking to sell the property uh it might be difficult for them to find a buyer who's willing to take that responsibility on as well.

Um something that uh was brought up from a number of respondents is that you know the affordability ranges might be too low for a program um that's written this way uh and that they thought you know something like this could be possible if it was a workforce housing bonus program rather than an affordable housing bonus program uh and you know focus on the 80% to 120% area median income.

Uh and then similarly to um something we talked about in the last slide, there was also some discourse about maybe looking to expand and go even beyond densities that we talk about in the general plan or in places that the general plan um does not project density.

So on this slide, uh, I've just kind of, um, sorted out some of the comments, concerns that we hear from the public and then align them with kind of the same, um, remarks that we've heard from our development and property management community to help um, give an idea of the opposing thoughts about a program like this and what expectations might be of it.

Uh, you know, we heard from the public that they're looking to see additional provisions to ensure there's um see-through and compliance with these affordability requirements. And our survey with the development community, you know, says the opposite. They're looking for lesser regulations. They want less bond rating asurances within the covenants, more flexibility in the income ranges that they can provide.

Um, we heard from the public that they want to see retained in some form of public hearing or notification process. and our respondents from our ULI survey really said that those expedited reviews and certainty of outcomes are crucial to a program like this. Um we heard also from the public that if it's possible 30 years you know might not be long enough. We want to see guarantees extend beyond that.

Um and you know from our ULI survey we heard that um the the lesser uh the reporting responsibilities the lesser you know there's um those terms are the easier might be for them to sell in the future. Um and then you know with with the public um input that we heard you know we wanted they wanted to see a focus on some of those lower ranges the 65% 50% area median income.

Um and on the previous slide I mentioned that you know through responses we heard that this program would work for them if it were more akin to workforce housing rather than affordable housing. Um so it's based on all of that feedback that we've received from the public and through uh our development community. Um the planning division is thinking we don't want to recommend moving forward with the program in this iteration.

Um but instead maybe to seek alternatives uh to increase affordable housing stock via other methods uh and over the next couple slides I've got some suggestions and programs that we currently employ um that have potential to be expanded or uh you know worked further towards. Um so the first one uh would be updates to housing affordable housing fee reductions.

Um so currently on the books uh we have uh development fee reductions that apply to uh projects within the Apache redevelopment area uh which stretches along Apache basically from rural road uh until Mesa. What this um fee reduction allows for is 50% development fee reductions for projects that offer 10% uh of their units at the 80 to 100 area median income or projects that offer 15% of their units at the 100 to 120 AMI range.

So there uh you know it could be looking at possibilities to expand eligibility for a program like this a fee reduction um citywide for any affordable housing developments. Uh we also have uh in the Tempe zoning and development code uh as a result of a uh change in state law uh a provision for what's known as adaptive reuse or redevelopment for multif family uh of commercial buildings.

So this was implemented back in January of 2025 and it allows obsolete commercial or office or industrial buildings to redevelop as multif family. Uh and what the state statute allowed municipalities to do is require 10% of the units through a project uh developing in this avenue to be moderate or low income. Uh which goes up to the 120% AMI range.

So even though this is mandated by state statute, this is an opportunity where we could potentially look at updates or modifications to enhance that program um in different ways to u get some outcomes that build affordable housing. Uh and then finally uh the Tempe Coalition for affordable housing um there's ongoing collaborations with the city um to develop affordable housing um in several locations.

You know, we could strengthen efforts in those uh areas and continue to work with uh that affiliate. So uh with that uh we'll kind of conclude on the note of you know recommendations uh for the future uh and thoughts uh direction of this program as well as some of those other avenues um in affordable housing development and with that we have happy to take any questions. Thank you very much. Appreciate the presentation.

Um okay I have more than a few thoughts about this which I'm going to try to share in a reasonable amount of time. So, f first of all, I'll start by not burying the lead and saying I, you know, I concur with the staff's direction in terms of not moving forward with the program. I mean, the challenge with this program is that it doesn't really have any constituency. You've got residents who don't support the program. You've got the development community doesn't support the program.

So, you really don't have anyone who really wants this to be implemented or is really willing to participate. So, if you don't have that, you don't really have much of a program. and then it puts the council and staff in a position of trying to support something where you don't really have any backing. So, I I support the recommendation of staff to not move forward with the program. So, I'll I'll say that first.

Second, um completely in favor of exploring other avenues to find ways to create more affordable housing. I think it's a critical need in our community and I've been banging this drum since I first got on council back in 2008 about the need for more affordable housing. So, I absolutely support staff looking for other ways to actually uh make this happen.

the cons the the kind of concern slash I'm going to try to frame this properly look I mean to the really kind of to the development community I mean I would ask them to come to the table and try to figure out ways to work with us more on this this is clearly something that's a priority to every single member of council I frankly typically do not speak on behalf of the entire council they can speak for themselves but on this one I know this is a value that's shared by all of us that we need more affordable housing for people in the city of Tempe.

There are folks who are being rapidly priced out of this community. And I think about people like my mother who was a teacher for 30 years in New York City public schools. And teachers now are having an increasingly hard time living in this community because of the cost of housing. Whether they're trying to buy a home or rent a house or rent an apartment.

The fact of the matter is we have got to get the development community in as partners and they have to try to figure out ways to work with us to produce housing for the people in this community who truly do need it. So I would actually implore them to uh do everything they can to work with the city council, work with staff, work with our commission to figure out how we can get this done.

[snorts] However, also to the residents here in the city, I'm I'm going to also issue this challenge because this is something that really is very deeply important to me. We talk about this all the time and I and I see many times on social media where when a project gets passed that's a market rate apartment complex, people will jump online and drag the council and talk about how this is a market rate development. We already have enough stuff like this.

We need affordable product in this community. And I hear this all the time. I'm sure everyone on council has seen these comments along with many people on staff. Back in November of 2024, we had a bond election and bond question number three uh was asked. It was the first time in the city's history we had a question for $32 million for affordable housing and it passed with over 69% nearly 70% of the vote.

So nearly seven and 10 people in this community who voted in that November election, which is typically a larger slice of the electorate than the typical March election, uh voted for that and basically said to the council and no uncertain terms, we have got to find ways to create more affordable housing for people in this community. The challenge is though when we're trying to implement certain things, we're many times getting rebuked.

Um, when we talk about doing some kind of a density bonus program, we're told it's going to add too much density or too much traffic or it's going to change the neighborhood or community character. Uh, I know there's been a lot of concerns about the accessory dwelling unit program, although however that's state law. We were frankly preempted on that by the folks at the legislature, but there's been concern about that as well.

I I know myself and uh council member Amberg sat at a meeting a few months ago that was a three-hour long meeting regarding doing a combined fire station and a minimum of 50 units of affordable housing. Uh something that was the first investment we made from that bond that residents passed to go out and spend I think $5.5 million to acquire a piece of property at the northeast corner of rural and baseline. And I thought this would be an absolute slam dunk.

Not only do you get a state-of-the-art fire station to provide emergency medical rescue response along with fire response, but you also get at least a minimum of 50 affordable housing units that folks like teachers and other people in the service industry can use. And we were there till 10:00 at night with a lot of folks very concerned about who's going to be living here and and just sort of the general concerns you many times hear when people talk about building affordable housing.

My point of this whole speech is saying we have got to figure out a way to do this. It's not enough to simply say we support affordable housing and we want this in our community, but every time we try to come up with a way to actually create more affordable housing in an environment where the state many times has restricted Arizona cities and towns from doing more of this, we can't just say no. We're a 40 square mile city.

There's not a lot of land here and we're going to have to get creative in terms of how we do it. So, I am frankly asking and imploring our residents too. We have to come to the table and figure out a way to get this done. And we can't just put all of it on Apache Boulevard. There ha there is going to have to be affordable housing in all different sections of this community.

And we're going to have to figure out a way to accept doing that and not use terms like neighborhood character as a way to defeat affordable housing coming into this community that people desperately need. So, I mean, I know that this is being probably a little bit direct, but my concern, frankly, is that every time we come up with a way to actually do this in an in a legislative environment that's very challenging to build more of it, we're told to go back to the drawing board.

And so, we have got to figure out a way to do this. So, I am asking any member of the community that's watching this and has a similar concern about the need to create more affordable housing. We have got to come together and challenge ourselves and figure out how we're going to get this done for people who actually really need this housing and they need it yesterday. So, with that, I will stop and look to anyone else. Council Nichols. Yeah, thank you very much for this presentation.

and I appreciate all the work you've been doing on this and it's certainly a detailed and very interesting, you know, uh, resource that you've put together here. I had a quick question about slide four, uh, some of the numbers that were presented there. Yes. So, you mentioned that 51% as of 2022, 51% of Tempe renters were costburdened. Um, thanks for putting in the other information about the specific zip codes.

I'm wondering if we've seen any um changes or updates in these numbers over the last four years. Uh, thanks for the question, Council Member Nichols. I'd have to review the older um versions of the housing inventory analysis. This is just from the most recent one um from 2022. So, there hasn't been one done since then. I believe 2019 was the I mean, since I don't got it. All right.

And then I will say that I I certainly am sensitive to the community's desires to continue to have input in uh the development of these processes and these these developments, but I also look forward to I believe that this is a topic that we'll probably be covering in the tenants and rental properties subcommittee when that starts meeting in the near future. So I appreciate this and look out for an email from me to ask you to do this presentation again.

[laughter] Thank you very much, Council Brand. Yes. Thank you, Mr. Mayor. I want to congratulate Ryan and Jacob on doing what everyone thought was the impossible was getting residents and developers on the same page opposing something. Um, now for completely different reasons, but um, yes, I was at that meeting. It was very long. Um, I honestly do think that the residents of the Tempee want affordable housing. They just don't want it anywhere near them is what it boils down to.

Uh, and it's not even just this, but the number of times I I joked that I came on council and suddenly everything that DRC was doing was getting basically appealed to to the council and and a lot of it had to do with the ADUs because people didn't want any of that anywhere near them, but they were okay with it everywhere else in the city. Um, I do have some questions on your other program options.

uh how are you going to get over the hurdles that this program has shown you in terms of uh like your fee reduction and your adaptive reuse? Um how are you going to get over those barriers set by the feedback from both the public and the developers mainly for the length of time that those units have to be affordable and uh the level the the AMI levels on there like how how because I see you're going to you're going to run into the same thing to me. Yes.

Uh thank you um mayor, council member Amber, part of the um efforts with the looking at the updates to the affordable housing fee reductions and as part of our uh Tempe accelerated uh program to focus on on housing needs. So um what we're exploring right now is looking at uh citywide fee wa waiver initiative that um addresses the qualified approved affordable housing project.

So, this would be a project maybe that's uh coming from the affordable housing uh coalition or a project that's coming out of a LITC project that is is approved or has the entitlements of the process and then the project gets awarded the the fee reductions as a result [clears throat] of of going through the building permit construction process. So, those those fees are are reductions are are sought through uh primarily the u planning fees as well as the building plan review fees.

So uh these would have to be qualified authorized by the city. Um there's expectation and it could be at ranges of different levels of of of commitment for the affordability ranges but approved through those other programs like the coalition and litec projects that get uh those funding efforts. But how do you get over the folks that are going to live that are going to the communities that are going to be around where these projects are?

They're going to come to us and say we don't want this here. Yeah. and we'll certainly handle that through the normal resoning or entitlement process that occurs. Um we went through the uh Victor Acres uh the um that project uh La Victoria and that had an affordable housing component which also actually did receive through a development agreement um some affordability uh discounts and fee waiverss there.

for that process had uh several neighborhood meetings, outreach and effort to develop that project and program and I think it was done effectively because there was support primarily from the community to see that through. We're we're hopeful that other projects will be able to do the same, but it comes with the risk of of the the public hearing process to to weigh out and vet those those details. Thank you very much. Uh, Commissioner Lloyd. Thank you, Mayor.

Um, so back to the the public hearing process. Can you talk a little bit more about that um mandate by the state senate and if we've seen any examples of that come forward in Tempe or other cities? And would that require the same public hearing process or is that a little more uh of a for lack of a better term like pre-approved?

And then um is there a way to potentially identify a few assets within the city of Tempe because I can think of a few where you went out and did some targeted outreach to those asset owners and said, "Hey, you know about the statemandated program combined with what we could offer here at the city of Tempee. Would you be interested in engaging in conversation on a redevelopment?" Sure, Commissioner Lloyd, I can answer those questions.

So the uh the mandate for the adaptive reuse uh for multif family either redevelopment or new development uh it's been on the books for about a year and a half now and there actually was a second round of of cleanup by the state in this process. Council is very familiar with that. Um but since that time period we have yet to see an applicant um seek uh an actual qualified application to take advantage of this program.

and we see maybe some areas there where maybe there was lost opportunity that the state didn't recognize that we could uh from our own gain experience see where we could help improve it so that it does become a valuable potential tool. Um if since uh we have the author here that was helping implementing the code text of him in that process I could have uh Jacob explain some of the the uh entitlement process for that program. Yeah. Um thanks Commissioner Lloyd.

Um part of the the uh premise of this program for the obsolete commercial buildings redeveloping is that uh it does not go through a public hearing process or resoning would um the you know qualified obsolescence is basically the requisite to um build in the program. Uh and the way that the state legislature drafted the terms of the program is that density uh allowances building height allowances are based on geographic um proximity.

So uh within a mile of the selected site is you know whatever the highest built density of a project is within that buffer is essentially what the limits of development for uh it would be.

Uh but as Ryan mentioned um you know we haven't seen any applicants um come forward to utilize the program and you know knowing what we know about temp and what development is looking for you know there's potential um for um modifications to try and fix some of those gaps that prevent it from being an attractive alternative to use. Um particularly things like parking. Um this program doesn't offer any reductions to parking.

Um and like for an example um something that um you know poses an opportunity for you qualified obsolete commercial building sometimes are hotels. Uh hotels have units kind of already pre-broken out and but they're parked differently than an apartment complex would be. Um so even though a program like this provides an opportunity for redevelopment as multif family with affordable housing, the parking becomes an issue um that can't be overcome very easily.

Um, so there's there's opportunities um and things like that for us to, you know, try and see if there's a way to make this a custom temp version that might get um, you know, more attention. Um, and that's kind of what we're we're leaving on the table as an opportunity because I think even if you were to identify some of these obsolete, maybe it's a class C office building and use that as a target case, right? To be like, here's one where we think we can offer this, right?

just I mean I feel like even if we identify just a small handful of those obsolete assets, one would be a win, right? If we can deliver 200 units out of that. Yeah, you're correct. With this opportunity maybe to enhance some of the areas of deficiencies, there also could be opportunity to promote the program and and be able to advertise it better. Yes, Vice Chair Schwarz. Yeah, thanks again for all the efforts.

I think we had seen this early on and um before some of the feedback from ULI and taking that into account um is how we probably landed here today.

I guess along those lines, it feels like that adaptive reuse um state mandate would be another one to maybe get the feedback from ULI and community from why we're not looking at this today cuz I would gather that, you know, the 10% of units and and what they're getting for that with regards to an expedited reszone or no reszoning is probably where you're coming up with some sort of gap between the what the market values and um what they're seeing here as far as the state mandate.

Just more feedback. I think that was really helpful in coming to the decision that you made here today or recommended here today. Thank you. Yes, Commissioner Miller. Um, so sort of following up on that, when ULI submitted all their comments, did they give any specific indication as to what kinds of incentives their members might actually think of as desirable as opposed to the ones that were on the table at that point, which apparently aren't perceived as particularly valuable? Sure.

Uh, Commissioner Miller, uh, yes, that's a great question. So the um the summary um that they provided to us was about eight or nine pages long and it was uh you know fairly in-depth about some of the suggestions.

Um what was uh you know absent from it that certainly you know to your point uh might have been helpful would be you know to know what where some of the performer that the respondents are using is breaking um to help us figure out you know if it's simply just the math um of the percentages being designated that we could tweak and work on.

Um but unfortunately a lot of the times they're you know the performance perceived as being some proprietary formulas that they're using and it's not information that they're willing to share with us.

Uh we did get some you know more direct indications of some individual um regulations of the program um that they you know had suggestions for um specifically things like the bond rating um and the proposal um as part of the covenant was a million dollar bond rating um and there was a suggestion that you know that's too high and then maybe bring it down to something like 500,000. Um so there were suggestions um to the effect of alternatives.

Um but you know at the core uh question about this uh you know loss of loss of return on investment of of the designation for those affordable units. We didn't really get an answer as to if there's a sweet spot on that just because the information as to what their math uh chocked out to wasn't shared. All right. Thank you.

Unfortunately, it would have been nice had they been able to provide you with some at least guidelines as to how to maybe make a better per better program, but uh I guess that's not happening yet. And and to add to that too as well as keep in mind they they focused on making sure that it was a broad-based outreach of input. Most of these developers are are the market rate development community.

So they know that there's a level of area there of community of of interest that that do do affordable housing type projects, but they wanted to open up the spectrum to the to the other folks and and get their their thoughts and input on the program. Commissioner Young, um I had a quick question about the uh diversity of the responses for the developer and property manager. Can you expand on how many submissions and from kind of what areas or demographics of those developers they come from?

Um, Commissioner Young. Yeah, so um we didn't get uh you know a number or the names of the respondents as I mentioned that the survey was anonymous. Um but we were told um from ULI that um the respondents of the survey are developers, property managers who do work in Tempe and would be familiar um to us in uh community development.

Um, so although we don't know the specifics, you know, uh, like Ryan said, a lot of these are market rate developers, property management companies that, uh, do operate in the Phoenix metro and do operate in Tempb and have familiarity with what market, um, what the markets look like here as far as things that they um develop. So then we don't know if there's two respondents versus 16 respondents. Is that accurate?

They did uh in the full summary break down um specific larger responses from um individual respondents and then had a you know kind of an end session where they accumulated the general consensus across the board. Um but no, I didn't get a number but it was more than two because there was more than one or more than two of the individually um broken out uh longer answer responses from individual respondents. Thank you.

Um, my follow-up question to this kind of goes, I know we've talked a lot about what the public has responded to in their comments. Um, I am also curious about how this program or what you've learned from this program could be used to recruit new developers to Tempe. I can't imagine that affordable housing is a new concept in the country and that there are probably a lot of really great actors, including a fantastic developer in the Midwest called Mosaic.

I'm very curious about how we might do some re um outreach to these uh developers who have done affordable housing that have done this type of work and that maybe we need to bring new game in town and actually um push the boundaries of our local development willing to play with uh the the pieces that you all have so artfully crafted uh for our community. So that's where my head goes.

Um because it's not just uh while I echo uh Mayor Woods's comments about obviously we want our community to come forward and to be part of the solution, developers should also be part of that solution and if that means we need new developers, I would love to see what that type of recruitment looks like. Thank you. Absolutely. Thank you. No, and I totally concur with that. I mean I mean everyone's going to have to be part of the solution.

the development community, residents, we're all going to have to come together to figure out sort of a collective solution for how to solve this problem. So, I completely agree with your statement. Absolutely. Anyone else? Okay. Uh and so do we have then consensus from all the folks up here to not move forward with this program? Yes. Okay. Sounds good. Perfect. Thank you very much. Thank you. That will bring us to item number four, future meeting topics.

Uh let me first look to the folks on the commission. Any future meeting topics anyone would like to suggest? Okay, seeing none, let me look then to the council and oh, Commissioner Spears. Um can we draft an ordinance so that we don't have to require use permits for using uh parking in your front yard? Say that with more conviction. [laughter] I'm going to leave that to staff.

So, what Commissioner Spears is speaking of is a majority of our our recent hearings have been primarily uh use permits for um either garage enclosures or are or carport enclosures and deliverable space, sometimes ADUs, and there's a requirement for use permit to park in the front yard setback.

Um, we do also have a new provision that that's fairly new, which introduces the um uh engineered shade canopy, which is a new use permit concept that allows um applicants again to put a structure in the front yard where typically it wasn't allowed for the purposes of shading uh the front yard driveway.

So, but I think Commissioner Spears is primarily talking about the parking use permit that that has come up recently and that has been a combination of both um addressing um non-compliant un unauthorized uh unpermitted work of changes that occurred in in units and then some of the the newer uh concepts of basically expanding living areas and ADUs that that have come Sounds good. We can we can talk about that in the future. Happy to. [laughter] Okay.

Uh, Commissioner Miller, um, I'm going to piggyback on that based upon our last DRC meeting and which was somewhat contentious on at least in in part because of the uh way in which the applicant came to us and some of the issues that were raised with regard to how compliance is judged or enforced or not enforced or something like that.

And maybe that's something that needs to be looked at in terms of um you're burdened, if you will, because you don't have a lot of staff to to go out and actually look at areas. And the only way that apparently that happens is if you get enough complaints about something, then you go then somebody goes and gets cited for it. But if nobody else complains, they don't get cited. And that to me isn't necessarily the best way for to enforce a code if there is a code for it.

And if you're not going to if you're not going to be enforcing it for the most part, except except when somebody complains, even though people are if people are parking in their front yards or people are parking boats or trailers or something where they shouldn't, but nobody in the neighborhood cares enough to complain even though it's against the code, they won't get cited for it.

and then somebody does get cited for it and they come up and say, "Well, there are 15 people around here that never got cited. Why are you picking on me?" Well, people complained about you. And I I think maybe there's a sort of way to work that a little more um equitably perhaps. I don't know. That's something that I think is staff should work out or council should maybe provide direction. I'll say thank you, Commissioner Bill. Mr.

City Attorney, I guess I would look to you to see cuz it sounds like the conversation is about we basically at this point have a reactive code enforcement system, not not a proactive code enforcement system. So maybe some kind of a discussion about that. We do both proactive and and reactive. Okay. But it's based on certain um regulations. Right. Right. Okay. Uh mayor, I I think right now we're kind of an off the agenda. It's just a future agenda topic.

So, um, we really shouldn't discuss anything beyond just whether to put it on the Yeah, that's why I was trying to see if I could kind of get Commissioner Miller's statement as something that could be a future agenda item kind of based on your interpretation of what he said. Is there something that we could come up with that would just not be a discussion about it, but would just be a future item we could tease out later?

You could request that staff bring it forward for future discussion at a council meeting. Okay. Ryan, Jacob, you think that's enough kind of input from Commissioner Miller that you could come up with an item to talk about with us later? I can. Yeah. and that comes from our community enhancement division that enforces uh the zoning code and nuisance code. So, we can certainly talk with them about setting up a study session item. Okay, sounds good. Thank you. Anyone else from the commission?

Any other future agenda items? All right. Uh anyone on council? Any future agenda items you can think of? Okay, seeing none, item number five is closing remarks of which I don't have any. So, um, we Anyone have any closing remarks they'd like to offer? Nichols, we went back really quick. I would like to suggest one thing. Yeah, sure. Council member Nichols, please.

So, I would like to suggest a review of the um items that were discussed on um slide four, specifically the um percentage of cost burden renters and homeowners in the city of Tempe. See if we can get updated numbers on that and have a presentation on um because I think that goes towards affordability of housing in the city. Sounds good. Thank you, Lang. Good. Okay. Thank you so much. All right. Anything else?

All right, seeing nothing then we are I'm going to go ahead and adjourn this meeting at 5:10 p.m. Thank you so much everyone for attending. Have a good rest of your evening.