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Downtown Phoenix 'Workforce Housing' Developer Proposes About $1,000 Per Month In Rent
A proposed high rise at the Arizona Center is sparking discussion about who can afford to live downtown and how to add workforce housing.
According to Phoenix’s Economic Development Department, the term "workforce housing" currently applies to annual household incomes between $39,462 and $59,194.
The latest high rise proposal at the northwest corner of 5th and Van Buren streets is called Palm Court Tower. It would include 370 structure parking spaces and more than 350 apartments, with 20 set aside for workforce housing.
Nick Wood, a representative for North American Development Group, told a council subcommittee earlier this month that workforce rents would be about $1,000 per month. He said rising costs for materials and labor make high-rises more challenging than smaller buildings.
“The margins are pretty thin,” Wood said. “You’re looking at about a six percent margin on all of the high rise development and when you add a GPLET to it, you’re adding maybe another .7 percent to 1 percent to that margin.”
A Government Property Lease Excise Tax (GPLET) is a way for government to offer tax breaks to developers. It involves the city owning the land and leasing it to developers who pay lower property taxes than if they owned the land.
The GPLET for Palm Court Tower at the Arizona Center, the GPLET would last eight years if the city council approves.
“We have a need in the city of Phoenix and it’s workforce units,” Councilwoman Laura Pastor said.
She asked staff to work with the developer to try to boost the number of workforce units before the proposal comes before the full council and it looks like that has happened.
The agenda for the Oct. 3 formal council meeting includes a report on the Palm Court Tower proposal. The original 20 workforce units has been replaced with "10 percent will be reserved for workforce housing." The report says the project will consist of 354 units.
During a presentation before the subcommittee, Christine Mackay, the city’s economic development director, said the parcel was originally intended to be developed as part of the Arizona Center, but has sat vacant since at least the late 1980s.