Local governments continue push for affordable housing

Local governments are using streamlined regulations to try to attract private sector investment and smooth development efforts as officials confront the most pressing issues in the region: affordable housing.

Efforts at the city level started in 2020 when the pandemic hit, but once housing costs rose in 2021, “it sort of became clear that this is a real emergent need, in a way that you see it,” said Ann Chanecka, director of the city’s department of housing and community development.

That year, 2021, the city council directed Chanecka’s department as well as the city’s planning and development office, to begin developing an affordable housing strategy for Tucson..

While in development, the departments held “listening sessions” for feedback, Chanecka said, which produced primarily three suggestions from developers: add support for the permitting process; promote zoning flexibility and regulatory relief; and find ways to give more monetary assistance.

Following that, a staff member was dedicated to helping affordable housing developers get through the city’s permitting process and support their development efforts.

Chanecka pointed to Spire Development, Inc., as an example, when they were “new” to Tucson. City staff was able to help support Spire through the permitting process as well as get through the tax credit application for its affordable senior housing community Rincon Manor on South 12th Avenue, just south of West Valencia Road. It’s set to open next year.

In March, the Pima County Board of Supervisors approved selling a two-acre property on Tucson’s southside to Spire to build an 80-unit, low-income rental project called “Drexel Commons.” Later that month, the board approved $5 million in funding for a number of affordable housing projects underway, including $1 million for Rincon Manor.

Zoning flexibility, regulatory relief

In 2023, a package of zoning changes recommended by planning and development and approved by the council began allowing for more development flexibility, including minimizing parking requirements to maximize a lot’s capacity for housing, fixing code provisions that diminish the ability to build townhouses and changing the rules that determine buildings’ setbacks.

“We kept hearing there’s not enough zoned land where you could do a development by right that could work,” Chanecka said. “That is, I think, one of many examples of what PDSD has done to really help bring more folks here to look at building affordable or market rate (housing).”

Around the time the council also approved its ordinance allowing construction of casitas, also called accessory dwelling units (ADUs). That work ultimately culminated in the planning department’s Casita Model Plan Competition two years later.

The 10 winning designs from that competition were included in the city’s pre-approved model plan library, so if a property owner wants to build an ADU, designs in the city’s library are eligible for waived fees, not only making the process cheaper, but faster.

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Monetary relief

David Wohl, president of developer Newport SW LLC., says an effective change made in recent years at the city level has been the impact fee subsidy program. Up until a few years ago, the program was restricted to nonprofit developers only, but a change made by the City Council began allowing for-profit developers to get up to $150,000 in impact fees subsidized by the city.

But a big area the city has helped developers in when it comes to monetary assistance is gap funding, Wohl and Chanecka said, and for a few different reasons.

Gap funding not only allows for developers to keep their costs down, a crucial component when building affordable housing, but it also has downstream effects, Chanecka said, particularly in the way of Low Income Housing Tax Credits, a competitive federal program that subsidizes affordable housing.

The LIHTC competition at the state level works on a points system, Chanecka said previously, and points are awarded if the local government commits at least $500,000 in gap funding. An example of these credits being used in affordable housing projects Chanecka gave is the recently-opened Milagro on Oracle, which the city received $2.5 million in LIHTC funds for. Milagro is the first of nine housing developments planned with the city’s non-profit, El Pueblo Housing Development.

Wohl, in addition to being president of Newport SW, is a member of Pima County’s Regional Affordable Housing Commission. The “most direct impact” he’s seen come from the commission and the county within this space is its own gap funding endeavors.

Since authorizing the housing commission in October 2022, the county has approved nearly $11 million in gap funding for 12 projects that have gone towards preserving or developing 1,059 affordable housing units, the county said last month. In December last year, the commissioned endorsed $5 million in gap funding that went towards supporting seven projects and a total of 273 affordable housing units, the county said.

Newport SW has also benefited from tax credits for its Tucson projects. Its Newport at Amphi apartment complex, which opened in early 2022, was awarded a reservation of 2019 Low Income Housing Tax Credits by the Arizona Department of Housing. Last year, it opened Newport at Rodeo, which holds 77 affordable housing units.

The company’s third project on East 22nd Street near South Swan Road — this time for affordable senior housing — is called Belvedere Terrace. The complex has set aside 22 units for formerly homeless seniors, and on-site services will be available. The rest of the units will be available to renters making between 40% and 60% of the area median income.

Wohl said these projects wouldn’t be possible without gap funding coming from local governments, like the city and county.

“That’s very important. There have been improvements in the permitting process for affordable housing, efforts to fast-track affordable housing so it doesn’t get caught up in some of the ‘traffic jams.’ That’s been a major improvement,” Wohl said. “With very rare exceptions, it’s very difficult to do any affordable housing development without some kind of gap financing, and the city was and remains an essential source of gap financing ... We couldn’t have done what we do without collaborating with the city. It wouldn’t be possible.”