Mesa senior-living complex will be based on Tempe project

Encore on Farmer has one foot forward, into the sustainable, transit-friendly ethos of a new century -- and one foot pretty far back, into the first half of the last century, when most of its residents were born.

The five-story, 56-unit project, which opened in January just west of Tempe's downtown core, is a sneak peek at the next big step in the evolution of downtown Mesa.

Encore is everything Mesa has been saying it wants in its new buildings:

Sustainable, with solar panels supplying much of the electricity and rainwater harvesting to augment irrigation.

Pedestrian-friendly, with a landscaped walkway offering a place for exercise and access to other parts of downtown Tempe.

Transit-oriented, just a short jaunt away from light rail and bus lines.

The same people who built Encore aim to break ground in September for a larger, 81-unit senior-living complex on First Avenue just southwest of the Mesa Arts Center.

Mesa's project will be called the Residences at Center Street Station, a nod to the light-rail stop that will open in the symbolic heart of the city three years from now.

Despite not having seen large-scale private investment in downtown for well over 20 years, the City Council almost turned its back on the $17 million project this year. At least one council member is still wishing it could be something else.

Under the aegis of Mesa Housing Associates LLC, the developers approached the City Council in February seeking approval to apply for federal tax credits to help finance the project.

They needed council approval because they had to prove they controlled the land on which they wanted to build.

Early on, that was to have been a city parking lot just east of Mesa City Plaza, right across the street from the arts center.

The initial council debate was rough. Charles Huellmantel, a principal with Mesa Housing Associates, said he and his colleagues were taken aback by fears that the residents would be a bad mix for a neighborhood soon to be teeming with college students and already rife with noisy civic festivals.

The council's initial 4-3 approval solidified into a 4-1 final vote after Mesa offered a new site still close enough to the arts center and light rail to suit the developers.

The project is designed for low-income older people, who, Huellmantel said, "want to live in an urban environment."

Councilman Dave Richins was the council's strongest advocate for the project, saying Mesa couldn't afford to nitpick the details of a $17 million private investment. "In my memory, this is the first project in downtown that didn't have the applicant starting with, 'City of,' " he said.

Vice Mayor Scott Somers, who voted "no" on the First Avenue site, still believes the project does not belong in the downtown core.

It would be fine anywhere else along the light-rail line, Somers said. But low-income, subsidized housing is the wrong way to kick off what Mesa hopes will be a sweeping, rail-oriented transformation of the city center.

Somers would rather see market-rate housing for people who can afford to buy their own homes.

"The kind of deals we have put together, I really worry that the foundations we are laying are not that impressive," Somers said, noting that Mesa recently approved incentives for welfare offices in the former East Valley Tribune building.

Mayor Scott Smith, at first an opponent of the project, changed his vote after the First Avenue site was chosen.

Some of the acrimony, he said, could have been avoided had Mesa had better procedures for dealing with tax-credit housing projects.

He added, "I think it will be a beautiful building. The end result, I'm not totally dissatisfied with, but I think the process left a bad taste in everyone's mouth."

How tax credits work

The Tax Reform Act of 1986 signaled a change in how the federal government promotes low-income housing.

Rather than pay directly to build such projects, the government now gives tax breaks to entities willing to finance them privately.

The IRS divvies up a set amount of tax credits per year among the states, based on population. This year, Arizona was allotted about $14 million.

In Arizona, companies that want to build projects apply to the Arizona Department of Housing.

Winners in the competitive process don't always have their own money for construction. Instead, they get funding from outside equity firms.

The sponsoring organization then sells the tax credits to the equity companies. That makes the equity companies eligible for tax credits each year for 10 years.

That, in turn, lowers the overall cost of building a project. Rents can therefore be lower, although tenants might also receive other forms of government aid.

This year, Mesa saw three such projects win state approval, with construction on all to begin by Nov. 1:

A senior housing complex on First Avenue near Center Street.

Workforce housing to replace most of the La Mesita Family Shelter on West Main Street.

A housing complex to replace the vacant city-owned Escobedo Apartments north of the downtown core on University Drive.

The tax credits are not universally popular. The Cato Institute, a Libertarian think tank, opposes the program and says on its website, "The low-income housing tax-credit program provides large subsidies to developers and few, if any, benefits to low-income families."

The land deal

Mesa is selling to Mesa Housing Associates LLC a 2.4-acre tract at 25 First Ave. that is now a parking lot just west of an LDS church.

Ambrose Rojas of ASI Appraisers in Phoenix valued the parcel at $260,000 in May.

However, Mesa is selling the land for $180,000.

ScotRigby, senior project manager in Mesa's economic development department, said Mesa did not demand full value because the buyers will:

Build a 25-foot-wide, landscaped mini-park between the new building and the rest of the large parking lot to the west.

Pay for environmental abatements.

Pay all required city fees and taxes, and use city utilities.

Move a waterline under Drew Street, which will be vacated immediately south of First Avenue to accommodate the project.

by Gary Nelson - Aug. 17, 2012 The Republic | azcentral.com


Mesa senior-living complex will be based on Tempe project