Reports Renew Apartment Development Debate Here

Article originally posted on HERE on June 21, 2022
Reports renew
Sal Cosenza, an artist and friend of Mayor David Ortega, said he shares the mayor’s criticism of apartment over-development in the city and submitted this cartoon with Ortega’s recommendation. “I too support a more appropriate, measured, and contextual response to Scottsdale’s future residences,” said Cosenza, a faculty associate at the Arizona State University Design School. (Sal Cosenza)

 

They say the three most important factors in real estate are location, location and location and if that location is Scottsdale, it’s going to cost money, money, money.

Forget about owning a home, even renting in Scottsdale can break the bank.

According to the website Zumper.com, Scottsdale has the 14th highest median price for a one-bedroom apartment in the nation at $1,810 per month. Some places where it’s cheaper to rent a one-bedroom apartment than Scottsdale include, Chicago, Denver and Honolulu, it said.

One reason for Scottsdale’s rental prices is insufficient supply. Opponents of development in Scottsdale claim the city has 10,000 apartments in the metaphorical pipeline, but that may not be as overwhelming than it sounds for a couple of reasons.

For one thing, that number isn’t really 10,000. In an email to City Council members dated May 2, Assistant City Manager Brent Stockwell stated the number of multifamily units “in the pipeline” is actually 7,879.

And of those, 1,489 are considered “prospective” units meaning, “zoning entitlements are still being sought – or the cases are so old, it’s unknown as to whether or not the project will be built.”

Second, according to the website Construction Coverage, Scottsdale saw a 56% decline in multi-family home construction – a decrease of 1,457 units – between 2020 and 2021.

That bucks both state and national trends for multifamily unit permits being granted.

Statewide, there was a 3.9% increase in multifamily home construction between 2020 and 2021. Nationally, that increase was even greater at 26.4%, according to Construction Coverage.

That 56% decrease in Scottsdale multifamily permits can be a bit misleading, though, when you look at raw number, according to Mike Stromberg, lead data analyst at Construction Coverage.

He suggests 2020 was an abnormally busy year for multifamily housing construction in Scottsdale, making the shift to 2021 look more dramatic.

In 2019, 669 multifamily permits were issued. In 2020, that number was 2,604 but dropped down to 1,1,47 in 2021.

“I think it’s a bit of a combination of ramping up in 2020 and also some head winds” such as recession fears and supply chain shortages in 2021, Stromberg said.

But the numbers are disconcerting to Councilwoman Linda Milhaven.

“If we grow any more slowly, we’re going to be going backwards, which threatens our local economy and tax revenue,” Milhaven said.

She wasn’t surprised the median cost of a one-bedroom apartment in Scottsdale is so high.

“We’ve always paid a premium to live in Scottsdale because it’s a wonderful community, but the supply and demand are completely out of whack,” Milhaven said.

A report from the Census Bureau shows Scottsdale has the smallest percentage of rental units to homes as any city in the Valley, Milhaven said.

But Mayor David Ortega vehemently disagrees, declaring, “The multi-housing sector is hell- bent on turning Scottsdale into a ‘for-rent-only city.’ Flight from Chicago and costal urban cities is surging to Arizona, putting excessive pressure on Scottsdale.”

He charged, “Speculators have rotated hundreds of billions of dollars out of office and retail and piled into apartments, thinking it is easy money. Apartment resales and flippers have jacked up rents and forced evictions.”

“Mega drought and wastewater infrastructure are over-arching municipal concerns,” Ortega said, “and I have repeated my concern that massive apartments are replacing limited commercial land uses.”

He accused multifamily developers of “trying to sink our community vision including Old Town, parks, environment, bike paths, economic vitality and land use plan” and said, “As Mayor, I will not allow Scottsdale to be stampeded.”

Councilwoman Solange Whitehead said Scottsdale was saturated with apartment construction a few years ago and that it only makes sense things are slowing down a bit.

“The fastest way to solve the housing shortage is to get these developers with their entitlements to build their projects,” she said.

A 56% decline in multifamily housing in Scottsdale was not a surprise to Councilman Tom Durham.

“I think the number is 82% of Scottsdale employees live outside of Scottsdale and that’s because they can’t afford to live in Scottsdale,” he added, noting that the apartments that are being built in Scottsdale are luxury units that won’t drive down prices.

“I think we do need to supply enough multifamily housing to meet the demand, particularly for police, fire, teachers,” he said.

Councilwoman Kathy Littlefield, who has been conservative in her votes allowing additional multifamily housing, said water has to be taken into account where future growth is concerned.

Even more important is the location of the proposed multifamily complexes, she said.

“To me it’s more a case of where does it fit in the neighborhood,” she said.

“I’ve heard some developers want 100,000 apartments in Scottsdale … All of those developers who want to build all these apartments don’t want to hear from residents already there,” Littlefield said. “Don’t they have a right to enjoy what they paid for?”

Littlefield said short-term rentals also are driving up rents in traditional apartments.

There were 5,404 short-term rentals in the city in December 2021 listed by Air-bnb and Vrbo. If those homes were available as long-term rentals, that would go a long way toward lowering rents, Littlefield said.

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