The Laurel Tree at Northern apartment building in Phoenix, developed by Catholic Charities Phoenix, was erected using a panelized wall system, with wall sections constructed off site in a manufacturing facility. (ULI Arizona)

Editor’s note: ULI Arizona is one of four district councils (along with ULI Chicago, ULI Sacramento, and ULI Tampa Bay) selected through a competitive process to identify land use and transportation barriers to healthier and more equitable places and provide recommendations for local policy shifts and reforms. The program is spearheaded by the Institute’s Building Healthy Places Initiative, with support from the Robert Wood Johnson Foundation.

Through an initiative that seeks to demonstrate the connections among health, social equity, and living environments, ULI Arizona is offering solutions to the expanding housing affordability crisis facing essential service providers and other moderate-income workers in the Phoenix metropolitan region. The effort, which identifies strategies to increase the area’s supply of workforce housing, is intended primarily to support residents who do not qualify for housing subsidies but also do not earn enough to afford housing in centrally located neighborhoods near employment hubs.

Working in partnership with the Vitalyst Health Foundation in Phoenix and the ULI Building Healthy Places Initiative, ULI Arizona began in 2019 by forming the ULI Arizona Health, Equity, and Housing Affordability Task Force to identify innovative ways to counter the shortage of workforce housing. This type of housing is generally defined as housing for workers earning 60 to 120 percent of the area medium income (AMI), which ranges from $38,000 to $74,000 per year in the Phoenix metro area. It is distinguished from affordable housing, which is generally characterized as housing for lower-income residents earning less than 60 percent of AMI.

ULI Arizona Task Force members, including Christopher Ptomey, executive director of the ULI Terwilliger Center for Housing (standing at center), participate in a roundtable discussion with representatives from Arizona Governor Doug Ducey’s staff and other local stakeholders. (ULI Arizona)

The task force’s work was informed by a February 2020 roundtable discussion that included representatives from Governor Doug Ducey’s staff and local stakeholders from the public, private, and nonprofit sectors, and by an evaluation of existing housing programs in Arizona and best practices in workforce housing development in other areas. Research was conducted by Arizona State University graduate student Elizabeth Van Horn, who is now an urban planner and public health analyst for Harris County, Texas. The task force examined 74 policies for community investment without displacement to create strategies that could support health, equity, and housing affordability in the region.

According to research from ULI’s Terwilliger Center for Housing, over 35 percent of households in the Phoenix metro area spent more than 35 percent of their gross 2017 income on housing. (Over 30 percent is considered cost burdened by federal housing affordability standards.) While the Phoenix metro area has a variety of housing challenges such as rising homelessness and a lack of subsidized housing, the task force decided to focus on workforce housing because it has tended to be overlooked as a pressing need, says task force co-chair C.J. Eisenbarth Hager, director of healthy communities at the Vitalyst Health Foundation.

“There is promising movement around other parts of the housing system that are also under stress right now—folks who are experiencing homelessness, who are being threatened with eviction, folks whose incomes are very low. What has not received a lot of attention is the workforce housing element,” Hager says. Adding more workforce housing would help mitigate the “spillover” into other parts of the housing spectrum, which occurs when people pay more than they can afford for housing that is closer to employment, transit, and other necessities, Hager notes.

Historically, the supply of workforce housing has been replenished through the natural maturation of older products—often referred to as naturally occurring affordable housing (NOAH)—rather than new development. However, in evaluating workforce housing availability, the task force found that NOAH in the Phoenix region has been squeezed by redevelopment pressures, putting the existing supply at risk of becoming unaffordable or being demolished to accommodate new, more-expensive housing.

Silvia Urrutia, task force co-chair and a leading ULI Arizona member, notes that much of the existing NOAH stock is in subpar condition, with poor ventilation and no air conditioning, and is located in areas with a history of disinvestment. “After the Great Recession, when the money came back it went to where it can generate the most income, which is luxury housing. But we have a large under-income population, and for those workers, there is just not enough housing,” says Urrutia, founder and chief executive officer of U Developing LLC, a development firm in Phoenix that specializes in affordable and workforce housing.

Even before the COVID-19 pandemic, which spotlighted the health vulnerabilities of people living in substandard and crowded housing, working families living in these conditions have suffered from a variety of health issues, such as those resulting from living in urban heat islands, Urrutia notes. “In our area, summer temperatures can reach 115 degrees, and if you have no air conditioning and no shade, it can be unbearable and certainly not healthy,” she says.

Concord Village in Tempe is an affordable housing cooperative consisting of 373 townhouses. (ULI Arizona)

“Health intersects with housing from three standpoints—shelter, affordability, location,” Hager says. “As shelter, it is filling a basic human need for a safe, decent place to live. Regarding affordability, if families have to stretch their budgets to pay for housing, they start making sacrifices in other areas [such as skipping doctor visits, forgoing prescription drugs, or buying cheaper, unhealthy food] and a lot of those tradeoffs result in poor health. And in terms of location, if housing that is affordable is isolated from jobs, good schools, economic opportunity, and other assets, that can impact health. The context in which housing is placed is very important to the well-being of individuals and families.”

In exploring how to make workforce housing more widely available, the task force also considered historical injustices related to health and housing that are reflected in neighborhoods segregated by race and ethnicity, as well as access to necessities such as transit, preventative health care services, and healthy foods. Because those who need workforce housing include a significant number of Blacks, Latinos, indigenous people, and other people of color, increasing and distributing the supply across the metro area would help increase neighborhood diversity, social equity, and inclusiveness, Hager says.

“People who pay more than 30 percent of their income are disproportionately people of color, so providing housing that is priced appropriately for [moderate-income] working families starts to address some of the historic diversity inequities we have experienced,” she says.

The task force examined the potential for the use of five housing typologies to be expanded in the Phoenix metro region—“missing middle” housing; accessory dwelling units; colocated housing and community facilities; co-living; and co-housing. It drew upon successful examples of each type in cities across the nation to determine how each could effectively address the local workforce housing shortage. “There is no one solution [for workforce housing],” Urrutia says. “We wanted to include several options for what might work.”

The initiative is detailed in a new report, Advancing Health and Equity through Workforce Housing. It is centered on six key themes and related solutions directed at Phoenix’s housing situation but that could be applied in other communities. The themes and solutions include the following:

  • Inclusive community investment without displacement. Without equity-related revitalization strategies, improvements can push working families farther from desirable areas, limiting equitable access to economic mobility, health amenities, and community services. Potential solutions provided by the task force include conducting neighborhood demonstration projects that employ inclusive and equitable redevelopment strategies; creating a regional housing strategy to address the workforce and affordable housing shortage; developing an interactive web platform for housing affordability; and considering the use of housing cooperatives to help residents stay in neighborhoods.
  • Planning and regulations. Municipal planning policies and zoning regulations that are outdated and overly complex can limit innovation in the development of housing affordable to people at all income levels. Potential solutions include reviewing and simplifying zoning codes and development guidelines, and offering incentives for workforce housing development; promoting consistency between jurisdictions with model building codes; fostering collaboration among local government agencies to address housing objectives holistically; developing a repository for preapproved, permit-ready housing plan options; and prioritizing community engagement and education to cultivate “yes-in-my-backyard” strategies.
  • Finance and capital. Rising development costs are a significant deterrent to workforce and affordable housing construction. Potential solutions include working with investors to expand and diversify project financing; creating more local financing options and equitable access to capital; leveraging vacant private and city-owned land to increase the workforce housing supply; and leveraging tax abatement incentives to encourage development that is affordable.
  • Land and location. Land availability and location are often the biggest factors governing the cost of housing development. Potential solutions include maximizing the use of existing buildings; partnering with landowners to explore opportunities for adding value to underused or vacant land through workforce housing development; leveraging land banks to acquire land; and using community land trusts to help ensure long-term affordability.
  • Sustainable, healthy design. Residents, community organizations, and real estate partners should pursue design excellence in the development of new workforce housing. Prioritizing sustainability and health in workforce housing design is immensely beneficial for both the dwellings and the surrounding neighborhood. Potential solutions for overcoming challenges to achieving sustainability and health include embracing zoning that encourages density, walkability, and accessibility; focusing on specific health elements such as active staircases, efficient energy and ventilation systems, and natural lighting; offering “affordable-by-design” options; and using off-site, modular construction methods and prefabricated materials (also beneficial for housing affordability).
  • Partnerships. Collaborative housing partnerships can foster and advance planning, design, and development strategies that make communities more inclusive, diverse, and accessible to people in a broad income range. Potential ways to create effective partnerships include engaging new public and private entities entering the housing arena; encouraging development of more employer-assisted housing; forming strategic partnerships to reduce land costs; and leveraging partnerships involving the public, private, and nonprofit sectors.

The next phase of the initiative will include developing a partnership with the city of Tempe, which has pursued an affordable and workforce housing agenda. Tempe, home to Arizona State University, is experiencing housing pressures related to its growing student population and worsening affordability for university staff as well as other workers in the community. Though Tempe is one of the few transit-oriented communities in the area, those who most need access to transit are increasingly priced out of homes near transit.

“Tempe has been very effective at engaging the community to talk about affordability and at gathering data to understand the issue and put together a plan,” Urrutia says. “We want to support the city’s efforts and show other cities what is possible.”

The task force took care to ensure that its work resonates with ULI’s private and public sector members, Hager notes. “We wanted to make sure that we provided private developers with solutions that don’t require government support, and solutions regarding policy changes that the private sector can help influence,” she says.

Hager adds that the Vitalyst Health Foundation’s partnership with ULI Arizona has proved beneficial in several ways—by helping elevate and continue the conversation regarding health and the built environment in Arizona; addressing the shortage of housing that is affordable to people in a variety of income categories; and focusing on a product that the private market can play an active role in addressing. “It has checked a lot of boxes for issues that are important to us,” she says.

Read part one of this series: Unlocking a Citywide ADU Policy in Chicago

Read part three of this series: Encouraging City of Tampa to Be Bold in Efforts to Increase Attainable Housing

Hear more about innovative policies at the 2021 ULI Housing Opportunity Conference.