In the $6 billion worth of private development built along the Metro light rail line, you’d be hard pressed to find something as humble as a thrift store in the mostly swanky new buildings.
But now a $20 million fund has been established as seed money for projects along the line, including more affordable developments for those priced out of high-rent projects.
The Sustainable Communities Development Fund will begin reviewing proposals this fall for projects that will bring more life along the $1.4 billion rail corridor. The goal is to further develop the transit corridor in part by boosting demographic diversity and to get lower-income residents by light rail so they have better access to employment.
The first project is on Tempe’s Apache Boulevard at what is now Gracie’s thrift store. Unlike any other light rail development that would get rid of a low-end use, Gracie’s Village will have a space for the store to remain on Apache.
The store is owned by Grace Community Church of Tempe. It’s keeping ownership of the two acres the tiny store sits on. A proposed six-story building would include a community center run by the church and 74 apartments for people who earn 40-60 percent of the county’s household median income. Rents will range from about $400 to $800.
The church couldn’t have afforded this on its own, Gracie’s manager Jeff Brosman said “What we were looking for was a project that could not only maintain our store but also extend our ministries and include affordable housing,” Brosman said.
Gracie’s mostly vacant 2-acre site with a 13,000 square-foot store would be replaced with a 99,000 square-foot building.
Brosman said despite its affordability component, Gracie’s Village will retain a high-end look and include environmental features equal to gold-level LEED certification.
The $19 million project will be developed by Wisconsin-based Gorman & Company, which specializes in redevelopment that includes an affordable housing component. Gorman will get tax credits for construction but no ongoing subsidy.
Tempe spent 30 years and millions of dollars on the blighted Apache Boulevard to encourage this kind of development but nothing came of it, Mayor Hugh Hallman said. Then light rail was built and it spurred $2 billion of investment along Apache. The $20 million fund can lure developments with amenities that will fully enliven the transit corridor, he said.
“Young people have identified that urban environments are the places that they want to live,” he said.
The fund includes $10 million each from the Local Initiatives Support Group and Raza Development Fund. They’re working on a feasibility study for what kind of development is likely as well as guidelines for eligible projects.
That money is essential to projects like Gracie’s Village because banks are much more eager to loan money for construction than they are for the early stages, said Brian Swanton, Gorman’s Arizona market manager.
“It’s almost impossible to get predevelopment financing from lenders,” Swanton said.
Developers like Gorman repay their loans back to the fund, which is reused on other projects.
Swanton estimates the $20 million fund could eventually leverage $1 billion in development.
Mesa Mayor Scott Smith expects new developments along the Metro line will show not just that light rail is about transit, but that it can create a sense of place. Smith, a former homebuilder, said projects built with the new fund will demonstrate the potential to build projects that go beyond existing ones that he considers “nice but not bold.”
“We know that investment follows other investment,” Smith said. “We’re like sheep, and you’ve got to get that first investment started to get the second and the third and the fourth.”