On June 6, 2014, the Arizona Department of Housing approved the public housing projects known as Frank Luke Phase II and Frank Luke Phase III. Each unit will cost a whopping $249,339.
According to City Councilman Sal DiCiccio, a similar project would be built in the private sector for about $160,000 a door.
Phoenix Councilman Sal DiCiccio tried in vain to at least begin a discussion as to the cost of construction. The Phoenix City Council discussed this project twice, at the April 16, 2014, and May 7, 2014 meetings. Although, DiCiccio was successful in making some of the Council members understand that if they could at least reduce cost, they could build more housing units.
The simple math was not lost on them, but it would not have been politically wise to make a fiscally wise decision.
In both meetings, the Council did nothing to address the cost concerns. Finally on a predictable 6-3 vote, they sent it to the Arizona Department of Housing to move forward with the project.
Frank Luke Phase II is expected to cost $15,753,088 for 56 units or $281,305 per unit. Frank Luke Phase III is expected to cost $16,660,997 for 74 units or $225,149 per unit.
According to trulia.com, the median sales price on a house in Phoenix is a little above $150,000.
According to DiCiccio, “The City Housing Staff took the position that these costs were in line with other affordable housing projects – and that any changes to these two projects would put the City’s HUD/HOPE VI Grant at risk. In my view, the City could work with leaders at HUD and the ADOH to find an alternate way to develop these two projects and still protect the HUD/HOPE VI Grant – perhaps with a larger role for the private sector to support the necessary cost cutting (as happens with many projects when value engineering and other cost-cutting techniques must be deployed).”
Seeing the failure of the Council to try to bring cost down in order to bring more affordable housing to the residents of Phoenix, DiCiccio turned to the Arizona Department of Housing. On May 27, DiCiccio wrote Michael Trailor, director of the Department, in opposition to the projects.
In his letter, DiCiccio included transcripts of the Council meetings so that Trailor could see for himself that “Phoenix leaders are kicking this decision up to you because they don’t want to make a politically difficult decision. They expect your office to take the heat on making the determination.”
DiCiccio emphasized the fact that he is “not opposed to the development of high quality, essential affordable housing.” He informed Trailor that while he was a strong supporter of affordable housing for “our community’s veterans, chronically homeless, seniors, families, and others,” he believed that “as government leaders, we need to push for the most cost-effective means for delivering this critical housing.”
DiCiccio went so far as to ask Trailor to “deny the funding for these two projects, and help us find a better means for delivering this housing to those in need in our City.” DiCiccio concluded, “There are many of us at the City of Phoenix that would welcome the decision by the State, and then work closely with you and your team and HUD to get these projects built at a more acceptable cost.”
Prior to the Department’s decision the AZDI asked Trailor about the possibility of working with the City to bring the cost of the project down. Trailor dismissed the suggestion. It was clear that after only a few years as a bureaucrat, he has embraced the bureaucracy and spending other people’s money.
Trailor said that the City should have come to them before the application was made and once it had been made, he certainly had no interest in rejecting the project. Although the cynical Trailor said, “we are sensitive to any input we get from the community,” he claimed that most input is only political. “What I have learned is that we have Democrats and Republicans pulling at these things, so the struggle creates additional cost.”
But, DiCiccio was trying to reduce cost.
But to a bureaucrat like Trailor, costs are really not all that important. He wants to move on to the next project almost immediately after this allocation is made. “We get done with the allocations, and we start the process for the next year pretty quickly. We begin with public meetings to allow the public give us input on how we are managing the program. We meet with the community in Tucson and Phoenix, and the end of November we have a public hearing and report our findings and review changes we have made with the governor and staff and once they approve it we have our system in place for the next year.”
Trailor says that it is not the fact that the projects must pay Davis Bacon wages that make the costs skyrocket, “We have a program that requires us to pay more, but the costs of proving that you paid those wages cost more than the actual wages.”
Davis Bacon is a requirement for any housing developments that use Federal/HUD/HOME funds. What this requirement dictates is that projects that use Federal funds must pay a “prevailing wage.” However, even with this added cost it would only raise the wages by 3% to 4%. Higher wages and reporting costs cannot justify the exorbitant cost of the Luke project.
Trailor offers anecdotes to justify the expense when Davis Bacon won’t suffice. While he is dismissive of the concerns of all politicians and “political leaders that are basing their leadership on philosophies,” it is his philosophy, or that of Governor Brewer’s, that seems to be the deciding factor.
He claims to want to give a hand up and not a hand out; and few would disagree with that. It is the anecdote he chooses as an example of his, or her, philosophy that leaves one wondering what a hand up really means. “We are trying to invest taxpayer funds so the taxpayers get the best return on our investment. We help people save money so they can get ahead in life.” He explains that he just spoke to a family who has lived in subsidized housing for a few years and they recently reported to him that they have saved so much money living in Phoenix’s public housing that they were able to start their own 401K.
Leaving one to wonder; how many taxpayers were able to put less away in their retirement accounts in order to subsidize others people’s retirement accounts?