Court green-lights affordable housing project in Phoenix
A challenge to Phoenix’s efforts to develop affordable housing near downtown failed in court last month.
The legal battle was waged by the conservative Goldwater Institute, with the backing of Councilman Sal DiCiccio, who believed the city wrongfully sold land it owned in the Garfield Neighborhood to a developer at a discount.
Phoenix agreed to sell 10 vacant lots to developer Trellis for $50,000 — $650,000 less than the land was appraised for. In exchange for the low cost, the city required that Trellis develop the lots into energy-efficient homes and sell them to low-income and middle-income buyers. It also required Trellis to provide down-payment assistance to the buyers.
The Goldwater Institute believed the deal violated Arizona’s “gift clause,” which prohibits governments from giving public money to an entity without a public purpose.
Last week, a judge disagreed. “The transaction unquestionably involves a public purpose,” Maricopa County Superior Court Judge Connie Contes wrote in an order.
The Goldwater Institute, which sued on behalf of two Phoenix taxpayers, is considering an appeal.
‘The entire community benefits’
Contes didn’t buy the Goldwater Institute’s argument that the city’s transaction was a violation of the gift clause because “the entire community benefits from replacing the vacant lots with affordable housing,” she wrote.
Contes wrote that in a previous decision, the Arizona Supreme Court held that “all of the residents of a community are vitally interested in the housing of its inhabitants.”
In a statement, the city said it was pleased with the court’s decision.
“The court confirmed that the gift clause does not limit the city to just monetary benefits when determining the value received in a transaction. Under the gift clause, the city is permitted to bargain for non-monetary as well as monetary benefits in structuring a transaction,” the city said.
The lawsuit cost the city $110,000 in attorney’s fees, according to city spokesman Nick Valenzuela.
DiCiccio, Goldwater stand by view
The Phoenix City Council approved the sale of the land, with the exception of Councilman Sal DiCiccio who was not present at the meeting.
DiCiccio wasted no time in criticizing the council and city management after the deal was approved.
He shared a Facebook post that began with “Corruption Exposed” and proceeded to call the sale of the land an “insider giveaway” and a “cozy deal.”
After the court’s decision, Diciccio stood by his view.
“This is insane,” DiCiccio said. “There’s no way on its face that could be legal. It’s all an inside job as far as I’m concerned.”
Goldwater Institute attorney Jon Riches said he was troubled by the judge’s opinion that because the city had placed restrictions on the land — in this case, the requirement of affordable housing — it could circumvent the gift clause.
“The government can’t take what the public owns and reduce its value so it can give a subsidy to a private party,” Riches said.
He said his team will decide whether to appeal by the end of the week.