The City of Tempe has filed a request for the Arizona Supreme Court to review a recent appeals court decision concerning a proposed development at Tempe Town Lake that would bring jobs, tax revenue, apartments and condominiums, retail, offices and a hotel. 

Known as South Pier, the $1.8 billion, multi-use development would be located on 12 acres on the south shore of Tempe Town Lake east of Rural Road. It would include seven buildings built in phases over 15 years, as well as an observation wheel, pedestrian bridge and public dock. The developer will pay the city market value for its land and they have pledged to contribute approximately $10.1 million to off-site affordable housing in Tempe. The City Council unanimously approved the Development & Disposition Agreement (DDA) for the project at its Feb. 10, 2022 Regular Council Meeting.

City maintains decision should lawfully rest with Council
After the Council’s approval, an advocacy group gathered petition signatures to place the agreement on a future city election ballot. Group leaders had expressed their belief that the proposed development should have included on-site affordable housing units.

Tempe declined to process the petition signatures because the city maintains the ordinance is not legislative in nature and therefore not referable to the ballot for a public vote. The advocacy group sued the city and in June 2022, a Maricopa County Superior Court judge ruled the group’s signatures could not be used because its petition form did not comply with state law. The court also ruled that the City Council’s DDA decision could be subject to voter referendum; the city had argued that it was an administrative action on the Council’s part that did not call for the possibility of a referendum.

Both sides appealed to the Arizona Court of Appeals. That body returned a judgment last month. It declared the form of the advocacy group’s referendum petitions satisfied state law, and that the City Council’s DDA approval action is able to be referred to the ballot for voter ratification or rejection. The City of Tempe’s action today requests that the Arizona Supreme Court review the matter and reverse the appellate court finding that the DDA can be put on a ballot. The developer requested the Arizona Supreme Court review and reverse the appellate court finding that the petition format was sufficient. City officials will not speculate about next steps or outcomes. The request for review by the state’s supreme court continues to put on hold the processing of petition signatures.

Critical affordable housing provisions
Mayor Corey Woods said that the South Pier agreement provided unprecedented public benefits to the city in exchange for a Government Property Lease Excise Tax abatement on the property. Among those benefits is: $10.1 million to the Tempe Coalition for Affordable Housing, which buys and builds permanently affordable housing in the city as part of Tempe’s Hometown for All Initiative; $2.5 million to the city’s transit fund; $250,000 for education; a fully developer-paid public pier valued at $10 million; and $2 million toward the construction of a public pedestrian bridge.

Woods cited the city’s recent $10.7 million purchase of the former Food City plaza on Apache Boulevard as an example of where Tempe is purposefully heading with affordable housing. The plaza land, in combination with two neighboring parcels, is now projected to be transformed into up to 400 units of mixed-income housing with an affordable grocery store. The housing would include affordable units that would be kept permanently affordable.

“The South Pier agreement was meticulously constructed to provide genuine public benefits to the city. Besides being an exciting asset to the people who live and work there, and to the wider community, it represents a tremendous opportunity for Tempe to make even more headway in building new places for people of all incomes to live and be part of our community,” Woods said. “Through this development agreement, we would have the ability to secure many permanently affordable units within the city. That is transformative, sustainable progress.”

South Pier would be located on land that has two sizeable annual assessments that must be paid by property owners in order to contribute to maintaining Town Lake and surrounding park areas. In similar Town Lake-area developments, those assessments are most often passed on by property owners to residential owners and renters, office renters and others on those properties. This fact means that affordable units on the site are implausible, because of the burden the additional expense would place on residents within the affordable units.

To read details about the project, visit tempe.gov/SouthPier.