With home prices that far outstrip the average worker's wages, Scottsdale may have to resign itself to having a commuter work force and all the economic and transportation problems that go along with it, according to city officials and business leaders.
The gap is only expected to increase as the city reaches buildout in 12 years, said Val Iverson of Iverson Ideas, a consulting firm that recently released a report, "The Scottsdale Housing Ladder: A Reality Check on the State of Workforce Options." The trend leaves the city with a tough choice, she said.
Continuing down the current road could mean more traffic congestion and air pollution, and, ultimately, a decline in Scottsdale's ability to attract and retain businesses, Iverson said.
Or, she said, the city could invest in local work force housing projects priced below market rates - an idea that historically has not been popular here. The City Council is to address one such project planned for south Scottsdale on Tuesday.
Iverson said pursuit of affordable housing is an increasingly expensive proposition as vacant land available for building disappears. It's a matter of supply and demand, she said.
"Because the city is reaching buildout, that means there are less places to build on," she said. "That will put a squeeze on prices."
Some city leaders, like Councilmen Wayne Ecton and Jim Lane, said Scottsdale may already have passed the tipping point when affordable work force housing projects were a reasonable alternative from a financial perspective.
"I don't see Scottsdale having what's called affordable housing when you look at the cost of land," Ecton said. "I think it's going to be very, very difficult to find a piece of property where you can in fact do that."
Rather, the city should look at funding public transportation like express buses and roadway improvements, he said.
"The key to that is transportation," Ecton said. "I think that's the only solution."
Lane said he believes the city is capable of handling problems associated with a commuter work force.
"It hasn't been a problem in the past as long as you provide an economical way for people to commute," he said.
Iverson's report, commissioned by nonprofit local think tank Leaders in Non-Partisan Knowledge-Based Solutions, or LINKS, describes Scottsdale as having a "jobs surplus," meaning the city has more jobs than housing and imports workers from other communities.
While the average worker at a Scottsdale business employing five people or more earned about $41,600 a year in 2006, according to Iverson's calculations, the median home price in Scottsdale during the same period hovered at $595,000, putting most local housing options out of reach for those workers.
That means many workers choose to live in surrounding cities where housing is more affordable. Those commuters increase traffic on local roadways and contribute to air pollution, Iverson said. It also means those workers may be less connected to the communities in which they live, she said.
"People are spending more time on the road and less time with their families," she said. "It disconnects people from their communities."
Over time, Scottsdale may have trouble attracting new business, and existing businesses may have problems with retaining workers, because of worker dissatisfaction with long commutes, Iverson said. Such problems already exist in parts of California, she said.
"As jobs follow the labor force moving to more affordable cities, one has to wonder at what point workers will deem it no longer worth the commute to work in Scottsdale," Iverson noted in her study.
Judy Crider, LINKS executive director, said another drawback is the children and grandchildren of Scottsdale residents may not be able to afford to live in Scottsdale.
LINKS became interested in the problem of local work force housing in the wake of a recent wave of apartments converting to condominiums and a drop in construction of multifamily housing in Scottsdale. The number of multifamily building permits issued in Scottsdale has decreased from 1,929 units in 1997 to 559 in 2006, according to Iverson's report. In 2005 and 2006, 3,182 apartment units converted to condos, removing about 15 percent of the rental housing stock from the market, the report states.
And another 4,133 apartments have received approval to go condo and likely will do so when the real estate market heats up again, potentially removing up to 22 percent more of the rental stock, according to Iverson.
"The decrease in the supply of multifamily units has pushed the cost of apartments out of reach of many Scottsdale employees," the report states.
Crider said the shift away from entry-level housing, which she attributed to high land values, is what got LINKS interested in affordable housing.
"It had a significant impact on a lot of people's ability to live in Scottsdale," Crider said.
The point of the study, she said, is to help the city decide which direction to take on work force housing in the future. The study notes that raising taxes for affordable housing would be extremely difficult "given the fact that the current political climate is tax adverse."
Instead, city officials could pursue work force housing options by increasing the number of housing units built per acre and establishing new home financing assistance programs for potential residents, the report states.
"What we're really saying is, 'Look at what your community is, and decide how to approach this,'" Crider said. "Density may be one of the resources you choose. It may not."
There's also the problem of overcoming opposition by neighbors of proposed affordable housing projects.LINKS eventually plans to hold a series of public forums on the issue that ultimately could result in some detailed recommendations for the city.
Rick Kidder, Scottsdale Area Chamber of Commerce president and LINKS vice chairman, said affordable housing is unlikely to be popular here unless there is a groundswell from a business community that it can't attract workers.Iverson said the same quality of life issues that make Scottsdale so attractive are partly responsible for the gap between housing prices and workers' salaries.
"It's really not that wages have been held down. It's just that housing prices have risen at a much faster rate," she said. "The better the quality of life, the higher the housing prices."
Affordable housing proposals historically haven't always done well in the city. In 2000, Scottsdale voters defeated a ballot initiative that would have raised $12.9 million to buy land and build affordable housing, said Craig Clifford, city finance director.
Nevertheless, the City Council on Tuesdayis to consider whether to support an application from the nonprofit Community Services of Arizona for a $500,000 federal grant for an affordable housing project at 7230 E. Belleview St. in south Scottsdale.
