Tempe is entering negotiations with the developer who opened the Mesa Artspace Lofts, an affordable housing project that provides live-work space for artists and their families.

The Tempe City Council on Thursday directed the city manager to enter talks with Minneapolis-based developer Artspace Projects Inc.on a new affordable housing project along the light rail in north Tempe.

The project would go on land leased from the city near Dorsey Lane and Apache Boulevard.

Along with the Mesa project, the nonprofit real estate developer has more than 50 live-work and affordable housing projects across the country.

Artspace is proposing to build up to 140 market rate, workforce and affordable units for artists and their families and an arts and cultural hub in the area, according to a copy of the proposal the firm submitted.

The project could help address what many see as an affordable housing problem in the city, especially in north Tempe where a booming real estate market and rising costs have put the squeeze on renters and buyers.

The city still must hammer out an agreement with the developer, which can be a long process. How much the city would lease or sell the land for and other details would be worked out during negotiations and then go back to the council for approval. 

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Affordable housing near light rail

Tempe earlier this year put out a call to developers seeking proposals for the lease and development of affordable or workforce housing on the city-owned land.

The city sought to develop affordable apartments with live-work spaces, according to city documents.

The 5-acre property consists of two parcels that are bisected by Dorsey Lane. A vacant building and a park-and-ride lot are on the eastern parcel. The land to the west is owned by the city’s Transit Department and used for parking by the New School for the Arts.

According to city documents, the developer must provide the same number of parking spaces in the new development that are being displaced by the project, in addition to parking for residents.

Artspace’s proposal was selected from among three bids. 

The proposal includes:

• up to 80 affordable, live-work units on the Dorsey Lane parcel.
• 60 market rate and workforce units on the Lemon Street land.
• two parking garages with 400 stalls
• a ground-floor galley for residents to host shows and display their work on Lemon Street.
• commercial space on the ground floor along Apache Boulevard.

The project is expected to cost nearly $30 million but will likely be partially financed through federal grants for the creation of affordable housing, according to the proposal.

The anticipated completion date is spring 2022, the company said.

“In addition to providing much-needed affordable artist housing, this project will serve as a cultural anchor that will help further connect the downtown business and the arts and entertainment district and easily draw tourists and art lovers from the region with its close proximity to the metro,” said Artspace Vice President Steve Stanley in the proposal. 

The land is in a highly coveted and growing area of Tempe, near light rail and Arizona State University.

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As the economy has bounced back over the last five years, older, garden-style apartments have been demolished and a mobile-home park was cleared out to make way for high-end options along the light-rail corridor on Apache Boulevard.

Monthly rent for a one-bedroom apartment at several of the nearby apartments — most of which are geared toward ASU students and young professionals — is upwards of $1,400, slightly higher than the average rent for a similarly sized apartment in Tempe.

The average rent for a one-bedroom apartment in Tempe is $1,378, according to national apartment research and listing firm RENTCafe.

Second development in Arizona

If approved, the Tempe project would be Artspace’s second development in Arizona.

The Mesa Artspace Lofts opened in downtown Mesa in summer 2018.

The complex features 50 lofts for artists and their families that are one-, two- or three-bedrooms.

The $15.8 million project in Mesa boasts commercial space on the ground floor and a 2,900-square-foot community space where artists can display their work.

The apartments range in size from 905 square feet to 1,365 square feet and go for between $465 and $992 a month, according to Artspace.

Reach reporter Paulina Pineda at [email protected] or 602-444-8130. Follow her on Twitter: @paulinapineda22.

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