The Republic | Aug 8, 2013

The northern side of University Drive near downtown Mesa used to be, figuratively speaking, the other side of the tracks.

Seventy years ago, Mesa chose the neighborhood as the site of its first low-income housing project financed with federal money.

During World War II, the low-slung bungalows housed airmen training at Falcon Field.

But after the war, the Escobedo Apartments reverted to their original purpose: providing roofs for many who otherwise wouldn’t have one.

Faced with a monumental bill to rehabilitate the decaying units, Mesa closed them in 2008. The tenants got vouchers for reduced rents in other quarters.

Now, Escobedo is being reborn.

You can still see many of the original units, fenced off and slowly crumbling. But others are gone, and in their place is the frame of a low-income complex called Escobedo at Verde Vista.

It’s happening because last year the Arizona Department of Housing included the complex among projects approved for federal tax-credit financing. This year, Escobedo’s second phase, which will add 62 units to the 70 under construction, also received funding.

Overall, the list of approved housing projects statewide — only seven — is far shorter than the 18 issued by the department last year.

And while last year’s projects included nine in the Phoenix metro area, this year there are only two, both in Mesa.

In addition to Escobedo, the department approved a 78-unit complex proposed by Scottsdale-based Algarve Partners on the site of an old motel at 950 W. Main St.

The Algarve Apartments complex will be adjacent to a light-rail extension under construction, complying with the housing department’s goal of building as many units as possible next to public transit.

These complexes, and others like them throughout the Valley, are built by private companies or non-profit agencies, rather than with public money.

But public money is involved because the companies receive tax breaks under a Reagan-era program designed to spur investment in affordable housing. The federal government issues a certain amount in tax credits each year, and the states decide which projects are worthy. This year, Arizona sifted 32 applications.

Rent at Escobedo will range from $256 for one-bedroom units to $824 for the most expensive four-bedroom models. The first residents are expected to arrive in late September.

“Without the tax credits, none of this would be remotely economically feasible,” said Brian Swanton, Arizona market president for Gorman & Co., which is building the Escobedo project.

Swanton said Escobedo and other tax-credit projects around the state won’t fill the demand for affordable housing.

Already, he said, 100 people are on the waiting list for Phase I without the company doing any marketing other than putting signs on the construction-site fence.

“I was surprised by all the demand,” Swanton said. “We will literally fill up overnight.”

Nationwide, he said, industry experts have estimated there is $25 billion in past-due capital needs for affordable housing.

“It’s a crisis,” Swanton said.

The disparity between last year’s long list of approved projects and this year’s short one was deliberate, Housing Department spokesman Daniel Romm said.

In 2012, the department beefed up the project list using 25 percent of the tax credits it knew would be available this year, he said.

“Our goal was to leverage our program to create immediate job growth,” Romm said. “As a result, we invested over $200 million in financing to fund 18 low-income rental projects, creating over 1,200 low-income rental units in seven counties.”

That, he said, “was the most ever funded in one year by ADOH.”

Those who received last year’s tax credits, which totaled more than $20 million, were required to speed up the construction timetable, and ground was broken for Escobedo and two other projects in Mesa late last fall.

Total investment in Escobedo at Verde Vista is estimated at $23 million.

It is being built under the auspices of the Save the Family Foundation, a Mesa charity created in 1988 to serve homeless families.

It partnered with other non-profits and Wisconsin-based Gorman, which specializes in affordable housing and urban redevelopment.

The project includes a new headquarters for Save the Family and a social-services campus on the southern side of University Drive.

In addition, four of the original bungalows are being preserved for historical purposes. They will house a fitness center, computer classes and other services for Escobedo’s new generation of residents.