Breaking Ground: Change isn’t coming — it’s here
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If you build it, they will come in baseball, of course, also in semiconductor manufacturing. Our series Breaking Ground comes back today from American Public Media. This is Market Class. In Los Angeles, I'm Kyle Rizdahl. Wednesday, today, 29 May. Good as always to have you along, everybody. We spent some time in Phoenix, Arizona a couple of months ago.

trying to figure out what happens to a place when billions of federal dollars land there. This is one of the biggest construction sites I've ever seen. Specifically, what happens when companies like Intel and TSMC take those billions of dollars in government investment, add many more billions of their own, and build high-tech semiconductor factories. Factories that, as we saw when we were there, are drawing workers from all over the country.

Oh, wow, that's a Michigan flag on that vehicle. Go blue. We've got one more installment of our series Breaking Ground from Phoenix today. How the Inflation Reduction Act, the bipartisan infrastructure law, and the CHIPS Act are changing this economy in complicated, invisible, and sometimes contradictory ways. What was it like when you first moved down here? There was a house and a white rail fence and a lot of weeds.

We're in what used to be the middle of the desert. TSMC plant was a, you know, we still haven't felt the full economic impact of that. You know, that's going to create economic waves going out, you know, miles and miles and miles for years and years and years to come. Maps on the radio are hard. I get that. But work with me here. Picture a chunk of land that's

Triangle-shaped, about a half a square mile, mostly dirt roads. It's 20 miles north of downtown Phoenix and about seven miles south of that massive construction site where TSMC, the world's biggest chipmaker, is building three factories on what was, until just a couple of years ago, raw desert. So this area we're standing on used to be called, or probably still is called, the Golden Triangle.

The Golden Triangle used to be Raw Desert, too. Right now, it has a couple of hundred residents, but is about to get a couple of thousand more. Three new apartment complexes have been approved, in part to fill the demand for housing fueled by all the semiconductor factory construction that's being driven by those billions of dollars from the CHIPS Act. Our story today is how all of that money flowing into one small area can fan the flames of the competing interests that were already there.

I was so excited when I found out what was going in behind us. Cat Blaz is part of interest number one, small business. In one corner of this triangle, there's a freshly built strip mall with a Mexican restaurant, a hair salon, and a couple other businesses. This is a lot of Legos.

Kat owns a Bricks and Mini-Figs franchise, which sells new and used Lego products. She's been open a little bit more than two years. How's it working out? How's business? It's been good. It's been good. This area has a lot of growth that's coming, so we're looking forward to the future. And yeah, we live a couple miles from here, so we wanted to put something in our neighborhood, our community.

Tell me about the growth because it didn't used to be this way. No, no. I mean, we've lived up in the North Phoenix area for, I mean, about 12 years. And I remember when there was like nothing up here. But now it's just been booming, constantly putting up homes and apartments, you know, about the chip plant that's going in. That's a big deal for us.

It's good. It's cool to see a lot of stores and shops that we normally have to travel like 20 minutes to coming right in our area. Housing stock. You mentioned more housing coming. There's those three big apartment buildings that are coming over there. Hundreds and hundreds of people are going to be moving in. That has to be good for you. Oh, yeah. We are so excited. It's hard nowadays for brick and mortars to survive with all the online shopping. And the fact that we can get more foot traffic is awesome.

Kat's betting that the new chip factories and the workers coming with them are going to bring more people to her. And that bet does seem to be paying off. Those three new apartment buildings with hundreds of units per are being built right next to the strip mall. One door down from Kat is another store. It's called Pigtails and Crew Cuts. Oh, man. It's a salon franchise specializing in haircuts for kids. Ah!

And when we walked in the door, there was a particularly dissatisfied customer in the chair. And he's squirmy, too. More power to the woman cutting his hair. Yeah, that kid had lungs. I waited for his haircut to finish before I introduced myself to the owner. Kids, right? I'm Kai. Hi, nice to meet you, Kai. Yvette. How are you? Very good. Yvette Stumpf is her name. Her salon's been open for almost three years. What was it like when you opened up? It was a ghost town.

We were the first ones to open up in the area in this little strip mall. And everything was dirt lots. But we knew that this was a thriving market. So eventually it got busy. You were betting on the future, right? Playing the long game? Absolutely. Looks like it's working out. There's more stuff around here. There's...

Huge new apartment buildings coming? That's kind of crazy, yeah. You've got to be banking on that, right? That the people who live in there are going to have kids? I'm hoping so, yeah. That's what they're going to be able to afford. They're not going to be able to afford all the houses. Well, say more about that. Well, I bought my house for a good chunk, and now it's doubled in price. And I live 15 minutes away in Anthem, and I'm shocked by that. How long ago did you buy your house? Five years ago. Wow. They want a million dollars for it.

I wouldn't pay a million dollars for that house. No, but you'd take a million, wouldn't you? I'd take a million, but where would I go? I can't afford something else. You're in business. You're up and running. What's the monster under your bed? What are you worried about? I worry about the economy, to tell you the truth. Do you? Oh, gosh, yeah. I mean, things are so expensive. Gas, groceries. I can't keep raising my prices here at the salon.

But here's the thing.

By all metrics, the economy is strong. Yes, inflation is still at 3.4%, but that's down from 9% just two years ago. Meanwhile, unemployment is near record lows, has been for years, and the economy is growing at a healthy pace. But as we know, how you feel about the economy depends on what you see in your day-to-day. What do you tell him you need to make your business better? That's a loaded question. Um...

I don't really know. There's just so many things. The primary thing is let the economy thrive, you know, less taxation, take care of small businesses. Right now, it's our particular state needs to continue to be an employer state. Same question, different way. There's the CHIPS Act. There's the infrastructure law. There's trillions of dollars in federal spending, many billions of which are coming to this city.

Have you been following that? And do you view that as a boon to your business? I see that as a boon to my business because that's more people. However, I also do like not having, I don't like the big city feel. And we still feel like country. That big city feel, though, is on its way, thanks in part to interest number two. My name is Charles Eckert. I'm a real estate developer here in North Phoenix. I've been developing in this area for about 20 years.

Charles is Yvette and Kat's landlord. He built that strip mall that they're in. We've taken raw desert, basically, and turned it into this. We met him just across the parking lot from Yvette and Kat's stores on a piece of land he owns that is yet to be developed. It's just dirt. But thanks to Charles, it is now bordered by a daycare center and what will soon be a five-story apartment building, one of the three approved for construction in this triangle. And it's a place where you can live and work.

He was wearing a cowboy hat, a pressed white button-down shirt, Wrangler jeans, and a big silver belt buckle. He had a cigar in a corner of his mouth and a pistol at his hip. And he knows every square inch of this triangle.

I mean, when I say raw desert, I mean, just look at what this looks like, except it had some palo verde trees. There was no curbs, no gutters, no sidewalks. The road was two lanes wide. That was a dirt road right there. And there was nothing here. I mean, you could see all the way to 19th Avenue. This patch right here...

You probably know off the top of your head how much land it was. Is this an acre? I don't even know. Well, it's 52,600 square feet. So it's actually an L-shape, so it goes over to the other side of that monument sign and up to the driveway and across. What are you going to put here? This is going to be a building just like that one. It's going to be a multi-tenant retail building. We're talking to some coffee guys who want to put in a coffee kiosk right where we're standing here.

What's the metric by which you measure land out here? Square foot, square acre? Square foot. Square foot? Yeah. So when you were buying, what were you paying for square foot? Give or take, spitball it. I can tell you exactly. I'm sure you could. I paid, so for not this corner, but for the property basically from that 1730 building all the way down to the circle, $1.36 a square foot. And now it's what?

If you were to buy this corner now, it would cost you about 50 bucks. No, man. Yeah. Now, mind you, I've spent $3 million. Right. Right? Improving this. So all the profits we gained out of selling the land to the Circle K, selling the land to the AutoZone, all went into off-site improvements and infrastructure. None of that went into my business.

Well, some of it went into your pocket. Come on. I get some fees here. There you go. I get some fees here. The point is that it was reinvested. When you saw that raw desert 20 or whatever it was years ago, did you see this? Yeah, I did. You did? I did. That's why I invested my entire net worth in this area to do what we've done. And it took 10 years, 15 years after that for that to be true, but it became true.

Fast forward to 2020, TSMC comes in. They start building and you say, I was right? Well, let's not be... Come on, you did. Come on. No, I'm not that arrogant. I'm not. The fact is that there's a lot of land up there. The fact is that the economic development group in the city of Phoenix was very oriented toward getting technology companies out here. You know, we have 4,000 homes right now within a one-mile radius of this site. Ten years ago, we had...

I was just going to say. So did I envision that? No. Did I see that? No. Was there an element of luck to that? Yes. But at the same time, the overall strategy was this area was going to develop a little bit.

And again, the state of Arizona was very active in trying to attract businesses, especially technology businesses. And that's going to drive jobs and drive employment. So let's go there for a minute. You're a pro-business guy. My sense is you're not a big government guy at all. No, can't stand government. Do you appreciate the irony then that the state of Arizona, the government of the state of Arizona, prompted this? Also, the CHIPS Act and all of that getting TSMC to basically double its investment to the billions and billions of dollars. You appreciate that irony, right? Well...

To an extent. And to the extent that government does things like create an economic council that is working as a private economic council, you know, it's a public-private partnership. There are places like this Golden Triangle all over the country where people benefiting from government money, people who stand to profit thanks to the CHIPS Act, have feelings about whether the government should be involved that way at all. I don't have to remind you, this is an election year.

Voters have a lot of things on their minds. And one of them in a year when there's lots of fresh government money coming is exactly how far into the economy the government ought to be. The Biden administration is betting pretty far. What's your sense of of the people who came out here 20, 30 years ago and you did who like the raw desert, who see all that's going on here? And they're you know, that's a very legitimate question.

This was all county land. It was not part of the city of Phoenix. And it was horse properties. And because it's county, you can have ag stuff out here. You can have goats. You can have cows. You can have your chickens. And so when we came here and I acquired these properties and then began the zoning process, that is to turn it to commercial property, we got some resistance. You had a fight. You had a fight, right? We got some resistance.

After the break, then, The Resistance.

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This is Marketplace. I'm Kai Risdahl. Today in our series Breaking Ground, the story of three competing interests on one piece of land in Phoenix, Arizona, that's about to have a bunch of new residents, thanks to all the development that's being driven by the CHIPS Act. So this area we're standing on used to be called, or probably still is called, the Golden Triangle.

About 800 yards from the strip mall where I spoke to Yvette, Kat, and Charles, I meet the resistance. Our third interest, the neighbors. I'm Kai. Nice to see you. Hi, Kai. Nice to meet you, too. I'm fine, thank you. Laurel Brody owns one of the roughly 100 houses in this Golden Triangle, which is, to be clear, county land and not inside Phoenix city limits. So we built this. I struck every joint in this house. Did you really? We built this on weekends. So it breaks and...

Laurel's husband and her father-in-law bought the property in 1976. And inside, on her kitchen counter, she's laid out some old pictures. So these, I went through and I pulled out just some things. Yeah, there's a whole stack of pictures. But you don't have to go through all of them. The crown jewel of that stack is a framed aerial picture of this area from 1990. You can see mountains, miles of brown desert, and two little houses.

Okay, so we're here. We're standing right in here, right in that house. So this, I believe, is, that's I-17 and the bridge that goes over it, I believe. So this is 30 years ago. This is 19th Avenue, which was a dirt road. There's nothing in this. Yes, no, there is nothing. ♪

Today, there is still some raw desert left. But as more and more people come to this area, many of them drawn by the semiconductor industry, the pace of development is speeding up, including the five-story apartment building that's going to be a five-minute walk from Laurel's house.

Obviously, you know, we're not exclusive. We also built in the desert, so we disturb the desert. But all these now, the ones that you see that are all being built and stuff, that's five-story buildings. Even the ones on the freeway don't go up that high. And yet they find it appropriate to put five stories right here. If you're hearing this and thinking to yourself, yeah, I've heard this one before, not in my backyard, right? Well, right. That is what Laurel's saying.

But backyards, especially on a house you built yourself and lived in for decades, are personal. You know, I moved every two or three years. That's just how it happened in my family. And now I've lived someplace for 36 years. This was our life. This is an indelicate question, but I have to ask. Your land now is worth so much more than you paid for it. You know what? Do you ever think about packing it in, selling it to the eyes, bitter, and going somewhere else? Well, worth...

is in the eye of the beholder. They will say that, oh, we're upping the value of your land. No, you're upping my taxes. I could not go and find even, I don't even know what kind of money value you put on it to find the things that we found here. It's not out there. The worth, the value of the land in this triangle...

What Laurel's family saw as a good investment because of its distance in the 1970s is now seen as a good investment because of its proximity to TSMC. Laurel and a group of her neighbors did try to fight City Hall. We spent hours doing letters, doing petitions, doing this, that, the other. And then you're given two minutes to talk about your life. You know, you know you're wasting your time. And yet we still did it every time. Allison McKee lives down a dirt road from Laurel.

Hi, puppy. How are you? Her little black rescue dog made itself at home. Out of the car! Say hello. It's a rental. It's a rental. Come here. Come here. But that is not the only animal on this property. What am I looking at, Allison? You are looking at the world's smallest ranch with a whole bunch of donkeys. How many donkeys? One, two, three, four, five, seven today.

Allison's got five donkeys of her own, including a mammoth donkey that weighs 725 pounds. Daffodil. God, look at how big her ears are. 18 goats, 26 chickens, a horse, a barn cat, and a rotating cast of foster donkeys. And in the decade since she and her husband bought this property, a mega church has been built across the street. Shopping centers and apartments sprang up down the road. And with the growth coming from the semiconductor factories, more are coming.

So what do you make of everything that's happening around here? Yeah, I don't... It's rather threatening to my way of life. It's going to be on a whole lot of people that are in apartments that are going to be walking in our community and walking their dogs. And, you know, when people start complaining...

About, you know, the donkeys waking them up at 5 a.m. because it's ready to be fed. And, you know, they don't like the flies. They don't like the smell. They don't like, you know, those complaints are coming back to me. This is where the growth is, though, right? TSMC is coming in. There are more people coming who are going to work there. They want things like child care and strip malls and housing. This is going to sound bad, and I apologize in advance, but you're in the way. Oh, yeah, I am.

We do feel like we'll be bowled over, that we will be forced out. We will be made so miserable that we must move. So am I the weird old lady that stands her ground and holds out? Or do I just go, I can't stand it anymore, I gotta go? I don't know.

Allison doesn't pay Phoenix City taxes. She can't vote for city council. But the city is getting closer to her. Who's standing desk? Tell us who you are and where we are, just so we get that straight. So I am Phoenix City Councilwoman Anne O'Brien. I represent District 1, and you are in my office at City Hall. You're not a lifelong Phoenician, are you? I am. Are you? Mm-hmm. ASU all the way, right? Go Sun Devils? Go Sun Devils. Okay.

Ann O'Brien has been on the Phoenix City Council for three years now. She represents the district where TSMC is building and that Golden Triangle area where the city limits are creeping closer and closer to Laurel and Allison's property. She is one of the people responsible for balancing all those competing interests out there. We've been reporting the past couple of days up in Happy Valley, along Happy Valley Boulevard and the Golden Triangle and 19th Avenue and all that. Here's the question.

The locals up there don't feel the government works for them. They think and they feel that government is all about development, is about economic growth.

So you might know we have a little bit of a housing shortage here in the entire state of Arizona. And one of my commitments when I ran for office in 2020 was to ensure that we brought a diversity of housing. And that area was primed for that given that you had TSMC, a new school in that area. And so it was very much a draw for developers to continue building along that 19th Avenue corridor north of Happy Valley.

One of the questions, one of the challenges that we heard from the people up there in Happy Valley is specifically the height of the building that you were involved in, right? It was originally either three or four and you said, I want more density. You said, I want more. That particular project, um,

came to us as a more affordable project. So we all know that in Phoenix, it is getting more and more difficult for our teachers and our police officers and our nurses. So when they came to me and three or four stories, and they wanted it to be attainable housing, workforce housing, we were really excited about that. And then inflation and costs were going up. And so when they came back to me and said, look, we want to keep this

attainable housing, but now because of costs, we're not going to be able to do that. And so we asked them, what would it take? And they said a little bit more density, right? And they said five stories, but it was so that we could keep attainable housing for our workforce. They were concerned though. And I said to some of the folks up there, I'm going to talk to Anna Bryant tomorrow. What do you want me to ask? And basically to a person they said,

why didn't they reach out to us more? Why didn't we have more of an opportunity? Why didn't they come see us? And these are folks who, you know, they've been there like 30 years. So the city does have a process for neighborhood outreach and community outreach, and we do have them go through that process. The fact is, is that, you know, Phoenix is growing and what used to be far out there isn't so far out there anymore. Change is coming, right? Change, yeah, it's not just coming, it's here.

It is here and more is coming. This change to this triangle and these competing interests is coming fast. And everybody here, the neighbors who are trying to hang on to their rural lifestyles, the small business owners who want more foot traffic, and the developers who see a good investment are now trying to balance that with another force pushing into this landscape, billions of federal dollars.

All right, we got to go. Our media production team around here includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Dorado, and Becca Weinman. Jeff Peters is the manager of media production. I'm Kai Risdell. We will see you tomorrow, everybody. This is APM.