8.E.
City Council Draft Agenda
- Meeting Date:
- 06/02/2026
- From:
- Jennifer Mikelson, Housing Planning Manager
TITLE:
Consideration and Approval of Contract: Revisions to Rental Incentive Bond Program loan documents for Elkwood Apartments (Wexford Developments)
STAFF RECOMMENDED ACTION:
Staff requests City Council's approval of revised loan documents related to a $528,000 forgivable loan to Elkwood Partners LP, utilizing Rental Incentive Bond Program funds, for affordable housing (Elkwood Apartments).
Executive Summary:
Staff is requesting Council's approval of revisions to loan documents (Funding Agreement, Promissory Note, Deed of Trust), and approval of a Declaration of Restrictive Covenants mentioned in the loan documents. The loan and loan documents were previously approved by Council on November 4, 2025, but required revisions before closing. The developer and First Mortgagee requested changes primarily related to possible refinancing and transfer of control. Substantively, the loan remains the same. Revisions were made to timeframes for the City's review of subordination requests for refinancing and transfers to third parties, change of control provisions, timeframes for First Mortgagee's consent to City remedial actions in the event of a default. In addition, the documents were revisited for consistency and to correct clerical errors. The Declaration of Restrictive Covenants is recorded against the apartment development and requires 22 affordable units for up to 50 years, consistent with the existing Development Agreement and the RIBP requirements.
Project and loan details are below:
Project and loan details are below:
- Unit count: 224 total - 202 market rate / 22 affordable
- Income Level Served: Households up to 70% of the Area Median Income ($70,560 for a household of 3)
- Loan Amount: $528,000
- Loan term: 50 years
- 0% interest
- Loan forgiven at 50 years of compliance
Financial Impact:
Project Name: Elkwood Apartments
Cost: $528,000
Account Number Budgeted: 411-13-105-0354-4-4290
FY Budgeted Amount: $5,000,000
Funding Source: Housing Bond (Prop 442) - Rental Incentive Bond Program
Cost: $528,000
Account Number Budgeted: 411-13-105-0354-4-4290
FY Budgeted Amount: $5,000,000
Funding Source: Housing Bond (Prop 442) - Rental Incentive Bond Program
Policy Impact:
None
Previous Council Decision or Community Discussion:
After a Notice of Funding Availability for the Rental Incentive Bond Program concluded last spring, Council recommended approval of this funding award on March 18, 2025.
Staff worked to draft the loan documents during the summer 2025, and Council approved the loan at their November 4, 2025 regular meeting.
Staff worked to draft the loan documents during the summer 2025, and Council approved the loan at their November 4, 2025 regular meeting.
Options and Alternatives to Recommended Action:
1. Approve the loan as recommended.
2. Amend the loan per Council direction
3. Reject staff recommendation
2. Amend the loan per Council direction
3. Reject staff recommendation
Background and History:
Housing Bond
Proposition 442 authorizes the use of $20 million dollars of general obligation bonds for "Creating Rental and Ownership Opportunities for Residents of Flagstaff" was approved by the voters in the November 2022 General Election. Proposition 442 identified four affordable housing spending categories, including "incentivizing the private sector to incorporate affordable rental housing into new developments."
Rental Incentive Bond Program
Approved by City Council in November 2023, the RIBP is intended to provide loans to eligible developers of rental housing choosing to include a minimum of 10% affordable units in new rental projects serving households at or below 80% area median income in Flagstaff.
NOFA and Evaluation Process
On November 4, 2024 the City of Flagstaff published a NOFA (#2025-106) for $1,670,000 in Rental Incentive Bond Program funds. Three applications were received by the closing date of January 17, 2025 and were provided to a Ranking Committee and scored individually in accordance with the NOFA's evaluation criteria. The NOFA identified that the highest-scoring application would receive a recommendation for full funding, with any remaining funding to be awarded to the next highest-scoring application until all funding is allocated. Wexford's application was the highest-scoring application and was therefore recommended for full funding at the requested amount of $528,000.
Project Details
Wexford Developments is the developer of Elkwood Apartments, a multifamily project located at 1002 N. Fourth Street (northeast corner of Butler Avenue and Fourth Street). After various delays and cost increases over the last several years, construction is currently underway. This project was originally approved by Council in November 2020 and included a development agreement designating 22 (10%) affordable units serving households up to 70% AMI for a period of 30 years. With this funding, Wexford has proposed extending the affordability period from 30 to 50 years, which would result in their loan being forgiven, per the adopted RIBP.
Loan Documents
Attached loan documents include the funding agreement between the City of Flagstaff and Wexford Developments LLC, declaration of restrictive covenants, promissory note, and deed of trust. All loan documents were prepared by the City's external legal counsel and reviewed by the awardee.
Proposition 442 authorizes the use of $20 million dollars of general obligation bonds for "Creating Rental and Ownership Opportunities for Residents of Flagstaff" was approved by the voters in the November 2022 General Election. Proposition 442 identified four affordable housing spending categories, including "incentivizing the private sector to incorporate affordable rental housing into new developments."
Rental Incentive Bond Program
Approved by City Council in November 2023, the RIBP is intended to provide loans to eligible developers of rental housing choosing to include a minimum of 10% affordable units in new rental projects serving households at or below 80% area median income in Flagstaff.
NOFA and Evaluation Process
On November 4, 2024 the City of Flagstaff published a NOFA (#2025-106) for $1,670,000 in Rental Incentive Bond Program funds. Three applications were received by the closing date of January 17, 2025 and were provided to a Ranking Committee and scored individually in accordance with the NOFA's evaluation criteria. The NOFA identified that the highest-scoring application would receive a recommendation for full funding, with any remaining funding to be awarded to the next highest-scoring application until all funding is allocated. Wexford's application was the highest-scoring application and was therefore recommended for full funding at the requested amount of $528,000.
Project Details
Wexford Developments is the developer of Elkwood Apartments, a multifamily project located at 1002 N. Fourth Street (northeast corner of Butler Avenue and Fourth Street). After various delays and cost increases over the last several years, construction is currently underway. This project was originally approved by Council in November 2020 and included a development agreement designating 22 (10%) affordable units serving households up to 70% AMI for a period of 30 years. With this funding, Wexford has proposed extending the affordability period from 30 to 50 years, which would result in their loan being forgiven, per the adopted RIBP.
Loan Documents
Attached loan documents include the funding agreement between the City of Flagstaff and Wexford Developments LLC, declaration of restrictive covenants, promissory note, and deed of trust. All loan documents were prepared by the City's external legal counsel and reviewed by the awardee.
Connection to PBB Priorities and Objectives:
Livable Community: Actively support attainable & affordable housing through City projects & opportunities with developers.
Connection to Regional Plan:
Goal LU.9. Focus reinvestment, partnerships, regulations, and incentives on developing or redeveloping urban areas.
Goal NH.3. Make available a variety of housing types at different price points, to provide housing opportunity for all economic sectors.
Policy NH.3.1. Provide a variety of housing types throughout the City and region, including purchase and rental options, to expand the choices available to meet the financial and lifestyle needs of our diverse population.
Policy NH.3.3. Increase the availability of affordable housing for very low-income persons, through innovative and effective funding mechanisms.
Policy NH.3.5. Encourage and incentivize affordable housing.
Goal NH.3. Make available a variety of housing types at different price points, to provide housing opportunity for all economic sectors.
Policy NH.3.1. Provide a variety of housing types throughout the City and region, including purchase and rental options, to expand the choices available to meet the financial and lifestyle needs of our diverse population.
Policy NH.3.3. Increase the availability of affordable housing for very low-income persons, through innovative and effective funding mechanisms.
Policy NH.3.5. Encourage and incentivize affordable housing.
Connection to Carbon Neutrality Plan:
HA-1: Create housing options for households at all income levels and family sizes occupied by local residents
HA-2: Connect people to equitable housing solutions.
HA-4: Protect people from housing discrimination and remove housing barriers.
HA-2: Connect people to equitable housing solutions.
HA-4: Protect people from housing discrimination and remove housing barriers.
Connection to 10-Year Housing Plan:
Goal: Create housing options for households at all income levels and family sizes occupied by local residents.
Create 1: Incentivize the creation of affordable units through various programs and mechanisms.
Goal: Protect people from housing discrimination and remove housing barriers.
Protect 2: Ensure affordable housing is a part of every Flagstaff neighborhood and work to address disparate impact as part of any development or redevelopment.
Create 1: Incentivize the creation of affordable units through various programs and mechanisms.
Goal: Protect people from housing discrimination and remove housing barriers.
Protect 2: Ensure affordable housing is a part of every Flagstaff neighborhood and work to address disparate impact as part of any development or redevelopment.
Connection to Division Specific Plan:
N/A