Consideration and Adoption of Resolution No. 2022-30:  A resolution authorizing the execution of a Development Agreement between VP66 & Woody Mountain, LLC and the City of Flagstaff related to the development of approximately 197.58 acres of real property generally located at 3425 W Route 66 known as Timber Sky.

State law allows the City to enter into development agreements by resolution.  The proposed agreement governs the terms and conditions of zoning densities, workforce housing, and water system improvement requirements for the Timber Sky development.

No financial impacts have been identified.

No policy impacts have been identified.

Priority Based Budget Key Community Priorities and Objectives
Carbon Neutrality Plan
Regional Plan

City Council approved the original development agreement for the Timber Sky project on November 15, 2016.  A first amendment was approved on September 18, 2017, a second amendment on March 14, 2018, and a third amendment on September 18, 2018.

1. City Council may approve the Development Agreement Amendment as presented.
2. City Council may approve the Development Agreement Amendment with additional, modified, or deleted terms.
3. City Council may remand the Development Agreement Amendment back to staff for additional negotiations with the Owner.
4. City Council may deny the Development Agreement Amendment.

Timber Sky is a master planned, multi-phased development that has zoning to support a minimum of 910 dwelling units and a maximum of 1,656 dwelling units.  The development includes a mixture of high density residential, medium density residential, and single-family residential units combined with commercial services and open space on 197.58-acres.  An Annexation, a Concept Zoning Map Amendment, and a Preliminary Block Plat were approved by the Council on November 15, 2016.  Timber Sky was intended to be developed in four phases with both on-site and off-site infrastructure improvements.  The anticipated phases 2 and 3 were combined in the last block plat.  The first development agreement for this project was approved in conjunction with the cases referenced above and governs the terms and conditions of the annexation, zoning map amendment and phasing of the subdivision improvements. This agreement included provisions for workforce housing to consist of 100 residential ownership (City of Flagstaff Land Trust - CLT) units with a minimum of 2 bedrooms and 2 bathrooms that would be sold at or below 100% AMI affordability level.  No incentives were taken for the provision of these units. The workforce housing provisions were amended in the Second Amendment to the Timber Sky Annexation and Development Agreement which included an incentive (reduced engineering fees) for the 100 residential ownership units.  These provisions included a penalty if 75% of the units were not completed prior to Phase 4.

Update:  Following the original submission of the staff summary, Vintage Partners discussed the proposed DA amendment with Council at a work session on June 14 and agreed to additional changes.  The revised amendment is attached.  It addresses most of staff's concerns below, with the exception of adding Roers and Habitat for Humanity as signatories to the amendment.  The revised amendment also reduces the number of committed rental units from 200 to 190.  Although Roers has submitted a concept plan showing 200 units, Vintage Partners wanted a buffer in case Roers needs to reduce units during the development review process.

Vintage Partners has provided staff with a draft amendment to the Development Agreement, which is attached.  Staff is attempting to negotiate revised terms and discussions are underway to address some issues identified by staff.  The attached draft DA amendment will be updated prior to final agenda if agreement is reached.  The main points of amendment and concerns staff has identified are set forth below.  

Amendment Request
The main points of the amendment are as follows:

• Section 5.1.3 Densities: This new addition allows the density of the project to be averaged across the project regardless of zoning category. This provision will not increase the overall maximum density for the project, nor will it permit the density of any individual development parcel to exceed the maximum density for that parcel.
• Section 5.2 Workforce Housing: This section of the original Development Agreement–requiring 100 residential ownership units–will be replaced with the following provisions:
  • Affordable Rental Units: First, Block One will be sold to Roers Flagstaff Apartment Owners, LLC for the development of affordable rentals. Block One will be deed restricted, requiring the development of at least two hundred (200) affordable residential units that will be rented to lessees with an average household income of 60% or less of the Area Median Income (AMI) for a period of no less than 30 years. Site Plan application must be approved with twelve (12) months.  The Vintage obligation is met once Roers (or other developer) is under construction.
  •  Affordable Ownership Units: Vintage will donate no less than three (3) acres to Habitat for Humanity to develop no less than 40 homes for permanent affordability through the City Community Land Trust program.  The specific land and proposed layout will be attached to the proposed Development Agreement Amendment.  The units will be part of the Timber Sky Homeowners Association and therefore subject to the same design standards in order to maintain consistency in the community.  The property will revert to the City of Flagstaff if development is not complete within five (5) years of Agreement.  The City and Habitat shall enter into an agreement regarding the specifics of the housing development. 
  • Timber Sky Phase 4 will not record a final plat unless the Roers project is under construction and the land described above has been transferred to Habitat.
• Sections 8.4.1.1 and 8.4.1.2 Water Fees: This amendment was recommended by staff as a cleanup measure.  All required capacity fees will be paid in the ordinary course.

Staff Concerns with Amendment as Proposed

Section 5.2 Workforce Housing: 

• Staff recommends the amendment include the following commitments in regard to the Affordable Ownership Units: 
  • Vintage Partners will stub infrastructure to the Habitat parcel, including road and utilities.
  • At the time of the new subdivision plat for Block 2, Vintage Partners will grant to the Habitat parcel the rights for cross parcel detention and utility access.  (Without this, the Habitat parcel cannot develop as proposed.) 
  • The 40 units on the Habitat parcel will be starter homes in alignment with Habitat's existing starter home program, roughly 400 square feet in total size, and able to house up to a family size of three.   

Additional Concerns

• The provision stating that less than 200 rental units will satisfy the agreement if City Code requirements do not allow for 200 rental units is confusing.  City Code requirements will never prohibit 200 units on the parcel identified, but they could increase the cost of development or alter the design.  
• Grading is an insufficient trigger to ensure development of the Roers parcel.
• The draft incorrectly states that Block 2 will need a replat.  The City does not have a replat process.  In actuality, Vintage Partners will need a new subdivision plat. 
• Although the agreement largely revolves around the obligations of Roers and Habitat, neither entity is a party to the agreement.  Staff recommends that Roers and Habitat be included as signatories on the Development Agreement.

Inform
A public hearing or public outreach is currently required as part of the City Council's review of an amended development agreement.