Consideration and Adoption of Resolution No. 2025-29: A resolution of the Flagstaff City Council adopting an amendment to the City of Flagstaff's Incentive Policy for Affordable Housing. 
 

1. Read Resolution No. 2025-29 by title only
2. City Clerk reads Resolution No. 2025-29 by title only (if approved above)
3. Adopt Resolution No. 2025-29

Staff is proposing a technical amendment to the Incentive Policy for Affordable Housing (IPAH), originally approved in 2009. The primary purpose of this amendment is to correct terminology related to the eligible fees list. Specifically, the revision will correct references to water and sewer fees, creating a new definition for “Water and Sewer System Fees,” and including capacity, connection, and meter fees as eligible for reimbursement under the policy. 

None

This policy is intended to make the construction of affordable housing units more financially viable. Amending this policy will continue to allow staff to assist developers with City fees charged during the development process.  

Housing Commission recommended approval on 4/24/2025. 

1. Revise the proposed amendment. 
2. Reject the proposed amendment and provide further direction. 

The IPAH continues to be a valuable tool to assist in the creation of affordable housing units in Flagstaff. A comprehensive update to the IPAH will be conducted once the City’s Code Analysis Project (CAP) concludes. It is critical that staff understand how the city’s base codes will change before identifying viable incentives for affordable housing.  
 
The IPAH includes both financial and zoning incentives. The financial incentives have always been funded by the general fund and the dollar amount allocated to the policy varies with each budget year. The policy does not officially “waive” any fee; the cost of an eligible fee is paid out of the incentive policy account on behalf of the developer. To give context to the impact of these financial incentives, the largest allocation provided to date was $1.1M in funds reserved for the 100% affordable project Sierra on 66 by Roers, currently under construction. Smaller-scale projects, like Habitat for Humanity homes, have historically required less than $20K to cover the cost of eligible fees.  
 
The need for this amendment arose from the fact that the City of Flagstaff does not charge impact fees for water and sewer, it charges capacity fees. The proposed amendment provides a more appropriate term, “Water and Sewer System Fees” which includes both the capacity and the meter fees charged as new residential units are added to the overall system. 

Livable Community: Actively support attainable and affordable housing through the City’s 10-Year Housing plan as well as other projects and opportunities 

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. 

Target Area: Housing for All 
Strategy: Create housing options for households at all income levels and family sizes occupied by local residents.  
Action: Incentivize the creation of affordable units through various programs and mechanisms. 

Create 1: Incentivize the creation of affordable units through various programs and mechanisms. 
Create 1.2: Update the City's affordable housing incentive policy to implement the goals and policies of the 10-Year Housing Plan.  
Create 1.4: Explore implementing reduced fees and waivers to incentivize the development of affordable housing.