10.C.
City Council Meeting - FINAL (AMENDED)
- Meeting Date:
- 03/18/2025
- From:
- Jennifer Mikelson, Housing Planning Manager
TITLE:
Consideration and Approval of Rental Incentive Bond Program Awards
STAFF RECOMMENDED ACTION:
Staff requests City Council's approval of two Rental Incentive Bond Program Awards totaling $1,670,000, resulting in a total of 62 affordable rental units, as recommended by the Housing Commission.
Executive Summary:
The Rental Incentive Bond Program (RIBP) was approved by Council in November 2023. Two Notices of Funding Availability (NOFAs) have been conducted; the first in February 2024 and the second in February 2025. As a result of the latest NOFA for $1,670,000, three applications were determined eligible for funding, were scored by a Ranking Committee, and brought to the Housing Commission for their recommendation. Staff is requesting Council’s approval of two funding awards per the Commission’s recommendation.
The project details and recommended award amounts are as follows:
The project details and recommended award amounts are as follows:
- Elkwood Apartments
- Developer: Wexford Developments
- 224 units total: 202 market rate / 22 affordable (serving households up to 70% AMI)
- Award Amount: $528,000
- Lake Mary Housing
- Developer: Atlantic Development & Investments, Inc.
- 202 units total: 162 market rate / 40 affordable (serving households up to 80% AMI)
- Award Amount: $1,142,000
Financial Impact:
Loans will utilize general obligation bond funds, as approved by Flagstaff voters in the November 2022 election. A total of five million ($5M) in bond funds were initially available under the RIBP; $3,330,000 has already been reserved contingent on Low Income Housing Tax Credit funding. Approval of the two awards will obligate the full $5M of available Rental Incentive Bond Program funds. Loans will have no financial impact on the city’s general fund.
Policy Impact:
None
Previous Council Decision or Community Discussion:
- City Council placed Proposition 442 on the ballot for the November 2022 election, with one of the funding items being “Incentivizing the Private Sector to Incorporate Affordable Rental Housing in New Developments.”
- Resolution 2023-51 adopting the RIBP was approved on November 7, 2023.
- City Council approved the first round of awards (totaling $3.3M) on March 19, 2024.
Options and Alternatives to Recommended Action:
- Approve the awards as recommended.
- Amend the awards per Council direction
- Reject staff recommendation
Background and History:
Housing Bond Background
Proposition 442 – authorizing 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 Overview
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 ($72,000 for a household of 3) 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. Advertised in the Arizona Daily Sun on November 12th and 23rd, 2024. Staff prioritized a simple application with fact-based evaluation criteria in an effort to streamline the application and evaluation process. Three applications were received by the closing date of January 17, 2025. Housing staff conducted a minimum threshold review of all three applications and determined all three to be eligible for evaluation. The applications were provided to members of the Ranking Committee and scored individually in accordance with the evaluation criteria. The Committee; comprised of two Housing Commissioners and internal City staff involved in the review of affordable development projects. The group met to discuss their scores and reached a final consensus score for each application.
The NOFA identifies 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. With $1,670,000 in remaining bond funding available and a total of $2,774,000 requested, staff recommends funding the two highest-scoring applications (out of 600 cumulative points), which leaves the lowest-scoring application unfunded.
Highest Score: 516 cumulative points – Elkwood
Wexford Developments submitted an application for Elkwood, their 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 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 to extend the affordability period from 30 to 50 years, which would result in their loan being forgiven, per the adopted RIBP.
Second Highest Score: 352 cumulative points – Lake Mary Housing
Atlantic submitted an application for their multifamily project, tentatively titled Lake Mary Housing, located at 4621 S Lake Mary Road. This project was recently approved by Council on December 3, 2024 and included a development agreement designating 40 (20%) affordable units serving households up to 80% AMI for a period of 30 years. The developer will continue to work toward their remaining plan approvals (building and engineering plan reviews) before construction can begin on this project. The adopted policy states that developers must obtain building permits within 24 months of award, with extensions to this timeframe considered on a case-by-case basis with documented justification.
A table summarizing both applications is below.
If Council approves the award amounts, staff will issue notices of award to the developers. Funding will be provided as two separate loans:
Community Benefit
This funding will assist in creating 62 new affordable units available to low—to moderate-income residents. Additionally, both projects will provide 364 new market-rate rental housing units, consisting of studios, one-bedrooms, two-bedrooms, and townhome style units.
Proposition 442 – authorizing 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 Overview
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 ($72,000 for a household of 3) 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. Advertised in the Arizona Daily Sun on November 12th and 23rd, 2024. Staff prioritized a simple application with fact-based evaluation criteria in an effort to streamline the application and evaluation process. Three applications were received by the closing date of January 17, 2025. Housing staff conducted a minimum threshold review of all three applications and determined all three to be eligible for evaluation. The applications were provided to members of the Ranking Committee and scored individually in accordance with the evaluation criteria. The Committee; comprised of two Housing Commissioners and internal City staff involved in the review of affordable development projects. The group met to discuss their scores and reached a final consensus score for each application.
The NOFA identifies 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. With $1,670,000 in remaining bond funding available and a total of $2,774,000 requested, staff recommends funding the two highest-scoring applications (out of 600 cumulative points), which leaves the lowest-scoring application unfunded.
Highest Score: 516 cumulative points – Elkwood
Wexford Developments submitted an application for Elkwood, their 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 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 to extend the affordability period from 30 to 50 years, which would result in their loan being forgiven, per the adopted RIBP.
Second Highest Score: 352 cumulative points – Lake Mary Housing
Atlantic submitted an application for their multifamily project, tentatively titled Lake Mary Housing, located at 4621 S Lake Mary Road. This project was recently approved by Council on December 3, 2024 and included a development agreement designating 40 (20%) affordable units serving households up to 80% AMI for a period of 30 years. The developer will continue to work toward their remaining plan approvals (building and engineering plan reviews) before construction can begin on this project. The adopted policy states that developers must obtain building permits within 24 months of award, with extensions to this timeframe considered on a case-by-case basis with documented justification.
A table summarizing both applications is below.
| #1 | #2 | |
| Project Name | Elkwood | Lake Mary Housing |
| Applicant Name | Wexford Development | Atlantic Development & Investments |
| Requested Award Amount | $528,000 | $1,670,000 |
| Total Project Cost | $83,250,000 | $106,852,703 |
| Number of Affordable Units | 22 | 40 |
| Subsidy Per Unit Requested | $24,000 | $41,750 |
| Percent Affordable | 10% | 20% |
| Area Median Income (AMI) Limit | 70% AMI | 80% AMI |
| Affordability Period | 50 years | 30 years |
| Cumulative Score (out of 600) | 516 | 352 |
| Recommended Funding Amount | $528,000 | $1,142,000 |
If Council approves the award amounts, staff will issue notices of award to the developers. Funding will be provided as two separate loans:
- $528,000 loan to Wexford Developments, which would be forgiven at the end of the 50-year term
- $1,142,000 loan to Atlantic Development & Investments, Inc. to be repaid at the end of the 30-year term
Community Benefit
This funding will assist in creating 62 new affordable units available to low—to moderate-income residents. Additionally, both projects will provide 364 new market-rate rental housing units, consisting of studios, one-bedrooms, two-bedrooms, and townhome style units.
Connection to PBB Priorities and Objectives:
PBB Priority:
Livable Community: Actively support attainable & affordable housing through City projects & opportunities with developers.
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.