Consideration and Adoption of Resolution No. 2025-57: A resolution of the Flagstaff City Council, adopting the Community Homebuyer Assistance Program - Bond-Funded Expansion; authorizing use of bond funds for the program; providing for delegation of authority to implement the program; and establishing an effective date
 

1. Read Resolution No. 2025-57 by title only
2. City Clerk reads Resolution No. 2025-57 by title only (if approved above)
3. Adopt Resolution No. 2025-57

Staff are requesting City Council approval of program criteria for the expanded Community Homebuyer Assistance Program (CHAP), including proposed changes to the existing program parameters, and approval of a new Permanent Affordability Pilot program. The proposed changes aim to expand access to homeownership for local Flagstaff residents, promote long-term affordability, and foster a diverse range of housing options in all neighborhoods. These updates will also maximize the impact of $7 million in general obligation bond funds approved by voters through Proposition 442 in November 2022.

CHAP has historically supported first-time, mortgage-ready homebuyers with down payment and closing cost assistance. Between February 2024 and February 2025, the program assisted 11 households with $40,000 per household before exhausting its general fund allocation.

In anticipation of the depletion of funds, City staff conducted extensive research on potential opportunities for expansion throughout 2024 and held multiple brainstorming sessions with the Housing Commission. In October 2024, City Council reviewed the proposed criteria, provided recommendations, and directed staff to move forward with a competitive process to hire a program administrator. A Request for Statement of Qualifications (RSOQ) was launched in March 2025 to select a third-party administrator. Housing Solutions of Northern Arizona (HSNA) was selected and began administering the expanded, bond-funded program in August 2025. Since August, three households have closed, and three more households are currently under contract.

The updated program structure includes two distinct pathways for Flagstaff residents to choose from:

• Option 1: Financial assistance, up to $50,000, for first-time homebuyers earning up to 150% of Area Median Income (AMI), secured through a repayable loan.
• Option 2: A permanent affordability pilot that provides 30% of the home’s purchase price in exchange for permanent affordability.

Together, these two options are designed to meet the needs of a broader range of Flagstaff households, increase homeownership opportunities citywide, and support inclusive, mixed-income neighborhoods.

The expanded CHAP program is funded with up to $7 million in general obligation bond funds authorized by voters under Proposition 442 (November 2022).

This program is being expanded to provide the increased level of financial assistance needed for Flagstaff households to achieve their first-time homeownership goals. The program’s purpose is to assist eligible first-time homebuyers with upfront costs, such as down payments and closing costs, and to increase the inventory of permanently affordable homes in all areas of the City.

In November 2022, Flagstaff voters approved Proposition 442, which included approximately $7 million to expand the Community Homebuyer Assistance Program (CHAP). Between January and September 2024, City staff researched opportunities for program expansion and held multiple brainstorming sessions with the Housing Commission. In October 2024, City Council reviewed the proposed criteria, provided recommendations, and directed staff to move forward with a competitive process to select a program administrator. A Request for Statement of Qualifications (RSOQ) was published in March 2025, and Housing Solutions of Northern Arizona (HSNA) was selected to administer the program. A limited version of the expanded CHAP program officially launched in August 2025 under HSNA’s administration.

1. Adopt the Resolution: Approve the proposed program changes and permanent affordability pilot as presented.
2. Adopt with Amendments: Approve the program changes and/or permanent affordability pilot with Council-specified modifications.
3. Deny Adoption: Do not approve the proposed program changes and/or permanent affordability pilot.

In 1998, the City of Flagstaff established the Community Homebuyer Assistance Program (CHAP) to help first-time homebuyers earning up to 125% of Area Median Income (AMI) with the upfront costs of homeownership. Funded through the City’s general fund, CHAP has historically served moderate-income, mortgage-ready households who are often ineligible for traditional low-income housing assistance but still face significant barriers in Flagstaff’s housing market.

In November 2022, Flagstaff voters approved Proposition 442, authorizing $20 million in general obligation bonds to support local housing efforts. Of this, $7 million was allocated specifically to expand CHAP.

Beginning in early 2024, Housing staff worked with the Housing Commission and community stakeholders to develop expanded program criteria. In August and September 2024, the Housing Commission reviewed and refined draft guidelines. On October 8, 2024, City Council provided additional direction and authorized staff to proceed with a formal procurement process to select a program administrator.

An RSOQ was published in March 2025, and Housing Solutions of Northern Arizona (HSNA) was selected to administer the expanded program. CHAP officially relaunched with a limited scope under HSNA’s administration in August 2025. Since the relaunch, three households have successfully closed on their new homes, with three additional closings underway.

The below are key components of both of the options provided by the program, pending Council’s approval:

Option 1: Home Purchase Assistance
This option supports first-time homebuyers with down payment and closing cost assistance through a repayable loan. Key criteria include:

• Household income up to 150% AMI ($152,820 for a household of three)
• Maximum assistance of $50,000, with a minimum buyer contribution of $2,500
• 10:1 matching structure (e.g., $5,000 in buyer funds = $50,000 in assistance)
• Need-based – household must not have more than 8 months of total housing costs saved
• Home purchase price must fall below the jumbo loan limit ($806,500)
• Housing ratio between 25–35%, and debt-to-income (DTI) not to exceed 45%
• Repayment is required based on a shared appreciation formula; funds are recycled for future buyers

Option 2: Permanent Affordability Pilot Program
This pilot provides households with deeper assistance in exchange for making the home permanently affordable. Key features include:

• Household income up to 125% AMI ($127,350 for a household of three)
• Assistance equal to 30% of the home’s purchase price
• Home purchase price limit of $600,000
• Property must be within Flagstaff city limits and owner-occupied
• No repayment required, but resale is limited to 25% of market appreciation
• The home must be sold to income-eligible buyers
• Affordability guidelines: housing ratio ≤ 35%, DTI ≤ 45% (up to 50% with City approval)
• Secured through a 99-year renewable ground lease or deed restriction

Eligible buyers will be permitted to choose either Option 1 or Option 2, but not both.

• High Performing Governance:
  • Implement innovative local government programs, new ideas & best practices; be recognized as a model for others to follow.
• Safe & Healthy Community:
  • Support social services, community partners & housing opportunities
• Inclusive & Engaged Community:
  • Ensure city facilities, services, & programs are accessible for all residents & representative of Flagstaff's diverse community
• Robust Resilient Economy:
  • Support & strengthen a more robust, diverse, & sustainable economy in ways that reflect community values & provides for affordable housing opportunities
• Livable Community
  • Actively support attainable & affordable housing through City projects & opportunities with developers???????
• Environmental Stewardship
  • Implement, maintain & further the Climate Action & Adaptation Plan (CAAP) with awareness of social inequities

• 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.
• NH.3.3. Increase the availability of affordable housing for very low-income persons, through innovative and effective funding mechanisms.
• NH.3.5. Encourage and incentivize affordable housing.
• NH.5.3. Support and expand programs that prevent homelessness

• 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-3: Preserve affordable housing.
• HA-4: Protect people from housing discrimination and remove housing barriers.

• Create 3.3: Identify ongoing resource opportunities for the purpose of assisting households experiencing homelessness, households at risk of becoming homeless, first-time homebuyers, and affordable housing targeted to these populations.
• Connect 2.4: Utilize City of Flagstaff resources to educate the community about financing and housing opportunities with an emphasis on assisting low- to moderate-income households to advance through the housing continuum and to address past racial disparities.
• Protect 2.2: Encourage diversity of housing options in all neighborhoods, understanding that exclusive communities are incompatible with the City of Flagstaff's mission to protect and enhance the quality of life for all.