7.C.
City Council Meeting - FINAL
- Meeting Date:
- 11/04/2025
- From:
- Jennifer Mikelson, Housing Planning Manager
TITLE:
Consideration and Approval of Contract: Loan Documents for Elkwood Apartments by Wexford Developments
STAFF RECOMMENDED ACTION:
Staff requests City Council's approval of loan documents totaling $528,000 for Elkwood Apartments by Wexford Developments, utilizing Rental Incentive Bond Program funds.
Executive Summary:
Staff is requesting Council's approval of a loan for Wexford Developments, who responded to a Notice of Funding Availability in February 2025 and were recommended for an award of $528,000 for the inclusion of 10% affordable rental units at their multifamily project.
Project Details for Elkwood Apartments, by Wexford Developments:
Project Details for Elkwood Apartments, by Wexford Developments:
- Unit count: 224 total (202 market rate / 22 affordable)
- Maximum Income Level Served: 70% of the Area Median Income ($68,740 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
Grant Funded: n/a
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
Grant Funded: n/a
Funding Source: Housing Bond (Prop 442) - Rental Incentive Bond Program
Policy Impact:
None
Previous Council Decision or Community Discussion:
Council Approved the Rental Incentive Bond Program by Resolution 2023-31 on November 7, 2023
Council Approved a Recommendation of Award for Wexford Developments on March 18, 2025
Council Approved a Recommendation of Award for Wexford Developments on March 18, 2025
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 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 (RIBP) 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 in Flagstaff.
NOFA and Evaluation Process
On November 4, 2024 the City of Flagstaff published a NOFA (#2024-106) 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 identifies that the highest-scoring application will 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, 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 to extend 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 a funding agreement between the City of Flagstaff and Wexford Developments LLC, a 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 – 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 (RIBP) 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 in Flagstaff.
NOFA and Evaluation Process
On November 4, 2024 the City of Flagstaff published a NOFA (#2024-106) 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 identifies that the highest-scoring application will 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, 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 to extend 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 a funding agreement between the City of Flagstaff and Wexford Developments LLC, a 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 ofany 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 ofany development or redevelopment.