Consideration and Adoption of Ordinance No. 2025-23: An ordinance of the City Council of the City of Flagstaff, authorizing the acquisition and disposition of real property from the Flagstaff Unified School District, in order to facilitate affordable housing development, providing for delegation of authority, providing for severability, authority for clerical corrections, and establishing an effective date.
 

The Flagstaff Unified School District (FUSD) is exploring affordable housing development opportunities on the approximately 18.8 acres adjacent to the Sinagua campus, identified by tax assessor's parcel number 106-08-002V (Property). The Property is zoned Public Facility.

Under A.R.S. § 15-342.7, FUSD may "sell or lease [school property] to the state, a county, a city, another school district or a tribal government agency required for a public purpose if the sale or lease of the property will not affect the normal operations of a school within the District". The City received a request from the Superintendent of the District to purchase the Property in order to facilitate an affordable housing project under the following model:

1. FUSD will convey the Property to the City
2. The City will record a Land Use Restriction Agreement (LURA) restricting the use of the Property to a use which furthers the public purpose of increasing the supply of affordable housing. 
3. After recording the LURA, the City will convey the property to a special purpose nonprofit entity established by an Arizona Industrial Development Authority
4. The nonprofit entity will enter into a ground lease with a developer to develop the project.

The planned project is currently designed for between 40 to 48 affordable units. Several affordable housing projects have had success using this model in Arizona. Further details and a final purchase agreement will be brought to Council for consideration at a future meeting.

Staff is bringing the ordinance to acquire now because the project is contingent upon the award of a Low Income Housing Tax Credit (LIHTC) to the developer. The "pre-application" process for the LIHTC requires the developer to demonstrate site control by January 15, 2026. The Ordinance is a prerequisite to documenting site control by the applicant. Approval of the ordinance will allow the parties to work towards completing the transaction documents within the LIHTC application timeline. 

There will be no financial impact to the City. The transaction is structured in a manner that the City is not required to contribute any funds towards closing the transaction.  All payments are provided by other parties to the transaction.

None.

This is the first time this item is appearing at City Council.

Explore alternative paths to develop FUSD property into affordable housing.

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

Policy LU.10.5. Consider vacant and underutilized parcels within the City’s existing urban neighborhoods as excellent locations for contextual redevelopment that adds housing, shopping, employment, entertainment, and recreational options for nearby residents and transit patrons.

DD-1 Encourage vibrancy, appropriate density, and attainability in existing neighborhoods, so that more residents live within walking distance of their daily needs. 

Create 1.8

Explore the use of the community land trust model and public/private partnerships to incentivize the development of ownership units that are priced significantly below market rate.

Create 2.2

Identify suburban areas to support greater density and intensity of development.

Create 4.3

Explore adding affordable housing as an allowed use in the Public Facilities (PF) Zone.