Consideration and Approval of Contracts: with Habitat for Humanity of Northern Arizona related to establishing an Affordable Housing Plan for the Habitat at Timber Sky Condominium.
 

1. Restrictive Covenant Agreement;
2. Special Warranty Deed;
3. Ground Lease for the Habitat at Timber Sky Condominium;
4. Declaration of Condominium and Easements for Habitat at Timber Sky Condominium;
5. Declaration of Annexation and Supplemental Declaration to Declaration of Covenants, Conditions, Restrictions and Easements for Timber Sky;
6. Driveway Maintenance Agreement;
7. Habitat Affordability Plan;
8. Agreement for Subsidy of Association Assessment;
9. Closing Instructions Agreement;

Habitat is requesting that the City approve the Housing Affordability Plan and related documents now, versus later.  Habitat desires to complete transfer of the 3.3 acres of land to the City: (a) prior to selling units to eligible home buyers, and (b) prior to completion of construction of all 40 units, and (c) prior to release of the ADOH grant requirements.

The Arizona Department of Housing (ADOH) issued a forgivable loan of $2.16 million to Habitat for the starter homes. The loan is secured by a lien against the land. The loan is forgivable upon sale of 10 units. Habitat has constructed 10 units.  Habitat is requesting that ADOH agree to a partial release of the lien, so that the City is not subject to the lien upon accepting title to the land. ADOH is amenable to this idea but the partial release documents have not yet been approved.  

A summary of the Habitat Affordability Plan and responsibilities under the related documents follows:
 

• Design and construct 40 starter homes, including all infrastructure, on 3.3 acres of land;
• Establish the development as a leasehold condominium;
• Advertise, find, and income-qualify buyers for the condominium units;
• Sell units to eligible home buyers (households with income of up to 100% of the area median income or AMI)(initially only buyers with up to 80% AMI will be considered);
• Operate a savings program wherein homes are owned for up to 10 years, then resold to Habitat, with sellers to receive their net equity upon resale of the unit to Habitat;
• Prepare units for resale (including maintenance);
• Provide oversight of the leasehold condominium for a period of years to allow for the association to become self-sufficient;
• Use $100,000 in funding from VP 66 towards payment of Master Association and Condominium Association assessments over 10 years;
• Approve any subleases to ensure affordable housing goals are met; 
• Comply with Arizona Department of Housing (ADOH) grant restrictions related to funding used to build starter homes. 

• Accept title to the 3.3 acres of land from Habitat;
• Lease the land to all unit owners pursuant to a Ground Lease (initial term is 50 years);
• Agree to annexation of the land into the Timber Sky Community Association (the master association);
• Collect rent of $30 per month from each unit owner;
• Provide periodic maintenance of the driveway and parking spaces within the Condominium (in conjunction with maintenance of adjacent public roads);
• If needed, enforce Ground Lease and restrictive covenants that apply to the Condominium;
• Approve de-annexation of the land from the master association if appropriate to support affordable housing purposes;
• Approve use of beautification funds for a public amenity (such as a community garden) in the open space of the Condominium, if grant eligibility requirements are met and subject to any zoning requirements.  

Homeowner responsibilities:

• Purchase home from Habitat;
• Maintain the home in good condition (improvements are restricted to maintain affordability);
• Pay property taxes and insurance on the home;
• Pay all Master Association and Condominium Association fees and assessments (if not otherwise paid by Habitat);
• Resell the home to Habitat within 10 years;
• Comply with all residential use and other restrictions.

Habitat at Timber Sky Community Association (condominium association) responsibilities:

• Enforce residential use and other restrictions;
• Issue and collect assessments to pay for association expenses;
• Approve a license for a public amenity (such as a community garden) in the Condominium open space, if desired.

Timber Sky Community Association (master association) responsibilities:

• Enforce residential use and other restrictions;
• Provide snowplowing and maintenance of driveway and parking for the Condominium not otherwise provided by City;
• Issue and collect special assessments for the foregoing services being provided to the Condominium;
• Allow homeowners to use all Timber Sky amenities (including pickle ball courts).

 

The only costs associated with this project relate to the Driveway Maintenance Agreement. There will be a reduction in property tax revenues associated with transfer of the land to the City. The City will obtain title to the property (an asset), and will receive monthly rent of $30/month from each unit owner. 

Project Name: Habitat at Timber Sky Leasehold Condominium
Cost: Public Works anticipates that no maintenance will be needed for several years, as the pavement is new. Averaged over time the maintenance cost is roughly estimated at $18,000/year in today's dollars. 
Account Number Budgeted: None
FY Budgeted Amount: None
Grant Funded: No
Funding Source: General Fund. HURF and dedicated sales tax funds may only be used for public streets. 

In 2022 the City Council approved the 4th Amendment to the Development Agreement for Timber Sky with VP 66, wherein VP 66 agreed to transfer 3.3 acres of land to Habitat for development of 40 affordable housing units.

1. Approve documents.
2. Do not approve documents. In this case Habitat will remain as property owner and as the lessor. City would not maintain the driveway unless it approved that as a standalone agreement. City would not be the lessor of the land. 
3. Direct staff to take different action. 

This affordable housing project is part of a larger master planned development known as Timber Sky.  The developer of Timber Sky, VP 66, entered into the following agreements with the City:

• Timber Sky Development Agreement (DA) (2016). 
  • The Workforce Housing Provision: Timber Sky agreed to deliver 100 ownership units dispersed throughout the community to be sold at or below 100% AMI.
• 2^nd Amendment to DA (2018). 
  • Workforce Housing Provision: Allowed the 100 ownership units to be sold up to 125% AMI if the units were not selling for an extended period.
• 4^th Amendment to DA (20022).  
  • Workforce Housing Provision: Allows 90 rental units to be rented to persons with a household income of up to 60% AMI, and requires 40 Habitat ownership units on 3.3 acres of land to be sold at up to 100% AMI.  The Habitat ownership units are to be consistent with the existing starter home program on Leroux (400-500 sq.ft units), and placed into the Community Land Trust program. The 4th Amendment was not detailed, and the starter home program differs significantly from the City's Community Land Trust program. The 4th Amendment requires a Habitat Affordability Plan. 

City staff will be proposing that the City Council approve a 5th Amendment to the DA at a later date, consistent with the Habitat Affordability Plan being approved by the City.  This 5th Amendment will clarify that the Habitat ownership units are not being placed into the Community Land Trust program, and that Habitat will remain responsible for construction of the 40 starter homes after transfer of the land to the City. 
 

• High Performing Governance
  • Encourage public trust through transparency, accessibility & use of the City’s public participation policy
  • 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
  • Provide alternative responses, resources & programs, inclusive of mental health & other services
•  Inclusive & Engaged Community
  • Foster community pride & civic engagement by increasing opportunities for public involvement, in line with best practices & legal requirements
  • Advance social equity & social justice in Flagstaff by supporting social services
  • Facilitate & foster diversity & inclusivity, including support of anti-racist policies & practices
  • Enhance community involvement, education & regional partnerships to strengthen the level of public trust
  • Ensure city facilities, services, & programs are accessible for all residents & representative of Flagstaff’s diverse community
•  Sustainable, Innovative Infrastructure
  • Support the community’s social infrastructure needs; assist those partner organizations that provide services the City does not
•  Robust Resilient Economy
  • Support & strengthen a more robust, diverse, & sustainable economy in ways that reflect community values & provides for affordable housing opportunities
  • Enhance understanding between the development community, the City & Flagstaff residents
  • Enhance the community’s workforce development programs & improve partnerships with higher education institutions & the private & public sectors
•  Livable Community
  • Support regional partners which provide equitable & inclusive educational opportunities for Flagstaff residents of all ages
  • 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

 

• Goal NH.1. Foster and maintain healthy and diverse urban, suburban, and rural neighborhoods in the Flagstaff region.
  • Policy NH.1.1. Preserve and enhance existing neighborhoods.
• Goal NH.3. Make available a variety of housing types at different price points, to provide housing opportunities 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
• Goal NH.4. All housing is safe and sanitary.
  • Policy NH.4.1. Expand the availability of affordable housing throughout the region by preserving existing housing, including housing for very low-income persons. Policy NH.4.2. Reduce substandard housing units by conserving and rehabilitating existing housing stock to minimize impacts on existing residents.
  • Policy NH.4.3. Address accessibility issues and other housing barriers to persons with disabilities or special needs.
  • Policy NH.4.4. Encourage green practices in housing construction and rehabilitation that support durable, healthy, and energy efficient homes.
  • Policy NH.4.5. Renovate the existing housing stock to conserve energy and reduce utility and maintenance costs for owners and occupants.
  • Policy NH.4.6. Consider and integrate public transportation, when possible, in planning housing developments, to help reduce a household’s transportation costs and minimize impact on the community’s roads and transportation system.
  • Policy NH.4.7. Enforce compliance with fair housing laws.
• Goal NH.5. Eliminate homelessness.
  • Policy NH.5.1. Provide adequate resources for families with children experiencing homelessness.
  • Policy NH.5.2. Provide adequate resources for individuals experiencing homelessness.
  • Policy NH.5.3. Support and expand programs that prevent homelessness.
  • Policy NH.5.4. Make transitional housing resources available to populations experiencing homelessness

• Community resilience
  • CR-1: Ensure all mitigation actions improve Flagstaff’s ability to adapt to the future.
  • CR-2: Strengthen existing community systems to create resilience to both short-term shocks and long-term change.
• Equitable systems
  • ES-2: Proactively engage community members on an ongoing basis
  • ES-4: Actively seek to recognize past harms, repair trust, and build deeper relationships with community members.

 

• Connect people to equitable housing solutions.
  • Connect 1: Reduce homelessness in the Flagstaff community and seek creative solutions to foster housing permanency for all.
    • Connect 1.3 Continue to support and develop Coordinated Entry as a meaningful process that provides linkages to healthcare, behavioral health, and housing
  • Connect 2: Implement a framework for centering equity in proposed and existing housing practices, policies, and programs.
    • Connect 2.1 Evaluate housing policies and strategies in City of Flagstaff planning documents through an equity lens.
    • Connect 2.2 Encourage community organizations such as local Continuum of Care to continue to integrate equity into programs and policies.
  • Connect 3: Integrate healthcare into housing programs, and housing into healthcare programs, as appropriate.
    • Connect 3.1 Raise awareness of housing security as a social determinate of health
    • Connect 3.2 Encourage neighborhoods, housing types and building practices that increase health.
    • Connect 3.3 Work in partnership with the community to develop and promote community health measurement data collection into housing services when viable
• Preserve affordable housing
  • Preserve 1: Encourage the adaptive reuse of buildings.
    • Preserve 2.2 Acquire and rehabilitate already built properties for affordable housing projects when financially feasible.
• Protect people from housing discrimination and remove housing barriers.
  • Protect 1: Continue Flagstaff's commitment to further Federal and Arizona Fair Housing laws in all housing-related services and programs, valuing the efforts of those who seek to reduce barriers to equitable housing opportunities, and providing Fair Housing education and resources to the community.

None.