9.B.
City Council Meeting - FINAL
- Meeting Date:
- 10/06/2026
- From:
- Sullivan Moore, Housing Planner
TITLE:
Consideration and Approval of Contract: Loan Documents with Lone Tree Ranch, LP related to a $1,650,000 loan for development of affordable housing units
STAFF RECOMMENDED ACTION:
- Approve loan documents related to a loan of $1,650,000 to Lone Tree Ranch, LP for affordable housing rental units, using Rental Incentive Bond Program (RIBP) funds; and
- Authorize the City Attorney to approve nominal changes to the documents if required for consistency; and
- Authorize the City Manager to execute the final loan documents, consisting of (a) Funding Agreement, (b) Promissory Note, (c) Deed of Trust, (d) Declaration of Restrictive Covenants.
Executive Summary:
Staff is recommending Council approval of loan documents with Lone Tree Ranch, LP (Developer). Developer responded to a Notice of Funding Availability in February 2026, and the City Council previously recommended an award of $1,650,000 for construction of 100% affordable rental units at the multifamily project, Lone Tree Ranch, by Lincoln Avenue Communities.
Project Details:
Project Details:
- Unit count: 168 affordable units
- Income Level Served: Households up to 60% of the Area Median Income ($60,480 for a household of 3)
- Loan Amount: $1,650,000
- Loan term: 50 years
- 0% interest
- Loan fully forgiven at 50 years of compliance
Financial Impact:
Project Name: Lone Tree Ranch
Cost: $1,650,000
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: $1,650,000
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 for award of a loan for the Lone Tree Ranch, by Lincoln Avenue Communities development on April 7, 2026.
Council approved a Development Agreement with Lone Tree Ranch, LP in March 2026 which, among other things, includes zoning code incentives for the provision of affordable housing units.
Council approved a recommendation for award of a loan for the Lone Tree Ranch, by Lincoln Avenue Communities development on April 7, 2026.
Council approved a Development Agreement with Lone Tree Ranch, LP in March 2026 which, among other things, includes zoning code incentives for the provision of affordable housing units.
Options and Alternatives to Recommended Action:
1. Approve the loan and loan documents as recommended.
2. Amend the loan documents per Council direction.
3. Reject staff recommendation.
2. Amend the loan documents per Council direction.
3. Reject staff recommendation.
Background and History:
Housing Bond
Proposition 442 authorized the use of $20 million dollars of general obligation bonds for "Creating Rental and Ownership Opportunities for Residents of Flagstaff" and was approved by 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
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 January 2, 2026 the City of Flagstaff published Request For Proposals (RFP) for a NOFA (#2026-132) for $1,650,000 in Rental Incentive Bond Program funds. Three applications were received by the closing date of February 2, 2026 and were provided to a Ranking Committee and scored individually in accordance with the NOFA's evaluation criteria. The NOFA identified 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. Lincoln Avenue’s application was the highest-scoring application and was therefore recommended for full funding at the requested amount of $1,650,000.
Project Details
Lincoln Avenue Communities is the developer of Lone Tree Ranch, a multifamily low-income housing tax credit project that utilizes noncompetitive 4% bond funding and is located at the northeast corner of Lone Tree Road and Pine Knoll Drive. This project was originally approved as a rezoning case by Council in March 2026 and included a development agreement designating 168 (100%) affordable units serving households up to 60% AMI for a period of 30 years, per their LIHTC requirements. With this funding, Lincoln Avenue Communities 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 Lone Tree Ranch, LP, a promissory note, and a deed of trust. All loan documents were prepared by the City's legal counsel and reviewed by the awardee.
Proposition 442 authorized the use of $20 million dollars of general obligation bonds for "Creating Rental and Ownership Opportunities for Residents of Flagstaff" and was approved by 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
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 January 2, 2026 the City of Flagstaff published Request For Proposals (RFP) for a NOFA (#2026-132) for $1,650,000 in Rental Incentive Bond Program funds. Three applications were received by the closing date of February 2, 2026 and were provided to a Ranking Committee and scored individually in accordance with the NOFA's evaluation criteria. The NOFA identified 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. Lincoln Avenue’s application was the highest-scoring application and was therefore recommended for full funding at the requested amount of $1,650,000.
Project Details
Lincoln Avenue Communities is the developer of Lone Tree Ranch, a multifamily low-income housing tax credit project that utilizes noncompetitive 4% bond funding and is located at the northeast corner of Lone Tree Road and Pine Knoll Drive. This project was originally approved as a rezoning case by Council in March 2026 and included a development agreement designating 168 (100%) affordable units serving households up to 60% AMI for a period of 30 years, per their LIHTC requirements. With this funding, Lincoln Avenue Communities 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 Lone Tree Ranch, LP, a promissory note, and a deed of trust. All loan documents were prepared by the City's 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 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.
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 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.
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.
Connection to Division Specific Plan:
see above
Attachments
- Funding Agreement
- Exhibit B to Funding Agreement
- Promissory Note
- Deed of Trust
- Declaration of Restrictive Covenants
- Rental Incentive Bond Program