Consideration and Adoption of Resolution No. 2026-54: A resolution of the Flagstaff City Council, delegating authority to the City Manager to approve awards of funding for affordable projects eligible for payment and/or reimbursement of municipal fees; providing for delegation of authority and establishing an effective date.
 

1. Read Resolution No. 2026-54 by title only
2. City Clerk reads Resolution No. 2026-54 by title only (if approved above)
3. Adopt Resolution No. 2026-54

This resolution would authorize the City Manager to approve contracts up to $1,000,000 to pay for municipal fees for eligible affordable housing projects. The existing Incentive Policy for Affordable Housing (IPAH) identifies which permits and fees may be paid on a developer's behalf and affordability requirements.

Historically, the City Council has appropriated funding to the IPAH as part of the annual budget process. When IPAH funding is available it is awarded on a first come, first served basis.

Account Number Budgeted: 021-13-106-0362-4-4290 
FY Budgeted Amount: $1,564,750.74
Funding Source: General Fund

This resolution is intended to support the administration of the current Incentive Policy for Affordable Housing by streamlining the provision of funding to assist in the development of affordable housing.

None

1. Revise the proposed Resolution
2. Reject the proposed Resolution and provide further direction

Since 2009, the City of Flagstaff has implemented both financial and zoning incentives to support the creation of affordable housing units. The attached Incentive Policy for Affordable Housing (IPAH) identifies the various municipal fees and permits that are eligible for payment or reimbursement on a developer’s behalf and the affordability requirements. The IPAH does not officially "waive" any fee; the cost of an eligible fee is paid from Housing Division’s IPAH account on behalf of the developer. IPAH funding varies annually and is funded by the City’s general fund, after Council adoption of the annual budget.

Historically, Housing Division staff assisted local non-profits with smaller-scale affordable rental and ownership projects utilizing modest annual budget allocations. In recent years, the barriers to construct affordable housing have intensified. Larger-scale 100% affordable Low Income Housing Tax Credit (LIHTC) projects have been acutely impacted — rising construction and labor costs, lower investor pricing on tax credits, and higher borrowing costs. Consequently, LIHTC developers are asking for greater financial support from the communities they build in. Award of tax credits often hinges on some form of local financial support. Therefore, staff has requested more IPAH funding from the annual budget process to substantively assist in the delivery of affordable rental projects for our community.

Once IPAH funding is secured for a particular project, Housing Division staff officially reserve that funding by entering into agreements. Given that there is a $100,000 City charter limitation on the amount of funding city staff is authorized to expend without Council approval, the proposed Resolution would authorize the City Manager to enter into agreements with developers to reserve up to $1,000,000 in IPAH funds for eligible affordable projects. Allowing staff to process these agreements administratively furthers the intent of the Incentive Policy and is responsive to the tight timeframes and capital constraints developers face between development approvals and construction.

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

HA.5: Support the development of ownership and rental units that are priced below market rate.
CD.2: Support affordable and attainable housing development through additional support for infrastructure costs and sustainably reduced development standards and fees.

Target Area: Housing for All
Strategy: Create housing options for households at all income levels and family sizes occupied by local residents.
Action: Incentivize the creation of affordable units through various programs and mechanisms.

Create 1: Incentivize the creation of affordable units through various programs and mechanisms.
Create 1.2: Update the City's affordable housing incentive policy to implement the goals and policies of the 10-Year Housing Plan.
Create 1.4: Explore implementing reduced fees and waivers to incentivize the development of affordable housing

N/A