City Backs Staff’s Push for Federal Housing Grant

On March 11, the Sedona City Council unanimously voted to back a Low-Income Housing Tax Credit (LIHTC) application submitted by HS Development Partners from Ohio. The funding is aimed at developing a three-story, 36-unit apartment complex at a recently purchased city site located at 2411 W. State Route 89A. The council also authorized city staff to negotiate a lease option agreement for the land contingent upon the success of the LIHTC application.

Housing Manager Jeanne Blum emphasized the site’s advantageous location near supermarkets, parks, and trails, factors that could enhance the competitiveness of the application. The deadline to submit the LIHTC application is April 1, placing pressure on the city to act quickly.

City Attorney Kurt Christianson noted that due to time constraints, a complete land lease agreement could not be finalized immediately. The council approval only pertains to an option agreement, reliant on two conditions: the approval of a 9% LIHTC award and a successful negotiation of the land lease with the developer.

In response to a request for proposals issued on January 2, the city received three bids for the site. Despite HS Development Partners receiving the highest overall score, Spire Development outperformed them in both LIHTC experience and financing feasibility categories. The city council did not finalize the property purchase until January 28.

The new development is tentatively named “The Flats on Blue Heron,” featuring a mix of one-, two-, and three-bedroom apartments, all set at or below 60% of the median household income. Blum mentioned potential changes to the architectural design and aesthetics as the project progresses.

Developer Matt Shoemacher stated that adjustments could be made to the apartment sizes while maintaining the unit total, adhering to LIHTC regulations. Proposed rental rates will fluctuate based on individual incomes, ranging from $547 to $933 for one-bedroom units, $747 to $1,120 for two-bedroom units, and $863 to $1,295 for three-bedroom units.

The project’s estimated cost is around $19 million, translating to approximately $527,778 per unit. This cost is in comparison to the earlier project, the Villas on Shelby, which was estimated at $466,666 per unit but has not yet begun construction. HS Development Partners has requested a $100,000 “soft loan” from the city to bolster the LIHTC application.

Mayor Scott Jablow expressed concern over entrusting HS Development Partners with another project when their current one has yet to break ground. Shoemacher reassured the council, indicating that they are close to finalizing finances and expect construction to begin in early April.

Public comments included support from Sedona Chamber of Commerce President David Key and Sedona Lodging Council President Cheryl Barron, who shared a poignant story about a single parent struggling with housing costs. Councilman Derek Pfaff remarked, “This is why we bought this property,” expressing satisfaction over the initiative moving forward swiftly. Councilman Pete Furman supported the project under the condition that decisions would remain flexible, particularly concerning unit numbers. Councilwoman Kathy Kinsella highlighted the project’s strong fit for the location.

The council’s unanimous decision reflects a commitment to addressing housing needs in the community. The Arizona Department of Housing will announce successful LIHTC awardees on June 2.