Sunset Lofts Project Receives Extension Until 2026

The Sunset Lofts affordable housing project, initially touted by Sedona city officials in July 2021 and prominently featured in Mayor Scott Jablow’s election campaign the following year, has encountered various delays. Nevertheless, the Sedona Planning and Zoning Commission has recently breathed new life into the initiative during a meeting on November 5.

Following the MK Company of Scottsdale’s failure to commence construction by the set deadlines—first on July 13, 2023, and later on April 1, 2024—the city decided to take ownership of the 2.2-acre site designated for the planned 46-unit apartment complex. Instead of focusing on Sunset Lofts, the developer shifted attention towards a separate 60-unit townhome project on Navajo Drive.

“A building permit for the project was issued on December 20, 2023, and was extended in June 2024, pushing expiration to December 20, 2024,” disclosed interim Housing Manager Jeanne Frieder during a recent city development review extension request. “With the city now at the helm, we are mobilizing the project. However, we need to issue a request for proposals (RFP) to select a contractor. This RFP is expected to be released in October 2024.” However, since the construction timeline is tight, it is unlikely that any building will begin before the permit expires.

Planning Manager Cari Meyer emphasized that city staff is committed to moving forward despite the limited timeframe following the acquisition. “We just need some additional time,” she noted.

Community Development Director Steve Mertes confirmed, “We are finalizing that RFP today and aim to distribute it this week.” He detailed that the city seeks a developer to both construct and manage the property under a land lease agreement lasting a minimum of 30 years.

Discussions within the commission included inquiries about potential design changes, notably the building’s roof design. However, Meyer clarified that the current plans feature a flat roof.

The fiscal year 2025 budget allocates a total of $7.2 million as a loan for the project. By March 28, $1,982,123 had already been disbursed to the previous developer. The commission later unanimously approved an extension of the development review period until September 21, 2026. Without substantial progress by then, the approval will lapse, necessitating a restart of the review process.

The RFP for this project was officially issued at 4 p.m. on November 7 and will remain open until 2 p.m. on December 5. The city anticipates awarding a contract to the successful bidder by February 2025.

To qualify, applicants must have completed at least three community housing projects in the last decade. Proposals may modify unit types but cannot change the footprint of the existing building. Furthermore, successful applicants must allocate three to five staff members to manage the project.

The approved land lease comes with a set fee of $12,000 per year, which will increase by $5,000 every five years. Upon completion of the housing units, developers will be required to conduct annual income audits of tenants and provide that data to the city. Notably, rental rates will be based on Prescott Valley’s median income instead of the Yavapai County median.

Lastly, the city plans to offer a loan at an interest rate of 4.08% to support the project, significantly lower than the national average rate of 6.97% for 30-year mortgages, which stood at that rate on November 8. During a budget session in April, officials considered a subsidy amounting to $7.75 million, though the final figures remain to be determined.