Flagstaff official outlines incentives, bond funding and monitoring used to spur workforce housing; Prescott committee weighs density-bonus code approach

Jennifer, a housing department staff member for the City of Flagstaff, told the Prescott City Workforce Housing Committee on a video call that Flagstaff uses regulatory and financial incentives to attract developers to workforce housing projects. “I think the the the biggest response to that would be just having incentives,” she said, listing zoning relief, density bonuses and direct money as tools. She said Flagstaff also has used a voter-approved general obligation bond to provide predictable funding.

The bond, Jennifer said, was a $20,000,000 voter-approved general obligation bond split into four categories: a down-payment assistance program (about $7,000,000), a $5,000,000 developer-incentive pot for multifamily rental projects, $3,000,000 to assist adaptive reuse of existing buildings, and $5,000,000 set aside for redevelopment of public housing sites. “We were lucky enough to get a voter approved, general obligation bond for affordable housing for 20,000,000,” she said.

Jennifer described other incentives Flagstaff uses to make projects feasible: offering city-owned land for land-lease arrangements, density bonuses written into the zoning code, parking reductions, landscape-relief and targeted relief from local resource-protection overlays. On density bonuses she advised putting the bonus language into the code so a developer can calculate potential units up front rather than waiting for a rezoning: “If you do affordable, then you get a 25% density bonus,” she explained as an example of how a city code provision could be phrased.

On affordability terms and monitoring, Flagstaff aligns multifamily rental affordability with Low Income Housing Tax Credit practice: a 30-year affordability term and a legally binding development agreement requiring biannual compliance reports. “That document stipulates that they will, submit, biannual reports to our housing department that verify, you know, the income levels of the tenants in those units and the rent being charged,” Jennifer said. She described the practical monitoring process as a continuing relationship between city staff and the property manager rather than day-to-day municipal management of tenants.

On ownership and permanently affordable units, Jennifer described use of deed restrictions or a 99-year ground lease to secure resale-price limits and preserve affordability across sales. “Each owner agrees to restrict the resale pricing on their home if and when they decide to sell,” she said, summarizing how Flagstaff keeps ownership units affordable to the next buyer.

Jennifer also described Flagstaff’s community land trust work. The city operates the program in-house but contracts eligibility determinations and administration of down-payment assistance to a local nonprofit, Housing Solutions of Northern Arizona. She recommended leveraging nonprofit partners where possible for operations and eligibility screening.

Committee members pressed for practical detail the committee could use in drafting local policy. Randy Goodman and other members said a Prescott code provision that plainly states density bonuses, parking reductions and other specific concessions for workforce housing—so developers “know right away”—would be most useful. Amber, the committee staff member, and members discussed timing and whether to place specific language in the zoning code (so it’s immediately actionable for developers) or in policy (easier to revise but less directly useful at the developer application stage).

Jennifer cautioned that many incentive provisions must be calibrated to local code constraints (building form, lot size, protected resources) and recommended close coordination with planning staff when designing bonuses and reductions. She also urged that city programs be designed to permit periodic reassessment and adjustment, noting Flagstaff’s experience that program details sometimes need to change after projects apply the rules in practice.

The committee discussed next steps, including asking staff to circulate Flagstaff code excerpts and templates Jennifer offered to provide, and scheduling a follow-up meeting to draft language. Amber advised the committee that council had asked to see a draft policy at a study session on May 27 (committee members discussed options for meeting in April to prepare materials for council’s review).