Sedona council approves ground lease for 30‑unit Villas on Shelby affordable housing project

Sedona City Council approved a resolution to authorize a ground lease, land use restrictions and related financing for the 30‑unit Villas on Shelby affordable housing project at 2250 Shelby Drive on a 5‑2 vote.

City staff and the developer told council that the project has been under development for roughly two years and moved to closing after bond issuance in January. Jeannie (city staff) told council the lease is now in compliance with Internal Revenue Code Section 42 and other tax‑credit requirements and recommended approval so the project can close and begin construction. City Attorney Kurt (last name not provided) summarized prior approvals and recent required changes to the deal’s structure.

Why it matters: Councilors said Sedona has very limited rental housing stock and that the project would create 30 affordable units in a market with few multifamily units. Several councilors urged caution because key lease and affordability terms changed in recent weeks and some long‑term economic consequences for the city remain uncertain.

Developer and financing details Developer Matt Schmacher, of HS Development Partners, said the project was originally structured as a 9% low‑income…