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Council selects developer for 36-unit 9% LIHTC project at 2411 West State Route 89A; approval contingent on award and lease negotiation
Summary
The council awarded a developer selection for a 36-unit low-income housing tax credit proposal on West State Route 89A, approving a conditional option to negotiate a city land lease if the project secures 9% LIHTC funding from the Arizona Department of Housing.
The Sedona City Council selected HS Development Partners LLC as the preferred developer for a proposed 36-unit multi-family project planned at 2411 West State Route 89A and approved a lease-option arrangement contingent on the developer winning a 9% Low Income Housing Tax Credit (LIHTC) award from the Arizona Department of Housing and on successful negotiation of a land lease with the city.
City staff issued an RFP in January to identify a developer able to deliver a competitive 9% LIHTC application by the April 1 deadline. A review panel of city staff scored three proposals; HS Development Partners scored highest and presented their concept to council and the public at the meeting.
HS Development Partners’ concept anticipates 36 units targeted at households at or below 60% area median income (AMI), with a mix of one-, two- and three-bedroom units. The project’s financing plan presented to council includes LIHTC equity, construction and permanent loans, deferred developer fee, and a requested $100,000 soft loan from the city (proposed to maximize scoring in the state allocation process). Total projected development cost shown in the developer’s packet was about $19 million.
Staff explained the site was purchased for workforce and income-aligned housing and sits near transit, grocery, urgent care and employment centers in the West Sedona corridor. The city and developer discussed design, traffic and fire access options; staff emphasized that site layout, building height and detailed plans will be reviewed through normal planning-and-zoning and development-agreement processes if the project receives tax credits.
Council conditioned its approval: the selection advances the city’s intention to partner with the chosen developer and authorizes staff to negotiate a lease option, but a final land lease and a development agreement must be negotiated and returned to council for final approval. Council members said they supported the project and its location, noting the city bought the parcel for housing and that the need for workforce housing remains pressing.
Next steps: the Arizona Department of Housing notifies applicants of awards (staff said June 2 is the award date referenced in the presentation). If HS Development Partners receives a LIHTC allocation, staff will negotiate the lease and return a development agreement and land lease for council consideration and will shepherd required land-use approvals through planning and zoning. Council specifically approved a motion to award the RFP and authorize a conditional lease-option; the vote was unanimous.
The developer and city will also finalize construction drawings, financing documentation and the land-lease draft if the award is made; council and the public will review the project design, access and other details in subsequent public hearings required by city process.
