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Flagstaff council authorizes first steps to use FUSD land for affordable housing; ordinance read for first time

Flagstaff City Council · November 19, 2025

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Summary

Council read an ordinance authorizing acquisition and disposition of about 18.8 acres from Flagstaff Unified School District to enable a LIHTC-driven affordable housing project; the ordinance will return for adoption after developers pursue tax credits.

Councilors read Ordinance 2025‑23 by title on Nov. 18, beginning a multi‑step process to make roughly 18.8 acres on the Sonaqua campus available for affordable housing development if a developer can secure Low‑Income Housing Tax Credits (LIHTC).

Bryce Doty, the city’s real estate manager, said the city would act as a transactional intermediary: the school district would authorize disposition of the parcel to the city, the city would acquire and be authorized to resell or transfer it to an industrial development authority (IDA) created LLC, and a developer with site control could then apply for LIHTC financing. Doty said the transactions are structured so the city bears no net cost; transaction and escrow costs would be paid by the eventual developer if the LIHTC application succeeds.

Superintendent Mike Penza (Flagstaff Unified School District), participating remotely, said the district does not plan school uses for the parcel and supported the pathway because state law limits district ground-lease terms and a city-mediated transfer can enable the long-term site control developers need for LIHTC financing.

Council members asked about who would occupy any future units; Penza and staff said LIHTC rules limit the district’s ability to reserve units for employees and that housing would generally be occupied by qualifying low-income households.

What’s next: Staff said developer site control is needed for LIHTC preapplication (pre‑app targeted in mid‑Jan), and council will see a purchase and sale agreement if a developer is identified. Council read Ordinance 2025‑23 by title for first reading; the measure will return for a future vote.