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Meeting Date: 04/01/2014  
From: Sarah Darr, Housing Manager

Consideration and Approval of Lease of City-Owned Property:  Ground Lease Agreement for the Development of Affordable Housing: Providing site control of City owned land located at 300 South Verde for Habitat for Humanity of Northern Arizona to support construction of a home for inclusion in the Community Land Trust Program. (Permission for Habitat for Humanity of Northern Arizona to build a permanently affordable home on City land) 
Approve the Ground Lease Agreement with Habitat for Humanity of Northern Arizona for the construction of one single-family home to be sold to a qualified low-income household and included in the Community Land Trust Program.
Policy Decision or Reason for Action:
Providing site control of City-owned land for Habitat for Humanity of Northern Arizona (HFHNA) will provide an owne- occupied permanently affordable home for the community, support a non-profit’s capacity, and increase the Community Land Trust Program (CLTP) inventory with limited City financial resources required.

Subsidiary Decisions Points: 
No subsidiary decision points.
Financial Impact:
The agreement allows a single family home to be constructed on City land.  HFHNA will provide $30/month to the City as a lease fee.  After the home is sold, the cost will be assigned to the new owner.  (An additional financial implication is the reduction in cost to the City required to maintain the current landscaping and for snow removal.) 
Connection to Council Goal:
5. Retain, expand, and diversify economic base
11. Effective governance

Has There Been Previous Council Decision on This:
While there has not been a previous Council decision on this specific property, in the fall of 2011 a very similar agreement was approved and executed for a near-by property.  The home associated with the previous Ground Lease has been constructed and is occupied by a low-income household.
Options and Alternatives:
A) Approve the ground lease agreement
B) Approve the ground lease agreement with amendments
C) Not approve the ground lease agreement and provide guidance regarding areas for renegotiation
D) Not approve the agreement
Council provided direction to identify appropriate parcels that could be utilized to assist non-profit organizations in providing affordable owner occupied housing opportunities.  HFHNA has worked with staff to explore the possiblity of developing several remnant parecls over the past couple years; has requested site control and proceeded with design work.  The proposed parcel is a remnant from the Butler widening project over fifteen years ago.  In 1998, the Flagstaff Housing Authority built a duplex that serves as part of the Scattered Site Public Housing Program.  Staff, together with HFHNA, has determined there is room for an additonal unit on the same parcel.  Private funds and Community Development Block Grant (previously awarded) will be used to build the home.  The improvements will be sold to a qualified household and the land will stay in the CLTP.
Key Considerations:
The parcel is an infill parcel in a residential neighborhood with appropriate zoning.  It will provide space for one single-family unit and has been through pre-application and Design Review as well.  The parcel will be controlled by HFHNA through the construction process and then assigned to the qualified household who will purchase the improvements.  The identified qualified household earns less than 60% of the Area Median Income ($38,340 for a family of four in 2014), a difficult population to serve with other models.  Control will be provided through the 99-year renewable ground lease which allows the City to require standards be met and that existing infrastructure be maintained where necessary.  The parcel improvements, including the building, fencing and landscaping, will be maintained by the homeowner.  Due to the unique nature of the partnership and the lack of alternative uses for the parcel, sole source procurement was determined to be acceptable. 

One additional action to be performed administratively is the application for a Lot Combination through Coconino County.  Restructuring the current parcel boundaries will provide two viable parcels divided by Butler Avenue.  This addresses an issue created by the Butler realignment and corrects a non-viable remnant that exists today South of Butler Avenue.
Expanded Financial Considerations:
The agreement uses existing and appropriate City land to achieve a Council goal with limited City of Flagstaff financial contribution necessary.  The ground lease will result in $30/month lease fee provided to the City and control of the parcel by an outside entity will save City BBB resources currently used to maintain the landscaping and sidewalks.
Community Benefits and Considerations:
Permanent affordability provides the ongoing community benefit of affordable homeownership to a difficult-to-serve population through a unique melding of models.  This agreement supports a non-profit partner, HFHNA, as they work to provide affordable housing and simultaneously increases the inventory of permanently affordable homes with limited cost to the City.
Community Involvement:
Consult - Permanent affordability and the CLTP have had significant public involvement and opportunities for public comment during the various stages of development.  The Community Housing Policy Task Force identified the use of City-owned land as a potential strategy for assisting partner organizations in a mutually beneficial manner.
Expanded Options and Alternatives:
The recommended option is the product of discussion with the provider and their formal request for the land use.  There are few, if any, alternative parcels that are viable for this building season.

Site Plan and Elevation
Legal Description for Lease Parcel
Exhibit to Legal Description
IDS Approval Letter and Conditions
Development Ground Lease

Form Review
Inbox Reviewed By Date
Purchasing Director rcompau 03/19/2014 08:15 AM
Legal Assistant Vicki Baker 03/20/2014 09:35 AM
Form Started By: Sarah Darr Started On: 03/17/2014 04:50 PM
Final Approval Date: 03/21/2014


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