Flagstaff approves Canyon Del Rio 141-lot plat, advances affordable housing incentive amendment

Flagstaff Commission Backs Canyon Del Rio Plat; Debates Teeth of Affordable Housing Incentive for Adaptive Reuse

Flagstaff's Planning and Zoning Commission unanimously approved a 141-lot single-family subdivision on Wednesday while simultaneously signaling skepticism about a signature affordable housing incentive embedded in proposed zoning text amendments. The dual approvals exposed lingering tension between housing supply growth and affordability mandates—a tension that will carry into an August public hearing on the code changes.

The meeting revealed fractures within the city's housing policy coalition. While Planning staff advocated for a 20% affordable housing requirement as a threshold to unlock by-right development of single-use residential and adaptive reuse projects, the city's Housing Commission had urged elimination of affordable mandates altogether. A developer present at the meeting publicly sided with the Housing Commission, arguing that affordability requirements kill projects before they start.

Key Speeches

"I would recommend not including the requirements of 20% affordable units. The requirement of 20% affordable housing will disincentivize a builder for moving forward with this type of development. I would recommend providing flexibility in the code without adding more restrictions and requirements of affordable housing." — Charity Lee, Capstone Homes

"We know from recent work we've had completed on our code that our incentives aren't moving the needle as far as we need it to go. Um so we do need to rethink our incentives overall… we have the bond funds that we need to release sooner rather than later. And so the idea was is that we could take a first step um in terms of helping these adaptive reuse projects along." — Tiffany Antel, Zoning Code Manager

"I've seen a ton of new developments with, you know, staff giving incentives in the valley to different communities for the affordable and nobody's taking it… I've seen it in many other people's ordinances, but um I'm just wondering is it an effect? Is it going to be effective?" — Commissioner Christine Shehy

Timeline

Text Amendment Work Session (APZ 20-25-000041)

• Staff presentation: Tiffany Antel (Zoning Code Manager) and Jennifer Michaelelsson (Housing) presented proposed amendments to allow single-use residential in commercial zones and adaptive reuse projects with reduced development friction. Single-use residential would require 20% of units at 80% AMI for rentals (30-year affordability) or 15% at 100% AMI for ownership. Adaptive reuse projects face the same affordability threshold but gain parking relief, no landscaping code updates, no architectural design standard compliance, and no common-space requirements—provided the building is at least 15 years old and additions do not exceed 25% of existing square footage.

• Affordability debate: Staff noted the Housing Commission recommended eliminating affordable housing requirements entirely for adaptive reuse, making such projects fully by-right. Commissioners Norton and Shehy expressed skepticism that 20% is an effective incentive, citing valley-wide examples of developers rejecting affordability provisions and citing financing barriers. Antel acknowledged the feedback and stated staff is "open to the conversation" about the percentage threshold and invited commissioners to recommend alternatives before August.

• Public comment: One speaker—Charity Lee of Capstone Homes—opposed the 20% requirement, recommending instead that the city offer 100% affordable projects preferential access to bond funding while removing all affordability mandates from code incentives. Lee stated affordability thresholds "disincentivize a builder" and urged the city to "provide flexibility in the code without adding more restrictions."

• Short-term rental enforcement: Commissioner CJ Lukey raised concerns that developers receiving incentives could circumvent affordability goals by allowing short-term rentals in market-rate units. Jennifer Michaelelsson clarified that income-restricted units are regulated via reporting and periodic verification, but the city cannot city-wide prohibit short-term rentals; developers may voluntarily restrict them via deed covenants (CCRs). Lee confirmed Canyon Del Rio R1 will not restrict short-term rentals via CCRs, and staff noted a future adaptive reuse bond program will apply funding only on a per-affordable-unit basis (capped at ~$40,000/unit).

• Gentrification risk: Commissioner Mandina asked whether gentrification pressures could displace surrounding residents if affordable adaptive reuse projects drive up neighborhood rents. Antel noted that while redevelopment risk is real, adaptive reuse of commercial-to-residential conversions is unlikely to displace existing residents (unlike replacement of existing housing stock), though surrounding rents could face upward pressure.

• PRD point system critique: Commissioner Norton flagged that the PRD design-point system awards one point per seating area or bench, making it easy for developers to satisfy the five-point requirement with minimal effort. She suggested staff reassess point values as more PRD projects come forward to ensure projects meet city planning goals.

• Council discussion: The work session involved no formal vote. Commissioners emphasized time for staff revision before August public hearing.

Canyon Del Rio R1 Preliminary Plat (PZ24-000015-01)

• Staff presentation: Ben Mia (Planner) presented a 27.07-acre preliminary plat for 141 single-family lots within the MR zone at 3805 East Wetstone Drive. Project is part of the larger 261-acre Canyon Del Rio mixed-use development (approved 2019) and includes phased buildout with access via Wetstone and future John Wesley Powell Boulevard. Density: 5.2 gross units/acre, 5.7 net units/acre (below the MR zone range of 6–9 but within development-agreement minimums). Common space: 8.67 acres (32% of gross lot area, exceeding 15% requirement). Natural resource preservation: 54.5% (exceeds 47.5% requirement). Lot sizes range from 2,000 to ~6,396 sq ft; setbacks conform to PRD standards. Four detention basins manage stormwater, including two extended-detention basins off-site to the east.

• Traffic and roundabout: Mia noted that a traffic impact analysis (TIA) evaluated buildout of John Wesley Powell Boulevard and projected that the intersection of Wetstone and JW Powell may require a roundabout in the future. Right-of-way is being set aside within Canyon Del Rio; any future roundabout would require acquisition from adjacent non-Canyon-Del-Rio properties. Applicant Charity Lee confirmed that the TIA had already modeled JW Powell's full buildout from Pine Canyon through Canyon Del Rio and that Phase 2 block plat (coming in July) would address right-of-way dedication for the potential roundabout.

• PRD design elements: Applicant earned five required points: two points for maintaining ≥50% of required natural resources in common space; one point for CCRs and setback standards not prohibiting ADUs; one point for enhanced pedestrian environments; and one point for outdoor seating areas (six total, with two in Phase 1 counted toward current-phase compliance).

• Public comment: None on the plat itself.

• Council discussion: Commissioner Norton asked about ADU integration; Lee confirmed ADUs are not prohibited and could be incorporated either vertically within the building envelope or horizontally on-site, but noted product type is still under evaluation. Norton reiterated her concern about the PRD point system's laxity (one point per bench) and urged staff reassessment. Commissioner Lukey asked whether CCRs would restrict short-term rentals; Lee confirmed they would not.

• Vote: All in favor (unanimous).

Opposition

Text Amendment Opposition (Affordable Housing Threshold)

• Number of speakers against: One formal public speaker (Charity Lee, Capstone Homes) opposed the 20% affordability requirement; Housing Commission majority recommendation against affordability mandates represented broader skepticism.

• Main concerns:

  1. 20% affordability requirement discourages developers and kills projects before financing closes.
  2. Incentives in other valley jurisdictions consistently rejected by private builders; affordability add-ons are cited as financing barriers.
  3. Conditions should be reduced, not expanded; flexibility (fewer requirements) will unlock more housing supply.
  4. 100% affordable projects should be separately incentivized with bond funds; mixed-income projects dilute impact.
  5. Age restrictions (15 years minimum) and addition caps (25% max) unnecessarily constrain adaptive reuse eligibility.

• Most compelling arguments:

  • Lee: "The requirement of 20% affordable housing will disincentivize a builder for moving forward with this type of development."
  • Shehy: Private-sector developers across the valley repeatedly decline affordability thresholds despite incentives; staff-provided incentives in other jurisdictions show "nobody's taking it" when affordability is attached.
  • Norton: Most housing incentives tier at 10%; jumping to 20% is a high bar; Housing Commission's recommendation to make adaptive reuse fully by-right is worth testing.

• Organized groups: Housing Commission (majority position, though not a formal vote).

Support

Text Amendment Support

• Number of speakers for: No formal public speakers in favor; staff and commissioners expressed cautious support.

• Main arguments in favor:

  1. Adaptive reuse projects are expensive and encounter unforeseen costs (fire-sprinkler upgrades, structural remediation); removing conditional-use-permit friction unlocks previously stalled projects.
  2. Housing crisis and bond funding require immediate action; can iterate on affordability percentages later if data shows ineffectiveness.
  3. Making adaptive reuse by-right (without affordability conditions) will move projects forward; affordability can be separately incentivized through bond funds applied on per-unit basis.
  4. Bond program already targets affordability by capping fund application to affordable units only (~$40,000/unit cap).
  5. Non-residential adaptive reuse in southside and other neighborhoods will revitalize stagnant commercial buildings and allow business transitions without requiring new parking.

• Most compelling arguments:

  • Antel: "We've had an incentive program in our zoning code for decades… we know from recent work we've had completed on our code that our incentives aren't moving the needle as far as we need it to go."
  • Shehy: "I'm glad you're trying to make this by right because a lot of times I'd see projects and then I'd say well what happened to that in the redevelopment areas like along Van Buer and some of the old which is similar to our Route 66… and they'd run into building permit issues financing, fire, and it would get too expensive and they never happened. So, kudos to staff for recognizing that and trying to make this by right."

Project Details

Text Amendment (APZ 20-25-000041)

• Case number: APZ 20-25-000041
• Title: Single-Use Residential in Commercial Zone and Adaptive Reuse Incentives
• Applicant/initiator: City of Flagstaff Planning staff (Tiffany Antel, Jennifer Michaelelsson)
• Status: Work session; no vote taken; public hearing scheduled for August 2025
• Proposed changes:
  • Single-use residential in commercial zones: Allow by-right (no conditional-use permit) for projects with ≥20% of units at 80% AMI for rentals (30-year affordability restriction) or ≥15% at 100% AMI for ownership.
  • Adaptive reuse residential: Same affordability thresholds (20% at 80% AMI rental; 15% at 100% AMI ownership) plus relief from parking requirements, landscaping code updates, architectural design standards, and common-space minimums. Building must be ≥15 years old; additions limited to 25% of existing square footage.
  • Adaptive reuse non-residential: For buildings ≤5,000 sq ft, ≥15 years old, with additions ≤50% of existing square footage, allow conversion without new parking if on-street public parking exists within ¼ mile.

Canyon Del Rio R1 Preliminary Plat

• Case number: PZ24-000015-01
• Applicant/developer: EPS Group Incorporated on behalf of CDR DevCorp
• Attorney: Not identified in transcript.
• Location/address: 3805 East Wetstone Drive, Flagstaff, AZ
• APN: Not stated in transcript.
• Current zoning → Proposed zoning: MR (Mixed Residential) zone; no rezone required. Preliminary plat under Planned Residential Development (PRD) standards within Resource Protection Overlay.
• Density/units/square footage:
  • Total lots: 141 single-family lots
  • Total acreage: 27.07 acres
  • Gross density: 5.2 units/acre
  • Net density: 5.7 units/acre
  • MR zone range: 6–9 units/acre (proposal is slightly below but within development-agreement minimums of 367 total units across all R blocks R1–R5)
• Lot sizes: 2,000 sq ft to ~6,396 sq ft; dimensions approximately 40 ft × 80 ft or 25 ft × 80 ft.
• Common space: 8.67 acres (32% of gross lot area; exceeds 15% requirement).
• Natural resource preservation: 54.5% (exceeds 47.5% requirement); majority preserved off-site or in common-space tracks; building envelopes used to preserve on-lot forest.
• Phasing: Three phases; Phase 1 (northern, coral-colored section) and Phase 2 (green section, includes JW Powell connection) and Phase 3 (lilac section).
• Access: Wetstone Drive and future John Wesley Powell Boulevard.
• Stormwater management: Four detention basins (two extended-detention off-site east, one extended-detention south, one regional basin in Phase 2).
• Water/sewer: New 8-inch water and sewer lines to each lot.
• Traffic: TIA completed; Wetstone and JW Powell intersection may require roundabout upon buildout of JW Powell corridor; right-of-way set aside in Canyon Del Rio; future roundabout would require additional right-of-way from adjacent non-Canyon-Del-Rio properties.
• PRD design points (5 required):
  • 2 points: ≥50% required natural resources maintained in common space.
  • 1 point: CCRs and setbacks do not prohibit ADUs.
  • 1 point: Enhanced pedestrian environments (outdoor seating areas).
  • 1 point: Additional outdoor seating area (six total seating areas; two in Phase 1).

Vote Breakdown

Text Amendment (APZ 20-25-000041)

• Result: No vote taken; work session only.

Canyon Del Rio R1 Preliminary Plat (PZ24-000015-01)

• Final: 5-0 (unanimous in favor)
• Yes: All present commissioners (Carol Mandina, Joshua Maher, Christine Shehy, CJ Lukey, Mary Norton)
• No: None
• Abstentions/absences: Ian Sharp and Megan Weller absent; not present for vote.

Minutes Approval (May 28, 2025 Regular Meeting)

• Final: Unanimous (all in favor)
• Yes: All present commissioners
• No: None

Outcome & Next Steps

Text Amendment (APZ 20-25-000041): The work session concluded without a vote. Staff will revise the text amendment based on commissioner feedback, particularly regarding the 20% affordable housing threshold. Commissioners invited to propose alternative percentages or incentive structures. Public hearing is scheduled for August 2025. Staff indicated willingness to adjust the affordability percentage, design details, and building-age or addition-cap parameters in response to commission input.

Canyon Del Rio R1 Preliminary Plat (PZ24-000015-01): Preliminary plat unanimously approved and forwarded to City Council with staff recommendation for approval. The plat is now in the City Council pipeline; next step is Council consideration. Civil engineering plans and further traffic studies will follow approval of the preliminary plat.

Controversies & Context

Affordable Housing Incentive Effectiveness: A core tension emerged between the Housing Commission's recommendation to eliminate affordability requirements and Planning staff's position that a 20% threshold is a reasonable first step while bond funding is being deployed. Commissioner Norton and Housing Commission members questioned whether 20% is effective given that private developers in the Phoenix valley have consistently declined affordability add-ons even when offered. Antel acknowledged the concern and invited the commission to propose alternative thresholds. This disagreement reflects a broader Arizona regulatory constraint: Prop. 207 and related state law prohibit inclusionary zoning (mandatory affordability), forcing cities to rely on incentives that developers can refuse.

Short-Term Rental Enforcement: Commissioner Lukey flagged a loophole: developers receiving incentives could allow short-term rentals in non-restricted units, undermining affordable housing goals. While income-restricted units are regulated via deed restrictions and periodic income verification, market-rate units cannot be restricted city-wide without CCRs. Canyon Del Rio's developer confirmed no intent to restrict short-term rentals, and staff noted regulatory limitations. This remains an unresolved tension between incentives and enforcement.

Gentrification Risk in Adaptive Reuse: Commissioner Mandina raised concern that adaptive reuse projects (especially on the southside) could drive up surrounding rents and displace existing residents via gentrification. Antel noted that commercial-to-residential conversion is less likely to displace existing residents than replacement of existing housing stock, but acknowledged the trickle-down rent-pressure risk is real.

PRD Point System Rigor: Commissioner Norton flagged a design-code concern: the PRD point system awards one point per seating area or bench, making it trivial to accumulate the five required points with minimal effort. With only five points required and developers earning points for basic amenities (benches, seating areas), the system may not push projects toward meaningful city planning goals. Antel was invited to reconsider point values as more PRD projects come forward.

Duration

• Text amendment work session: Approximately 45 minutes
• Canyon Del Rio plat presentation and discussion: Approximately 20 minutes
• Total meeting: Approximately 65 minutes (adjourned at 4:59 p.m.; start time not stated but implied mid-afternoon)

Other Notable Items

Approval of May 28, 2025 Minutes: Unanimously approved without discussion.