Flagstaff Housing Commission Hears Habitat's National Starter-Home Model and Market Data Revealing Affordability Crisis With Few Homes Under $500K

actually. All right, and it's all yours. I'm going to share my window so that we can have the agenda up and running, too. Thank you, Adriana. It is 10:02 p.m. on Thursday, June 25th, and I am calling this meeting to order. Um, Adriana, would you please start roll call? Yes. Thank you. Chair Kevin Bond here. Tyler Denim here. Kevin Dobby. Karen Flores here. Sandy Flores. I'm here. Jackie Kellogg. I'm here. Devanna Mclofflin is absent today. Sarah Meyer here. Moses Malazo I'm here.

Sarah Miles here. Corey Rungi. Jen Vargas here. Haley Zoroya here. Thank you. Great. Thank you, Adriana. Um, for our land acknowledgement, I believe Sarah Meyer has volunteered to read it. The housing commission humbly acknowledges the ancestral homelands of this area's indigenous nations and original stewards. These lands, still inhabited by native descendants, border mountains sacred to indigenous peoples. We honor them, their legacies, their traditions, and their continued contributions.

We celebrate their past, present, and future generations who will forever know this place as home. Thank you, Sarah. Um, at this time, any member of the public may address the commission on any subject within their jurisdiction that is not scheduled before this commission today. Due to open meeting laws, the commission may not discuss or act on items presented during this portion of the agenda. to address the commission on an item that is on the agenda.

Please wait for the chair to call for public comment at the time the item is heard. Adriana, do you know if we have any public comments? I do not. Chair, thank you for asking. Thank you. And I see no Caesar Q's in the chat and no hands raised. So, we'll move on to item number five, which is approval of the minutes from May 28th, 2026. Do I have a motion? I'll motion. Commissioner, I'll second the motion. Commissioner Denim. Thank you.

I have a motion from Commissioner Vargas and a second from Commissioner Denim. Any discussion? All right. All those in favor, please indicate by saying I. I. I. I. Any opposed? And any abstensions? Great. Motion carries. The minutes have been approved. We have no formal action items where we would need to take a vote. So, we'll move on to presentation and discussion items. Our first presentation is from Eric Wolverton, the CEO for Habitat for Humanity.

And this will be an overview of Habitat for Humanity of Northern Arizona. Um, Eric, whenever you're ready. Yes. Thank you, chair. Appreciate that. I want to thank city staff as well for inviting me to be able to present to such an awesome full room. I will admit I hope that I don't offend anybody with my beautiful face, but you're more than welcome to share your beautiful face with me because, you know, I don't even know who you most of you guys are.

So, when we bump into each other in town, it'd be nice to be able to see who we are all talking to. Um, I love being able to make this a beautiful, tight Flagstaff community that we are. That's awesome. Thanks, guys. That really does mean a lot. Um so first and foremost um let me do my introduction. My name is Eric Wolverton. I am the CEO for Habitat for Humanity. I've been in this role for the last 13 years.

Um I moved to Flagstaff in 1998 and like probably many of you uh immediately introduced to this wonderful town um with poverty with a view. That's what I was told I was moving into. And so even uh almost you know 30 year 20 years ago was still having the same problem. Um so anyway uh I've been in nonprofits now for over 27 years uh where I was the director of operations and development for St. Mary's Food Bank for eight of them.

And then as I mentioned I've been with Habitat and then I also did three years with Kau NPR public radio. So, a real big fan of uh nonprofit community uh recognizing that uh even though maybe some people in the public believe that the government's going to solve the majority of our problems, that's not the reality of life.

Um really what's great about having a local municipality is that they can function in a way of being able to support our community members but also partner with uh nonprofits and private industry to be able to really support that community in a broader sense. Um so with that the main thing that I'm bringing to your attention today is um our starter home model.

Uh, this is an innovative new home ownership model that was created right here in Flagstaff where we took components of the 50-year Habitat for Humanity home ownership model and augmented it for today's societal needs. Um, what we needed 30, 40 years ago in housing is vastly different than what we need now. And most importantly, and this is what we need to keep top of mind, isn't what's good for people, but more importantly, what do people want?

And so that's what we're trying to address with starter homes. So, I'm going to prepare myself by sharing my screen so I can provide you with my presentation. So, just be patient for just a second. And for those um participating on the call um if you could uh just humor me. I just want to ask one quick question and you can uh either raise your physical hand if we can see you and or raise your virtual hand. How many people on the call own their home? All right. So it looks like half and half.

That's good. I'm glad to see that we've got a fair contingency here on the commission. Um, so for us, we recognize that we are pretty biased here at Habitat. We believe that home ownership is the opportunity for people to be able to invest in themselves. It is um without been shown for many, many decades the safest retirement package that you can kind of consider in terms of growing personal assets.

And so what we wanted to do is we wanted to take our old forever home uh habitat model and again change that to meet especially Flag Staff's emerging generation uh needs and wants. And then also uh creating a model that'll work great for communities that also are dealing with age in place scenarios. Not so much up here at 7,000 ft, but we certainly know that that's still an issue for us. So, as you can see on your screen, um these two homes, these are our pilot two starter homes.

They're located on Butler and Olyri. And, uh this is really what kicked off uh what now is turning into a nationwide uh program throughout the Habitat affiliates. And so what we wanted to do and the reason that we decided let's look internally, you know, it's really easy for us to kind of find flaws for other people, but what we wanted to do is we wanted to find out what could we do ourselves to make our programs better.

Um, and so we knew when the mayor and council uh decided to declare a housing emergency for Flagstaff, we had to step up to the plate. At that time, we were only building one or two homes annually and we weren't meeting the need. The need is hundreds to thousands of units and so obviously just ticking off one or two at a time is not going to solve that problem. The other issue that we had with our Habitat model is, as I mentioned, it was a forever home model.

And so, Habitat would raise funds, build a house, select a low-income family, and then they would live there for um pretty much in perpetuity. Because if you consider the fact that people aren't selling homes with their COVID 2 to 3% interest rates, Habitat homeowners at a 0% interest rate, they have no reason to really move out of their home. Um, why would you forfeit such a great opportunity?

So, a lot of those homes sometimes got lost to market rate and um and it made us feel like we weren't being the best steward of the donor dollar that we received and we wanted to do better. The big thing for us when we were devising the starter home model was how can we create a home that can actually stay in our um in our inventory in perpetuity. and that we never lose it to market rate. Um, at the same time, we also recognize that Flagstaff has very little land.

So, how do we take advantage of density as well? And so, a lot of this stuff has all been incorporated into the design of the starter home. As you can see here, we do have three different models that I'll show to you um shortly, but our main design is our studio style starter home. Here in this uh starter home, it will have a loft style bedroom, a full bath, full kitchen, a living area. We think that these starter homes can accommodate a family of three.

So that would be probably a single parent with two littles. It could also be a married couple with a a little that maybe one of the parents has chosen not to have a job, but instead stay home. So there's lots of family dynamics that can work, but again um we do limit this to families of three because of the smallcale nature of the home.

At the same time, and I will be sharing some uh pictures of the inside of these homes here shortly, but at the same time, when you walk through this front door, you're immediately visited by 25 ft ceilings. This does not feel like an apartment. This feels like the home you want to come home to every day. Now, a lot of folks have asked me, "Well, these are great, Eric, you know, but we appreciate you thinking of density. Why not do multifamily? Everybody seems to be talking about multifamily.

Why don't we do more of it?" Well, there's good arguments and then there's negative arguments with it. And from a personal and this is truly a personal thing. Um in all of my years working in social services, the one thing that I noticed is that unfortunately our programs love to put folks that are dealing with hardships on top of other folks dealing with hardships. And then we actually combound that with even more folks with hardships.

And so we're not really creating an environment of opportunity. we're creating an environment that can actually kind of spin in a negative direction and pulling neighbors in that uh direction as well too. So, the wonderful part about a standalone home is that without a doubt, if you've got a solution like you need a cup of sugar, it is just 5 ft away.

But if you have your own internal issue, you might be, let's just say, having a disagreement with um your partner, your neighbor doesn't need to be drawn into that. That's something for you to work on. It's not something for you to draw your neighbor into, too. Um, at the same time, we are also very proud of the simple fact that our starter homes are incorporated in Timber Sky. Got ahead of me a little bit.

Um because we know that we have the Sierra and 66 Litec development 220 beds for 60% or below AMI. And on the other side of our starter homes, we have market rate homes. This is great. typically not something I'd be a fan of if it was just 40 starter homes alone. But the fact that we have the LITC development connected with our development through roads, I know that those renters are going to walk their dogs through our neighborhood dreaming of the opportunity of owning a starter home.

At the same time, our starter home homeowners are who by the way also are fully paying into the Timber Sky HOA and part of that community. They're going to be walking into market rate homes and dreaming about how they can take their equity savings and utilize that for an opportunity possibly to be able to purchase one of those units.

I bring this up because what we need to do is we need to continue on providing the all of our families with an opportunity of quite frankly keeping up with the Joneses. Meaning when our neighbors are doing better, we strive to do better too.

So, if we can show that there's incremental steps throughout the Timber Sky neighborhood of being able to increase the capacity and even the wealth in your life and then the happiness and the health that goes along with that too, that's an awesome awesome outcome. And so, we're really excited to be part of that. Now, with Timber Sky, um, we got an incredible generous donation of land from Vintage Properties of 3 acres worth $2.75 million. And we again wanted to take full advantage of this.

So, we're in the middle of building 40 units on this home, but I quickly wanted to talk about the importance of land trusts because without it, the starter home model would not exist.

The other thing too that I really want to express is that the city of Flagstaff's housing department were incredible innovators themselves um years ago when they developed the land trust program being one of the first in the country and now we are able to leverage the success of that with our partnering neighborhoods as we're looking at doing early development work in PAC Winslow and Fredonia and Paige we are actually kind of forcing those municipalities to adopt your land trust program along with your incentive program for us to be able to build up there because those contributions are so vital for the success of starter homes.

Also, we are uh playing with other opportunities to be able to not acquire land to own but again to partner through land trusts. And so down in PAC, we are actually working with the Presbyterian Church and they have already got their statewide approvals. So that way we could put three starter homes on a piece of property that they own. This is going to be very important because again, we don't need to be going after the city to solve all of our problems. And this includes land.

So we can work with churches like this as um a perfect example. But more importantly, you may or may not have heard last year that uh state legislators tried came close but failed to passing a yes in God's backyard bill which would allow congregations to much more easily utilize undeveloped lands that they own to be able to host affordable workforce housing. So, we're hoping that in this partnership, we're going to help exacerbate that maybe in next year's sessions.

I mentioned our private developer. This is a really, really awesome opportunity for Flag Staff. So when uh Timber Sky was coming about and working with the city about amending their original um development agreement because unfortunately CO inflation was just no longer going to allow that to pencil out. But one thing that we did was we approached the developer and we said listen you know the city is just mandating that you um with your zoning request provide this many units.

They didn't say that you had to build them. And the problem with the developer is that they don't want to really build affordable housing because all of those units turn out to be a net negative on their balance sheet and they end up actually they're not going to lose money. So they're going to put that on their market rate homes exacerbating those values. So we went in and just said, "Hey, why are you taking on this onus? Throw it at Habitat.

donate us that land and let us work on the funding and then we'll uh do the infrastructure work. We'll build the homes and then we'll select the families and manage the homes. It's a huge win-win for the development as a whole. The developer saves tons of money. It brings habitat into the fold to be able to meet that need. And more importantly, we're building houses that make sense for our workforce that's struggling right now.

So, our hope is to be able to continue these kind of partnerships with private developers. And to give you an idea, we were able to duplicate the same exact thing up in the town of Fredonia where a private developer is putting in 130 lots as a master plan. They are going to donate 10 fully developed lots to us. So, once we acquired the land, it's time for a site plan. And so here you can see uh basically what we look like at Timber Sky.

Um I certainly hope and I'm putting out an invitation to each of you and I'll do this individually if any of you ever would like to do a tour of our starter homes. Don't hesitate. Drop me an email. I'm going to make you a priority and make sure that you get an awesome tour. Uh one thing uh our design of our homes as I mentioned we have three different designs at Timbererscott. Our right we have our studio design. On the far left we have our one-bedroom bumpout.

So you still have the loft style bedroom but with a a room attached to it. This is really for our ADA compliant applicants. So that way they don't have to worry about maneuvering the stairs or any of that. But at the same time, we wanted to keep the design in the loft because we know at least for again folks um that are age in place, this is a great opportunity for them to have an inhome health opportunity where you could have a bed upstairs. And then we have a duplex.

Um and this goes to what I was saying earlier. There's always these conflicts. Um, and so our conflict, our conflict was actually internal. And I have my bias, you know, shared walls, shared problems. My contractor has a bias. Shared walls equal great savings. And so we are going to work with these homeowners and just doing post surveys. Um, so that way we can kind of compare and contrast the different living situations.

What we want to do is we want to create a brand new value that's never been quite frankly considered. Um, and that's the value of health and happiness. We want to know how these people are living. Are they being pulled into their neighbors um situations more than they like to? Is everything great and fine? By being able to learn about these things, we're going to be able to again create that new value and put it against the value of a 2x4.

Because here at Habitat, we value our homeowners and what they get out of outcomes more than we value the savings of a 2x4. All of our starter homes are net zero homes. Holy cow, look at this list of sustainable things that comes with a starter home. So, they are fully electrified homes. We do this on purpose so that way um when it comes to the cost of utilities, it's an easy process for homeowners.

And more importantly, uh you know, what we're seeing is that everything is going to more and more fully electrified homes just in terms of supporting uh efforts in uh deflecting climate change and things like that. But because they are fully electrified homes, all of our starter homes come with their own independent solar array because um I don't I don't know how you pitch it, um Jackie, but I'm still waiting after 27 years to get my APS notice that my rates going down and I've never gotten one.

So since we know that it's only going to keep increasing and the word of mouth is I've heard about these data centers, it's just going to get bigger. Let's head that off and let's help out these homeowners by offsetting their electrical costs. We work in great partnerships because, you know, for us at Habitat, we're about building with community. As I mentioned, we don't have a very robust retirement community here of folks that have just free time to be able to help us.

So, we looked outside the box and said, how do we get community to build our homes? And so we entered in a partnership with CCC four years ago. Um they built those two pilot starter homes that I showed you at the beginning of the presentation at their lab on Fourth Street. What's great about this partnership is prior to this partnership, CCC was uh teaching students home construction management skills by building doghouses. Now they're building real homes and that's fantastic.

It's also allowed them because they are building Habitat homes, their student population for their home construction management program has it tripled in this time frame and so they've had to actually add professors. Um, and we're saving habitat money on labor and we're saving CCC the cost of materials. Um the other great win on this is for CCC uh because um the fact that uh they're showing uh funders that they're now building habitat homes.

They got a $1.2 million grant from the Delhi Web Foundation to expand their construction lab. And then after that they received a quarter or I'm sorry threequarters of a million dollar grant from the Lowe's Foundation to do the same thing. So even these large foundations are starting to see the benefit that we are building now our workforce as we're building our workforce housing. So it's a great um a great opportunity to do two things at the very same time along with that Lowe's Foundation.

Just really quick if anybody wants to pencil this down. Um, part of that grant also was uh to pay for a fully um produced docu series, which you can now find on the Magnolia channel, or you can find it streaming on HBO Max. Um, it's called Building Back America's Trades. And I'll tell you what, if you want to fall in love with Flagstaff, watch this docue series.

They really focus on us on episodes two and three, but I think you are going to be blown away by the simple fact that we are doing this in Flagstaff and you probably didn't even know it. Um, here you can kind of just see how we do our construction in a panelized system. This allows our homes to just be transported on a flatbed truck and then raised within a matter of two or three days. And this is why we're moving so quickly at Timber Sky.

Um, so as I mentioned, there's lots of partners that are are part of this. And the key thing too on this slide is just to keep in mind that this is permanent affordability that's going to be able to serve our future generations forever and ever and ever. So if you're worried about your great grandchild, they will be able to buy one of these homes, too. All right, let's talk money because everybody loves the brass tax. So, this is not your traditional home sale as Jackie would sell a home.

Hey, it's, you know, $700,000 and you need your down payment and um let's do your inspections and appraisals and things like that. So, we don't have like a true sales price. Um our sales price basically is $100,000. So, let's talk about how that works. So, first and foremost, we know entry into home ownership um is complicated. It's anxietyridden. And so, we wanted to keep our numbers simple so that way people understood and didn't get overwhelmed.

So, for just a $1,000 down payment, you can be a homeowner in Flagstaff. Okay? Nobody's excited. That's exciting. All right. And then the good news is after your thousand down payment, um, then your total mortgage payments, and this is exact examples from Timber Sky in our first 10 homeowners, uh, no payment is over $1,100 a month. That's with all inounds. So that includes your insurance, your property taxes, lease agreement, and HOA fees. $833 of those $1,100 goes into your principal savings.

That times 12 months is $10,000 of savings per year that you own your starter home. Now, you have to own your home for a minimum of 3 years because this is not just about shelter, but it's about investment and it's about workforce. Now, this is the big critical change too with uh in terms of our traditional habitat model. With starter homes, you do have a maturity date and that is 10 years after you buy your home. That is when you are done owning your home. The good news is this.

Between three and 10 years, it is deed restricted. You can sell your home guaranteed to Habitat at any point. And if it's 3 years, Habitat's going to cut you a check for $30,000. 5 years, $50,000. 10 years, you're going to get a check for $100,000 simply for paying a mortgage rather than paying a rent. Um the next thing is is that Habitat will go in. We will work with the homeowner and they are on the hook.

If there is any uh maintenance that needs to be done to the house, that is a homeowner um maintenance situation. So, if you get angry, you put a hole in the drywall, guess who fixs and pays for the drywall? The homeowner. This is also built into their deed of trust. And so, we will do a punch list. It is their opportunity to fix those things. If they don't, Habitat hires a contractor. We get those repairs done. Those costs come out of the payout.

So, it's actually a benefit for the homeowner to keep their home maintained throughout. We also make sure that every um person that is chosen to buy a starter home has to do 200 sweat equity hours either on their home or another starter home or just volunteering throughout the community.

The thing is that what we're trying to do through that is create a sense of pride, respect, and responsibility not only for your home that you're going to own, but for the community that you're going to live into. Um, boy, I've got a lot to say. So, uh, I would then go into really how our maintenance Let me see where I'm at here. I mentioned all that fun stuff. Yes.

So, here's another big critical part and a brand new innovation um with Habitat and our starter homes, and that's what we call our sustainable maintenance and production fund. So, far too often, nonprofits are really good about begging for money, like we are, to build these homes initially, but they're also really good about begging for money to maintain things.

And since we are asking our homeowners to eventually graduate out of their starter home into self-sufficiency, uh we need to act that way internally and we need to lead by example. So the way that we are doing that is as we're holding on to the principal payments of our homeowners and we're waiting for them to sell, Habitat is earning interest on those funds.

And so what we're going to do with those funds is we're actually going to use that to be able to put $25,000 every 25 years on every single starter home. This way we know that our homes are going to be um still looking great within the Timber Sky neighborhood and throughout Flagstaff. Um, and you we don't have to go to a funer and ask for money for simple things like maintenance, which to be honest with you is not a very attractive ask of a funer.

And so, um, we actually partnered with the Wells Fargo Foundation where they provided us with some of their, um, very, very smart staff to be able to create a 30-year schedule of what this would look like for Habitat internally. And the great news is that we found out that we only need a 0.9% interest rate on average to reach the $850,000 needed every 25 years to meet our goal.

The great news that means is that we have actually opportunity to earn more interest than that and then we can take the any of those earnings and put it directly into the production of more starter homes. meaning that takes the burden off myself and future staff from having to beg for donations to make those a reality. So, we're really excited to be able to combine those two mechanisms again that we created right here um and be able to provide a brand new unique living situation for Flagstaff.

you know, we feel very strongly that when we're looking at emerging generations, you know, those folks that um just don't think that home ownership is an opportunity for them, we want to not only bring out that opportunity to them, but again, we want them to thrive. So, unlike assistant rental programs um where there's income qualifications annually that you have to go through, when you're buying a Habitat Starter home, it's no different than buying a traditional home.

You only have to qualify at the beginning. The great news is you can do great things after that from day one. So, you can increase your income by getting a better job. You can decide, I want to move jobs so that way I could walk to work rather than driving 20 miles. Um, whatever it is, but you can better your job. At the same time, who knows, while you're living in your home, you may meet Mr. or Mrs.

Wright and things might go swimmingly well and next thing you know, you've got yourself a dual income while you're saving money in your starter home. And so there's no burden of income when it comes to our starter homes except for like I said at that very beginning. And our goal is is that we want to graduate families and move them out of poverty and closer to the middle class with their saved equity. Uh this works um for them. Obviously this is a big opportunity 100 grand.

I think it's transformational. I don't know about you guys, but 27 years living in Flagstaff, I've got about maybe $3,000 in my gas tank. So, um I just know that, you know, this could be a big big change for folks. Also, this model has been adopted by Habitat International and um we are getting solicited by Habitat affiliates weekly. I had two presentations this year or I'm sorry not this year but this week um with Santa Fe and with uh St.

Louis because they want to incorporate our model since they've heard about it. Um to give you an idea too on how successful we've been internally in fundraising because of this model with the traditional home, we were raising about $300,000 a year to uh be able to meet our mission. And in just the last three years, we have raised over $6.5 million in cash and $5.5 million in in contributions. So that in itself is screaming that we need to keep bringing workforce housing to Flag Staff.

I've said a lot so I'm going to open it up to questions and I really hope there's a lot out there. Great. Thank you, Eric. Do any commissioners have questions? And if you have Oh, go ahead. Hi, Eric. Did I hear you say uh regarding Timber Sky that they pay the HOA fees to Timber Sky? Yep. Yeah, they are they are voting members and paying members into the HOA. How much is that a month? Do they pay the same as the the other homes? Yep. They It's just as any HOA would be. Yep. So, they pay $66.

$66 a month. Yep. Okay. Thank you. You're welcome. Thank you, Sandy. Any other questions? Come on, guys. This is so weird. Everybody's got a question. I see a hand up from Tyler. Go ahead, Tyler. Hey there. Uh, thanks for the presentation, Eric. That was great. And I'll say that, uh, when I poured the homes during the donate a stud event, Yeah. Yeah, they were all really gorgeous and it was super cool to see them IRL.

Uh, you mentioned something about partnering with churches and I've heard a lot about that concept and it seems really promising. I'm curious if you've had any conversations about that in Flagstaff and if you have like what were kind of the scopes what was the scope of the conversation? What kind of barriers did they see or opportunities? Yeah.

So, we actually have uh we worked with Shepherd of the Hills Church uh up in the North Hospital neighborhood and they were really really excited about being able to incorporate starter homes on some of their private lands. Um this was about four or five years ago when we were just creating the concept of starter homes. And so, um, the only reason that those conversations kind of slowed down is that we were new to it and they didn't understand the legalities and the permissions needed.

Um, being that that's the Lutheran church, you know, they're going to need to go to their statewide um, Lutheran uh, group to get those permissions. These are all great things that we learned working with Shepherd of the Hills and then brought to the Presbyterian Church in PAC. Um, and thankfully that congregation just really just kept the momentum going and that got us to where we are now. Thank you, Tyler. Do we have any other questions or comments? Well, sorry. Sorry. Go ahead.

I was gonna say I would have more questions if I hadn't been following Eric since day one of this project. So, good job, Eric. Thanks, Jackie. I I'll just I'll just conclude with and I tell this to everyone and this is vastly important for all of you commission members because you are the housing voice for the city of Flagstaff. You now know too much about starter homes and that means the burden is on you to share this information broadly to your friends, neighbors, co-workers.

Let them know that you want them to stay in Flagstaff and you've got an idea of a way for them to do it and it's starter homes. Great. Thank you, Eric. Um I do need to call for any public questions or comments um outside of the commission if there are any, but I don't see any people here who are not either staff or commissioners. Okay, I don't see any requests for public comment. Thank you so much, Eric. Thank you all.

All right, we will move on to item number 7B, which is 2026 housing market overview by commissioners Flores and Kellogg. Go ahead, please. I know Jackie is working on sharing it and as soon as she's got it up, we'll Jackie, you're on mute if you're okay. I was talking to myself. Okay, good. wasn't sure there. Yay. We can see it. I can see it. Can everyone else see it? Looks good to me. Yep. Cool.

All right, Jackie, if I can just let you know when when to go to the next slide, I'd appreciate it since I apparently am going to be the first one talking. So, um I'm Karen Flores. I've been on the commission since the beginning, since day one. Um, and a lot of what I'm going to share today, um, some of it is, uh, because of the things that the commission has been able to put into place, which I'm very excited to to share what those pieces are.

Um, I work for Barrett Financial, which is a mortgage brokerage here in Flagstaff. And I have been a loan officer and in the lending industry for over 30 years. Most of that being here in Flagstaff. So obviously in in 30 years I have seen many different economic ups and downs and um lots of different um things that were positive in in the markets here in Flagstaff.

Obviously things that weren't so um positive, but I have been able to fortunately help many many firsttime home buyers get into their first home. So, it's not impossible. And um yes, do we have expensive homes here, but like Eric um presented, there's options and programs and ways for people to be able to get into a traditional home at some point.

So, what I'm going to focus on initially is what are the different loan programs that are available if someone wants to buy within the city, what kind of income they would need to qualify for a median priced home in Flagstaff. Um, which most of my presentation is going to be a presentation on averages. So, there's definitely things where purchase prices are higher than what I'm sharing and purchase prices that are lower.

Um, and then I'm going to finish up with the impact of how interest rates um definitely make a difference on how much a person can buy. And then when I'm done with that, Jackie will take over and share the common barriers to financing as well as income versus home price affordability gap here. Flagstaff. So, Jackie, if you'll switch for me. Thank you.

So, there are technically four different loan programs out there, traditional loan programs where someone can use them to buy um a home in the city of Flagstaff. Three of the four are available to be used. So, there's conventional loans with a max loan amount of 832750. FHA has a max loan amount of 609500. VA does not have a max loan amount. And then USDA is the other option, but those are for um rural properties. It has to be located outside of city limits.

So, it would not be eligible for someone uh to use that to buy a home within the city limits. You can go ahead and switch. So, this is um an overview of some of the down payment assistance programs that are out there. And these programs that I'm going to go over on this slide are um overseen by Housing Solutions of Northern Arizona, which Devana Mclofflin, one of our fellow commissioners, is the CEO of Housing Solutions.

And this is an probably the best down payment assistance options for home home buyers. And the reason I say that is there are other home down payment um assistance programs out there. Um but those programs have their own interest rates associated with the program.

And the reason they do that um is so that they can replenish the funds that they provide to homeowners um because in many situations the funds themselves aren't necessarily paid back by the home buyer, but they charge a higher interest rate in order to replenish funds for future home buyers. And those interest rates are typically at least 1% above market rate. So most first-time home buyers already are struggling to afford a home and and have an affordable payment.

So those other programs a lot of times become prohibitive um for most people when they go to buy. And that's why I love working with Housing Solutions because their programs are amazing. um we can use market rate interest rates um and even can use some of their assistance to help buy down the interest rates if necessary to make a a payment more affordable for someone.

So, the five programs that they have a available here in Flagstaff um are the CHAP program, which is the community home buyer assistance program. And this program and the second program, which is the CHAP permanent home buyer assistance program, are two programs that came to be because of the efforts from this commission in helping get the bond money passed with the um citizens of Flagstaff. And we were able to get a total of $7 million that could be used for this these two programs.

And the great part that we as a commission did is we ensured that this was going to be a continuous source of funds. So all of the funds have to be repaid so that we can keep these programs going for many many years to come. So, the first program that is um and just to to back up a little bit, we were finally able to get these programs up and running and did the first um assistance in November of 2025. Um and it has been an exceptionally um popular program.

I know that Housing Solutions is just overwhelmed with the response um of people wanting to use these programs and has already helped many many home buyers since November. Um the home buyer assistance program itself will give up to $50,000 in matching funds. So, it's a 10 to one match, which means for um every $1,000 that a home buyer brings in, they will match up to $10,000 per thousand. So, if someone brings in $1,000, that's $10,000 that they will get from this program.

If they bring in $5,000, then they will get a full $50,000 that they can use for down payment, for closing costs. they can use it to buy down the rate. Um, but that money helps them get into that that home with those funds. The permanent home buyer assistance program actually, I believe, is still in pilot. And I was fortunate enough to be the um loan officer for the buyers that did the first closing utilizing this program. just this month.

And how this program works is it turns it a traditional resale home into a land trust property. So these home buyers found a home that was being sold by a current homeowner and they went to the city and said, "We want to use this program." So what the city does is they provide a 30% reduction to the cost of the home to turn it into a land trust home and that reduces their price. So for instance, I'll give you an example. If the home is $500,000, we take 30% of the price, which is $150,000.

That $150,000 is then subtracted from the market price and the home buyer's transaction is now based on a $350,000 purchase price. So their down payment requirements are based off the $350,000. Their loan is based off the $350,000. So that drastically reduces what they need to come in with for down payment. um it drastically reduces their monthly payment and makes it permanently affordable.

So, what this program does is the homeowner has to agree that when they go to sell their home, it has to stay as a land trust property where the city owns the land, the home buyer owns the home, and it has to be sold that same way where it's capped on the value of of that property. The next program is EA8 or employer assisted housing program and this is for city of Flagstaff employees and based on what the employee is able to bring in the city will match up to $20,000 in additional assistance.

There is the commission law enforcement and detention officer retention program and that's for Cookanino County law enforcement and detention officers. And then lastly, they have the Flagstaff Affordable Home Ownership Program, which is for existing land trust homes. So, in that home buyer that purchased the first CHAP permanent home this month, now their home would be considered part of that FAHP program going forward. The nice thing with all of these programs is most of them can be combined.

So, someone could be able to use the CHAP home buyer assistance program and get up to $50,000 in down payment assistance and could use the permanent home buyer assistance program. Um, as well as several of these things could be combined together. So, I think as I mentioned, housing solutions programs are are truly a great innovative um source and solution for our community. Jackie, you can move forward. Some further details on the two chat programs.

I just wanted to share with you um what the program requirements and income limits were. Um, one of the or two really important things with the chat program is the housing ratio and the max DTI ratios. So housing ratio is the new house payment, the principal and interest, taxes, insurance, everything in the payment divided by gross monthly income. And then the max DTI is the new house payment plus uh the and thanks Moses. It's debt to income ratios.

Um the maximum debt to income ratio is when we take the house payment plus all existing debt. So if they have a car payment or student loans, credit cards, things like that, we add all of that together for their total debt to income ratio. So on traditional programs without down payment assistance, we can usually go up to a 50% housing ratio and a 50% total debt to income ratio. With um down payment assistance, they cap the housing ratio to be between 30 and 35%.

The reason they do that is they want to make sure that the folks that are getting this assistance need the assistance. And then the max debt to income ratio of 45 is because we want to make sure that these first-time home buyers are going to be successful and can truly afford the payment that they have. Um the one one of the other important things is it has to be a conforming fixed rate mortgage which means it has to be below that 825 max loan amount in order um to utilize this program.

We have to also make sure that fees on the loan meet industry standards. And there are also government regulations where we have to ensure that we are not um charging folks excessive amounts of fees. And as I had mentioned before, the assistant is fully repayable. It's not forgiven so that we can utilize it um for future home buyers. and it's repayable upon sale of the home or if they do a cash out refinance. Um, as far as the income limits, you'll see them there.

Um, it's based on household size and then it's also based on household income. So, what they look at is anyone in the household that has income regardless of whether they're going to be on the loan or not, they must include their income in this calculation. So, when I do a mortgage loan, I'm looking at whomever's on the loan, and I don't have to include income for anyone who's not on the loan. for the down payment assistance programs.

If there is a a husband and wife and they have a son living with them who works, we have to include the son's income. If they have an elder parent that gets social security income that will be living with them, then chap has to include that income.

So sometimes because of others that live in the household having income end up disqualifying folks from being able to qualify for this program, which is unfortunate, but I have seen that happen um for folks when they just have too much income to meet the program requirements. Jackie So what I want to do in the next few slides is give you an idea of how much income is needed to buy a particular property type.

So we're going to look at single family residences, condos, town homes, mobile homes, which are manufactured homes in a park that um a home is not affixed to the land and they usually pay space rent. And then your traditional man, excuse me, manufactured home. That would be a home that's affixed to the property. And I'm going to use the average purchase prices for each of these types of properties. So, we're going to assume that in my scenarios, we've got credit qualified borrowers.

We've they have a $900 a month in recurring debt, which is technically the national average of a first-time home buyer. I'm going to be use using current market rates and the payments will include taxes, homeowners insurance, any association fees, and mortgage insurance if it's required. You can move ahead, Jackie. So, we'll start with single family residents. The average purchase price of a single family residence in Flagstaff is around $814,000. Minimum down payment required is 5%.

The interest rates right now are running around 6 and a.5%. So you can see a total payment with everything included would be around $5,800. If someone were able to qualify with a full um $50,000 of the CHAP assistance, we would use 42,000 of that or could use 42,000 of that for the down payment. The remaining $8,000 could go towards closing costs and that would be a payment of just under $5,800 a month.

So, if you were not using the down payment assistance, you would need a household income of about $157,000 a year to qualify for this purchase price. If someone were able to utilize CHAP, they need $198,000 to meet the debt to income ratios that I was explaining uh a few slides ago. So, unfortunately, because of that income requirement, that exceeds the TAP requirements. So, this purchase price would be out of reach for someone who wanted to utilize the CHAP funds. Next, condos.

So, condos are seen as a more affordable option. Um, you can see average purchase prices around 427,000. What ends up making condos sometimes not so affordable is they have an HOA fee with them. And the average HOA fee for condos in Flagstaff is around 250 a month.

So in this scenario with 5% down and a rate of 6.75 and the reason the rate's a little higher than a single family is condominiums do have an adjustment that we have to add um to the interest rate and that would bump it up about a quarter%. So you can see on a payment without down payment assistance, you're looking at about 3,300 a month. With the CHAP assistance about 3188 and the household income that you'd need without the assistance is about 101520.

If they were using chat funds, they'd need about 109,000. Next please. Town homes. Town homes have the same situation as condos where they're also going to require an HOA fee and they do here in Flagstaff also average around 250 a month. So town homes in Flagstaff the average purchase price is just over 5.85. They don't have an adjustment to the rate. So we would use a rate of 6 and a half. And you can see the total payment with the HOA and no assistance is about 43.90.

They use the assistance slightly lower at 4304. And then the incomes needed without the assistance just under 127. If they were using CHAP funds, they're going to need almost 148,000 a year. Next please. Manufactured homes. So the average price for manufactured homes is just over 437. Manufactured homes have a an adjustment to the rate just like condominiums do. Um and rates are running around 6.775. Total payment 3169 with CHAP just over 33,000.

and the needed incomes without assistance almost 98,000 and with assistance almost 104. Next please. Mobile homes. So you'll look at the purchase price of mobile homes and see that the average price is just around 120. So that's definitely affordable. The challenge with um mobile homes is they have space rent and the average space rent in Flagstaff is around 1,200 a month.

That does often include sometimes some utilities, but um for the most part it's just the space rent, you know, um snow removal, things like that. Um but the rates are also significantly higher and the terms are shorter. So, um, someone with good credit, 5% down is looking at a rate around 9%. But the longest you can take that, um, loan term over is 25 years. Whereas on a traditional home, you can go 30 years and sometimes even longer than that.

Um, we cannot use down payment assistance with mobile homes. Um, no down payment assistance program anywhere is available for mobile homes. And in this scenario, someone would need a household income of $78,000. So you can see definitely a much more affordable option um compared to the other traditional types of properties. Next, this slide is just sharing the difference of an interest rate for a husband and wife who makes 100,000 a year, have 900 in debt, and can put 5% down.

So at today's interest rates of six and a half they're able to afford a purchase price of 440,000. If rates were to come down at some point at 5 1/2 we could stretch that up 60 grand to 500,000. 4 and a half would get them up to 570. So definitely rate makes a difference and makes an impact. Um, I don't know that we will see rates get below 5% anytime soon or ever again. Who knows? It's there's so many things that could go into making that uh situation happen.

One thing to note though is when rates go down, prices do typically go up. Obviously, we saw that in the pandemic because more people want to enter the market, want to buy a house, and that leads to multiple offers, price bidding wars, and that drives up the prices because usually it's the highest and best offer wins. So, while lower interest rates definitely make a difference, they can also become a big hindrance for folks. Next. So, that sums it up from my part. Jackie, take it over. Okay.

So, I put together some slides to show what our market looks like as far as what is available. Um, we've already gone over the barriers to home ownership. Obviously, affordability, home prices are too high, limited availability, which you're about to see, and I think might surprise you a little bit. um savings for down payments with the cost of living in Flagstaff and then financing constraints.

Um just coming up with enough money down the debt to income ratios especially in flight staff with your rents and stuff. Um so this is just an overview of the entire market like as of year to date as of this weekend. So, there's 277 active residential listings. 75 of those are under 500,000. And this is all types. I did I'm going to break it out later, but I did mobile, manufactured, town homes, condos, and single family homes. So, the active medium price in the market is $720,000.

So in these price points you have 75 under a half a million 128 between 500 and a million and then over a million there's 74 homes that's 26% of our market is over a million dollars. So, let's start with mobile homes. Year to date, they've there's been eight sales. And as Karen mentioned, um they had lot rent. So, the people see them and they're super excited. You know, I can I can afford $120,000 house. Well, not when you add on another house payment on top of it.

So, next is manufactured homes. Year to date, uh there have been 25 sales. Average price is 437. Um currently, right now available, there are six manufactured homes. Um they're on the west side and they're under 500,000 and there is actually one listing that's been sitting there over 500,000. I think it'll it'll stay there till it gets under 500,000. Um, condominiums year to date 46 sales. Average price of a condominium is 427,000.

Um, current active inventory we have 40 and you'll see a little later in the slides the breakdown of these is pretty random as far as low to high. So the averages are they're kind of skewed. I think you'll see in a minute. Uh, town homes, 66 sold year to date. Average price of a town home is now over $500,000. Um, the current market shows five at 463 and then 37 listings, average price 6764. And there's quite a few more.

um uh luxury style included in those numbers, which is why you'll see I broke them out a little bit more later. And then the single family home market, 186 homes sold year to date, 814,000 average sold price. Current market under $500,000. There are three homes on the market as of this weekend. 74 homes between $500 and a million dollars and 63 homes over a million dollars. So yeah, so we um I did a kind of a income overview through chat GPT.

So, I can't guarantee 100% that these are like right on the money, but average according to um national and Arizona and Flagstaff median household income in Flagstaff and this is all of Flagstaff. I couldn't break it out but just city of Flagstaff. So, this is Flagstaff including the county. So it's 38,000 per capita household 71. And then we're going to get into what you can afford and who can afford it. So this is our ser service and tourism occupations.

This is the median price needed our income needed to buy a medium price house which was that um 700 number. So you can see that's not really happening in the ser service and tourism occupations and you can see the difference in Flagstaff versus Arizona mostly because um the minimum wage. So a lot of people in Arizona are not making 15 or $18 an hour.

Average salaries for skilled and trades workers also not anywhere near that median number that um essential workers getting a little closer but still not quite there yet. Um, you can see that life staff, essential workers make a little bit less than if they were to go to the valley, which is why I think our retention here is so hard.

I do know with the nurses that flight staff from what I understand because I used to rent to travel nurses was they decided to start paying locals more and bring in less travel nurses because they were paying travel nurses so much more than our locals which didn't make sense. So they actually have a pretty high average compared to Arizona.

and then healthc care support services like your medical assistants um community health workers and such you know basically every part of our workforce can't afford the minimum of the median and then I na impaired full professor is actually and again these are averages. I know some people make more than this and some people make less than this, but they're still right on the border. And then higher income professional occupations.

Again, these are just averages, but it it's pretty amazing that our home prices have become almost completely out of touch for everybody in Flagstaff. Not that we didn't already know that. And then dual income households. So if you have two minimum wage workers obviously doing a little better and then a professional and a teacher or a nurse and whatever. So, I mean it climbs up there, but I think local wages obviously do not.

Um, the word I'm looking for, our home prices do not support our population. That's all I got. Sorry, I know I'm As I understand it, you're done. Commissioners, thank you so much. This was fantastic. Um, do we have any questions from the commission? There was a ton of information in here and I'm sure as people are able to digest this they'll have additional questions and comments. Um I'm not seeing any hands raised or user sees in the chat.

So I'm going to go ahead and um pause for another moment. Oh, I do have a hand raised by um Adriana Fischer. Go ahead, Adriana. Thank you, Chair Malazo. I actually had a question for Karen. Karen, you mentioned that the CHAP, if someone were using CHAP for the purpose of purchasing a home, the income required is a lot. Do you mean those are the income limits or can you explain that a little bit more thoroughly?

So the incomes that we shared on that PowerPoint are the max that they can have for that number of members in the household. Got it. Thank you. I thought so. I just figured I'd get some clarification. No worries. Thank you, Adriana. Any other comments or questions? Okay. And we have one moreformational item. 7C, an overview of the Northern Arizona Builders and Remodelers Association. Uh, this is from Commissioner Meyer. Hi everyone.

Um, I've been on the commission for almost six months and I'm a real estate agent here in town. I've um I'm coming up on my fifth year and I am excited to bring the builders association back to Flag Staff. Um I'm the executive officer and we are officially up and running. Um really our goal is to bridge the gap between industry professionals, the city community and um help with workforce development.

We're working very closely with Cookanino Community College and we're hoping to get NA on board um and really just keep students here, give them apprentice apprenticeship programs with our local builders um who we have a lot that are very eager and willing to jump in and help. Um and then um to keep them here in Flagstaff, keep people here, keep them working here.

And um our our main goals are to grow membership, help educate and um advocate for builders between um the consumer and the city and build partnerships and really grow the workforce um and keep keep building um sustainable and responsible and um everything everything local. So um I'm excited to to tell you guys about it and bring it back. Um maybe there's something that we can do with Eric. Your presentation was amazing and u maybe there's something we can do to work together.

Um but yep, that's all I've got. Fantastic. Thank you, Commissioner Meyer. Uh moving on or before we move on, I need to ask if there are any questions. Do we have any questions or comments? Sarah I don't see any hands raised. I don't see any Caesar cues in the chat. So, thank you so much, Sarah. Yep. Thank you. And we'll move on to item 8. Um 8A is an update from the housing authority liaison, myself and Sarah Dar, the housing division director.

Uh we did not meet this past month because um we ended up without a quorum. Um but there were a couple offormational items we were hoping to hear about. I don't know Sarah if you want to talk about any of those here. Chair Sarah Dar is actually not in this meeting right now but I can second that you did cancel the meeting this month. Okay. Thank you, Adriana. And 8B is update from housing commissioners and otherformational items. Any commissioners have any uh updates they would like to share?

I have a cue from Commissioner Flores Sandy. Oh, no. I'm sorry. I was on the wrong part of it. Um, I do not see any Caesar Q's in the chat and I don't see any hands raised. So, we'll move on to updates from housing staff. I have a hand raised from Sully. Go ahead Sully. Hey, everyone. I um just wanted to give a quick update. Um, it was in the the email notes from the last commission meeting. Um but just wanted to reiterate it.

So we have a couple projects coming online in the affordable rental space. Um these are market rate complexes for the most part. Um that took some incentive policy um money to then also have uh affordable units inside them. So that's going to be Elkwood Apartments, which is the one that's coming off Fourth Street there. Um there's going to be 22 units I believe in that one that are affordable up to 70% AMI for their initial leases.

Um and then in addition Live Sky Cottages um they're kind of out on uh Woody Mountain Road, that area over there. I think it I don't think it's actually Woody Mountain Road off the top, but they're going to have 20 affordable units um that rent to up to 80% AMI for the initial leases. Great. Thank you, Sullivan. Do we have any questions or comments for Sullivan? Hey, do we have any additional updates from city staff? I have another hand raised by Adriana. Go ahead, Adriana. Thank you, chair.

I just wanted to mention that the next meeting is actually going to be a combined meeting between July and August and it's going to happen August 13 from 1 to 3. I did change that calendar meeting invite so it should be updated on your calendars but I wanted to remind you so that we all know that there is no actual meeting next month. It has been combined with August. Thank you. Great. Thank you Adriana. That reminds me I will be unavailable for that meeting.

So I wonder if vice chair um Dunham is available or if we need to find someone else who can share the meeting. I will speak with Vice Chair Denim and just make sure and if not we'll we'll figure it out. Thank you. Okay. Wonderful. Thank you. Um, any other questions, comments from staff, commissioners, or the public? Okay, I want to thank our speakers again. You all did wonderful.

um some incredibly information dense presentations and I was actually very worried that we were going to run over time but we are actually 40 minutes 38 minutes early. Um but I will adjourn the mission uh the commission meeting at 2:22 p.m. Thank you everybody. Thank you. Thanks. Thank you.