The recent groundbreaking for the first phase of the Izabel Homes project signals a new milestone for the city-run community land trust.

In a partnership with local builder Loven Contracting, Flagstaff officials expect to have a total of 16 homes added to the land trust by 2015, offering one of the only paths to home ownership for local families making no more than 80 percent of the area median income. For a family of four, that would mean those making less than $49,200 annually would qualify.

Community Housing Manager Sarah Darr said the groundbreaking was a huge step forward for the community land trust, which was formed by the Flagstaff City Council in 2006. The Izabel units will be the first permanently deeded, affordable homes to be built specifically with the land trust in mind.

The city will be able to price each home between $160,000 and $180,000, with the city retaining ownership of the land and allowing the homeowner to purchase only the house itself.

The homes will vary in size to accommodate different family sizes, but all will be townhomes.

The city has several conditions on the resale of homes in the trust, including capping the amount for which they can be resold and requiring the new buyers to meet income eligibility guidelines.

Two separate housing projects have produced a total of the 33 permanently deeded affordable homes in Flagstaff through partnerships with outside groups.

“We are very excited to be moving forward with our community partners toward 16 new, owner-occupied homes in the Sunnyside neighborhood,” Darr said.

FEDERAL GRANTS PAY BILLS

The barren, 1.67-acre site near Coconino High School has been in city possession for several years after the city took control of several buildings that were found to pose a significant health hazard.

The city spent roughly $1.1 million — mostly from federal grants set aside for neighborhood revitalization — to demolish the buildings, clean up asbestos and relocate several renters.

Darr said the finished lots will end up costing less than $70,000 apiece, far below the going price for a finished lot inside the city limits.

The city will also be loaning Loven Contracting $180,000 to help cover the costs of building the first three homes.

The construction loan will be paid off when the homes are sold, but Darr notes the money will essentially be put into a revolving account to fund the construction of future phases of the same project, with the city being repaid as each home is sold.

Darr said the city has received significant interest in the project after the groundbreaking was announced.

The city’s Nexus Study, released in 2007, said Flagstaff has an immediate demand for 800 affordable housing units and will need 2,800 more over the next 15 years.

NO CITY INVESTMENT, NO BIDS

The city had initially put the entire Izabel Homes project out to bid without any type of city investment with the hope that the developers could find private financing for the entire project. The city received no bids on the initial proposal.

Darr said it was difficult to find banks willing to offer construction loans in the immediate aftermath of the subprime mortgage meltdown.

“For developers acquiring construction financing and for low-income home buyers looking to acquire mortgage financing, the lending market has become quite conservative,” Darr said.

Drastic changes in lending and the general local economy over the last few years were part of the reason it took several years for the city to set up the community land trust and begin building homes.

“As lenders have become more conservative in lending practices with first-time homebuyers and specifically, permanently affordable units have become more complicated,” Darr said.

Joe Ferguson can be reached at jferguson@azdailysun.com.