The Sedona City Council approved a development agreement with the MK Company of Scottsdale for the construction of a 60-unit townhome development at 10 Navajo Drive during its meeting on Tuesday, June 27.

The MK Company proposed the construction of 60 duplex townhomes on the 4.5-acre parcel at 10 Navajo Drive in May 2021. The city’s Planning and Zoning Commission unanimously approved the development review for the property on Feb. 15, 2022, subject to the company’s entering into a development agreement with the city.

“The proposed density of 13.3 units per acre is permitted if the project is addressing local housing needs,” the commission found. “The applicant has submitted a draft development agreement that would guarantee that the units be used as long-term rentals. This agreement will need to be approved by City Council prior to issuance of building permits.”

The proposed development agreement offered to limit rental of the properties to a minimum of 90 days.

“Is that a permanent deeded restriction?” Councilman Brian Fultz asked about the prohibition on short-term rentals.

“It’s a 30-year restriction,” city planning manager Cari Meyer said.

The agreement also includes an easement for a shared use path along the southern border of the property, which would connect Symphony Way to Southwest Drive.

Under the terms of the agreement, the city will reimburse the developer up to $300,000 for the design and construction costs for the path. Should the cost of the path exceed that figure, the amount in excess of $300,000 will be split between the city and the developer.

“Is it actually connecting to Aria and out the other side?” Councilman Pete Furman asked regarding the shared use path. “The drawing to me kind of looked like it petered out.”

“The easement for it does connect to two streets,” Meyer confirmed.

The council then approved the development agreement without discussion or public comment.

The development company’s principal, M. Keith Holben, said on June 28 that they have already applied for permits for the project and are currently in plan review, with construction expected to start in the first quarter of 2024.

“This project is not designed to provide affordable housing,” the citizen participation plan for the development stated. “Rather, it is designed to provide housing diversity to the community with a rental product which would be more suited to slightly larger households.”

Holben is also developing the 46-unit Sunset Lofts project at 220 Sunset Drive, which has been moving through the city’s permitting process since July 2021 while awaiting approval of federal funding.

The Planning and Zoning Commission will meet on July 18 to consider a request for a change to the approved plans for Sunset Lofts. The change would involve switching from a pitched roof to a parapeted flat roof and increasing the height of the buildings by five feet, from 22 feet to 27 feet.

City housing manager Shannon Boone informed the City Council during its recent budget work session that due to rising construction costs, the city may need to increase its contribution to Sunset Lofts by an additional $2 million.

Sunset Lofts have been described as workforce housing, which has no formal or federal definition, but the Urban Land Institute considers it to be housing for households earning between 80% and 120% of area median income.

Boone said in March that rents at Sunset Lofts would likely not be affordable for a single minimum-wage worker.