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The scoop on Sedona’s housing crisis

TZR correspondent Cyndy Hardy spent months examining the affordable housing shortage in Arizona’s most expensive city to live in. Sedona cops, nurses and teachers – the very people who make the town tick – are living out in the sticks while the town’s part-time residents continue to build out to the Red Rock. Are residents powerless?

Sedona’s cheap housing disappears under mansions

SEDONA — Mike Horner is a cashier at a mom-and-pop convenience store in Sedona. Over the past 17 years, he has downsized from a three-bedroom home in West Sedona to a trailer in Oak Creek Mobile Lodge on Highway 179.

His 16-year-old son, Brooks, lives with him. Soon, his 18-year-old daughter, Esme, will leave Flagstaff and move in.

When Horner first moved to Sedona, he could rent a three-bedroom house for about $675. When he re-entered the rental market after his divorce, rents were about $1,000 for a two-bedroom house. So he moved into Oak Creek Mobile Lodge because it was a good deal.

Now Horner believes his days as a Sedona resident are numbered. Oak Creek Mobile Lodge is on the chopping block. The property owner, Don Campbell, plans to remove the park’s 59 trailers and build about 50 condominiums.

Horner is dubious about the city’s intentions to do something – anything – about affordable housing in Sedona. To him, it’s empty talk about doing what’s best from people who cater more to the rich than to the “regular people” that make the town tick.

“They have a lot to say but it doesn’t seem to do any good. It’s like they have their own agenda and a deaf ear,” says Horner, who spoke to TZR under the condition that his real name not be used. “I haven’t seen them put up any low-income housing. I don’t think they’ve done anything.”

It’s been almost three months since the Sedona City Council approved new rules to encourage the construction and retention of affordable housing. City officials have been talking about the housing problem since at least 1992.

Little has changed, and Horner was not impressed by the news.

“Oh? I’m not sure what you’re talking about,” Horner says as he bags a customer’s cigarettes and six-pack. “Have a good night, George.”

Instead, Horner will move to nearby Cornville, Ariz., where he owns a piece of land with a run-down mobile home on it.

“If [the landlord] says we have to go, I’ll make my Cornville property livable,” says Horner, who plans to continue working at the convenience store in Sedona.

SEDONA: WIDEST AFFORDABILITY GAP IN ARIZONA

Affordable housing is defined by the relationship between housing prices and household income – what one can reasonably buy or rent without financial hardships. Experts say monthly housing should represent no more than one-third of one’s monthly income over the long run, such as a 30-year mortgage or more.

With that in mind, Sedona has the highest affordability gap in the state, according to a report distributed at the Governor’s Housing Forum in September 2007. The city falls behind 96 percent of all U.S. towns with 40,000 people or less in the category of affordable housing, according to a 2007 citizen survey Sedona officials commissioned from National Research Center in Boulder, Colo.

Median home prices in Sedona increased 77 percent between 2000 and 2006 while rents increased 40 percent, according to the city’s Housing Commission. But Sedona median household incomes only increased 13 percent, from $43,466 to $49,225.

The current median asking price of a single-family home in Sedona is about $586,000, according to Buyers Brokers Realty of Sedona. Townhomes and condominiums fetch about $390,000 apiece.

At those prices, the average Sedonan would have to earn $23 per hour to rent or $84.50 per hour to buy a median-priced home, the governor’s report stated. That is $30 more per hour than the Arizona community with the next highest housing costs: Flagstaff, where workers need to make $54.14 per hour to buy a median-priced home.

As a result, about 64 percent of the Sedona’s workforce lives outside of Sedona. By comparison, 80 percent of the workforce in neighboring Flagstaff actually lives in Flagstaff, according to Flagstaff’s 2007 Housing and Community Sustainability Nexus Study.

In Flagstaff, wages are keeping up with housing prices – sort of. In Sedona, however, Horner’s “regular people” must work like Manhattan-ites. They take on multiple jobs just to afford a decent trailer here.

Between 2000 and and 2006, Sedona’s unemployment rate was 2 percent, less than half the rate for Arizona or the U.S. Those who live and work in Sedona usually have two or more jobs, says Sedona Economic Planner Jodie Filardo.

After all, they want to enjoy the city’s red rock formations and soothing vibe just like everyone else. But a recent video testimonial prepared by the city’s own housing commission shows that most of Sedona’s workers end up with a window seat.

Rhonda Ross, a former Sedona resident, talks about why she caved in and moved to the unincorporated Village of Oak Creek nearby.

Ross tells the camera: “Living in Sedona is definitely a very important part of being here. I really would not want to be working all my jobs just to be living here, just to be having the majority of my income going to rent, bills and food.”

The city’s affordability crisis goes far beyond the lowest wage earners most people associate with affordable housing, says Sedona Housing Commission member Nate Oskar. It makes it hard to attract teachers, police officers, nurses, managers and other professionals because the salaries don’t match the incomes required to buy or rent in Sedona, he says.

SIMPLE SOLUTION NEEDS WORK

Guiding future development is the solution. Sedona’s new housing policy, enacted in December, gives the city some leverage to negotiate affordable housing with developers seeking approval for their projects.

The new rules ask to developers to set aside six to 12 percent of the units they build as affordable housing in order to get zoning approvals from the city. Only those with a household income that falls between 80 and 150 percent of the area’s median income are eligible to buy them.

The new rule is hardly unique to Sedona. It can be found in pricey urban markets outside Arizona, such as Carlsbad and Oceanside, Calif., just north of San Diego.

If the developer does not want to set aside units for affordable housing, the developer can choose to pay into a special fund. This fund directly supports the creation and maintenance of affordable housing elsewhere in Sedona through activities such as land acquisition, down-payment assistance and low-interest loans.

Most developers opt for this route. It allows them to get their project approved and meet affordable housing rules without selling their own units at a discount or having the “affordable housing” stigma attached to their project in particular.

The city offers a carrot in return. Sedona officials can waive or defer development fees for some or all of the units, review building plans more quickly or, on a case-by-case basis, bend the city’s land development codes to accommodate the affordable units. This includes making exceptions for lot coverage, building heights, lot area, lot dimensions and yard setbacks.

But there’s a catch to the new rules: Compliance is voluntary. State law does not allow the city to make its affordable housing rules a requirement, says Sedona Housing Planner Jessica Williamson.

Even so, Sedona’s new policy is the biggest tool in its shed so far for narrowing the state’s worst affordability gap. To create it, Sedona’s Housing Commission met with businesses, resorts, the Sedona Oak Creek Unified School District, the Verde Valley Medical Center, and five major Sedona employers over a three-year period to determine how the lack of affordable housing affects their interests.

The commission circulated two informational brochures. It hosted focus groups and presentations on density and how community participation can help blend affordable housing into the community without a ruckus.

Though local Realtors cried foul about the policy, some Sedona officials cried fair.

“Developers are getting a benefit for a benefit given,” City Councilman Rob Adams said recently.

Yet some of the authors of the rules, such as Sedona Housing Commission chairwoman Linda Martinez, admit that the rules are flawed. But City Councilman Harvey Stern said it’s a good start and that, ironically, the city can’t afford to study the affordable housing problem much longer.

Housing Commissioner Diane Smith agreed, saying, “Small solutions got away while we’ve been looking for a big solution” for 15 years.

The commission took an aggressive step on March 10. It won approval from the City Council to lobby state legislators to pass a new law that would allow local governments to make developers include some affordable housing through special “inclusionary” zoning.

The City Council voted 6-1 in favor of the lobbying, with vice mayor Jerry Frey opposed. The commission will seek help from other towns to find a legislator willing to sponsor the bill.

AFFORDABLE HOUSING IS DISAPPEARING

Whatever the solution is, officials better hurry. In the 12 years it took to create a housing commission and take a snapshot of the situation, much of Sedona’s older [read: affordable] housing has disappeared, giving way to exclusive subdivisions and swanky mansions.

Today, Sedona’s stock of affordable housing is eroding before residents’ very eyes. It has dwindled so much that neither the city nor the commission could offer an estimate on the losses.

That means most of the disappearances are anecdotal – a trailer park here, a few lots there.

In 2000, all but four of 12 trailers were removed from the former Laughing Coyote bar in West Sedona. The rest were removed when the bar sold in 2004. Those affordable units have not been replaced.
Two years ago, about 80 residents of Hawkeye RV Park in Uptown were evicted to make way for about 150 condominiums and 12 affordable off-site units, all of which have yet to be built.

Now, because of funding issues, the developer is asking the city for an 18-month extension – meaning those residents might have had affordable housing for more than three more years. Windsong Trailer Park in West Sedona has sold and is planned for development.

Don Campbell, who is re-developing the Oak Creek Mobile Lodge where Horner lives, agreed to reduce the density of his project. He will come back to the city with five fewer units, which includes two affordable units. If the city approves the project, another 53 units of affordable housing will disappear without comment from the city’s Planning and Zoning Commission.

So forget houses. Sedona’s workers should just toughen up and find an apartment, right?

Well, Sedona lags far behind in that category, too. Apartments account for just 4 percent of Sedona’s housing stock, compared to 23 percent of Arizona’s housing stock overall, according to a 2006 city study by Kuehl Enterprises.

The same study showed that Sedona also lags behind other resort communities. Multifamily housing makes up 20 percent and 13 percent of the land uses in Aspen and Durango, Colo., respectively. Sedona clocks in at 4 percent.

DIM FUTURE IF SOLUTION NOT FOUND

So far, Sedona’s new affordable housing policy has netted at least 13 new affordable units and $186,984 in the special fund. That’s almost enough money to buy one bedroom in a median-priced, three-bedroom Sedona home.

But Sedona housing officials aren’t waiting around to see more successes. They are fast at work exploring other strategies such as inclusionary zoning, which would make some affordable units mandatory for any residential project.

Among those items is a request for help from Republican Andrew Tobin and other state lawmakers who represent the area. Although Tobin acknowledges the problem, he says the state’s projected billion-dollar shortfall and the Capitol’s bias toward helping big cities will hurt Sedona’s chances.

In a March 2 email to TZR, Tobin wrote, “It is not likely that our rural communities will get much help from an urban-dominated legislature.”

Tobin also wrote that beating the affordable housing crisis has to happen at the local level through partnerships between city governments and developers to build high-density, multifamily projects.

But Sedona has just 59 acres left for such projects. About 80 percent of the city’s developable land is spoken for.

Tobin also said he was unsure if any bills addressing affordable housing had made it past legislative committees, the Legislature’s lowest rungs for new bills to become laws.

Even if they did, he wrote, the bills would probably get stuck in the appropriations committee – which controls the state’s purse strings – because “funding is not available this year or next, as [far as] I can tell.”

SEDONA’S AFFORDABLE CLOCK IS TICKING

This leaves Sedonans like Ronald Pauley to find their own solution while local and state officials debate the ins and outs of the city’s affordable housing crisis.

Pauley owns a successful business that repairs restaurant equipment. He has rented a two-bedroom apartment in Uptown Sedona since 2002.

The view from Pauley’s affordable apartment used to be the jagged red hills below Wilson Mountain. Now, his view is the back of a new three-story timeshare condominium built about 30 feet from his window.

“I know they are timeshares because I see the people who come and go,” he says.

None of the mountains are visible. “How did they get three stories?” he asks, perplexed.

These days, media coverage of land speculation is driving up land values and rental prices in Sedona. Pauley says he is close to moving out of Sedona because the affordability gap is turning into a chasm.

Fearing reprisal from his landlord, Pauley spoke to TZR under the condition that his real name not be used for this story.

“My landlord started raising the rent after reading about higher average rent prices in the newspaper,” Pauley says. Last year, he adds, his rent rose three times in one week. It began at $600 and rose to $625, then $650, then $700.

Pauley says the eight-unit apartment building was built in 1972 by its current owner. The construction is not up to code. There are gaps between the original wood siding and the newer brick façade. The PVC pipes rattle inside the walls, he says, and methane gas vents into the attic, not outside the dwelling.

“I’ve got a working smoke detector and an exit strategy,” Pauley says with a grin.

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>>Email the editor at aklaw@zoniereport.com.