AS ANTICIPATED, YAVAPAI COMMUNITY COLLEGE CUTS DEAL WITH PRESCOTT VALLEY’S FAIN SIGNATURE GROUP TO RENT APARTMENTS FOR VERDE CAMPUS/SEDONA CENTER STUDENTS AND EMPLOYEES AT COMPLEX NOW UNDER CONSTRUCTION ADJACENT HIGHWAY 89A IN COTTONWOOD

The College released few details about numbers of apartments it anticipates leasing and subsidizing or the amount of the subsidy in its June 8, 2023, press release. The background and history of the Government subsidized 192 apartment mostly HUD financed project, which was first approved in April 2018 by Cottonwood’s City Council, has been added to this story by the Blog 

On June 8, 2023, Yavapai Community College announced it had partnered with Prescott Valley’s Fain Signature Group to rent apartments for Verde Campus/Sedona Center students and employees at a complex now under construction adjacent Highway 89A in Cottonwood.  The College released no other details regarding the number of apartments it anticipates leasing or any estimate of the amount of subsidy it would provide for those who leased them.

In the College’s press release, Brad Fain, CEO of the Fain Signature Group, was quoted as follows:  “We are excited to work with Yavapai College to design housing options for our educational institutions, their employees and students. The college and its leadership have been immensely helpful in helping us understand their challenges and how we can work together to find attainable housing solutions. The college’s collaboration in this regard will benefit all employers in the region as we begin to collaborate with industry, trades, first responders, medical professionals, as well as cities and towns to create solutions that makes sense for our communities, residents, and environment.  We are also grateful to have strong partners in the City of Cottonwood, Arizona. At every turn and every challenge, the City of Cottonwood has worked with us to find solutions to help bring housing to their community.”

Yavapai Community College President, Dr. Lisa Rhine, was also quoted in the press release. She said that “the housing availability and affordability situation in our county has reached a point where Yavapai College is losing valuable faculty, staff, and prospective students. YC will continue to identify and invest in solutions for this issue. We are thankful for the Fain Signature Group’s vision and willingness to partner with the College to create solutions.ai College. The Inspiration Apartments in Cottonwood will provide another housing option for employees and students who work at or wish to attend the College’s Verde Valley Campus or Sedona Center.”

The Blog has researched the history of the project, including funding, which appears directly below.

The idea of building an apartment complex on land adjacent highway 89A only a block or so from the Northern Arizona Health Center in Cottonwood began in April 2018. That month  the Cottonwood City Council unanimously approved a plan to rezone 9.01 acres of land situated adjacent State Route 89A from Commercial and Industrial to Planned Area Development. The Council approval allowed for the construction of a new housing development, which was called “Inspiration.”

There were initial problems  in getting the project going because of  COVID and obtaining approval from the Federal Government for funding from the Housing and Urban Development agency.  The builder, Sedona developer Bob Porter, needed a substantial amount of federal loan assistance to support construction. After struggling with HUD and COVID delays,  Mr. Porter resubmitted his development plan and partnered with the  Fain Signature Group in Prescott Valley, to begin the project. The Fain Group  had  completed a project using similar HUD funding on the west side of Mingus Mountain.

The project got underway almost three years after the area was rezoned when a groundbreaking ceremony was held in Cottonwood  on December 7, 2021. Initially it was hoped the first apartments would be ready by the spring of 2022.  However, as of June 1, 2023, the complex remains under construction and the occupancy date as yet is uncertain.  At least one set of apartments in the complex appear from the outside as nearing completion and the developer says he hopes to have occupancy of some of the apartments by July 1, 2023.

The planned development is currently described as featuring 192 units, all for lease, ranging from 694-square-foot one-bedroom apartments to 1,181-square-foot three-bedroom apartments, with the most common size being two-bedroom units. There will be garages in some of the units, and each unit will have its own balcony.

Prices for the apartments are advertised as ranging from $1,575 to $2,235.

The apartments are described as “workforce” housing.  Porter has told the local media that  the housing development is “affordable, but not in the way of capital `A’ affordable.” Porter hopes to keep prices down to make the units usable for working and middle-class tenants. He has said that the project is not classified as Affordable Housing in the official way used by the U.S. Department of Housing and Urban Development, which has strict regulations on certain housing for rental to low-income tenants.

“It’s affordable, but no tests, no subsidies,” Porter said in interviews last year.

According to local media, Porter is receiving millions in assistance from the Federal Housing and Urban Development agency (HUD). The press has reported he is receiving a 221(d)(4) loan from HUD for $37 million, representing 82% of the cost of the $45 million project.

Based on Blog research, Section 221(d)(4) is a federal program that refers to a specific provision of the United States Housing and Urban Development (HUD) Act of 1968. This section pertains to the mortgage insurance program administered by the Federal Housing Administration (FHA) under HUD.

In general, HUD insures lenders against loss on mortgages for the construction or substantial rehabilitation of multifamily properties with at least five units. The properties can be market rate, low-to-moderate income, subsidized, or single-room occupancy (SRO) housing. The loans are interest only during the construction period and have a fixed rate. The program has eligibility criteria for the properties, the borrowers, the contractors, and the third party reports. The program also requires adherence to prevailing wage standards, annual audit of operations, and limitations on commercial use and occupancy.

Porter has said that dealing with HUD added to the delays in the project. “In late 2018 and early 2019,” he said, “before we could make our final HUD submittal, we had to do quite a bit of ‘value engineering’ to reduce costs. That entire process added four to six months to our schedule. When we finally received our initial HUD approval in the spring of 2019, we were approved at a 4.65% interest rate, and interest rates were dropping sharply. So, we made the decision to resubmit to HUD in order to achieve a lower interest rate, which we were ultimately successful in doing.”

In an interview with Verde Independent reporter Vyto Starinskas published June 11,  2023, Vice President of Finance and Administrative Services  Clint Ewell provided the following additional information:    The Community College will rent 10 units, five 2-bedroom and five 3-bedroom apartments.  “We plan to sublet these apartments to our employees, and will offer them to YC students if there is not enough employee demand.”

Ewell also said the Community College is concerned about the lack of attainable housing for the workforce near the median-salary range. “We are exploring many options and would be happy to discuss possible long-term public servant housing solutions with city and town leaders,” he is quoted as saying. “We are especially concerned about public servants including college employees, K-12 teachers, firefighters, police, health care providers, etc..”