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Facing $51 million in land use claims, Flagstaff will waive high-occupancy zoning enforcement for 70 properties

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Logjam on Mike's Pike

Cars sit in a traffic jam on Mike’s Pike Street as parents wait to get into the parking garage of The Hub student-housing complex in this 2018 file photo.

After being threatened with a collective $51 million in claims from property owners, the City of Flagstaff will waive the enforcement of a high-occupancy housing land use law for dozens of local properties.

The Flagstaff City Council on Tuesday approved a resolution precluding 70 land parcels from zoning code changes brought by the High Occupancy Housing amendment adopted by the council in November of last year.

The amendment placed stricter restrictions on density and the maximum number of bedrooms that can be built on a property. For example, if 20% or more of the apartments in a large development have four or more bedrooms, it is automatically considered high-occupancy housing.

In some cases, the designation requires developers to obtain a special use permit for high-occupancy land use -- which some claim can be costly. Other provisions, such as parking requirements, are considered by some to be additional challenges for future land developments.

In the claims made to the city, the property owners argued these types of zoning code changes reduced their rights to use their property, and subsequently, reduced the fair market value of the land.

The claims were filed under Arizona Proposition 207, passed by state voters in 2006, that requires the government to reimburse land owners when regulations result in a decrease in a property’s fair market value.

Christina Rubalcava, senior assistant city attorney, defined fair market value as “the most likely price which the land would bring if exposed for sale in the open market by a purchaser who buys with knowledge of all the uses and purposes to which it is adapted and for which it is capable.”

Proposition 207 requires property owners to submit a written demand for monetary compensation based on the fair market value. The government, or in this case the City of Flagstaff, then has 90 days to either pay the compensation, amend the law or waive the enforcement on the property owner's parcel.

When asked, city officials did not indicate whether there has been any consideration to amend or repeal the related zoning code. A discussion on the city's High Occupancy Housing Plan, however, is scheduled for the upcoming city council meeting Tuesday, according to Flagstaff Interim Public Affairs Director Sarah Langley.

If the city failed to act on the claims, the property owners would have been permitted to file for compensation in the superior court. Rubalcava said the city received Proposition 207 claims on behalf of the 70 parcels of land beginning in July.

Adoption of the resolution waiving the enforcement for the 70 properties “will moot the pending claims for just compensation,” according to the city’s public meeting agenda.

Council’s decision comes after the Goldwater Institute, a conservative public policy think tank, announced in July that it had filed more than $23 million in claims against the City of Flagstaff on behalf of property owners.

At the time, the group said the bill against the city was only expected to grow “as thousands more may have claims under state law.”

A total of 87 Proposition 207 claims have been filed with the City of Flagstaff in response to the High Occupancy Housing Zoning Code amendment, Langley said.

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