The deal hasn’t closed, and the plan for the former Sedona Cultural Park changed.
The reason, a bad United States economy.
“There’s a whole problem with our economy right now,” Monty Fitch, executive administrator of Fitch Industries, said.
Escrow has not closed on the approximately 40 acres on the west end of Sedona, and the live/work units — including affordable housing — were taken out of the plan.
By Trista Steers
Larson Newspapers
The deal hasn’t closed, and the plan for the former Sedona Cultural Park changed.
The reason, a bad United States economy.
“There’s a whole problem with our economy right now,” Monty Fitch, executive administrator of Fitch Industries, said.
Escrow has not closed on the approximately 40 acres on the west end of Sedona, and the live/work units — including affordable housing — were taken out of the plan.
Fitch Industries’ plan made its most recent appearance before the city at a Sedona Planning and Zoning meeting on July 1 for a conceptual review. In October 2007, Sedona City Council approved a Sedona Community Plan Future Land Use Map major amendment for half of the property. The other half does not require a major amendment.
According to Fitch, the company couldn’t obtain financing in the U.S. because investors are scared by the recent economic downturn, and had to turn to overseas investors. Fitch claims most U.S. companies are looking to foreign countries to finance major development projects.
“The timing couldn’t have been worse,” Fitch said.
When the project started, Fitch said, Fitch Industries had interested U.S. investors, but as the project moved forward, the problems started. At one point, Fitch Industries was within two weeks of securing funding — part U.S. dollars and part foreign money — when the deal fell through.
Since February, Fitch Industries has been working with two groups, one American and one foreign, but both investing foreign money, to secure money to close on the land, according to Fitch. For construction dollars, Fitch Industries is working with a third foreign investment group.
Working with foreign money brings further complication to the process, according to Fitch, and the investment groups are experiencing delays getting the money out of their countries and into the U.S.
Fitch did not disclose the names of the potential investors.
Live/work units, originally included in the commercial village component, also had to go due to uncontrollable economic factors, Fitch said.
The idea was to build units with studios on the ground floor and condominium-type living quarters above.
Fitch said this isn’t possible in today’s economic climate. There isn’t a market for condos right now; groups won’t invest in condo projects and people can’t afford the condos due to the mortgage crisis.
At a Sedona Planning and Zoning Commission meeting July 1, commissioners asked Fitch Industries how they planned to provide affordable housing as a component of its project in line with new recommendations from the Sedona Housing Commission.
Fitch said people eligible for the condos can’t afford them right now.
“Just because it’s workforce housing doesn’t mean it’s cheap,” Fitch said.
The target population of the commission’s efforts are teachers, firefighters and police officers, whom Fitch said are most affected by the mortgage crisis. People in this income bracket can’t get a mortgage.
This means, even if affordable units were included, Fitch Industries may not be able to sell them, Fitch said.
“We now have zero residential on that property and we are keeping zero residential,” Fitch said.
But, that doesn’t mean Fitch Industries isn’t willing to help address the housing problem at a different location.
Ideally, Fitch said Fitch Industries would like to construct affordable housing at a different location to meet the city’s request; but if it’s not possible, it will pay in lieu fees.
After overcoming funding hurdles and adjusting the plan to be viable economically, Fitch said the company will break ground in February at the earliest for both Phase I and Phase II.
Sedona Director of Community Development John O’Brien said the city hasn’t heard from Fitch Industries regarding the next step in the city approval process since the July 1 meeting.
