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ITEM 7.c. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 3/9/2026 Meeting Type: Planning and Zoning Commission Regular Meeting Submitting Department: Development Services Prepared by: John Wesley, Development Services Director Staff Contact Information: Phone: 480-816-5138 Email: jwesley@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PUBLIC HEARING, with CONSIDERATION AND POSSIBLE ACTION: Relating to Ordinance 26-02 amending Zoning Ordinance Chapter 27, Downtown Overlay, Sec. 27.02 A. related to permitted density for residential development. Staff Summary (background) At their September 2, 2025, Town Council meeting, the Council approved adding Chapter 27, Downtown Overlay, to the Zoning Ordinance. As part of their consideration to apply this zoning designation to the downtown area at their meeting on December 18, concerns were raised about the residential density being allowed by the overlay district. Based on those concerns, the Council asked the Planning and Zoning Commission to review this issue and make a recommendation on changes to the ordinance to address this concern. The Commission held a public hearing to consider possible changes to this overlay district at their regular meeting on January 12, 2026. During that meeting comments and questions were raised with regard to the existing development pattern in the downtown area and concerns about the existing language as it would apply to major redevelopment in the downtown. Each of the four blocks in Plat 208 is about 11 acres. In total, as platted, there were 139 lots on these four blocks. In the years since it was platted, some lots have been combined, some have been split, and condominium plats have added numerous units and owners on some lots. Given the current configuration and ownership pattern, there are over 100 individual owners of properties within this area. Plat 208 is governed by a property owners' association that was established when the area was platted and began development. This association controls all the common areas within the plat. Each lot owner has a voice in what happens within this area. It takes approval by at least 66% of the owners to make any changes to the common property. Following the Commission discussion in January, staff reached out to the Chair of the Plat 208 Board to discuss the issues raised and what the likelihood is of seeing any substantive changes in the current platting and common area ownership and uses. The feeling is that modifications of the type being discussed by the Commission were so challenging it was not worth the time that would be spent studying and considering them. The issue given to the Commission by the Council for consideration is what should the by- right density be in the Downtown Overlay? The notice for the public hearing was just on that question. Concern was expressed at the previous meeting that the area would become overrun with apartments at the density currently approved, resulting in not achieving the desired commercial development. The ordinance does not allow first floor residential in the Avenue District at all and allows it on the first floor in the business district only through approval of a Special Use Permit. Therefore, the Town can ensure the balance is maintained between commercial and residential uses. It is well known in real estate that "retail follows rooftops." Population and population density is needed to attract business. While there are some exceptions, they are rare and driven by unique situations. In order to achieve the desired level of active commercial use in downtown, there needs to be a population base to support the businesses. There was also concern that if a block could be totally redeveloped to the allowed density it would be too much for the area. Based on the previous staff analysis, it would be good to add 400-550 additional dwelling units within the downtown area. At least 300 of these should be in Plat 208. The possible number of units that could be added to the area by density allowance are shown in this table. Dwelling Units/Acre Number of Units Based on Total Building Lot Area Number of Units Based on Vacant Lot Area 15 294 88 25 468 149 35 662 208 45 920 267 It is unlikely many of the properties with existing development will be redeveloped to add residential units, but some will. It is also unlikely all the existing vacant lots will be developed with residential uses. It was noted at the January meeting that the figures above are based only on the actual lot area for development. All the parking and other amenity areas that are typically part of a development and factored into a density calculation are not included. Using the number of possible units from the table above for the total lot area (residential development on every existing platted lot at the maximum density allowed), the density per acre drops to 6.7, 10.6, 15, and 20.9, respectively, for an entire 11-acre block. Given the ownership of the common area by the Plat 208 Association and the challenge it would be for that area to become privately owned for development, it is extremely unlikely the Town would ever experience someone building out an entire block based on the allowed density. However, to resolve any concerns about this possibility, the ordinance has been amended to set a cap on the maximum density that can be developed across an entire block at 15 units per acre. Related Ordinance, Policy or Guiding Principle Zoning Ordinance Chapter 27 Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) The public hearing for this text amendment was held on January 12, 2026. Per the Zoning Ordinance, the Commission must make a recommendation to the Town Council within 90 days unless a continuance has been requested by the applicant. The desire is to move this issue forward so the rezoning of the property can take place and the Town can begin to benefit from the change in regulations. If the Commission does not act by April 12 (the day before your April meeting) this item will be forwarded to the Council without a Commission recommendation. Staff is open to adjustments to the densities stated in the ordinance but, given the built nature of the property and the control of first floor uses through the Special Use Permit process, recommends approval of the ordinance as presented. Suggested Motion MOVE TO recommend adoption of Ordinance 26-02. FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. Draft Ordinance 26-02