Consideration and Acceptance of Highest Bids for Solicitations 2025-30 and 2025-31 for Sale of Real Property (Koch Field subdivision) and Consideration and Approval of Purchase Agreements: with Open Sky Development, LLC for sale of 9.26 acres of residential land; and with Silver Saddle Development, LLC for the sale of 12.52 acres of residential land.
 

1. Accept the highest bid for Solicitation No. 2025-30 and approve Real Estate Purchase and Sale Contract for sale of 9.26 acres of residential land for $664,000 to Open Sky Development, LLC; and
2. Accept the highest bid for Solicitation No. 2025-31 and approve Real Estate Purchase and Sale Contract for sale of 12.52 acres of residential land for $823,000 to Silver Sky Development, LLC; and 
3. Find that properties are not suitable for City development of affordable housing as proceeds from the sale need to be returned to Self-Insured Trust Fund.

The City has owned vacant residential land in the Koch Field subdivision in Doney Park area for many years. These lands are assets of the City's Self-Insured Trust Fund, established under the Flagstaff City Code Chapter 1-24.  The City has attempted to sell these properties in the past. Most recently, on March 5th, 2024, City Council rejected the sold bid received for Solicitation No. 2022-126 for the sale of two City-owned parcels and directed staff to issue new solicitations.

The City issued new solicitations inviting bids for purchase of the residential land, with a closing date of December 2, 2024.   The City received one bid for each property offered for sale.  Each bid was for an amount in excess of appraised value.  

Key Considerations:
The bid amounts are above the appraised values prepared by an independent appraiser on the City's behalf. 
The purchase agreements allow the buyer an entitlement period prior to closing to allow the buyer time to rezone the properties for greater density (manufactured housing). The properties are currently zoned as Coconino County, Agricultural Residential, with a minimum 2.5 acre lot size.  
The properties are assets of the Self-Insured Trust Fund; all proceeds from the sales will be returned to the Fund. 
The City Housing Section determined the land is not suitable for development with affordable housing. 
Per City of Flagstaff Resolution No. 2022-52, Section 5, before sale of a building or land, the City Housing Section needs to evaluate whether it could be repurposed for affordable housing, and the City Council is required to determine whether or not any funds from sale should be diverted to affordable housing purposes.
Per City of Flagstaff Resolution No. 2024-11, Section 1, all land owned by the City determined to be available for development will first be considered for housing prior to consideration of other uses; and affordable housing for a range of income levels shall be prioritized over market rake housing.

The City Self-Insured Trust Fund will receive the proceeds from the sales.  The sale prices are $664,000.00 for 9.26 acres of residential land located at 7462 Open Sky Road, and $823,000.00 for 12.52 acres of residential land located on Silver Saddle Road. 

No policy impact.

Housing- Support development and increase the inventory of public and private housing for renters and home-owners throughout the community.

Ordinance No. 1749 - 5/1/1992
Ordinance No. 1771 - 12/1/1992
Resolution 2014-04 - 2/14/2014
Resolution 2022-52 - 2/1/2022
City Council Meeting on March 3,2024, directing staff to reject all bids from a prior solicitation and to issue new invitations to bid.

1. Approve the purchase agreements as drafted.
2. Suggest amendments to the contract prior to approval.
3. Do not approve the purchase agreements.

The City previously owned 540 acres in Doney Park under the previous airfield known as Koch field. Ordinance No. 1772 declared the lands excess land, all of which was parceled out and sold in the early 1990's except for a 12.52-acre parcel, adjacent to Cromer Elementary School off of Silver Saddle Road (Assessor's Parcel No. 301-08-003F) and a 9.26-acre parcel just north off of Open Sky Road (Assessor Parcel No.301-08-056).

These parcels were purchased as assets by the City's self-insured trust in part to fund environmental remediation on the 9.26-acre parcel among others, a consequence of a former skeet shooting operation on the lands. City uses for these parcels are restricted in so far as that if the properties are repurposed for City use (such as housing), then the City would need to repay the investment made by the self-insured trust. City risk management staff have wanted to divest of these properties for many years, provided at a minimum the initial investment was recouped. 

The self-insurance trust fund functions to provide defense and payment of losses and claims for property, liability, unemployment compensation, worker's compensation; health, accident, life, disability or other benefits for the employees and officers of the City and their dependents; payment of insurance premiums; and risk management consultation.

Approving the purchase agreements will provide for additional housing stock in our community and convert real property assets of the self-insured trust fund into tangible assets.

 Proceeds and interest from the sale of the properties will be directed to the self-insured trust.