Consideration and Approval of Purchase Agreement: ZH Holdings Butler, LLC for exchange of real property of substantially equal value and purchase of property in the amount of $31,952.00 for the Lone Tree Overpass Project.

On February 20, 2024 the City Council  adopted an ordinance authorizing the exchange of real property of substantially equal value and purchase of property needed for the Lone Tree Overpass.  The ordinance calls for City Council approval of the form of purchase agreement. 

Per the ordinance and purchase agreement, City remnant parcels originally acquired for the Lone Tree Overpass Project will be exchanged for real property interests needed for the same Project from ZH HOLDINGS BUTLER LLC ("ZH Holdings").  The exchange provides the following benefits to the City:

1. Disposes of remnant land no longer needed by City
2. Offsets the cost to acquire real property interests from ZH Holdings
3. Returns remnant land back to tax base

The remnant properties were evaluated by the Housing Section as per Resolution 2022-52,and it was determined that the remnants are too small to be utilized as stand alone parcels for affordable housing. Additionally, City staff attending an internal property and development team meeting, representing multiple City divisions, did not identify any opposition to the exchange.  At this meeting staff determined that City policy calls for preserving an existing public alley in this area. This public alley is not part of the exchange.

City Council is also being asked to consider approval of a Purchase Agreement, which includes terms and conditions of the exchange. The Purchase Agreement will be attached to this staff report prior to the February 20, 2024 public meeting.

The areas to be exchanged have been valued at an equal price per square foot. The appraised value on the ZH Holdings parcels, inclusive of a temporary work easement is $198,963.00. The value of the City land remnant parcels is $167,011.00. The remaining  just compensation to be paid for the property interests is $31,952.00, based on the appraised value. The acquisition of the remaining portion will be funded by the Lone Tree Overpass Project Capital Improvements (Account No. 047-10-112-3054-6-4421)

None.

Priority Based Budget Key Community Priorities and Objectives
Safe and Healthy Community -

• Foster a safe, secure, and healthy community.
• Ensure the built environment is safe through the use of consistent standards, rules and regulations, and land use practices.

Inclusive and Engaged Community -

• Advance social equity and social justice in Flagstaff. 

Sustainable, Innovative Infrastructure -

• Deliver outstanding services to residents through a healthy, well maintained infrastructure system.
• Utilize existing long-range plans that identify the community's future infrastructure needs and all associated costs.
• Identify smart traffic management, multi modal transportation, and alternative energy opportunities.

Environmental Stewardship -

• Implement sustainable building practices and alternative energy and transportation options.
• Implement, maintain and further the Climate Action and Adaptation Plan.

Regional Plan

• Improve transportation safety and efficiency for all modes.

On July 6, 2021, Council approved Ordinance 2021-15 authorizing acquisition of this property, including others for the Lone Tree Overpass Project.

1. Retain City remnant parcels, and pay full appraised value for real property interests needed from ZH Holdings. 
2. Dispose or use City remnant parcels at a later date.

The initial 2010 Lone Tree Overpass study identified the entirety of the parcels owned by ZH Holdings as full acquisitions. As design efforts progressed, the acquisition has been reduced considerably to the final 6,816 square feet.

The City has published a notice of intent to exchange property of substantially equal value, pursuant to A.R.S. Section 9-407.