Consideration and Approval: First Amendment to the Purchase and Sale Agreement with Greentree Hospitality Group, Inc. (Greentree) which will extend the Site Plan Approval Period from 180 to 270 days.

The City of Flagstaff entered into a Purchase and Sale Agreement (PSA) with Greentree Hospitality Group, Inc. (Greentree) after Council approved the sale of the parcel and the PSA on June 6, 2017.  After the required waiting period, escrow was opened on July 13, 2017.

The PSA includes contingencies that must be satisfied within defined time periods for the transaction to close escrow.  Greentree has been successful in accomplishing the majority of these contingencies. 

One contingency that remains outstanding (Section 5.B of the PSA) provides 180 days for Greentree to receive Site Plan Approval of Phase 1 through the City's Development Review Process.  This is called the Site Plan Approval Period.  The intention of this contingency is to ensure that both the Buyer and Seller find the design of the intended project acceptable prior to the transaction closing. Greentree and City staff agree that all parties have been diligent in their efforts to meet the timeline requirements of the PSA and the project has been successfully approved in Concept Review.  However, the complexity of the project and the site has led to the need for additional time in order to achieve the best project design possible, which is in the best interest of both parties.  The final day of the Site Plan Approval Period will change from January 9, 2018 to April 9, 2018.

The addition of 90 days to the Site Plan Approval Period will allow the time needed to complete the Site Plan Approval process.  As the Close of Escrow for Phase 1 is defined as the tenth (10th) day following the receipt of Site Plan Approval, this will have the effect of extending the Close of Escrow as well.

Approval of the amendment has the financial impact of maintaining the remainder of the terms in the PSA.  This will result in the City receiving funds at Close of Escrow.  The purchase price is $5,576,725.  There are also financial benefits to the transaction in terms of property tax, sales tax, construction sales tax, and jobs.  The extension will provide additional time for the contingency period, and likely result in a delayed close of escrow, which would subsequently delay the City's receipt of the funds.

Not approving the extension of the Site Plan Approval Period could lead to the cancellation of the PSA.  This would leave the parcel in City ownership and prevent the City from receiving the funds agreed to as compensation for the sale.  Other indirect financial considerations, such as increased property tax, jobs and sales tax would be impacted as well.

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City Council approved Ordinance No. 2017-15 and the Purchase and Sale Agreement on June 6, 2017.

Approval of the First Amendment to the Purchase and Sale Agreement will extend the Site Plan Approval Period from 180 to 270 days, which will allow the Buyer sufficient time to complete the Site Plan Approval process and ensure the best project possible.  It will also extend the Close of Escrow by the amount of time required to complete the Site Plan Approval.

Not approving the First Amendment could prevent the completion of the Site Plan Approval contingency and lead to the cancellation of the Purchase and Sale Agreement.

The Purchase and Sale Agreement (PSA) with Greentree Hospitality Group, Inc (Greentree) contracts for the sale of 32 acres of City owned land in the vicinity of the airport for $5,576,725.  Phase 1 of the project includes 12.515 acres and will include a 120 room hotel, restaurant and event center, and a 15,000 square foot corporate office for Greentree's expansion into the United States market.  There will be fifty (50) corporate jobs and forty (40) hotel jobs within six years.  The project, at full employment, is anticipated to grow to one hundred forty (140) jobs provided by Phase 1 alone.  

The project was approved in Concept Design Review on November 15th. 

Additionally, Greentree participates with Northern Arizona University School of Hotel and Restaurant Management in a mutually beneficial partnership.

Approval of the First Amendment:

• Allows more time for design and the approval process.
• Adjusts the Site Plan Approval Period and Closing Date, but does not change any other terms in the Purchase and Sale Agreement.
• Does not impact the amount of money and benefits to be received.

Both parties agree:

• Each side has been diligent in their roles and responsibilities through this process.
• A better design is beneficial to both parties.

The Purchase and Sale Agreement, if fully executed:

• Generates funds for the airport.
• Creates additional activation of the Airpark area.
• Will lead to an estimated $15,000,000 development project, which generates construction sales tax.
• Is proposed to create 140 jobs with a potential payroll of $6,000,000 annually.
• Generates property taxes by placing the property onto the tax rolls and improving its value.

The Purchase and Sale Agreement, if fully executed:

• Supports the partnership between Greentree and Northern Arizona University.
• Generates jobs and advances the activity in the Airpark.

There has not been community involvement in the First Amendment to the Purchase and Sale Agreement, but there was involvement from the public and the Airport Commission in the initial Request for Proposals and Council actions.