Consideration and Approval of Contract and Discussion and Direction on RFP: Purchase agreement with FSL Holding Properties, LLC for real property consisting of block 45 of the Flagstaff Townsite, addressed as 320 N Humphreys Street.
 

1. Approve the purchase agreement with FSL Holding Properties, LLC and authorize the City Manager to execute the necessary documents
2. Discussion and direction on RFP for a housing development 

Council approved Ordinance 2025-29 in December 2025 which authorized the purchase of all or a part of the real property at 320 North Humphreys Street from Allthrive365 (formerly the Foundation for Senior Living). At that time, the purchase was for the south half of the parcel to ensure adequate parking for the City Courthouse and the Downtown and to allow for security of tenure and other possible uses. On January 13, 2026, staff updated Council about the opportunity to purchase the entire parcel. Council provided direction to pursue acquiring the entire block. Staff presents this negotiated purchase agreement for approval in order to accomplish acquiring the entire block.

Key Terms:

• The purchase price remains at the same price per square foot as the original south half purchase. With the additional square footage, the total price of the acquisition is $6,300,000.
• As part of the acquisition, the City is obligating itself to issue a public solicitation for development with an affordable housing component on all or a portion of the property within one year of closing on the property. 

The purchase price of $6,300,000 will be funded through the following sources: 

• Partial funding has been set aside as part of the Courthouse Capital Project in Fund 408.  With interest earning, we now have $1,880,679 as of 6/30/2025.
• Balance of Real Estate Proceeds Fund (approx. $407,000)
• Balance from General Fund capital reserve (approx. $1,500,000)
• The remaining funds will be provided from the sale of the old courthouse property. This is estimated in excess of $2.8 Million.
  • The timing of receiving the sale proceeds has not been determined. This will be outlined in the purchase and development agreement to redevelop the old city courthouse site.
  • The capital project fund will have a negative cash balance until the payment is received. We will record a receivable when the development agreement is executed.  This will show a positive Fund Balance, but still negative cash balance. 
  • Should the purchase and development agreement for the old city courthouse not be executed, the City will look at providing an interfund loan from another City fund until the property is sold or other resources are determined to fund the difference.

Budget Authority has been identified for FY 2025-26.

March 3rd, 2020--A discussion item on parking related to the new and old courthouse was presented to council which described some of the negotiations and ideas to secure the code required parking needed for the new courthouse facility. Incorporating Court facility parking in the FSL development was discussed. 
December 16th, 2025--Council passed Ordinance 2025-29 authorizing acquisition of all or a portion of the real property.
January 13th, 2026--A discussion item was presented to council introducing the opportunity to purchase the entire property.

Do not approve the purchase agreement and direct staff accordingly.

The City and Allthrive365 have been in negotiations to provide parking for the Courthouse and Downtown Flagstaff for over 7 years. Our negotiations included participating in a portion of the parking garage that was to be built to gain needed parking as well as support the intended affordable residential housing project. Recently,  it became clear that Allthrive365 would not be able to complete their plans. To avoid the loss of needed parking for the Courthouse and Downtown, the City entered negotiations to purchase the southern half of the parcel and then later, the entire parcel.

Regarding the David Babbitt House, in January 2021 the Heritage Preservation Commission approved the mitigation required for demolition of the house. This included approval of a Phase 2 Cultural Resource Study, and a condition to make a concerted effort to salvage historic items from the property. To meet this condition, AllThrive365 identified significant features and developed a salvage plan, which was required prior to issuing the demolition permit. Salvage item removal was completed under the demolition permit. In addition to the required mitigation, AllThrive365 offered the house, along with funds equal to the cost of demolition, to any parties willing to relocate it and AllThrive365 created a book documenting the house’s history. No community partner emerged to preserve the house at that time. AllThrive365 moved forward with its plans, which required demolition of the house in order to build affordable senior housing. When economic factors forced AllThrive365 to cancel its development plans in January 2026, AllThrive365 offered to work with parties who wanted to explore purchasing a portion of the parcel containing the house. A private developer expressed interest, but the restoration costs were prohibitively high so the proposed sale fell through. No other party stepped forward with viable preservation plans, so Allthrive365 elected to move forward with the demolition based on its previously issued permit.

The City’s intention is to provide surface parking as an interim condition for at least the southern portion of the parcel while we issue a procurement with project development to occur thereafter. 

• Sustainable and Innovative Infrastructure: Provide, manage, and maintain effective infrastructure for multimodal and active transportation
• Robust and Resilient Economy: Maintain and enhance an equitable and effective business, retention, and expansion program throughout the community

Policy LU.10.2. Support on-street parking, shared lots, and parking structures.
Goal LU.12. Accommodate pedestrians, bicyclists, transit riders, and private cars to supplement downtown’s status as the best-served and most accessible location in the region.
Policy LU.12.3. Locate public and private parking facilities, lots, and garages carefully, screening parking from streets, squares, and plazas.

Ownership of the property will allow the City to pursue electric charging stations at the facility in harmony with strategy EM-3: Support residents, businesses, and institutions in the transition to electric vehicles.

Create 1.8--Explore the use of the community land trust model and public/private partnerships to incentivize the development of ownership units that are priced significantly below market rate.
The City will continue to explore partnering on a development which provides for the City's parking needs while incorporating affordable housing.