Consideration and Approval/Denial of Real Estate Purchase and Sale Agreement:  Approve the Real Estate Purchase and Sale Agreement between the City of Flagstaff and Evergreen Devco, Inc. for the sale of approximately 33.5 acres of property consisting of three (3) parcels located at the southeast and southwest corners of the intersection of Fourth Street and Route 66, and the northwest corner of Fourth Street and Huntington Drive adjacent to the Fourth Street overpass.

Approve/deny the Real Estate Purchase and Sale Agreement between the City of Flagstaff and Evergreen Devco, Inc.; and, authorize the City Manager to execute all necessary documents to fulfill the intent of this Purchase and Sale Agreement.

City staff has negotiated the attached Real Estate Purchase and Sale Agreement with Evergreen Devco, Inc. to provide the framework for completing this land sale transaction.

Subsidiary Decisions Points:  The City of Flagstaff Charter, Article VII, Section 5, requires the City Council to review and approve Agreements that "provide for acquisition, sale or exchange of public real property."

The City has received $212,899.50 as earnest money toward the purchase of this property that has a total current purchase price of Three Million One Hundred Thousand Dollars and No Cents ($3,100,000.00).  The acceptance of this agreement by Council will trigger the opening of the escrow account and set in motion the other actions that need to be completed during the due diligence period and prior to closing.  Upon successful completion, the balance of funds will be received, and all proceeds from the sale of this land will benefit the Transportation Fund - 4th Street Overpass for debt service payment.

  1.  Retain, expand, and diversify economic base
  2.  Effective governance

Acceptance of this Real Estate Purchase and Sale Agreement will allow the City and Evergreen Devco, Inc. to pursue a development plan that creates a positive impact on sustainable tax revenues, new job opportunities, and commercial and retail enhancement for the citizens of Flagstaff.

Yes.  Council accepted the proposal from Evergreen Devco, Inc. for this property on December 6, 2011.  The ordinance authorizing this sale was first read on May 15, 2012, and the second read of the ordinance occurred on June 5, 2012.

1.  Approve the Real Estate Purchase and Sale Agreement.
2.  Amend the Real Estate Purchase and Sale Agreement.
3.  Reject the Real Estate Purchase and Sale Agreement.

The City previously awarded this property for development; however, due to economic conditions, the developer was unable to meet its obligations and returned the property to the City.  Subsequently, in October 2010 staff solicited the sale and redevelopment of these same three parcels to allow for revenue generation that would assist with the repayment of debt on the construction of the 4th Street overpass.  Only one proposal was received for two of the three parcels.  The proposal was significantly below the minimum price requested in the RFP and the development plan did not meet the expectations that were set forth in the RFP.  The Council rejected the proposal as it was determined to not be in the best interest of the City.  Council then directed staff to reissue the RFP.

A new RFP was issued in July 2011 that no longer had a minimum price requirement and provided for a greater emphasis on the type and timing of development that would occur.  The RFP closed on August 3, 2011.  One response was received by Evergreen Devco, Inc.  The City accepted this proposal on December 6, 2011, and adopted the ordinance that provides Council the authority to sell this property contingent upon the acceptance of the Real Estate Purchase and Sale Agreement.

The City desires to promote economic development in a number of modalities.  Providing the sale of this property at this time will encourage retail development along the Fourth Street corridor in a more structured and timely manner.

The acceptance of the Purchase and Sale Agreement will allow the City to open escrow on this acquisition and set in motion other actions by Evergreen Devco, Inc. including, but not limited to:

• Environmental and Title Investigations
• Development Agreement
• Regional Plan minor amendment
• Zoning Map Amendment

In addition, Evergreen Devco., Inc. has provided additional assurances to ensure their commitment to proceed in a timely manner in the development of these parcels, including, but not limited to:

• Marketing the site at all ICSC events
• Hiring a broker with strong tenant ties to market the site
• Processing the zoning application for all of the property at one time, and site plan approval requests as tenants are ready to move forward.
• Phasing the development of the property, with the first phase (southwest corner) commencing within approximately 12 months following the close of escrow; and, the southeast corner will be the second phase with the third phase to follow subsequently.
• Ensuring best efforts to place new businesses to the market within the development; and, any relocates to be of greater square footage than existing location(s).

Due to the recent economic downturn and the previous delays in the development of the property, City staff projects that the Fourth Street portion of the Transportation tax will not adequately meet the need to fund the Fourth Street overpass debt service by the time this tax expires in 2020.  By employing a two prong strategy that includes a timely sale of this property and reissuing the debt at a lower interest rate, City staff project that the financial obligation will now be met through the approval of this Real Estate Purchase and Sale Agreement.  It is also the staff's recommendation that the City will realize a greater benefit by receiving an incremental increase in sales tax revenues rather than waiting for the real estate market to improve which may or may not realize a greater dollar offer for the property.

Community benefits include providing greater commercial and retail opportunities, providing for a larger retail tax base and new job opportunities.

Collaborate/Inform - The three prior opportunities to bid on the project allowed for public participation and community involvement, as does future public hearings and the various Council and Commission actions noted under Key Considerations.

1.  Approve the Real Estate Purchase and Sale Agreement.
2.  Amend the Real Estate Purchase and Sale Agreement.
3.  Reject the Real Estate Purchase and Sale Agreement.