Consideration and Approval of Contract Addendum: Fourth Addendum to the Lease of the Hopi Building at Heritage Square for Office Space
 

The City of Flagstaff currently leases office space for ParkFlag and the Beautification, Arts and Science program at 6 E. Aspen Avenue. However, this lease is expiring. The City negotiated a three (3) year extension of the lease as reflected in the Fourth Addendum.

Continuing the lease of the Hopi Building supports the City’s long-standing commitment to sustainability and downtown vitality. The Hopi Building lease extension represents an environmentally responsible option by eliminating the carbon costs associated with new construction, or alternatively, the impact of moving these departments to lease office space located outside of downtown. Maintaining a City presence in the historic district also reinforces accessibility, visibility, and community engagement. Economically, leasing provides a cost-effective and flexible solution compared to the capital investment and long-term maintenance obligations of new facilities, while also supporting downtown businesses through the daily activity of staff and visitors. This approach reflects the City’s values of environmental stewardship, cultural continuity, and fiscal responsibility, making the continued lease of the Hopi Building a sustainable path forward.

Rental space includes: 

• An accessible and well-lit public space for customers to obtain parking permits and other parking-related business; 
• A private office for the Parking Manager; space to immediately accommodate Parking Aids;
• Downtown location, desirable for implantation and enforcement of the parking program;
• Space requires no remodeling; and 
• Sufficient space for sub-leasing. The Downtown Business Alliance is a current sub-tenant.

The Amendment to the Lease Term shall be for three (3) years and shall commence on October 31, 2025, and expire on October 31, 2028.
 

Dates	Monthly Rent	Tax*	Monthly Total*
11/1/25-10/31/26	$5,871.00	$163.57	$6,034.57
11/1/26-10/31/27	$6,047.13	$168.47	$6,215.60
11/1/27-10/31/28	$6,228.54	$173.53	$6,402.07

*Based on the current rate of 2.786% and subject to change. 

The City's monthly rent is set as follows: 
 

Dates	Monthly Rent	Tax*	Monthly Total*
11/1/25-10/31/26	$5,871.00	$163.57	$6,034.57
11/1/26-10/31/27	$6,047.13	$168.47	$6,215.60
11/1/27-10/31/28	$6,228.54	$173.53	$6,402.07

*Based on the current tax rate of 2.786% and subject to change. 
Breakdown of costs for ParkFlag, DBA, Beautification, Arts and Science Program the first year (Monthly Rent): $6,034.57, with a 3% increase annually. 

• The City's monthly rent for year one(1) is set at $6,034.57 for an annual cost of $72,414.84. ParkFlag has a budget of $37,000 on account 061-07-231-0890-6-4241 and Beautification, Arts and Sciences has a budget of $37,000 on account 051-07-211-0820-5-4241.  In addition, the DBA pays the City (that is reimbursing Beautification and Parking funds) a total of $18,372.00 year 6, $18,912.00 year 7, $19,488.00 year 8, annually for its sublease.

Consideration and approval of the third addendum was approved on August 26, 2024, providing for an extension date through October 31, 2025.

Consideration and approval of the Lease and Sub-lease with the Flagstaff Metropolitan Planning Organization and with the Downtown Business Alliance on November 19, 2019. City Council ratified the Second Addendum on June 20, 2023. A third addendum, to provide office space for City Staff (ParkFlag and the Beautification, Arts and Sciences Program) was approved on June 20, 2023. However, after the City Council meeting, the Hopi Tribe Economic Development Corporation did not execute this document, so it did not become effective. 

1. Approve the Lease Agreement extension to lease Addendum. 
2. Do not approve the Lease Agreement extension to lease Addendum. (This option is not recommended as there is currently no space for the additional employees to work at current City facilities and no available existing office space to accommodate the needs of the three programs: ParkFlag, Downtown Business Alliance, and Beautification Arts and Sciences Program.)
3. Provide alternative direction to staff. 

The City has a lease for commercial space in the Hopi Building (6 E. Aspen Avenue, Suite 200 on the western boundary of Heritage Square). The lease has been in place for five(5) years. The City, specifically ParkFlag, has been the lessee with Downtown Business Alliance (DBA) and the Beautification, Arts, and Sciences Program as subletting part of the space.

The current location at 6 E. Aspen Avenue meets all the space requirements for ParkFlag and is a desirable location to implement and enforce the Parking Management Plan. However, the lease expires October 31, 2025. ParkFlag, Beautification and the Downtown Business Alliance would prefer the stability of remaining in their current location. Last year, ParkFlag looked at several locations in the downtown area that were available, and none met the need to accommodate Park Flag, Downtown Business Alliance, and Beautification, Arts and Sciences Program. The limitations included: not meeting the requirements of the Americans with Disability Act, costs exceeded current costs, locations were not centrally located in the ParkFlag management area, and office space did not meet the needs of the staff. Because of the uniqueness of the requirements and the imminent lease expiration, it was determined that sole-source procurement was appropriate for the lease. 
 

• Core Service Delivery / Operational Excellence: Provides stable, adequate office space for staff, allowing uninterrupted delivery of City services. Staff can work efficiently in a centrally located, established office.
• Financial Sustainability: Extending an existing lease avoids the costs and disruption of relocating staff. Predictable lease payments support budget planning.
• Public Safety & Community Wellbeing: Centralized office space allows for coordinated emergency response and citizen services.
• Sustainability & Environmental Stewardship: Using an existing building reduces environmental impacts compared to constructing new space. Maintains downtown location, supporting walkable, transit-accessible workspaces.
• Economic Development / Community Vitality: Leasing in Heritage Square supports the downtown economy and keeps City staff near community resources.

• Policy LU.3 (Downtown as the Core) – Reinforces the role of downtown as the cultural, civic, and economic hub by maintaining active use of existing buildings in the downtown core.
• Policy CC.2 (Historic Preservation) – Supports preservation and continued use of historically significant structures like the Hopi Building and Heritage Square, keeping them occupied and contributing to community character.
• Policy E.1 (Economic Vitality) – Promotes a healthy, resilient economy by sustaining tenants and services in the downtown core.
• Policy LU.18 (City Leadership in Land Development) – Demonstrates the City’s leadership in managing its real estate portfolio responsibly and strategically.
• Policy CC.5 (Support for Arts, Science, and Culture) – Provides space for tenants that may offer cultural or community benefits, furthering Flagstaff’s identity as a vibrant and diverse community.

• Goal 1: Reduce Building Emissions – By maintaining and reusing an existing building, the City avoids the significant embodied carbon cost of demolition and new construction. Extending the lease supports adaptive reuse, which is more sustainable than developing new space.
• Goal 5: Lead by Example – Demonstrates the City’s commitment to sustainable property management practices by extending the useful life of an existing asset, consistent with municipal leadership in climate action.
• Cross-cutting Strategy: Partnerships – Supports tenants who may advance community resilience, equity, and sustainability initiatives while keeping operations in the City’s walkable, transit-accessible downtown core.
• Section 3 of Resolution 2022-52 (attached) is inapplicable due to single source procurement and lack of qualified alternatives.

Objective: Support Mixed-Use and Downtown Vibrancy – By keeping the Hopi Building occupied and active in the downtown core, the City reinforces a vibrant, walkable district where housing is better supported by nearby services, jobs, and amenities.

• Facilities / Real Estate Management Objectives – Extending the lease ensures City facilities are effectively managed, revenue-producing, and aligned with long-term portfolio strategy.
• Economic Vitality Goals – Supports downtown economic activity by maintaining occupancy of a historic building in the City core, preventing blight and vacancy.
• Community Development Goals – Ensures that downtown Flagstaff continues to be a vibrant, mixed-use district in line with the City’s planning objectives.
• Sustainability & Resiliency Program Alignment – Promotes adaptive reuse and efficient use of existing infrastructure, reducing the need for new resource-intensive development.