Consideration and Adoption of Ordinance No. 2025-29: an ordinance of the City Council of the City of Flagstaff, authorizing the acquisition of real property from FSL Holdings Properties LLC in order to provide parking; providing for delegation of authority; providing for severability; authority for clerical corrections, and establishing an effective date.
 

1. Read Ordinance No. 2025-29 by title only for the final time
2. City Clerk reads Ordinance No. 2025-29 by title only (if approved above)
3. Adopt Ordinance No. 2025-29

In order to provide the code required parking for the new courthouse facility on the corner of Cherry and Beaver, the City leases the existing parking lot on 320 N Humphreys St, the former site of the San Francisco de Asis Catholic school from FSL Real Estate Services ("FSL"). On January 26, 2025, the City of Flagstaff issued the request for proposals DA2025-136 to identify public parking opportunities in downtown. FSL submitted a proposal for continued use of the site for public parking. FSL currently has a phased site plan for two apartment buildings, one building on the north half of the site, and the other on the south half of the site.

The initial proposal to the City, discussed for several years, included buying parking from the required parking structure within the development on the south half of the lot. The current proposal is a purchase in fee simple of the southern half of the block. This acquisition will provide FSL capital to fund the demolition and the eventual construction of the northern development while providing the City the south half of the block unencumbered by any existing structures or future development plans. Demolition of the existing improvements should be accomplished prior to the first quarter of 2026.

Owning the south half of the block outright provides the City with an existing surface parking solution, which will be enhanced and expanded upon demolition of the existing structures. Ownership also provides the City flexibility in the future for a parking structure or a partnership which incorporates City parking needs with other types of mixed-use development. 

The purchase price of $3,750,000 was negotiated with the property owner based on an independent appraisal of the property. The conclusion of value is also validated by other City appraisals in the downtown area, most recently, the appraisal on the old city courthouse lots.

This ordinance authorizes the acquisition of the south half of block 45 of the Flagstaff Townsite, addressed at 320 N Humphreys Street. A purchase contract will be presented to council for approval at a later date.

The purchase price of $3,750,000 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.
• The remaining funds will be provided from the sale of the old courthouse property. This is estimated in excess of $2 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. 

None.

On 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. 

Do not authorize acquisition; pursue other solutions to provide parking needed for the courthouse facility. 

The City has been using the land under consideration, for Courthouse and public parking, under a license agreement since at least September 2020. The temporary parking has been provided while a deal for more permanent parking, as part of an affordable housing development, was discussed. The parking is important to the City's Courthouse and also benefits the Downtown.

• 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.