City Council Meeting - FINAL


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  8.A.       
Meeting Date: 06/01/2021  
Co-Submitter: Anja Wendel

Information
TITLE:
Consideration and Approval of Contract:  Reimbursement Agreement with Genterra Enterprises, LLC - Development of 31.45 Acres Adjacent to Flagstaff Pulliam Airport
STAFF RECOMMENDED ACTION:
Staff recommends that Council approve this Reimbursement Agreement with Genterra, LLC, (Genterra).  This Agreement is intended to minimize financial risk to both parties, while costs and time are incurred to research development options and craft a Master Development Agreement and/or Ground Lease including master development services for the Pulliam Airport 31.45 acre parcel.
Executive Summary:

This Reimbursement Agreement is expected to be one of several agreements that will be brought to Council in relation to development of the 31.45 acre parcel. This agreement will help enable the City to continue working with Genterra to craft a Master Development Agreement and/or Ground Lease including master development services to develop this parcel in accordance with the Request for Statement of Qualifications (RSOQ) that was issued by the City in September 2020. 

The intention is for the Developer to incur the upfront costs of master development services, and to recover such costs through project revenues i.e. leasing revenues. However, both parties desire to enter into this Reimbursement Agreement, to provide reimbursement for specific master development services costs incurred by the developer should certain events occur or when it would be equitable to do so. This agreement provides the framework necessary to proceed with required activities that will provide the information necessary for the development of the Master Development Agreement, Ground Lease including master development services and the parcel.

The City will only be obligated to reimburse Genterra for any appropriate expenses if one of the two events below occurs.
 

  1. The City and Developer do not enter into a Master Development Agreement or Ground Lease including Master Development Services;
  2. The Project or Project negotiations are canceled by City because of a desire to pursue other use or development of the Property;
If these event(s) do not occur, and the project moves forward as planned, the City will not be obligated to reimburse Genterra.

The CIty will have discretion to approve what costs are reimbursable. Genterra must submit a request to City staff for approval of a reimbursement commitment in advance of the work, to ensure the proposed expenditure meets the scope of this project and is critical for the advancement of the project. Genterra may only request reimbursement commitments for work to be completed by third-party contractors. Genterra will contract with the third-party contractors, and the City will be named as beneficiary of the contract and will be entitled to receive the work product. 
Financial Impact:
The City will provide reimbursement to Genterra, up to $100,000, in event one of the following two events occur:
  1. The City and Developer do not enter into a Master Development Agreement or Ground Lease including Master Development Services;
  2. The Project or Project negotiations are canceled by City because of a desire to pursue other use or development of the Property;
The City has $100,000 in the Airport Contingency Fund, that would be able to cover the reimbursement.
 
Policy Impact:
N/A
Connection to PBB Key Community Priorities/Objectives & Regional Plan:
Priority Based Budget Key Community Priorities and Objectives
  • Utilize existing long-range plan(s) that identify the community's future infrastructure needs and all associated costs
  • Attract employers that provide high quality jobs and have a low community impact

Regional Plan

The Regional Plan considers this an Employment Area and the uses outlined in the RSOQ are consistent with use as an Employment Area. Priority Based Budgeting - Priority and Objective Alignment: Sustainable, Innovative Infrastructure Utilize existing long-range plan(s) that identify the community’s future infrastructure needs & all associated costs.

 
Has There Been Previous Council Decision on This:
In December, 2020 Council directed staff to negotiate with the highest scoring RSOQ candidate (Genterra, LLC) for a master development agreement for the 31.45 acre parcel. 
Options and Alternatives:
1. Approve the agreement;
2. Do not approve the agreement, and provide other direction to staff.  If Council does not approve this agreement, staff would continue to coordinate with Genterra to make any necessary revisions Council desires and bring a new Reimbursement Agreement back to Council for approval. 
Background/History:

The City of Flagstaff (City) owns 31.45 acres of undeveloped property adjacent to the Flagstaff Pulliam Airport. The property is identified as Assessor’s Parcel Number 116-61-006A and is located east of Interstate 17, northwest of John Wesley Powell Boulevard, and southwest of South Pulliam Drive.

This property was released to the CIty by the Federal Aviation Administration (FAA) in 1989 and may be developed or sold. Any revenues derived from the property should benefit the Airport. Residential use was strongly discouraged by the FAA due to the proximity to the airport. The revenue generated from this parcel will directly support airport operations.

In September of 2019, Coffman & Associates with ESI Corporation conducted a market assessment of the 31.45-acre airport parcel. This assessment provided multiple options for the optimal disposition of this parcel including sale, lease, and other considerations for development and offered best potential uses of the land. 

In April of 2020, Council provided staff direction to solicit potential master developers through a Request for Statement of Qualifications (RSOQ) process to develop the 31.45-acre airport parcel and maintain ownership of this parcel.  Purchasing staff published a Request for Statement of Qualifications (RSOQ) solicitation for Master Developer Services for the Flagstaff Pulliam Airport 31.45 acre parcel in the Arizona Daily Sun on August 16 and 23, 2020 and posted the solicitation to the City of Flagstaff’s PlanetBids Website on August 11, 2020. On September 21, 2020, the City received two (2) Statements of Qualifications (SOQs) from Master Developer firms. The solicitation closed on September 15, 2020. After the RSOQ closed, an evaluation panel reviewed the submitted responses received. Final evaluation scores were tabulated in November of 2020 and Genterra Enterprises, LLC (“Genterra”) was determined to be the highest scoring candidate.  

In December 2020, Council directed staff to proceed with negotiations with Genterra to develop this parcel. 
 

Attachments
Presentation
Reimbursement Agreement
RSOQ
Market Assessment


    

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