The city of Selma and businessman Mark Peterson continue to fine-tune an agreement to sell the St. James Hotel.

Peterson has asked the council to approve a letter of intent before proceeding with a final definitive agreement.

City attorney Jimmy Nunn said Peterson wants to avoid title research and other attorney fees if the city isn’t serious about selling him the hotel.

“[They] don’t want to spend money and time on a definitive agreement if the city council declines to sign the letter of intent,” Nunn said.

The main sticking point seems to hinge on Peterson’s investment in the hotel.

The deal first proposed this fall included a clause outline how the city could take back ownership if a minimum of $1 million in mutually agreed upon upgrades aren’t made within 36 months. Under those terms, the city would owe Peterson fair market value for everything he had put into the hotel should the hotel revert back to the city.

The council bucked that proposal in a letter sent to Peterson last month saying the city “would not be in a position to reimburse you for improvements made.”

A revised letter of intent discussed calls for any permanent improvement (like roof repairs) to become part of the hotel.

However, it also mandates if the hotel goes back to the city Peterson can take any furnishings or equipment he adds with him.

Councilman Cecil Willamson said he doesn’t see much difference from the first proposal that called for the city to reimburse Peterson for his investment.

“It’s just as offensive as the first … I don’t think anyone thought that was a good idea,” Willamson said.

Most of the other proposed terms remain unchanged: the city would sell 100 percent of the hotel March 1 to Peterson for $1. In lieu of an upfront payment, the city would be paid based on future earnings for a minimum of $1.2 million. The payout to the city would be made in years eight, nine and 10 or longer if needed to reach $1.2 million.

The proposal also requires the building to keep the name the St. James Hotel and to continue to operate as a hotel and restaurant.

Councilwoman Susan Keith said her committee would meet in the next couple of weeks to discuss the revised letter. No action is expected at Tuesday night’s council meeting.