The U.S. Air Force and Park City are in peace negotiations that could end their war over where to build a new national military hotel and resort.

They said in a press release Thursday that all parties are working together "in the hope of locating the facility at The Canyons" ski resort area — which Park City has been pushing.

Earlier, the Air Force proposed building up to a 600-unit hotel instead on 26 acres of steep, pristine hillside it owns at the east entrance to Park City on state Route 248. It is the gateway to a valley where the city has purchased extensive acreage to protect as open space.

The city worried that a hotel there would ruin its open-space work. Its zoning laws ban development there. But the Air Force is exempt from such laws because of "federal supremacy," a legal term meaning a local government cannot tell the federal government what to do on its land.

Because the Air Force is exempt from zoning laws, the city and Summit County felt forced to offer the military millions of dollars of incentives to move elsewhere — but such deals also usually required the Air Force's contractor to help cover some costs, which it would not need to do on the land that the military already owns.

Local officials sometimes loudly complained the situation was unfair or that the Air Force was not cooperative, while military officials and allies sometimes questioned the patriotism of local officials.

The Deseret Morning News took an in-depth look at the situation in a Jan. 7 story, which is available online at deseretnews.com. It showed how proposals to replace an old military ski cabin grew into plans for a big resort — and twisted through the 2002 Olympics, Congress, the Pentagon and even some Iraq war politics.

The press release Thursday said Park City and Summit County officials last week made their latest proposal for a deal to move the hotel to The Canyons, on county land there, to leaders at Hill Air Force Base and its hotel contractor, Wadman Development.

While it said no final decisions have been made, all parties are now working with the hopes of building the hotel at The Canyons — and they plan to meet later this month to continue negotiations.

Maj. Gen. Kevin Sullivan, commander of the Ogden Air Logistics Center at Hill, said, "Everyone is committed to the same goals to provide our Department of Defense family with an affordable recreation experience, while remaining good neighbors with the citizens of Summit County."

Park City Manager Tom Bakaly said, "We agreed to continue to work on some of the details and have them analyze some of the numbers we've put together."