In September of 2012 the City Council and Redevelopment Agency Board approved a six month Exclusive Negotiating Agreement (ENA) granting AED Investments, LLC the opportunity to acquire and develop the Redevelopment Agency’s 10.2 acre parcel located on Marina Gateway Drive between East Prater Way and Lincoln Way and having Assessor’s Parcel Number 037-020-50 (the “Property”). AED intended to develop the Property with residential facilities for the elderly providing respiratory, memory, behavioral, orthopedic, transitory or other skilled care. The ENA was extended in March through September 23, 2013 to provide AED additional time to complete their feasibility analysis, prepare a development proposal and negotiate a Disposition and Development Agreement (DDA) with Agency staff. In August, AED withdrew from the ENA, informing City staff that while they believe there is market demand for such facilities they were unable to match a facility operator with development capital.

The market for vacant land in Reno-Sparks has improved in the last year as the region’s economy has steadily recovered. City staff has received inquiries regarding the Property from at least 3 parties, and the adjacent 9.6 acre parcel is currently under contract after the seller reportedly received multiple offers. However, economic growth has not been robust and project financing remains challenging to obtain, so it is uncertain as to whether the recent improved demand for commercial real estate in Reno-Sparks can be sustained.

Given these and other considerations, including the benefits to Redevelopment Agency and City budgets of selling the property during the current fiscal year, staff would not advise employing Request for Qualifications (RFQ) and/or Request for Proposals (RFP) processes as they are generally lengthy and laborious. Staff therefore recommends the Agency employ a more expeditious process to identify a prospective buyer.

After conferring with the Agency’s Chair and Vice-Chair, staff propose that the Agency Board direct staff to seek a buyer for the Property through a process intended to bring an offer – if a qualified buyer emerges – to the Agency Board by January of 2014. Steps in the process would include the following:

Update the appraisal. Updating the December 2012 summary appraisal and getting a review appraisal are necessary to establish the Property’s fair market value. If the Agency sells the Property for less than fair market value the buyer may be subject, per NRS 279.500, to the prevailing wage provisions stipulated in NRS 338.010-090.

Market the Property. Staff would market the property by publishing notice in local newspapers, posting a “for sale” sign on the Property, directly notifying those parties which have recently indicated an interest in the Property, and preparing and disseminating marketing flyers and other information about the Property.

Submittal of buyer offers. The marketing materials, including the published legal notices, will specify a date in November by which interested parties must submit a purchase offer. The offer must include all of the buyer’s proposed terms, including sales price and the length of the requested due diligence period. Prospective buyers will also be asked to describe their intended use of the property.

Review of offers. Staff will review and clarify the terms of all offers.

Presentation of offers to the Agency Board. Staff will present their analysis and recommendations to the Agency Board. If the Agency Board decides to accept an offer, said acceptance will be placed on the agenda as a public hearing item at subsequent Agency and City Council meetings to comply with the requirements of NRS 279.630(3).

As has been the Agency’s practice, the Agency would not pay any real estate commissions or fees in connection with the sale of the property. If a buyer wishes to be represented by a real estate professional, payment of any fees or commissions would be by separate agreement and outside of escrow for this transaction.

The Agency Board’s alternatives include: (a) requesting changes to the proposed process or timetable for seeking a buyer for the Property; (b) directing staff to utilize a different process (e.g., RFP or retention of a real estate broker) to identify a buyer; and, (c) opting not to seek a buyer for the Property at this time.