In 2005 the City and Redevelopment Agency adopted the First Amendment (Victorian Square Development Plan) to the Sparks Town Center 2000 Amended Redevelopment Plan.  The amendment shifted the plan’s focus for Victorian Square from a predominantly retail orientation to producing a mixed-use project featuring residential, retail, office and civic uses.  Late that same year the Agency also selected the Trammell Crow Company (TCC) to undertake the Phase I residential component of the plan, which was slated to occur on three of the six parcels that Silverwing is seeking to develop.  TCC vigorously initiated its predevelopment work, including pre-sales of the proposed condominium units, but the recession set in before TCC started construction of the project.  The parties mutually agreed to terminate their development agreement in 2008.

In 2009, the City of Sparks re-master planned and rezoned the area that includes Victorian Square as Transit Oriented Development – Downtown/Victorian Square.  The zoning calls for mixed-use development, and permits a variety of medium to high density housing types and a wide range of retail, entertainment, service, civic and office uses by right.

As the Agency Board is well aware, the recession adversely impacted the Reno-Sparks area more severely and for a longer period of time than it did in most of the country.  Local real estate markets, and development in particular, were especially hard hit as real estate values plunged and defaults and foreclosures became pervasive.  While real estate values have shown considerable appreciation in the last two plus years, they remain significantly below the peak values of 2005-06.  Development activity has begun to pick up only in the past year.  Due to these conditions the Agency has not actively marketed its Victorian Square property, nor sought a developer for Victorian Square, since the development agreement with TCC ended.  Silverwing Development is the first party to make a serious inquiry about the Redevelopment Agency’s Victorian Square property since the recession.

Silverwing Development is a Reno-based company dedicated to residential, commercial and land development.  It is headed by J Carter Witt III, its president, and the firm has been in existence for 27 years.  Silverwing’s currently active residential development projects include Edgewater @ Virginia Lake, a 336 unit condo (mix of for-sale and rental units) project in Reno and Bungalows @ Skye Vista, a 338 condo apartment project in north Reno.  Silverwing Development’s corporate profile is attached to this staff report.

Since their initial expression of interest in Victorian Square this past July, Silverwing has undertaken considerable due diligence and has prepared a multi-family residential project concept (with 165-200 units) for five Agency-owned parcels, and if it can be acquired, a parcel owned by a third party (Wolfhound Holdings LLC, owners of John Ascuaga’s Nugget).  A summary of the project, initially given the name Fountainhouse @ Victorian Square, is attached and includes a brief narrative as well as a preliminary site plan and building elevation.  Silverwing is also proposing to spend 24 months working with EDAWN to attract an office tenant on a sixth parcel (parcel 9) so that new full-time employment is added to Victorian Square.  Multi-family residential is Silverwing’s proposed back-up use for this sixth parcel.

At this juncture Silverwing is requesting an Exclusive Negotiating Agreement (ENA) so that they can continue on to the next stage of due diligence, which will require considerably more time and expense.  The six parcels that Silverwing is requesting be covered by the ENA are identified in the map attached to this staff report entitled “Victorian Square Project Property Ownership”.  The Assessor’s Parcel Numbers (APNs), the corresponding identifying number on the attached map, size and Silverwing’s proposed uses of the individual parcels are as follows:

An ENA would obligate the City and Agency to negotiate exclusively with Silverwing regarding the possible transfer, disposition or use of the subject parcels for the term of the ENA.  The ENA with Silverwing would also be anticipated to address topics that include, but are not limited to:

• Establishing a price for the land to be sold to Silverwing (the price would be based on summary and review appraisals).
• The Agency’s role, if any, regarding acquisition of any property owned by third parties.
• The possible abandonment of public right-of way, including a portion of 13^th Street north of Avenue of the Oaks, for inclusion in Silverwing’s project.
• The possible amendment or rescission of the (1997) Covenants, Conditions, Restrictions and Easements for Victorian Square.
• The availability of offsetting credits (from previously existing development on these parcels) that may be applied against sanitary sewer connection and regional road impact fees.
• The submittal, review and approval of any plans, drawings, proforma development and operating budgets and supporting documents for the multi-family residential and office projects.
• The procurement by Silverwing of an independently prepared market analysis for the proposed project, including an assessment of the likelihood of long-term success relative to competition (existing, planned and proposed).
• Likely financing sources for the project.
• A schedule showing the expected timeline for the possible financing, development and leasing of the project.
• The term of the ENA and performance schedules for each party.

An ENA would not, however, grant Silverwing the right to acquire the parcels.  A second agreement – a Disposition and Development Agreement (DDA) – would be necessary for Silverwing to acquire these parcels and redevelop them in accordance with an approved development proposal.

Staff believes Silverwing Development’s interest in these six parcels represents a genuine chance to redevelop a portion of Victorian Square in furtherance of the Agency’s interests, the Victorian Square Development Plan and the TOD master plan.  Silverwing appears to possess the appropriate experience and expertise to develop the type of project they are proposing for these parcels.  While there has also been some interest shown recently by other Victorian Square stakeholders in developing these same parcels, Silverwing has made a concerted effort to formulate and initiate due diligence on a project concept.  Moreover, granting Silverwing the opportunity to pursue development of this Agency property does not preclude other parties from also pursuing a Victorian Square development project.  In particular, the parcels bordering Victorian Square plaza (parcels 4, 6, 10, 12, 25, and 28 on the property map) and along Victorian Avenue from east of the plaza to Bourbon Square (parcels 29-34) represent opportunities for development, particularly retail, dining and entertainment uses.

For these reasons, staff recommends that the Agency Board direct staff to negotiate and prepare for future consideration by the Agency Board and City Council an Exclusive Negotiating Agreement with Silverwing Development.

Alternatives include choosing to not direct staff to negotiate an ENA with Silverwing Development or providing other direction, such as directing staff to identify other possible developers for the Agency’s Victorian Square land holdings. 

I move to direct staff to negotiate and prepare for future consideration by the Agency Board and City Council an Exclusive Negotiating Agreement with Silverwing Development.