In July of 2014, Silverwing Development (Developer) approached the Redevelopment Agency to express interest in developing Victorian Square parcels owned by the Agency and City.  The Developer proceeded to do considerable due diligence and prepared a mixed-use project proposal for seven parcels owned by the Redevelopment Agency and an eighth parcel (Parcel 23 on Exhibit 1 with APN 032-135-14) owned by Wolfhound Holdings, LLC.  On December 8, 2014, the City and Agency entered into an Exclusive Negotiating Agreement (ENA) with Developer for the proposed sale and development of property covered by the ENA.  The ENA granted Silverwing time to continue its due diligence, submit a project proposal and negotiate a Disposition and Development Agreement (DDA) with staff for future City Council and Agency board consideration.

The Developer has since submitted a proposal for a mixed-use project in the form of a Site Plan Review and a Tentative (Subdivision) Map for Fountainhouse at Victorian Square.  The City approved the Developer’s Site Plan Review application on February 17, 2015 and the Developer’s Tentative Map application on May 11, 2015.

On June 22, 2015, the City and Redevelopment Agency approved the “Victorian Square Property Exchange Agreement” with Wolfhound Holdings.  That Agreement, once fully implemented, will enable the Agency to acquire, through an exchange of real property, Parcel 23 from Wolfhound Holdings, LLC.

The City, on behalf of the Agency, commissioned summary appraisals from Reese Perkins of the firm of Johnson-Perkins & Associates, Inc. and review appraisals from William G. Kimmel.  The six parcels located east of the former 13^th Street alignment, referred to in the DDA as the Agency Residential Parcels (Parcels 3, 13, and 21-24 on Exhibit 1 to the DDA), were appraised as one site.  Mr. Kimmel and Mr. Perkins concluded that the fair market value of this site was in the range of $934,000 to $975,000, after adjusting for the costs of over excavating the site and providing compacted fill material.  The Agency Residential Parcels total approximately 157,402 square feet so the proposed sales price of $934,000 equates to approximately $5.93 per square foot in the current “as is” condition.  The two parcels in front of the Century Theater are referred to, in the DDA, as the Agency Mixed-Use Parcels (Parcels 4 and 6 on Exhibit 1).  Mr. Kimmel and Mr. Perkins concluded that the fair market value was $135,500 for each parcel, again after adjusting for the costs of excavating the site and providing compacted fill material.  The Agency Mixed-Use Parcels are 9,915 and 9,925 square feet in size so the proposed sales price of $135,500 for each equates to approximately $13.65-13.69 per square foot.

The Agency may sell property under NRS 279.472 Agency without public bidding if the Agency holds a public hearing, notice of which must be given by publication for not less than once a week for 2 weeks in a newspaper of general circulation published in the county in which the land lies.  Notice for this public hearing was provided by publishing once a week for two weeks in the Reno Gazette Journal.  A public hearing, preceded by the required notice, occurred on the date this Agreement was considered by the Agency board.

The principal terms of the DDA are as follows.

Price (Section 4.2).  There will be two escrows for the sale of the property.  The first is for the sale of the 6 parcels referred to in the DDA as the Agency Residential Parcels (Parcels 3, 13, and 21-24 on Exhibit 1) for $934,000.  The second is the sale of the two parcels in front of the cinema building (the “Agency Mixed-Use Parcels”) for $271,000.  Total sales price for the two transactions is $1,205,000. The sales price represents the fair market value for these properties, as established by appraisals, and therefore construction of the project is not subject to the prevailing wage requirements of NRS 279.500.

Earnest money deposit.  The amount is $25,000 which the Developer must deposit into escrow within 5 business days of approval of the DDA.

Developer’s use of property (Section 3.2).  The DDA specifies the components of the project to be constructed on the property it will acquire from the Agency On the Agency Residential Parcels the Developer shall build 10 buildings containing 220 multi-family residential units plus a clubhouse and pool.  On the Agency Mixed-Use Parcels the Developer shall construct one mixed-use building on each parcel with eight residences over approximately 4,615 square feet of restaurant/retail space on the ground floor, plus garage parking for 10-12 vehicles.  The project shall be constructed in substantial conformance with the approved Site Plan Review and Tentative Map applications for the project.

Non-restricted gaming covenant (Section 3.2.1.G).  On June 22, 2015, the City and Agency approved the “Victorian Square Property Exchange Agreement” with Wolfhound Holdings, LLC.  The terms of the agreement enable the Agency to acquire, through an exchange of real property, Parcel 23 (APN 032-135-14) from Wolfhound Holdings, LLC.  Parcel 23 is one of the Agency Residential Parcels.  In accordance with Article 6.C.2 (“Agency’s Covenant to Wolfhound”) of the Victorian Square Property Exchange Agreement, the Agency and Developer agree that Developer is:  (i) prohibited from using Parcel 23 (APN 032-135-14) for or in connection with the construction and operation of a nonrestricted gaming establishment as defined by the Nevada Gaming Control Act codified in Chapter 463 of the Nevada Revised Statutes; and, (ii) Wolfhound Holdings, LLC or its successors and assigns are specific third-party beneficiaries that may enforce by any legal or equitable remedy compliance with such use restriction.

Project schedule (Section 3.3).  The schedule includes deadlines for early termination of the agreement, closing of the first and second escrows, and the start and completion of construction for the residential and mixed-use phases of the project.  The schedule reflects the Developer’s intent to begin construction on the Agency Residential Parcels and to construct the two mixed-use buildings last.  This section of the DDA also specifies that the Developer may elect to not acquire the Agency Mixed-Use Parcels and construct the mixed-use buildings by the deadlines in this section.  Should that occur it would not constitute a default under the DDA but would terminate the Developer’s right to acquire and develop the Agency Mixed-Use Parcels.

Developer’s conditions precedent (Section 4.5).  This section specifies the conditions that must be satisfied before the Developer is obligated to purchase the project property.  These conditions include remediation of the soil contamination on Parcel 21 and the Agency successfully concluding its acquisition of Parcel 23 from Wolfhound Holdings.

Agency’s conditions precedent (Section 4.6).  The principal condition that must be satisfied before the Agency is obligated to sell property is that the Developer must have a financing commitment for construction of the project.

Under NRS 279.630(3), the Agency’s sale of real property is subject to gaining City Council approval by resolution after notice and a public hearing.  The statute provides no specific criteria for the Council to consider or findings to make before granting that consent.  The City Council was scheduled to consider a resolution granting consent in a meeting preceding the Redevelopment Agency meeting.

The Council could reject or modify the Disposition and Development Agreement subject to the consent of the Developer.

I move to approve the Disposition and Development Agreement (AC-SRA-308) with SWD-Quarry FVS, LLC.