In December of 2014 the Redevelopment Agency Board approved an Exclusive Negotiating Agreement (ENA) with Silverwing Development for the possible sale and development of Victorian Square property owned by the Redevelopment Agency.  One of the parcels (with the APN 032-341-26) covered by the ENA is .785 acres in size and located along the south side of Avenue of the Oaks.  Silverwing was granted through December 2016 to attract an office tenant for this parcel.

Silverwing has determined that it is unlikely to attract an office tenant that would support construction of a new multi-story office building on parcel 032-341-26.  Silverwing has, however, prepared an alternative development proposal for this parcel and a second Redevelopment Agency-owned parcel (with APN 032-341-20) that is .604 acres in size and located directly south of the City parking garage adjacent to the Cinemark movie theater.  These two parcels straddle Avenue of the Oaks between Victorian Plaza Circle (on the east) and the former 12^th Street right-of-way (on the west).  (The location of these two parcels are shown in Exhibit 1 attached to this staff report.)  The proposal, referred to as “The Bridges”, is for construction of at least 180 apartments, approximately 19,650 square feet of commercial space and structured parking.

The other parcels covered by the 2014 ENA are addressed in the Disposition and Development Agreement the City Council and Agency Board approved in July 2015 (the “2015 DDA”).  The terms of the 2015 DDA provide for the sale of eight Victorian Square parcels totaling approximately 4.083 acres to SWD-Quarry FVS, LLC, the entity created by Silverwing for development of the Fountainhouse at Victorian Square project.  Sale of the property was planned to occur in two escrows.  The first escrow, which has closed, was for the sale of 6 parcels on which Silverwing is currently constructing 220 multi-family residential units plus a clubhouse and a pool.   The second escrow will be for the sale of the two parcels directly in front of the movie theater on which Silverwing proposes to build approximately 9,230 square feet of restaurant/retail space on the ground floor, plus 16 residences above the retail/restaurant spaces.  Total sales price for the two transactions is $1,205,000.

Silverwing is requesting a second Disposition and Development Agreement (“Proposed 2016 DDA”) so that it may acquire parcels 032-341-20 (the “Northern Parcel”) and 032-341-26 (the “Southern Parcel”), collectively the “2016 DDA Parcels”, from the Redevelopment Agency and develop The Bridges project on them.  As noted above, The Bridges involves the construction of at least 180 apartments, approximately 19,650 square feet of office and commercial space, and structured parking.  As proposed:

• The building on the Northern Parcel would include approximately 5,000 SF of office/retail space, a 3 level internal parking garage (secured), 52+/- dwelling units and 145+/- parking stalls.
• The building on the Southern Parcel would be developed with approximately 14,650 square feet of office/retail space (approximately 4,000 square feet of this would be used for building office/gym and maintenance).  Additionally, there would be 59+/- parking stalls on the first floor and 128+/- dwelling units.  In the center of the southern building will be two atriums to be used for resident amenities.

The two buildings would be connected by a bridge spanning Avenue of the Oaks.  Attached as exhibits are preliminary sketches showing a cross section (“Exhibit 2 The Bridges cross section”), the street level site plan (“Exhibit 3 The Bridges ground level plan”) and a floor plan for the upper levels (“Exhibit 4 The Bridges upper level plan”).

This agenda item asks the Redevelopment Agency Board to direct staff to proceed with negotiating and preparing, for future consideration by the Redevelopment Agency Board and City Council, a Disposition and Development Agreement with Silverwing Development for the sale and redevelopment of the 2016 DDA Parcels.  The Proposed 2016 DDA would address topics that include, but are not limited to:

1. A price for the land to be sold to Silverwing (the price would be based on summary and review appraisals).
2. Possible modifications to the boundaries of the 2016 DDA parcels.
3. 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.
4. Roles and responsibilities regarding the mitigation of any environmental issues, should they arise.
5. A schedule for the financing, development and leasing of the project.
6. The term of the DDA and performance schedules for each party.
7. Developer’s conditions precedent.  These conditions would be those that must be satisfied before the Developer is obligated to purchase the 2016 DDA Parcels.
8. Agency’s conditions precedent.  These conditions would be those that must be satisfied before the Agency is obligated to sell the 2016 DDA Parcels and would include:

1. Project land use entitlement approval (in the form of an approved Administrative Review for the project site plan and architectural elevations).
2. Proforma development and operating budgets demonstrating project feasibility.
3. Financing commitments for construction of The Bridges.

The Agency may sell property under NRS 279.472 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.  Once appraisals are obtained and staff and Silverwing negotiate the Proposed 2016 DDA, it would be brought to the City Council and Agency Board for approval.  Since the DDA would represent the Agency’s conditional agreement to sell Silverwing the 2016 DDA parcels, at that point the Agency would need to conduct the public hearing required by NRS 279.472, as well as obtain the City Council’s consent to sell property.

Since the Redevelopment Agency began working with Silverwing in mid-2014, the developer has expeditiously advanced development of the Fountainhouse project.  Silverwing has demonstrated the ability to access development capital and has consistently deployed its own resources to undertake due diligence and advance its ambitious project development timeline.  As a result, 14 months after Silverwing first approached the Redevelopment Agency about acquiring the project site, Fountainhouse was under construction.

Staff believes Silverwing Development’s interest in undertaking another Victorian Square project represents an opportunity to build momentum in the redevelopment of Victorian Square in furtherance of the Agency’s interests, the Victorian Square Development Plan and the TOD master plan.  Silverwing has made a concerted effort to conceive and initiate due diligence on The Bridges concept.  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 a second Disposition and Development Agreement with Silverwing Development.

Alternatives include choosing to not direct staff to negotiate the Proposed 2016 DDA with Silverwing Development or providing other direction.

I move to direct staff to negotiate and prepare for future consideration by the Agency Board and City Council a Disposition and Development Agreement with Silverwing Development for the sale and redevelopment of two parcels owned by the Redevelopment Agency for The Bridges project.