In December of 2014 the Redevelopment Agency 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 – see Exhibit 1 to the DDA for a location map) covered by the 2014 ENA is .705 acres in size and is referred to in the proposed DDA as the Southern Parcel.  Silverwing was granted through December 2016 to attract an office tenant for this parcel.  (*See note at end of “Background” section regarding the other parcels covered by December 2014 ENA).

After creating a design for an office building and marketing said building to potential tenants, the Developer determined that it is unlikely to attract an office tenant that would support construction of an office building on the Southern Parcel.  The Developer, however, prepared an alternative development proposal for this parcel and the parcel with APN 032-341-21, referred to in the DDA as the Northern Parcel.  This second parcel is located directly south of the City parking structure that is adjacent to the Cinemark movie theater facility.  The proposal, referred to as “The Bridges”, is for the construction of approximately 192 apartments, approximately 19,600 square feet of commercial space, and structured parking for the Bridges’ residents and commercial tenants.

On March 28, 2016, the Redevelopment Agency directed City staff to proceed with negotiating and preparing, for consideration by the Redevelopment Agency and City Council, a DDA with the Developer for the sale and redevelopment of the Southern Parcel and the Northern Parcel (collectively the “Agency Parcels”) for The Bridges project. 

The City, on behalf of the Agency, commissioned a summary appraisal from Reese Perkins of the firm of Johnson-Perkins-Griffin and a review appraisal from William G. Kimmel.  The two Agency Parcels were appraised as one site.  Mr. Perkins concluded that the fair market value of this site was $750,000.  Mr. Kimmel concurred.  The Agency Parcels total approximately 59,350 square feet so the proposed sales price of $750,000 equates to approximately $12.64 per square foot.

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 two weeks in a newspaper of general circulation published in the county in which the land lies. Under NRS 279.630(3), the City Council must approve the Agency’s sale of property by resolution after notice and a public hearing.  The statute sets no specific criteria for the Council to consider or findings to make before granting that consent.  Notice for this public hearing was published on June 1 and June 8, 2016 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 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.

The principal terms of the DDA are as follows.

Price (Section 4.2.1).  The Redevelopment Agency will sell the Agency Parcels to SWD-Quarry Bridges for the price of $750,000.00, or $12.64 per square foot.  The sale price may increase if the boundaries of one or both of the Agency Parcels are modified pursuant to Section 3.1.1 of the DDA, depending on the method used and as determined by an updated appraisal.  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.  The Northern Parcel will be used for a mixed-use structure that includes structured parking, two floors of apartment residences and approximately 5,000 square feet of office/retail space.  The Southern Parcel will be developed with a mixed-use structure that includes a single story parking structure, four floors of apartment residences and approximately 14,600 square feet of office/retail space, a portion of which will be used to provide private amenities to project residents.  The Developer has sole discretion as to the size and mix of the units.  The design of the buildings will be in substantial conformance with the conceptual architectural elevations (DDA Exhibit 2) and with the development standards, including, without limitation, the off-street parking requirements, of Title 20 (Zoning Code) of the Sparks Municipal Code.

Project schedule (Section 3.3).  The schedule includes deadlines for early termination of the agreement, closing of escrow, and the start and completion of construction of the project.

Agency Parcels boundary modifications (Section 3.1.1).  The City and Agency agree to consider any request by Developer to modify the boundaries of the Agency Parcels pursuant to the abandonment provisions in NRS 278.480 or any other method provided for by law.

Limitation on height of City parking garage (Section 3.8).  The market viability of apartments located on the north side of the Northern Parcel requires that these residences have sufficient access to light and air.  Accordingly, the DDA includes a provision whereby the City and Agency agree to restrict the height of the existing City-owned parking structure located directly north of the Northern Parcel to its existing height for the life of The Bridges project.  Pursuant to this restriction, the City and Agency agree to forego adding additional levels of parking, or additional structures, above the parking structure’s existing rooftop deck that would materially affect the light and air available to residents of the apartments located on the northern side of the Northern Parcel.

Developer’s conditions precedent (Section 4.5).  This section specifies the conditions that must be satisfied before the Developer is obligated to purchase the Agency Parcels.  These conditions include remediation of any underground storage tanks found on the site and that Developer is satisfied with any modifications of the boundaries of the Agency Parcels requested and approved pursuant to 3.1.1 of this Agreement.

Agency’s conditions precedent (Section 4.6).  The principal conditions that must be satisfied before the Agency is obligated to sell the Agency Parcels are that the Developer must have a financing commitment for construction of The Bridges and have obtained an appropriate land use entitlement for development of the project.

The Agency Board 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 with SWD-Quarry Bridges, LLC.