In July of 2017, the City Council and Redevelopment Agency approved a Disposition and Development Agreement (DDA) for sale of eight Victorian Square parcels totaling approximately 4.083 acres to SWD-Quarry FVS, LLC, the entity created by Silverwing Development, for the Fountainhouse at Victorian Square project. The multi-family component of that project is now complete and the mixed-use component – comprised of two buildings with ground floor retail uses and residences on the second floor – on the two parcels in front of the Victorian Square movie theater is under construction.

In June of 2016, the Redevelopment Agency and City Council approved a Disposition and Development Agreement between the Redevelopment Agency, the City and the Silverwing (the specific entity is SWD-Quarry Bridges, LLC) providing for the sale by the Redevelopment Agency of two parcels along Avenue of the Oaks totaling approximately 1.36 acres for The Bridges project.  This project, consisting of 194 apartments, approximately 19,600 square feet of commercial space, a portion of which will be used to provide private amenities to project residents, and structured parking is under construction with a projected completion date of June 2018.

Silverwing Development remains interested in undertaking additional development in the Victorian Square area. The Developer is now requesting the opportunity to pursue acquisition of the City-owned C Street parking facility located at 955 C Street and having Assessor’s Parcel Number 032-193-19.  The property has a land area of a little less than 1 acre (42,000+/- square feet) and is improved with a 4 level parking garage containing approximately 341 parking spaces and a gross building area of approximately 125,760+/- square feet, including the roof parking deck.  The property is idenitified in Exhibit A to this staff report and referred to in the remainder of this staff report as the “Proposed 2017 DDA Parcel”.

Silverwing is requesting a third Disposition and Development Agreement (“Proposed 2017 DDA”) so that it may pursue further analysis of a proposed project for, an acquisition of, the Proposed 2017 DDA Parcel. Silverwing’s preliminary proposal for the Proposed 2017 DDA Parcel is to retain the existing parking structure but add another parking level, a podium and 5 stories of apartments (approximately 175 units), to create a 10-story structure. In exchange for the property, Silverwing is proposing to grant the City the right to use, for public parking, a to-be-determined number of parking spaces which would be maintained at the developer’s expense.

This agenda item asks the City Council to direct the City Manager to proceed with negotiating and preparing, for future consideration by the Redevelopment Agency Board and City Council, an agreement with Silverwing Development for the sale and redevelopment of the Proposed 2017 DDA Parcel.  The Proposed 2017 DDA would address topics that include, but are not limited to:

1. Compensation for the property to be sold to Silverwing (the price would be based on summary and review appraisals).  If, as contemplated, the City or Redevelopment Agency will be compensated by long-term or permanent access, for the public, of parking spaces in the parking facility, the DDA must specify the terms of the City’s right to use the parking spaces.
2. Possible modifications to the boundaries of the Proposed 2017 DDA Parcel.
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 Proposed 2017 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 Proposed 2017 DDA Parcel.
8. Agency’s conditions precedent.  These conditions would be those that must be satisfied before the Agency is obligated to sell the Proposed 2017 DDA Parcel 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 proposed project.

The Proposed 2017 DDA Parcel is owned by the City of Sparks. Per Nevada Revised Statues 279.432, the City may dedicate, sell, convey, or lease any of its property to a redevelopment agency to aid redevelopment. The City has previously conveyed property in the Victorian Square area to the Agency – some of which was originally acquired by the Agency and conveyed to the City – for redevelopment purposes on multiple occasions. 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 2017 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 Proposed 2017 DDA Parcel, 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 its Victorian Square projects.  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 timelines.  As a result, Silverwing recently completed construction of 220 residential units of the Fountainhouse at Victorian Square project and is currently constructing the Fountainhouse mixed-use and The Bridges projects on various properties they acquired from the Sparks Redevelopment Agency.

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 Sparks Town Center Redevelopment Plan and the Sparks Comprehensive Plan. To date Silverwing has made a concerted effort to conceive and initiate due diligence on a project concept for the Proposed 2017 DDA Parcel. For these reasons, the City Manager recommends that the City Council direct the City Manager to negotiate and prepare for future consideration by the Agency Board and City Council a Proposed 2017 DDA with Silverwing Development.

Alternatives include choosing to not direct the City Manager to negotiate the Proposed 2017 DDA with Silverwing Development or providing other direction to the City Manager.

I move to direct the City Manager to negotiate and prepare for future consideration by the Agency and City Council a Proposed 2017 DDA with Silverwing Development for the sale and redevelopment of the C Street parking facility property.