On August 28, 2017, the City Council directed staff to proceed with negotiating and preparing, for future consideration by the City Council and Redevelopment Agency (Agency), a Disposition and Development Agreement with Silverwing Development for the sale and redevelopment of the city-owned parking garage located at 955 C Street (Project Property; see Exhibit 1 to DDA for Location Map).  The Developer proposes to renovate the existing parking garage and construct a new high-density apartment building, currently referred to as The Deco, on the Project Property (Project).

On October 23, 2017, the Sparks City Council approved the transfer of the Project Property to the Agency. The transfer was for the express purpose of providing the Agency greater flexibility to structure an agreement for the prospective sale of the Project Property to the developer for redevelopment purposes.

An appraisal of the Project Property determined it has a market value of $950,000. The effective date of the appraisal, prepared by Reese Perkins, MAI, SRA, is May 8, 2017. Mr. Perkins provided an updated analysis dated November 7, 2017 which maintains the same value (i.e., $950,000) for the Project Property as in the original appraisal report. (Refer to DDA Exhibit 2. Appraisal and Update Analysis)

The Developer proposed, as compensation to the Agency for sale of the Project Property, to provide the entire first level of the parking garage (90+/- parking spaces after restriping) for long-term use (50 years) as parking for the general public (Public Parking). The Developer will bear all costs associated with the development of the Project including costs associated with obtaining construction financing and designing, building, and leasing or selling the Project and the maintenance of the dedicated Public Parking.  A supplemental cost-benefit analysis, also prepared by Reese Perkins, dated May 25, 2017 and updated on November ­­­­­­7, 2017, calculates the value of the public’s right to use the Public Parking. The analysis concludes that the right to use the Public Parking results in a public benefit of $60,000 per year for 100 spaces (i.e., $600 per space per year or $54,000 a year for 90 spaces). (Refer to DDA Exhibit 3. Supplemental Analysis).

The appraisal of the Project Property and the supplemental cost-benefit analysis prepared by Reese Perkins were analyzed by a second appraiser, William G. Kimmel, who opined, in a review dated November 8, 2017, that the appraisal and supplemental analysis are reasonable and well supported. (Refer to DDA Exhibit 4. Review of Appraisal Report).

The City commissioned a downtown parking analysis, prepared by Traffic Works LLC, which documented the existing and planned parking supply in downtown Sparks including all on-street parking, public parking lots, and public parking garages. Parking demand was calculated for each parcel in the study area using nationally accepted Institute of Transportation Engineers (ITE) parking generation rates and hourly demand during the peak days of the week (Friday and Saturday). The hourly demand takes into consideration time-of-day usage for each land use type. With the addition of the Project, the number of existing and planned parking spaces in the study area is projected to exceed the number of parking spaces needed for future peak demand by approximately 18 percent, which is sufficient to provide for the efficient usage of the downtown study area’s parking supply. (Refer to Exhibit 5. Parking Analysis)

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 November 29 and December 6, 2017 in the Reno Gazette Journal (the text for notice is attached as Exhibit 6 to the DDA).  A public hearing, preceded by the required notice, occurred on the date this Agreement was considered by the Agency board.

The proposed DDA’s key terms include the following:

Project description. Project will provide a minimum of 175 and a maximum of 212 apartment units plus administrative offices, maintenance facility, lobby, clubhouse/gym, and swimming pool. The design of the apartment building will be in substantial conformance with the conceptual architectural elevations attached as Exhibit 7 to the DDA, which reflect a contemporary interpretation of the art deco architectural style. The existing parking garage will be structurally updated to provide support for a podium and the apartment units above the podium. The existing garage elevators will be removed and updated and garage structure will be sealed and painted.  The Public Parking will be located on the first level; resident parking will be located on levels 2 to 4 of the parking garage and will be provided at a minimum ratio of 1.5 parking spaces per apartment unit. Public and private parking will be separated by a security gate and screen. (See Section 3.2)

Value of Project Property. As reviewed in the Background section above, a market value of $950,000 has been established for the Project Property based on the appraisal by Reese Perkins (of the firm Johnson-Perkins-Griffin) and a review of that appraisal by Bill Kimmel.

Compensation for the Project Property. The Developer will provide, for a period of 50 years, the entire first level of the parking garage (90+/- parking spaces) as Public Parking. Maintenance of the Public Parking shall be the Developer’s responsibility and at their expense.). The public’s right to use the Public Parking shall be secured by a deed restriction running in favor of the City and recorded against the title to the Project Property at close of escrow. (See Section 4.2)

The appraisers determined that the public’s right to use the Public Parking, as proposed, results in a public benefit of $60,000 per year for 100 spaces (i.e., $600 per space per year). This equates to $54,000 a year for the 90+/- spaces that the Developer and City staff anticipate will be available on the first level after restriping. The appraisers also determined that had the Project Property been privately owned in 2016/17, and thus subject to real property taxation, real estate taxes for that fiscal year would have been $37,309. For purposes of this DDA, however, the value of the public’s right to use the Public Parking has been determined to equal or exceed the $950,000 value of the real property prior to expiration of the public’s right to use the public parking. As a result, the project is exempt from the prevailing wage requirements of NRS 279.500. (See Section 5.1.2)

Termination dates. The proposed DDA includes an early termination date (deadline for start of construction) of October 31, 2018 and an absolute deadline of March 30, 2021. (See Section 3.3)

Temporary parking.  Developer will be required to provide temporary public parking (90+/- spaces) in an off-site location located within ¼ mile of the Project Property while the parking garage is closed for construction. (See Section 4.6.D)

Construction management:

• Upon Developer’s applications for encroachment and building permits, City will consider closure of the east bound lane of C Street between 9^th Street and 10 Street for use as a construction staging area and, within the staging area, the installation of a foundation for a construction crane. (See Section 5.1.4.B)
• Developer shall coordinate construction activities with existing property owners to minimize, to the extent practical, the impact of construction on special events and normal business operations.  City staff shall assist in coordinating construction activities. (See Section 5.1.4.C)
• Use of the Project Property, including the Public Parking, by the general public prior to completion of construction shall only be permitted: (i) in accordance with Chapter 33: Safeguards During Construction of the 2012 International Building Code (Exhibit 8); and (ii) subject to the approval of the City’s Fire Marshall, Building Official and City Engineer. (See Section 5.1.4.D)

The Project Property is located within the Town Center Redevelopment Area and the Downtown/Victorian Square Mixed-Use (zoning) district.  Over the last 20 plus years, the City and Agency have caused to be developed in Victorian Square a 14-screen movie theater complex, a 700-space public parking structure, a public plaza, the Fountainhouse at Victorian Square residential project, and the Fountainhouse and The Bridges mixed-use projects.

The proposed sale of the Project Property represents an opportunity to continue furthering the Redevelopment Plan and revitalization of downtown Sparks by promoting residential development in the Victorian Square area. Sale of the Project Property for the proposed Project would be consistent with the City of Sparks Comprehensive Plan, including the Vision statement, which states “Victorian Square functions as a vibrant downtown with living, shopping, restaurants and commercial,” as well as several Comprehensive Plan goals including, most directly, the following:

• Managing Growth Goal 4 (MG4):  Facilitate infill and redevelopment.
• Managing Growth Goal 5 (MG5):  Prioritize development and enhancement of the Downtown Sparks Center.
• Managing Growth Goal 6 (MG6):  Promote compact development to reduce the per capita cost of providing infrastructure, public facilities and public services
• Housing Goal 2 (H2):  Promote a strong, diverse housing market that supports economic growth and vitality while ensuring environmental and fiscal sustainability.

In addition to advancing the Comprehensive Plan, the provision of 90+/- public parking spaces on a long-term basis, at the Developer’s expense, provides for the retention of a significant number of spaces near existing businesses on Victorian Avenue while contributing to the parking needed, for future peak demand, to provide for the efficient usage of downtown Sparks’ parking supply.  Finally, sale of the Project Property to the Developer will allow for the transformation of a depreciating public asset. For these reasons, staff recommend approval of the sale of the Project Property and of the DDA.

1. The Agency Board can approve the DDA.
2. The Agency Board could reject or modify the DDA, subject to the consent of the Developer.

I move to approve the Disposition and Development Agreement with SWD Partners, LLC.