2012 2:00:00 PM

Monday, March 26, 2012 2:00 PM
745 4th Street, Sparks, NV

Item Number: 5

Title: Review, consideration and possible approval of an Exclusive Negotiating Agreement between the City of Sparks, the Redevelopment Agency of the City of Sparks and 1864 Real Estate Development LLC for the redevelopment of 916 and 918 Victorian Avenue

Petitioner/Presenter: Community Services/Armando Ornelas

Recommendation: Staff recommends that the City Council and Redevelopment Agency Board approve the proposed Exclusive Negotiating Agreement

Financial Impact: None

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: The Redevelopment Agency acquired the property located at 916 and 918 Victorian Avenue (the “Property”) in 2008 from Pacific Pawnbroker’s, Inc. as part of a “package” transaction necessary to acquire another Pacific Pawnbroker property formerly located at 1246 Victorian Avenue. The Agency acquired the Property with the intention of identifying a new use for it or disposition for a redevelopment purpose. Justin Quinton, principal owner of the Cantina Los Tres Hombres restaurant and bar located in an adjacent building, has requested an exclusive opportunity to prepare a proposal to redevelop the Property for a restaurant and bar use and, if the proposal is approved by the Agency, to own and redevelop the Property accordingly. The proposed Exclusive Negotiating Agreement (ENA) would grant 1864 Real Estate Development LLC, Mr. Quinton’s development company (the “Developer”), up to 6 months to prepare and submit for City and Agency consideration a development proposal for the Property. The ENA’s proposed terms obligate the City and Agency to negotiate exclusively with the Developer regarding the possible transfer, disposition or use of the Property for the term of the ENA. The ENA does not, however, grant the Developer the right to acquire the Property.

Background: The Redevelopment Agency acquired the property located at 916 and 918 Victorian Avenue (the “Property”) in 2008 from Pacific Pawnbroker’s, Inc. as part of “package” transaction necessary to acquire another Pacific Pawnbroker property formerly located at 1246 Victorian Avenue. The Property is comprised of two parcels totaling 7,000+ square feet in size, with two connected buildings totaling 3,024+ square feet in size. The Agency acquired the Property with the intention of identifying a new use for it or disposition for a redevelopment purpose. Justin Quinton, principal owner of the Cantina Los Tres Hombres restaurant and bar located in an adjacent building, has requested an exclusive opportunity to prepare a proposal to redevelop the Property for a restaurant and bar use and, if the proposal is approved by the Agency, to own and redevelop the Property accordingly.

Analysis: Mr. Quinton desires to prepare a proposal for the Project and, if his analysis indicates the project is feasible and is approved by the Agency, to enter into an agreement to acquire the property from the Agency and redevelop the Property in accordance with the approved development proposal. Mr. Quinton is unwilling, however, to expend time and funds to prepare plans and budgets and solicit financing and prospective tenants unless he has an exclusive negotiating agreement with Agency. The proposed Exclusive Negotiating Agreement (ENA) would grant 1864 Real Estate Development LLC, Mr. Quinton’s development company (the “Developer”), up to 6 months to prepare and submit for City and Agency consideration a development proposal for the Property and negotiate a Development Agreement (DDA) with the Agency and City. The ENA’s proposed terms obligate the City and Agency to negotiate exclusively with the Developer regarding the possible transfer, disposition or use of the property for the term of the ENA. Specifically, the City and Agency would agree to negotiate exclusively regarding the following matters (see Article 3.1, page 2 of the ENA): (i) the transfer or other disposition of the Property during the term of this Agreement; (ii) the submittal, review and approval of any plans, drawings, budgets and supporting documents for the Project; (iii) the terms and provisions of a Disposition and Development Agreement (DDA) for the Property; (iv) the use, lease or occupancy of the Property without the prior consent of Developer except (a) regulatory, police or legislative actions relating to public safety, public welfare or land use (including zoning and zoning enforcement); however, Developer’s consent is required to rezone the Property during the term of this Agreement. (b) uses in connection with special events; and (c) temporary uses. The ENA does not, however, grant the Developer the right to acquire the Property and any terms for conveyance of the Property to the Developer must be approved in a subsequent agreement, the prospective DDA. In order for the Developer to proceed to the DDA stage, he must submit a development proposal to the Agency and City within four months of approval of the ENA. The requirements for the submittal are specified in Attachment A to the ENA (see page 17), as follows: 1. Market Study. A market analysis that tests the proposed concept for the Project, including an assessment of the likelihood of long-term success relative to competition (existing, planned and proposed) and income projections for the project. 2. Plan. A schematic plan showing the location, size and use of all improvements to be constructed on the Property, including: a. The proposed building height, dimensions and square footage of all structures. b. The type of tenant proposed in the Project. c. Preliminary renderings showing the architectural style of the Project. 3. Budget. A proposed budget for the Project (reflecting any phasing), including the following elements: a. Projected costs for the construction and development of the concept for the Project, including all anticipated hard and soft costs. b. Projected operating revenues and expenses for the Project for three years following issuance of the first certificate of occupancy for the Project, together with information on operating revenues and expenses for various components (e.g. retail, housing, etc.) of the Project. 4. Land Value Analysis. A written analysis of land value Developer is willing to pay or written statement, with economic justification, asking for land contribution from the Agency and City. 5. Financing. A summary of likely financing sources for the Project. 6. Completion of Project. A schedule showing the expected timeline for the possible financing, development and leasing of the Project. The existing buildings on the Property are in poor shape, with considerable water damage and in need of extensive electrical and plumbing repairs, ADA related modifications and seismic reinforcement. Sparks public works staff have previously estimated it would cost $150-200,000, prior to any tenant-specific improvements, to repair the property and bring it in conformance with the current building code. The Developer has indicated that he believes all or the majority of the existing buildings should be demolished in favor of a new, larger structure at least 5,000 square feet in size and possibly as large as 8,500 square feet. The Developer’s initial intent is to build and lease the space to a third-party, full-service restaurant(s), with a bar(s), though Developer may ultimately want to directly operate a restaurant-bar on the Property. The Developer’s preliminary estimated development budget, exclusive of land costs, is approximately $1 million. Staff believes the Developer’s interest represents a genuine opportunity to redevelop the Property in furtherance of the Town Center Redevelopment Plan. Redevelopment of the Property in the manner envisioned by the Developer would replace currently unusable buildings with a new, code-compliant structure. This would create the possibility of filling the only vacant structures on the two block stretch of Victorian Avenue between 10th Street and Pyramid Way. For these reasons, Sparks staff believes granting the Developer an exclusive negotiating period is warranted and recommends approval of the ENA.

Alternatives: Amend the ENA, subject to the Developer’s agreement, or deny its approval.

Recommended Motion: I move to approve the Exclusive Negotiating Agreement between the City of Sparks, the Redevelopment Agency of the City of Sparks and 1864 Real Estate Development LLC for the redevelopment of 916 and 918 Victorian Avenue.

Attached Files:

918 Vict Ave (Quinton) ENA.PDF

Previous Item

Next Item

Return To Meeting