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Council to Discuss Land Exchange in Detail

Long term readers of this site will remember my intermittent posts regarding land exchanges in northeast downtown. This is a very exciting development, because the Redevelopment Agency/City of Reno has a chance to acquire a large mass of connected parcels which has taken a private company, Golden Eagle Industries, nearly 30 years to acquire. Think about that....nearly 30 years, since the early 1980's, and now GEI is willing to hand this over to the city to hold onto until the right project comes along at the right time, in exchange for already-developed parcels mostly along the ReTRAC corridor. With recently passed imminent domain laws reducing parcel acquisition power down to practically nothing, the city may never get a chance like this again. This is one of the worst, blighted areas of downtown.

To give you a primer, two main entities own masses of land in northeast downtown, Golden Eagle Industries and Northern Nevada Urban Development. NNUDC/UDM have invested more than $26,000,000 in connection with over 6 acres of land assemblage, development costs and feasibility studies over the past decade in preparation for a large mixed use project (Tessera). Golden Eagle Industries has been amassing property in the same general area since the late 1980’s. They now hold 31 properties in a two block area. This area has been identified as a possible priority project for Redevelopment Area 2 due to its proximity between the Downtown area and the University of Nevada, Reno. It has true potential to link these two regional centers and create a linkage between the University and downtown, anchoring the northeast corner of redevelopment. It should be noted, and was noted by Mark Lewis, Redevelopment Administrator, in a prior advisory board meeting, that any land acquired in this area by the Redevelopment Agency from GEI is not necessarily guaranteed to any one developer.

It's also safe to assume Golden Eagle Industries has no interest in developing the land they own in Northeast downtown, since they are interested in exchanging that land with the Redevelopment Agency.

What Golden Eagle Industries is interested in, however are city-owned properties that have current rental streams coming in. In other words, they have an interest in properties that are currently producing revenue, apparently properties with a light industrial tone to them along the ReTRAC corridor. Currently, of the 31 properties Golden Eagle Industries owns in northeast downtown, all but 2 are home rental income properties, and those rental home income properties aren't exactly Arrowcreek or Caughlin Ranch...not exactly big money-makers for GEI. I don't blame them for having an interest in properties currently occupied ...especially in this economy...the property they currently own produce SOME kind of revenue, so I don't blame them for not wanting just land. My guess is they don't have the resources or desire to redevelop 2 blocks of blight downtown..that's a huge huge endeavor to embark on.

So it works out to almost be a win-win situation. The Redevelopment Agency acquires extremely blighted property screaming for redevelopment, and GEI acquires property that might be more of a revenue source for them. This, however, isn't free, and funding has yet to be identified to pay for the associated costs, and there are also some hiccups involved with the existing leases.

Let's take a look at the properties involved:

Here are the properties GEI is putting on the table, based on this staff report.

109 E. 6th Street 619 N. Lake Street
115 E. 6th Street 624 N. Lake Street
121 E. 6th Street 626 N. Center Street
125 E. 7th Street 643 N. Lake Street
211 E. 7th Street 644 N. Lake Street
213 E. 6th Street 646 N. Lake Street
214 E. 7th Street 650 N. Center Street
220 E. 7th Street 653 N. Lake Street
600 N. Center Street 655 N. Lake Street
610 N. Center Street 660 N. Lake Street
612 N. Center Street 661 N. Lake Street
615 N. Lake Street 701 N. Lake Street
616 N. Center Street 708 N. Center Street
618 N. Center Street 712 N. Lake Street
  710 N. Lake Street
  713 N. Lake Street
  720 N. Lake Street

During this process, the Redevelopment Agency staff was also directed to come up with a list of available properties (January 25, 2008 and January 2009 RDA meetings) and then see which lessees of the identified ReTRAC properties were interested in first-right purchasing of the property.

So agency staff examined city owned property and cross-referenced with GEI's needs, and came up with the list below, posted in this staff report. Those that expressed interest in purchasing their properties are first on the below table in the shaded area.

Address Leasee
1610 W 4th St Retrac Eagle Window And Door
1750 W 4th St Retrac Eagle Window And Door
  Valley Rd Retrac Martin Iron
307 Morrill Ave Retrac Bighorn Iron Works
  Quincy St Retrac RHP
310 Quincy St Retrac RHP
  Sutro St Retrac Reno Salvage
  Sutro St Retrac Reno Salvage
  Montello St Retrac Reno Salvage Main Lot
  Toano St Retrac Reno Salvage West Side Main Lot
  Sutro St Retrac RHP
297 Washington St Retrac Denneys Auto
291 Washington St Retrac Denneys Auto
  E 4th St Retrac Washoe Fuel
  Spokane St No Apn Behind Diamond Dolls
     
  W 4th St Retrac Skillsource Inc Of Nv
  W 4th St Retrac Reno Fuel Berry Hinckley
  Keystone Ave Retrac Spirit Spe Portfolio
1435 N Virginia St House Near Unr
309 Park St Retrac Martin Iron
  Park St Retrac Vacant Lot End Of Park St
310 Park St Retrac Vacant Lot End Of Park St
  Morrill Ave Retrac Frontier Land
311 Sutro St Retrac Petro Distributors
  Sage St Retrac vacant
  Sage St Retrac Jordan Thermo King
  Sage St Retrac Reno Salv Behind Jordan Thermo King
  Sage St Retrac Rno Mll Wrks Rno Disp Lease
ARM Sage St Retrac Concrete Co. Arm
250 Sage St Retrac National Tow Arm
  Sage St Retrac vacant
ARM Sage St Retrac Concrete Co. Arm
250 S Arlington Ave Rental Lake Mansion Ground Lease
532 S Virginia St Parking Lot Starbucks Parking Lot
260 Winter St Retrac 2 Bdlgs Behind Dennys Auto
264 Keystone Ave Retrac Evidence Bldg
450 Sinclair St City Hall Annex
252 E Liberty St City Hall Annex Parking Lot
262 E Liberty St City Hall Annex Parking Lot
  E 4th St Retrac Cemex
2000 E 4th St Retrac Sierra Roof
333 Galletti Way Retrac Cemex
  E 4th St Retrac Sierra Roofing
  E 4th St Retrac Hooten Tire
1940 E 4th St Retrac Sierra Stripers

To read the legal process, costs involved and what the agency staff is asking the Redevelopment Board to decide on, read pages 18-22 of this Staff Report. There are definitely two sides to this debate...one the one hand, this is exactly the purpose of a redevelopment agency...to acquire land for redevelopment using what limited means it has. On the other side of the debate, there is substantial cost involved (see staff report) and someone has to pay for it. Let's discuss.

Comments:

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Posted by: Paul - 6/21/2009 8:10:49 AM
So is it 40 years or since the early 80's?

Posted by: DowntownMakeoverDude - 6/21/2009 8:21:33 AM
Early 80s sorry my bad! I finished this write up at 1:00 a.m. last night so it was a little late.

Posted by: Jimmy - 6/23/2009 12:22:27 PM
The end of the Blog suggests that the purpose of a Redevelopment Agency is to, "ACQUIRE land for redevelopment using what limited means it has." I could not disagree with this statement more. Where is it written that a Redevelopment Agency must take title to real estate in order to affect a policy goal. Government agencies (including redevelopment agencies) are notorious for making uneconomic real estate deals. In many other jurisdictions, redevelopment agencies have no interest or ability to take title to real estate, rather they provide non-cash financial incentives (e.g. TIF, bond credit enhancement, etc) to the private sector in order to provide an incentive to create projects that the city wants and users (tenants) will occupy. Since when is it the objective of Redevelopment to compete with the private sector? The city has proven to be a horrible owner of real estate. I can't see how that is going to change any time soon. I would suggest that redevelopment should focus their efforts on issues which the private sector cannot fix like public safety, homelessness, and public infrastructure. These are the issues that prevent more business and employers from locating downtown. PS: If there is a concern that the private sector will reap huge windfalls in such a scenario there are very easy mechanisms that will allow the City to profit (yes, MAKE MONEY) if and when a project is successful (look up "Carried Interest").

Posted by: DowntownMakeoverDude - 6/24/2009 9:25:52 AM
Hi Jimmy it says right on the City of Reno's Redevelopment Agency page that 'The Redevelopment Agency has the power to: buy private property for resale; reallocate property tax “increment” in order to finance the redevelopment program of the community; and use eminent domain (condemnation) to acquire property' In fact go to ANY redevelopment agency (including SFO, San Jose, Los Angeles, NYC) and you will find that one of the primary goals of a redevelopment agency is to acquire land in blighted areas, then either sell that land, or assist in its redevelopment. I agree, a government agency isn't the most ideal to hold real estate, however the intent here is not to hold onto the land indefinitely but to sell it/trade it/whatever to a private party for development when the time is right. The Redevelopment Agency is not acquiring any new land here, it is simply trading some land it already owns along the reTRAC corridor, which it acquired when the ReTRAC project was complete. This land was previously owned by Union Pacific.

Posted by: Jimmy - 6/24/2009 9:37:51 PM
Thank you for making my point. What effort has been made to get the this RETRAC real estate back on the tax rolls? Is it for sale, are they taking offers? Haven't seen much in the way of marketing on those properties. If this trade partner wants these parcels so badly, that would seem to indicate that there is value there? If my point wasn't clear in the first post, I apologize. Let me try to be succinct. Any policy goal of the city would be better achieved by providing appropriate incentives to the private sector, rather then entrusting a public agency to undertake their own real estate deal. I will trust you when you quote the enabling legislation for the redevelopment agency. But, just because that is how it is written doesn't make it right. Maybe that should be the focus of our attention, changing the mandate and charter of the redevelopment agency. You are entitled to your own opinion Mark. And so am I.

Posted by: DowntownMakeoverDude - 6/25/2009 7:49:00 AM
Hi Jimmy, first my name is Mike not Mark :) I agree with you on a lot of points. To clear up some confusion: The reTRAC properties are already on the city's tax rolls. The City Council does have concern that they would be trading properties with guaranteed lease agreements for properties with less revenue coming in, and they want to make sure that the property tax value/lease revenue is enough to continue paying off the bonds the agency is committed to paying off. The last things the city council wants to do is lower their revenue stream right now. The land trade, when and if its done, will have exact or near exact value. From the city's standpoint, no one is approaching the city asking to develop on its ReTRAC land, however there are parties interested in redeveloping the properties that Golden Eagle owns. It's very strategic for the city to own that land, as it connects downtown to the university. The Council however was not comfortable with this land exchange without knowing how it pencils in, including property tax revenue from both sets of properties as well as lease revenue. GEI is specifically after property with lease revenue coming in, so the city would be trading occupied properties for a bunch of blighted rental properties. However, that's one of the purposes of a redevelopment agency. One interesting side effect, is that the city discovered a bunch of unparcelled land downtown which if parcelled will bring in additional revenue into the redevelopment district.

Posted by: Jimmy` - 6/25/2009 9:45:21 AM
Sorry for being snarky. Much of what I read in your post sounded like it came from someone who had a vested interest in the continued growth in funding of the Redevelopment Agency. You can guess who I was referring to. I understand your viewpoint and agree with the underlying objective - continued revitalization of the downtown core. Where I differ with you (I think I understand you perspective?) is with respect to the best avenue to achieving this goal. From my viewpoint, the positives developments in the downtown area have occurred "in spite of" the Redevelopment Agency, not "because of". Give the private markets the appropriate encouragement and incentive to take on the ENORMOUS risks of speculative development and they will do it. A market driven solution is going to result in superior projects relative to the heavy hand of a government planned real estate development.

 

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