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Recovery Zone Facility Bond Update

- It's time for a Recovery Zone Facility Bond Update! Long term readers of this site know what I'm talking about but in case you're new onboard the bond train, these are NOT, I repeat NOT anything like Star Bonds. The Recovery Zone Facility (RZF) Bonds are a tax-free way for private developers to get financing that they would otherwise get anyway on a taxed basis. It's essentially a loan, with zero obligation to the City of Reno or Washoe County, and the developer is fully responsible for paying it back. It's part of the larger American Recovery and Investment Act meant to stimulate our economy.

A certain amount is allocated to both Washoe County and the City of Reno (for some reason, Vegas and Clark County aren't getting any of these bonds). The City of Reno is allocating $65,604,000, and Washoe County is allocating $59,648,000.

Over the course of the past 5 months, a special subcommittee formed by the City Council has been reviewing applications from various folks who'd like to take advantage of these bonds, and set these folks up in tiers based on presentations the developers gave to the subcommittee and a few other factors.

The first-tier projects which received RZF allocations under the City of Reno’s $65,604,000 bonding authority are:
• $30,000,000 for Vista Hills Project’s two hotels
• $20,600,000 for the Freight House District’s commercial and retail development
• $15,000,000 for the Tessera Project’s Class A office complex

The first-tier projects which received RZF allocations under Washoe County’s $59,648,000 bonding authority are:
• $30,000,000 for IMG Energy’s gasification plant
• $20,040,000 for Castaways’s “dirty” municipal recycling facility
• $5,000,000 for Titan’s photovoltaic manufacturing facility
• $4,600,000 for GA-SNC’s photovoltaic installation at Stead Treatment Plant

The second-tier projects, which are eligible for Reno and Washoe County’s RZFs, are, in this order:
1. $19,000,000 for GA-SNC’s photovoltaic installation at Reno-Tahoe Airport
2. $15,000,000 for Cobalt Composite’s manufacturing plant

The third-tier projects, which are eligible under Reno’s or Washoe County’s RZFs, are, in this order:
1. Up to $50,000,000 for Freight House District (Reno)
2. Up to $90,000,000 for IMG Energy’s gasification plant (Reno or Washoe County)
3. Up to $50,000,000 for Tessera (Reno)

So basically how this works is if any of the first-tier projects drop out, a second tier project can scoop up the first 'tier project's remaining amount.

During May Washoe County received applications from the IMG Energy and Castaways projects. Yay! This is a good sign our plasma gasification plant is becoming more of a reality. Titan and GA-SNC, however, dropped out. This freed up $9.6 million in Washoe County’s RZF allocations.

During the RZF Subcommittee hearings the two second-tier projects, GA-SNC and Colbalt, stated that they needed “all or nothing” with respect to RZF financing; the projects were not scalable. Due to the fact that only $9.6 million was available for re-allocation, well below the level that either second-tier project needed, Washoe County staff proceeded into the third-tier projects listed above. On May 25, the BCC approved the re-allocation of $9.6 million to IMG Energy’s Eco-Energy Park.

The City of Reno is in receipt of applications for the Freight House District and Tessera projects. Yay! Is this a good sign for the Tessera Project? The Vista Hills project, however, did not submit an application and is dropping out of RZF consideration. City of Reno staff contacted GA-SNC and Cobalt Composite, the “second tier” projects, and offered them the use of Vista Hills’s $30,000,000 allocation. But If GA-SNC or Cobalt Composite cannot act on the RZF financing, then city council will need to provide direction on the potential re-allocation of up to $30,000,000 in RZF authority to the three third-tier projects, i.e. the Freight House District, IMG Energy and Tessera, which are eligible for Reno’s RZF bond authorization if no second-tier applicant can use or act upon the bonds.

This will all go before the City Council at the 6/9 meeting which starts at 12:00 p.m. (not the usual 10:00 a.m. start time). Here is the agenda.

Overall, this provides a lot of clues as to which projects are still creeping forward in the background. I'm extremely excited about the municipal recycling facility (which would allow single-stream recycling) and the plasma gasification plant by IMG Energy. This article mentions Reno as one of the few cities in the country that will get a plasma gasification plant to process municipal waste. Here's a great video below on Richmond Washington's Plasma Gasification plant, which they call a 'Plasma Enhanced Melter'.

 

Comments:

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Posted by: Matt - 6/5/2010 3:00:35 PM
Im all for Freight House and Tessera projects, lets get them built already, especially Tessera!!

Posted by: Matt - 6/5/2010 3:03:13 PM
Oh and btw.. there are banners up around downtown streetlights that proclaim Tesseras logo and message "Redefining Downtown Reno" check them out Mike when youre walking around down there, I know that that is a good sign that this project is very much alive

Posted by: Anakin-Marc - 6/5/2010 10:28:54 PM
Glad to see plasma gasification is a possibility here. It's interesting to think, though, that if that happens, WM will charge us to take our trash, which will be converted to energy. Said energy will be sold to NV Energy, then we will be charged to use said energy which was obtained from trash which we paid to have taken in the first place. I know it's how the world works, but something just stinks about it...

Posted by: tocatchathief - 8/8/2010 8:56:50 PM
So "MattO" how's that Tessera project going for ya? As good as Courtyard at Idlywild or the Cottages at Kiley Ranch? What about Legend's Trail?

 

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