The City of Reno Redevelopment Agency is currently analyzing five separate districts for the
possibility of using STAR bonds for financial assistance. Each of these possible districts is at a
different level of analysis.
How a STAR Bond Works:
The State of Nevada passed Star Bond legislation to bring catalyst retail tourism
to the region, and the Governor signed the legislation on June 17, 2005. Thus far, in the State of
Nevada, two STAR bond districts have been formed; one for Cabela’s near Boomtown in the
City of Reno and one for Scheel’s in the City of Sparks. STAR Bonds are an important tool for a redevelopment agency, particularly when their power of eminent domain, once a tool to help development was seriously limited by recent laws passed.
State legislation does not limit the number of STAR bond districts a region can have. Yet each district has to be analyzed independently and go through the same process. Each district has to be found financially viable on its own merit. The legislation sets forth findings the City Council has to make in order to create the district. Let's take a look at the steps:
1. Staff requests direction and authorization from City Council to begin negotiations on possible financial and other assistance from the Agency for the project.
2. Staff drafts a MOU with developer to City Council, describing the payment of the deposit for the financial analysis and outlines the time line for the developer to complete their pro forma and prove financial backing for the project.
3. Council approves the MOU which authorizes the commencement of a financial analysis conducted by a consultant selected by the City and paid for by the developer. This includes:
a. Impacts of the project on local government services, including schools and whether there is a positive fiscal impact for the local governments are analyzed in study.
b. A preponderance (51%) of the sales tax must be shown in the study to be from out of state visitors.
c. The study must also show impact on existing businesses offering the same services known as “the displacement of customers.”
4. Once the above study is completed a report is made to City Council. A Definitive Agreement is adopted. City Council then makes an official referral of the study to the School District for their consideration and approval. Concurrently, the study is sent to the County Commission for review only. If Council is satisfied with the results of the study, a Definitive Agreement is executed.
5. Results from the School District and County reviews are presented to City Council. Council must make the findings that retailers will locate their business in the Tourist Improvement District (TID) and that there will be a sustainable increase in sales tax from the project.
6. If City Council approves the previous step, a public hearing before the Nevada Commission on Tourism is needed. The Commission will weigh all information from previous steps and evaluate that the preponderance (51% of the sales tax is coming from out of state visitors) has been meet.
7. After the Commission’s determination, the information is transmitted to the Governor’s Office. The Governor is charged with making the determination that the project will contribute significantly to economic development and tourism for the area. The Governor will also review the School Districts comments.
8. If the Governor approves the matter, it will go back to City Council to create the TID through ordinance. During this step there cannot be any retail of any kind in the proposed boundary for at least 120 days prior to the final adoption of the ordinance.
9. After that the City enters into an agreement with the Department of Taxation specifying the dates and procedures for distribution to the City of any money pledged. This distribution cannot last more than 20 years.
So as you can see, it's not a fly-by-night process nor can the council just haphazardly make final decisions about the bonds on their own. The staff report also has a great breakdown of each proposed district. Below is a map of the three downtown STAR Bond districts proposed, the red being L3, blue being Baseball and Yellow being NNUD's general area. Together, they cover a huge portion of downtown!
Courtesy Callison Architects
Northern Nevada Urban Development Company, LLC (NNUDC) has been working with Redevelopment staff since January of this year on the possibility of their proposed project using STAR bonds for financial assistance. NNUDC has invested more than $26,000,000 in connection with land assemblage, development costs and feasibility studies to initiate a redevelopment project on property generally located in the northeast portion of downtown Reno, between the Reno Events Center/Ballroom, the University of Nevada, North Virginia Street and Evans Avenue. On April 23, 2008 City Council and the Agency Board in a joint meeting authorized staff to negotiate agreements with NNUDC and other parties as necessary to develop the project. After approval, staff worked closely with the developer to create a Memorandum of Understanding (MOU) which will set into motion the process of studying the financial feasibility and appropriateness of using STAR bonds for the project. All MOUs for STAR bond districts require the developer to deposit funds into an account which the City then uses to pay for the financial analysis. The MOU was adopted at the Joint meeting of the Agency Board and City Council on June 25, 2008.
Northern Nevada Urban Development recently announced Callison is the primary architect for this project.
Train Trench Cover Project Phase II
L3 Development Co. (L3) has also been working with staff on the possibility of the project using STAR bonds for financial assistance since October of 2007. L3 has acquired more than 11 acres of real property in downtown Reno, encompassing more than 75,000 square feet of commercial space. L3 is also seeking assistance to enhance the development of the 380 residential unit project known as the Montage, which will also include approximately 16,000 square feet of new retail in the same building. The project area will also include the renovation and re-branding of the current Fitzgerald Hotel and Casino and associated properties which have 351 hotel rooms. L3 also has the opportunity to respond to the Request for Proposals (RFP) for the ReTRAC Train Trench enhancements project which covers two full blocks and could have up to 30,000 square feet of potential retail. Staff received direction from a joint meeting of the Agency Board and City Council on July 2, 2008 to actively pursue a STAR bond district for the project. An MOU to guide the process will be before the Agency Board and City Council on July 16, 2008.
On September 21, 2007, the Agency requested and obtained authority from a joint
meeting of the Agency Board and City Council to engage in the negotiation of
memoranda and agreements to enable the development of a mixed-use project anchored
by an AAA Ballpark and commercial retail facilities with Nevada Land II, LLC (NLII).
NLII has also been working with staff on the possibility of their proposed project using
STAR bonds for financial assistance since coming to the area to build the baseball
stadium. NLII project will be anchored by the Stadium and commercial development
specializing in destination retail and entertainment venues.
The retail district includes the block of parcels bounded by Evans, Lake and 2nd Street as well as possible retail on the bottom floor of the Bowling Stadium and the current site of CitiCenter on Plaza Street and 4th Street.
On April 11, 2007, The Grand Sierra Resort and Casino and Agency requested and obtained authority from the Council/Agency Board to engage in the negotiation of memoranda and agreements to enable the development of a mixed-use project anchored by an indoor water park, water show, exotic auto museum, professional health spa, and commercial retail facilities. Nevada Land II LLC has issued a similar request for assistance on the proposed project located at the Grand Sierra Resort, which will be anchored by a commercial development specializing in destination retail and entertainment venues. Although the purchase is not complete, Nevada Land II LLC has been working on the acquisition of the Grand Sierra site.
One thing interesting about this request is Nevada Land LLC's STAR Bond request doesn't mention the water park, and is not as specifically worded as GSR's original request, which makes me wonder if perhaps NEvada Land LLC has DIFFERENT plans in mind for the GSR if it acquires it. Notice how the wording in bold is different for the two different GSR requests above?
I don't know much about this project except that the Fitzgerald Group owns 48 acres in the vicinity of McCarran and North Virginia street, near the upper boundary of the University of Nevada Reno, and that the project would involve the University of Nevada, Reno, and encompass recreational facilities, retail, housing, and offices. This is at the MOU stage which will be presented to the council July 16.