Anjeanette Damon

adamon@rgj.com

The developers proposing a $1.2 billion redevelopment project in downtown Reno plan to ask the city for up to $100 million in property tax revenue to both help build the project and fund such things as education and services for the chronically homeless, they told the Reno Gazette-Journal in an exclusive interview.

To get the money, however, Don Clark said his development group Secundo Vita must perform. If the development doesn't generate the tax revenue, the developers won't get paid for the improvements they build up front, he said.

"We are asking to be put on the hook," Clark said.

$1.2B downtown Reno redevelopment vision revealed, explained

Secundo Vita is proposing to build a residential-heavy urban in-fill project between the train trench and the river just west of Arlington Avenue. Plans call for retail and office space, two non-gaming hotels, a central park and other amenities. The centerpiece is a 40-story condo tower, which developers hope will eclipse the Silver Legacy as the city's tallest building.

Under the contours of the request, Secundo Vita would spend about $49 million of the subsidy on public infrastructure such as storm drains, new street designs, sewer capacity, water resources and relocating the Greyhound bus terminal from the project area.

That money is critical to the project, Clark said.

"The infrastructure is what we have to have," Clark said. "It can't be built without it."

The developers also are planning to request another $51 million for such things as public art, education programs for the Washoe County School District and services for the chronically homeless.

The subsidy would come solely from the property tax increment generated by the project itself.

Under the agreement, the developers would spend the money up front and be reimbursed later. The developers also wouldn't receive any money until the Reno Redevelopment Agency's $37 million in existing debt—including the money owed to the developers of the Greater Nevada Field— is paid off.

As it stands now, the agency has barely enough revenue to pay its existing debt, some of which is paid by general city taxpayers. And in 2018, the agency will no longer be generating enough revenue to cover its debt payments.

The developers also will ask the city to abandon two alleyways and Stevenson Street, as well as donate land now being used as a parking lot. Those abandonments, however, would be conditional on the project being built.

Clark and his partners, Susan Clark and Colin Robertson, said they are operating under the philosophy that earmarking part of their tax incentive for critical services such as education and support for the chronically homeless is essential to ensuring their project is successful.

"One of the things we've been asked is why as developers would you ever do this, this is ridiculous. And why would investors do this?" Susan Clark said. "But we believe these kinds of things make a better project because we are improving the entire community around us."

"It mitigates the risk to their investment because it strengthens other systems simultaneously," Robertson added.

The concept, however, raises the question: Who is better to decide how that tax money is spent, elected officials or private developers.

"It is very intriguing," Councilman David Bobzien said. "It resonates because these are questions for this community. This community is becoming more expensive and we're facing challenges related to affordable housing. These are actual solutions they are putting on the table and we owe it to the city to look long and hard and engaging with this."

RGJ reporter Mike Higdon has the details and more renderings here:$1.2B downtown Reno redevelopment vision revealed, explained

Specifically, the tax subsidy requested by the developers is the property tax increment generated by the project. In other words, the amount of property tax generated above what the parcels already generate would go back to the developer.

If it didn't go the developer, that money would fund the Reno Redevelopment Agency, which is tasked with generating economic development projects downtown until it expires in 2028.

The Clarks argue the agency wouldn't spend that money on education, public art or homeless services because of the other demands on the nearly defunct agency.

They also said Secundo Vita would spend the money to address needs now, rather than waiting for the tax revenue to come in years from now.

"We are just asking the question, can we spend money on some new models for how people want to address these critical issues," Susan Clark said.



"You can bet we are going to be careful on what we're spending because we need to know how the project is doing," he said.Don Clark said the group plans to proceed "slowly and methodically," so it is able to respond to changing market conditions and so it can gauge how well the project is performing.

If the redevelopment agency opts to enter into a development agreement with Secundo Vita, the group will have the exclusive right to build in the 17-acre boundary on the west side of downtown. The agreement, however, would also trigger certain requirements, such as paying prevailing wage on the construction jobs and providing relocation assistance for those displaced by the project.

Clark said they would provide relocation assistance for low income residents in two motels set to be demolished whether or not the city required it.

The prevailing wage requirement would add a significant cost to the project, which many other developers work to avoid.

The Standard student housing project, for instance, does not have a development agreement to provide a direct subsidy to the project and therefore won't be required to pay prevailing wage.

Some of those additional costs have other development experts wondering how the project will pencil out. Building in downtown is inherently more expensive than building on a "clean piece of dirt" that's never been developed. Costs include demolition, relocating residents, cleaning contaminated soil and removing abandoned underground infrastructure.

Susan Clark said the group plans to use such things as new market tax credits, a central plant to heat and cool water more efficiently, and other resources to ensure the project is financially successful. They also will build one building at a time.

Secundo Vita plans to break ground on its first condominium building this week. But that doesn't mean the project doesn't face significant hurdles to come to fruition.

According to public records, Secundo Vita has only completed the acquisition on four of the 33 parcels they need for the project, spending $5.3 million on land so far. Susan Clark, however, said they control 94 percent of the land they need, noting there is often a lag between the time a public document is recorded and when a sale is complete.

And they are working with some difficult existing landowners. Reno physician John Iliescu owns some of the land and has a reputation forbeing notoriously difficult to negotiate with. The Siegel Group, which has been buying up downtown parcels at a quick pace, also owns some land in the district.

One of the larger parcels in the district belongs to the University of Nevada, Reno, which would require a vote of the Board of Regents to sell.

Don Clark acknowledges that the scale of the project prompts skepticism, but emphasized it would be done in phases.

"If we go down the path and make an agreement with the city and we only build half, that's great," he said. "But it's really worth doing it all. We've got one chance to build and make this a great city and it's right now."

Want to learn more? The developers are holding a series of meetings and walking tours for the public. Here is the schedule:

Don J Clark Group Public Open Houses at 250 Bell St. (Cathexes)

Thursdays, 12 p.m. to 1 p.m.:

April 28: Overview

Overview May 5: Design

Design May 12: Infrastructure

Infrastructure May 19: Community

Community May 26: Technology

Technology June 2: West 2nd Life

Saturdays, 2 p.m. to 4 p.m.