Staff Reports for July 16 Meeting

8/14/2019 Staff Reports for July 16 Meeting

1/88

CITY OF RENOREDEVELOPMENT

RENO CITY COUNCIL CHAMBERONE EAST FIRST STREET

RENO, NV 89501

Wednesday, July 16, 20082:00 P.M.

A.0 *ROLL CALL

A.1 APPROVAL OF THE AGENDA - July 16, 2008.

A.2 APPROVAL OF MINUTES - June 25, 2008 and July 2, 2008.

A.3 *PUBLIC COMMENT - Limited to No More than three (3) Minutes. The public maycomment by submitting a Request to Speak form to the City Clerk.

B.0 STANDARD DEPARTMENT ITEMS

B.1 Staff Report: Presentation, discussion, and potential direction to staff regarding thecreation of Sales Tax Anticipation Revenue ("STAR") Bond Districts within the City ofReno.

B.2 Staff Report: Discussion, direction and potential approval of a Memorandum ofUnderstanding by and between L3 Development Co., LLC, the Redevelopment Agencyof the City of Reno, and the City of Reno to explore the financial feasibility of assistingin financing a portion of the costs of the project area bounded by Third Street, SecondStreet, West Street, Center Street.

B.3 Staff Report: Discussion, direction and potential approval of a Memorandum ofUnderstanding between Nevada Land II LLC, the Redevelopment Agency of the City ofReno, and the City of Reno to facilitate the issuance of Sales Tax Anticipatory Revenue("STAR") bonds and/or other forms of financing for projects located within the Ball ParkDistrict, and/or within the general vicinity of the Grand Sierra Resort & Casino.

B.4 Staff Report: Discussion, direction and possible approval of amendments of certainagreements between the City of Reno Redevelopment Agency, SK Baseball, LLC, andNevada Land, LLC, regarding the development of a AAA Baseball Stadium, to allow thesubdivision the Stadium site to support additional retail and commercial development

B.4.1 First Amendment to Stadium Lease AgreementB.4.2 Amendment to Disposition and Development Agreement (Baseball Stadium)B.4.3 First Amendment to Ground Lease AgreementB.4.4 Memorandum of Amendment to Ground LeaseB.4.5 Memorandum of Amendment to Disposition and Development Agreement(Baseball B Stadium)


2/88


3/88

STAFF REPORT

Agenda Item:B1To: Chairman and Agency Board Members Date:7-16-2008

Thru: Charles McNeely, Executive Director

B.1Subject : Staff Report: Presentation, discussion, and potential direction to staff regarding

the creation of Sales Tax Anticipation Revenue ("STAR") Bond Districts within the City of

Reno.

From: Mark Lewis, Redevelopment AdministratorJessica Jones, Economic Development Manager

Summary: At the City Council/Redevelopment Agency Caucus meeting on June 23, 2008,Council requested staff provide a report on the possible areas being considered for Sales TaxAnticipation Revenues (STAR) bond districts.

The City of Reno Redevelopment Agency is currently analyzing five separate districts for thepossibility of using STAR bonds for financial assistance. Each of these possible districts is at adifferent level of analysis which will be explained in depth in the background section. The fivepossible districts include:

Northern Nevada Urban Development Company, LLC; L3 Development, LLC; Nevada Land II, LLC (Baseball District); Nevada Land II, LLC (Grand Sierra Resort); and Fitzgerald Group, LLC (UNR Joint Facilities Area).

Staff recommends the Council/Agency accept the report and give direction as appropriate.

Background: The State of Nevada passed Star Bond legislation to bring catalyst retail tourismto the region, and the Governor signed the legislation on June 17, 2005. Thus far, in the State ofNevada, two STAR bond districts have been formed; one for Cabelas near Boomtown in theCity of Reno and one for Scheels in the City of Sparks.

In the past one of the main tools to build economic growth for a Redevelopment Agency waseminent domain. This tool was used to assemble large areas of land. During these times theAgency would then work with a master developer who would bring the capital necessary forinfrastructure and construction of projects and the Agency would contribute the land to thepublic private partnership. In recent legislative sessions the powers of eminent domain havebeen reduced to only apply to public development and are restrictive. These changes have madeit extremely difficult for private developers due to the fact that capital that was available forinfrastructure is now needed for land assemblage. Land prices in the urban core are traditionallyhigher, especially in the downtown. Downtown areas usually have properties being held by


4/88

many different property owners and assemblage can be cost prohibitive to redevelopment on alarge scale. STAR bonds are a way to still maintain development in redevelopment areas byassisting in costs associated with infrastructure and building. STAR bonds remain one of the lastfinancial tools available to redevelop areas and the legislation to create STAR bonds provided anenabling device for the Cities in Nevada to continue with redevelopment.

Proposed District List

Northern Nevada Urban Development Company, LLC (NNUDC) has been working withRedevelopment staff since January of this year on the possibility of their proposed projectusing STAR bonds for financial assistance. NNUDC has invested more than$26,000,000 in connection with land assemblage, development costs and feasibilitystudies to initiate a redevelopment project on property generally located in the northeastportion of downtown Reno, between the Reno Events Center/Ballroom, the University ofNevada, North Virginia Street and Evans Avenue. On April 23, 2008 City Council andthe Agency Board in a joint meeting authorized staff to negotiate agreements with

NNUDC and other parties as necessary to develop the project. After approval, staffworked closely with the developer to create a Memorandum of Understanding (MOU)which will set into motion the process of studying the financial feasibility andappropriateness of using STAR bonds for the project. All MOUs for STAR bonddistricts require the developer to deposit funds into an account which the City then usesto pay for the financial analysis. The MOU was adopted at the Joint meeting of theAgency Board and City Council on June 25, 2008.

L3 Development Co. (L3) has also been working with staff on the possibility of theproject using STAR bonds for financial assistance since October of 2007. L3 hasacquired 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 enhancethe development of the 380 residential unit project known as the Montage, which willalso include approximately 16,000 square feet of new retail in the same building. Theproject area will also include the renovation and re-branding of the current FitzgeraldHotel and Casino and associated properties which have 351 hotel rooms. L3 also has theopportunity to respond to the Request for Proposals (RFP) for the ReTRAC Train Trenchenhancements project which covers two full blocks and could have up to 30,000 squarefeet of potential retail. Staff received direction from a joint meeting of the Agency Boardand 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 July16, 2008.

On September 21, 2007, the Agency requested and obtained authority from a jointmeeting of the Agency Board and City Council to engage in the negotiation ofmemoranda and agreements to enable the development of a mixed-use project anchoredby 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 usingSTAR bonds for financial assistance since coming to the area to build the baseball


5/88


6/88

the County Commission for review only. If Council is satisfied with the results of thestudy, 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 TouristImprovement 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 NevadaCommission on Tourism is needed. The Commission will weigh all information fromprevious steps and evaluate that the preponderance (51% of the sales tax is coming fromout of state visitors) has been meet.

7. After the Commissions determination, the information is transmitted to the GovernorsOffice. The Governor is charged with making the determination that the project willcontribute significantly to economic development and tourism for the area. TheGovernor will also review the School Districts comments.

8. If the Governor approves the matter, it will go back to City Council to create the TIDthrough 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 specifyingthe dates and procedures for distribution to the City of any money pledged. Thisdistribution cannot last more than 20 years.

Recommendation: Staff recommends the Agency Board and Council accept the report and givedirection as appropriate.

Motion: I move to approve the staff recommendation.


7/88

STAFF REPORT



B.2Subject : Staff Report: Discussion, direction and potential approval of a Memorandum of

Understanding by and between L3 Development Co., LLC, the Redevelopment Agency of

the City of Reno, and the City of Reno to explore the financial feasibility of assisting in

financing a portion of the costs of the project area bounded by Third Street, Second Street,

West Street, Center Street.

From: Mark Lewis, Redevelopment Administrator

Jessica Jones, Economic Development Manager

Summary: Staff proposes a Memorandum of Understanding (MOU) to allow the City and theAgency an opportunity to assess the proposed project, determine the feasibility of the project,and analyze the feasibility of the City and/or the Agency assisting the proposed project throughthe potential use of financing tools such as STAR Bonds and/or the formation of special districts.Staff requests direction and authorization from the Council/Agency Board to negotiate andpursue the development of a public/private partnership on a mixed use development specializingin residential, retail, and entertainment venues within the City of Reno Redevelopment boundarygenerally located in the area bounded by Third Street, Second Street, West Street, and CenterStreet. If deemed feasible, the City Council and Agency Board will be asked, at a later date, to

enter into a Definitive Agreement with the developer on the project. Staff recommends approvalof the proposed MOU among the City of Reno, the Redevelopment Agency of the City of Reno,and L3.

Background: L3 Development Co., LLC (L3) has acquired more than 11 acres of realproperty in downtown Reno, encompassing more than 75,000 square feet of commercial space.L3 also has the opportunity to respond to the Request for Proposals (RFP) for the ReTRAC TrainTrench enhancements project which covers two full blocks and could have up to 30,000 squarefeet of potential retail. Upon the Agencys prior recommendation, on July 2, 2008, L3 requestedthat the Agency seek and be granted authority from the Council/Agency Board to engage in thenegotiation of memoranda and agreements to enhance the development of a 380-unit residential,

for sale project known as the Montage, which will also include approximately 16,000 square feetof new retail. The development will also consist of the renovation and re-branding of the currentFitzgerald Hotel and Casino and associated properties which currently has 351 hotel rooms andover 600 gaming positions. All of these are on properties that are owned or controlled by L3 orits affiliates through long term leases.

Discussion: The proposed MOU does not legally obligate any party to undertake thedevelopment of the project. The MOU will allow the City and the Agency to determine the


8/88

financial feasibility of the project and to assess which tools, if any, can be utilized by the Cityand/or the Redevelopment Agency to aid in the development of the proposed project. It providesone 150 days to determine the feasibility of the Project (which term may be extended by up to 90additional days) and negotiate a Definitive Agreement. During the term of the MOU, thefollowing activities will take place:

L3 will deposit $150,000 in cash with the Agency to pay for costs incurred by the Cityand/or the Agency in connection with the Memorandum of Understanding;

L3 will conduct various studies such as title investigation, relocation analyses, marketing,feasibility, soils, seismic and environmental studies, financial feasibility analyses anddesign studies;

The City and/or Agency will retain feasibility and financial consultants to undertake thefeasibility study required to establish a tourism improvement district (NRS 271A.120 andNRS 271A.080) and assess the feasibility of the proposed project; and

L3 will obtain financial commitments from lenders for each component of the project andprovide the City/Agency with a pro forma for each phase of the project.

Financial Implications: All third-party costs and expenses of the City and/or the Agencyincluding and without limitation, all legal and/or consultant fees and related expenses shall bepaid from the deposit. The developer will pay the deposit to the Agency in three installments, inthe amount of $50,000 each.

If the Agreement is terminated, the remaining unspent portion of the deposit shall be returned tothe developer and the City/Agency has no further financial obligation to the developer.

Recommendation: Staff recommends approval of the proposed MOU among the City of Reno,the Redevelopment Agency of the City of Reno, and L3.

For the City Council: Staff recommends Council approval of the Memorandum ofUnderstanding, and authorize the Mayor to execute the Agreement on behalf of the City.

For the Agency Board: Staff recommends Agency Board approval of the Memorandum ofUnderstanding and authorize the Chairman to execute the Agreement on behalf of the Agency.

Proposed Motion: I move to approve the staff recommendation.


9/88


10/88

THIS MEMORANDUM OF UNDERSTANDING (this Agreement) is entered into effective as ofJune 11, 2008 (Effective Date) by and among the REDEVELOPMENT AGENCY OF THE CITY OFRENO (the Agency), the CITY OF RENO (the City) and the L3 Development Co., LLC,, a Nevadalimited liability company (the Developer). The Agency, the City and the Developer are hereinaftercollectively referred to as the Parties.

WHEREAS, the Agency is a redevelopment agency formed, existing and exercising its powerspursuant to the provisions of the Nevada Community Redevelopment Law, Nevada Revised Statutes279.382et. seq. (the Agency Act); and

WHEREAS, the Developer owns property in the City within the jurisdiction of the Agency, as moreparticularly described on Exhibit A attached hereto (the Property); and

WHEREAS, the Developer has notified the Agency and the City of its desire and intention toacquire, develop and construct on the Property, a mixed use development specializing in residential, retail,and entertainment venues within the City of Reno Redevelopment boundary(as more particularly described

in Section 5, the Project); and

WHEREAS, the Developer has requested that the Agency and the City enter into this Agreementto explore the feasibility of the Project and to explore the financial feasibility of issuance of debt obligationsby the City and/or the Agency and/or formation by the City of special assessment, tourism improvementand other districts to finance a portion of the costs of the Project; and

WHEREAS, at its meeting on July 2, 2008, the City Council and Redevelopment Agency Boarddirected staff to pursue negotiations with the Developer regarding the Project and authorized staff toprepare this Agreement for the purpose of negotiating a definitive agreement (Definitive Agreement)whose terms and conditions shall govern development, construction and financing of the Project; and

WHEREAS, the Developer anticipates expending funds to conduct certain studies that are neededto assess the feasibility of the development and construction of the Project and requests that the City andAgency enter into this Agreement prior to making such expenditures;

NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forthand other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the Parties agree as follows.

Section 1. Negotiation of Definitive Agreement. The Parties shall use reasonable efforts tonegotiate a Definitive Agreement which shall describe the terms and conditions governing development ofthe Project on the Property. The Parties shall use reasonable efforts to obtain any third-party consent,authorization, approval, or exemption required in connection with the transactions contemplated hereby.This Agreement does not impose a binding obligation on the Agency or the City to approve a DefinitiveAgreement or grant any approvals or authorizations required for the Project. In addition, this Agreementdoes not obligate the Parties to agree to any specific terms or obligations.

Section 2. Term. The term of this Agreement (the Term) shall commence on the EffectiveDate, and shall terminate one hundred fifty (150) days thereafter, unless extended or earlier terminated asprovided herein. The Term may be extended for up to a maximum of three (3) thirty (30) additional dayterms upon the mutual written agreement of the Developer, the Agency and the City acting through and inthe discretion of its Executive Director/City Manager.


11/88

Section 3. Relationship of the Parties. The Parties agree that nothing in this Agreement shall

be deemed or interpreted to create between them the relationship of lessor and lessee, of buyer and seller,or of partners or joint venturers.

Section 4. Deposit. In consideration for this Agreement and the costs the Agency and/or Cityhave and will incur in furtherance of this Agreement and the negotiation of the Definitive Agreement, theDeveloper shall, concurrently with the execution of this Agreement by Agency, submit to Agency a goodfaith deposit (Deposit) in the amount of $150,000. The Deposit shall be in the form of cash and shall bepaid by the Developer to the Agency in three (3) equal installments in accordance with the time period setforth in the Schedule, attached hereto as Exhibit B. If performance of this Agreement results in execution ofa Definitive Agreement, the disposition of the Deposit shall be as further set forth in the DefinitiveAgreement. If this Agreement is terminated pursuant to Section 12, any remaining balance of the Deposit,after payment of expenses incurred by the City and/or the Agency pursuant to Section 10 of this Agreementand accrued prior to the notice of termination, shall be returned by the Agency to the Developer.

Section 5. The Project. The negotiations hereunder shall be based on a developmentconcept consistent with the following points:

(a) Retail Development. Development and construction of a tourism destination retail centerincluding one or more anchor stores, entertainment facilities and restaurants.

Section 6. Developers Studies. During the Term, the Developer shall use its bestreasonable efforts to prepare, at the Developers expense, any studies, surveys, plans, specifications andreports (Developers Studies) the Developer deems necessary or desirable in Developers solediscretion, to determine the suitability of the Property for the Project. Such studies may include, withoutlimitation, title investigation, relocation analyses, marketing, feasibility, soils, seismic and environmentalstudies, financial feasibility analyses and design studies.

Section 7. Studies. The City and/or the Agency shall retain one or more feasibilityconsultants to prepare the feasibility study required by the NRS 271A.120 and to assist the City gatherinformation necessary to make the findings required by NRS 271A.080. The Agency and the City mayexpend the Deposit for costs incurred by the City and/or the Agency for the preparation of such studies andfindings.

Section 8. Developers Pro Forma and Evidence of Financing. Within the time period setforth in the Schedule, attached hereto as Exhibit B, the Developer shall obtain financing commitments fromprospective lenders or financing partners for each component of the Project specified in Section 5, in formand substance satisfactory to the City and the Agency, and shall provide evidence satisfactory to the Cityand the Agency that the Developer has secured commitments, subject only to commercially reasonableconditions, for all funding necessary for the successful completion of each phase of the Project. Neither theCity nor the Agency shall seek approval of the Definitive Agreement from their respective governing bodiesunless and until Developer has provided a pro forma for each phase of the Project that confirms thefinancial feasibility of Developers proposed redevelopment of the Property.

Section 9. Full Disclosure. At or prior to the execution of the Definitive Agreement, theDeveloper is required to make full disclosure to the City and the Agency of its principals, officers, majorstockholders, partners or members; joint venturers; negotiators; development managers; consultants anddirectly involved managerial employees (collectively, Developer Parties); and all other material


12/88


13/88

(iv) facsimile transmission, in which case notice shall be deemed delivered upontransmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first-class or certifiedmail or by overnight delivery, or (b) a transmission report is generated reflecting the accurate transmissionthereof. Any notice given by facsimile shall be considered to have been received on the next business dayif it is received after 5:00 p.m. recipients time or on a nonbusiness day.

Agency : Redevelopment Agency of the City of RenoOne East First Street, Suite 700Reno, Nevada 89505Attn: Redevelopment AdministratorPhone: 775-334-2077Fax: 775-334-3124

City: City of RenoOne East First StreetReno, Nevada 89505

Attn: City ManagerPhone: (775) 334-2020Fax: (775) 334-2097

Developer: L3 Development Co., LLC55 W. Monroe, Ste. 1700Chicago, IL 60603Attn: John RobersonPhone: (312) 316-2984Fax: (312) 558-1128

Section 15. Indemnification. The Developer hereby covenants, on behalf of itself and itspermitted successors and assigns, to indemnify, hold harmless and defend the Agency and the City andtheir respective elected and appointed officials, officers, agents, representatives and employees(Indemnitees) from and against all claims, costs (including without limitation reasonable attorneys feesand litigation costs) and liability, arising out of or in connection with this Agreement provided however,Developer shall have no indemnification obligation with respect to the gross negligence or willfulmisconduct of any Indemnitee, or any actual breach of agreement or applicable law by any Indemnitee.

Section 16. Severability. If any term or provision of this Agreement or the application thereofshall, to any extent, be held to be invalid or unenforceable, such term or provision shall be ineffective to theextent of such invalidity or unenforceability without invalidating or rendering unenforceable the remainingterms and provisions of this Agreement or the application of such terms and provisions to circumstancesother than those as to which it is held invalid or unenforceable unless an essential purpose of thisAgreement would be defeated by loss of the invalid or unenforceable provision.

Section 17. Entire Agreement; Amendments In Writing; Counterparts. This Agreementcontains the entire understanding of the Parties with respect to the subject matter hereof and supersedesall prior and contemporaneous agreements and understandings, oral and written, between the Parties withrespect to such subject matter. This Agreement may be amended only by a written instrument executed bythe Parties or their successors in interest. This Agreement may be executed in multiple counterparts, eachof which shall be an original and all of which together shall constitute one agreement.


14/88

Section 18. Successors and Assigns; No Third-Party Beneficiaries. This Agreement shall bebinding upon and inure to the benefit of the Parties and their respective successors and assigns; providedhowever, that neither Party shall transfer or assign any of such Partys rights hereunder by operation of lawor otherwise without the prior written consent of the other Party, and any such transfer or assignmentwithout such consent shall be void. Subject to the immediately preceding sentence, this Agreement is not

intended to benefit, and shall not run to the benefit of or be enforceable by, any other person or entity otherthan the Parties and their permitted successors and assigns.

Section 19. Captions. The captions of the sections and articles of this Agreement are forconvenience only and are not intended to affect the interpretation or construction of the provisions hereof.

Section 20. Subject to Applicable Laws. The Parties shall comply with all applicable andmaterial statutes, ordinances, laws, rules, regulations and requirements under Federal, State, City andother local authority applicable to the terms and conditions of this Agreement (collectively, Law or Laws).All terms and conditions of this Agreement shall be subject to all applicable Laws and to the extent that anyterm or condition is in violation of any applicable Law, such term or condition shall be void and

unenforceable. The Developer acknowledges that the City and Agency have certain obligations under theLaw including, but not limited to, the requirement that public notice and hearing be afforded for certainactions and that findings and determinations of fact be made. Nothing in this Agreement is intended toprejudge or prejudice those findings and determinations. Any conflict between the provisions of thisAgreement and any present or future lawful exercise of the City's legislative prerogative shall be resolved infavor of the latter.

[Remainder of page intentionally blank]


15/88

Section 20. Governing Law. This Agreement shall be governed by and construed inaccordance with the laws of the State of Nevada.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date firstwritten above.

REDEVELOPMENT AGENCYOF THE CITY OF RENO

By: _______________________________Robert A. Cashell, Sr.Chairman

CITY OF RENO

By: ______________________________Robert A. Cashell, Sr.Mayor

ATTEST:

By: ___________________________Agency Secretary

ATTEST:

By: ___________________________City Clerk

APPROVED AS TO FORM:

By: _________________________________Agency Counsel


By: _________________________________City Attorney

L3 Development Co., LLC, a Nevada limited liabilitycompany

By: _______________________________Its: _______________________________


16/88

EXHIBIT A


17/88

EXHIBIT B

SCHEDULE ACTION

1. Execution and Delivery of Agreement byDeveloper. The Developer shall execute and deliverthis Agreement to the Agency.

July 16, 2008

2. Execution of Agreement by City andAgency. The City and Agency shall each considerauthorizing execution of this Agreement, and if soauthorized, the City and Agency shall execute anddeliver this Agreement to the Developer.

July 16, 2008

3. Opening of Escrow; Deposit. The

Developer shall deposit $150,000 with the Agency.(Section 4)

Effective date - $50,000 (1st installment)

60 days - $50,000 (2nd installment)60 days - $50,000 (3rd installment)

4. Submission Pro Formas. The Developershall submit to the City and Agency in form andsubstance satisfactory to the City and Agency, proformas for each component of the Project. (Section8)

No later than 90 days from the EffectiveDate

5. Submission Evidence of Financing. TheDeveloper shall submit to the City and Agency

evidence of financing of each component of theProject confirming the financial feasibility of theProject. (Section 8)

No later than 120 days from theEffective Date

5. Submission Definitive Agreement forApproval. Submission of Definitive Agreement,executed by the Developer, to Agency Board andCity Council for consideration and approval. (Section2)

No later than 150 days from theEffective Date (unless extendedpursuant to Section 2 of thisAgreement)


18/88


19/88

Agency assisting the proposed Project through the potential use of financing tools such as StarBonds and/or formation of special districts.

Background: On September 21, 2007, the Agency requested and obtained authority from the

Council/Agency Board to engage in the negotiation of memoranda and agreements to enable thedevelopment of a mixed-use project anchored by an AAA Ballpark and commercial retailfacilities. Nevada Land II LLC has issued a request for assistance on the proposed projectlocated in the Baseball District, which will be anchored by the Stadium and commercialdevelopment specializing in destination retail and entertainment venues. Although theconsolidation of all parcels is not complete, Nevada Land LLC has been working on theacquisition of necessary land. The approval of this MOU will assist in the acquisition anddevelopment of the site.

Additionally, on April 11, 2007, The Grand Sierra Resort and Casino and Agency requested andobtained 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 waterpark, 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 locatedat the Grand Sierra Resort, which will be anchored by a commercial development specializing indestination retail and entertainment venues. Although the purchase is not complete, NevadaLand II LLC has been working on the acquisition of the Grand Sierra site. The approval of thisMOU will assist in the acquisition and development of the site.

Discussion: The proposed MOU does not legally obligate any party to undertake thedevelopment of the Project(s.) The Memorandum of Understanding will allow the City and theAgency to determine the financial feasibility of the project(s) and to assess which tools, if any,can be utilized by the City and/or the Redevelopment Agency to aid in the development of theproposed project(s.) The Memorandum provides 150 days to determine the feasibility of theProject (which term may be extended by up to 90 additional days) and negotiate a definitiveagreement. During the term of the Memorandum of Understanding, the following activities willtake place:

Nevada Land II will pay for all associated costs incurred by the City and/or the Agency inconnection with the Memorandum of Understanding;

Nevada Land II LLC will conduct various studies such as title investigation, marketing,feasibility, soils, seismic and environmental studies, financial feasibility analyses and

design studies for both project sites A and B;

The City and/or Agency will retain feasibility and financial consultants to undertake thefeasibility study required to establish a tourism improvement district (NRS 271A.120 andNRS 271A.080) and assess the feasibility of the proposed project; and


20/88

Nevada Land II LLC will obtain financial commitments from lenders for each componentof the project(s) and provide the City/Agency with a pro forma for each phase of theproject(s).

Financial Implications: All third-party costs and expenses of the City and/or the Agency

including and without limitation, all legal and/or consultant fees and related expenses shall bepaid by Nevada Land II LLC. The developer has the option to pay a deposit to the Agency inthree installments, in the amount of $50,000 each, or provide reimbursement on a pay as yougo basis as outlined in the Memorandum of Understanding.

If the Agreement is terminated, any unspent portions of the deposit shall be returned to thedeveloper and the City/Agency has no further financial obligation to the developer.

Legal Implications: The Memorandum of Understanding does not impose a binding obligationon the Agency or the City to grant any approvals or authorizations required for the project(s) nordoes it obligate the developer to agree to any specific terms or obligations. The Memorandum of

Understanding may be terminated at any time by mutual consent of the parties. Upon suchtermination or expiration of the term without reaching a Definitive Agreement, the Memorandumof Understanding becomes null and void without further liability or obligation of any party.

Recommendation: Staff recommends approval of the proposed Memorandum of Understandingamong the City, the Redevelopment Agency of the City of Reno and Nevada Land II LLC.

For the City Council: Staff recommends Council approval of the Memorandum ofUnderstanding, and authorize the Mayor to execute the Agreement on behalf of the City.

For the Agency Board: Staff recommends Agency Board approval of the Memorandum of

Understanding and authorize the Chairman to execute the Agreement on behalf of the Agency.


Attachment 1) Memorandum of Understanding


21/88


22/88


23/88


24/88


25/88


26/88


27/88


28/88


29/88


30/88


31/88


32/88


33/88

STAFF REPORT



B.4Subject : Staff Report: Discussion, direction and possible approval of amendments of

certain agreements between the City of Reno Redevelopment Agency, SK Baseball, LLC,

and Nevada Land, LLC, regarding the development of a AAA Baseball Stadium, to allow

the subdivision the Stadium site to support additional retail and commercial development

B.4.1 First Amendment to Stadium Lease AgreementB.4.2 Amendment to Disposition and Development Agreement (Baseball Stadium)

B.4.3 First Amendment to Ground Lease AgreementB.4.4 Memorandum of Amendment to Ground LeaseB.4.5 Memorandum of Amendment to Disposition and Development Agreement (Baseball BStadium)


Summary: Staff recommends Agency Board approval of the Amendments to the September 21,2007 Disposition and Development Agreements (DDA) by and between the RedevelopmentAgency of the City of Reno, the City of Reno, and Nevada Land, LLC. The attachedAmendments to the original Baseball DDA(s) allow Nevada Land LLC and Nevada Land II LLC

to subdivide the Stadium site for construction of supportive retail and commercial development.The construction of additional retail and commercial development will be funded privately usingzero funding from the Washoe Countys Car Tax proceeds. The desire for additional retail wasdirected by the Agency Board and is related to the approved Stadium DDA and Retail DDA.Three separate Amendments with two Memoranda are docketed for Board consideration. TheAmendments / Memorandums include:

Item B.4.1 First Amendment to Stadium Lease AgreementItem B.4.2 Amendment to Disposition and Development Agreement (Baseball Stadium)Item B.4.3 First Amendment to Ground Lease AgreementItem B.4.4 Memorandum of Amendment to Ground Lease

Item B.4.5 Memorandum of Amendment to Disposition and Development Agreement(Baseball Stadium)

Staff recommends the Agency Board approve the attached Amendments.

Previous Council Action: On June 27, 2007, the City Council authorized and directed staff toengage SK Baseball, LLC and Nevada Land, LLC (SK/NL), Washoe County, and other partiesas needed; Conduct any necessary analyses to determine the feasibility of a ballpark


34/88


35/88


36/88


37/88


38/88

Amendment to Disposition and Development Agreement (Baseball Stadium)First Amendment to Ground Lease AgreementMemorandum of Amendment to Ground LeaseMemorandum of Amendment to Disposition and Development Agreement (Baseball Stadium)


39/88


40/88


41/88


42/88


43/88


44/88


45/88


46/88


47/88


48/88


49/88


50/88


51/88


52/88


53/88


54/88


55/88


56/88


57/88


58/88


59/88


60/88


61/88


62/88


63/88


64/88


65/88


66/88

STAFF REPORT



B.5Subject : Staff Report: Staff Report: Discussion and potential direction to staff regarding

Priority Projects for Redevelopment Area No. 2.


Summary: Redevelopment Area No. 2 (RDA 2) was established in 2005 and amended toinclude additional lands in 2006 (Attachment A). Now that the potential exists to issue bonds

based on the anticipated property tax increment generated from the project area, the CityCouncil/Redevelopment Agency Board asked for a discussion of potential Priority Projects forRDA 2. Staff seeks additional direction from the City Council and Redevelopment Agency andrecommends the City Council and Agency Board: 1) establish Priority Projects for RDA 2and/or 2) direct Staff to develop a list of Priority Projects for RDA 2 for possible adoption.

Previous Council Action: RDA 2 was established on August 24, 2005 and amended on June 14,2006.

Discussion: Since RDA 2 was established, a number of projects have been initiated by theRedevelopment Agency in the project area. These projects include: Cabelas retail store

development; the completion of the ReTRAC Corridor Study; strategic land acquisition (427Evans and the Savoy Motel); the completion of Carriage Stone Apartments; entering into aMemorandum of Understanding with Grand Sierra Resort; and completing a demonstrationlighting project on South Virginia Street. In addition Agency staff has worked with propertyowners to attract new development to vacant and underutilized properties which include the ParkLane Mall, as well as a number of locations in the Fourth Street area and along Virginia Street.

Current Agency activities include:

RDA 2 loan Agreement to RDA 1 for the purposes of funding the RTC CitiCenteracquisition

Entering into a Memorandum of Understanding with Northern Nevada Urban

Development UNR Gateway development The development of a parking structure Lighting improvements on South Virginia Street from Plumb Lane to Liberty Street St Vincent's Residence Gould Street Autumn Village- 195 Gentry


67/88

Based upon the Councils direction, these projects have the potential to be included as PriorityProjects for RDA 2. Additionally, when RDA 2 was formed, a provision was included in theRedevelopment Plan to provide an eighteen percent (18 percent) set-aside of gross tax incrementcollected in any year to fund affordable housing initiatives

Financial Implications: A potential financing mechanism identified by staff to fund projects inRDA 2 involves the issuance of tax increment bonds for the RDA #2 project area. The basicconcept is as follows:

Issue approximately $12 million of tax increment bonds in the RDA #2 project area.After deducting cost of issuance and reserve requirements, it is anticipated thatapproximately $10 million of proceeds would be available for projects.

The first component of the conceptual financing plan consists of the issuance of tax incrementbonds for the RDA #2 project area. Currently, RDA #2 tax increment totals approximately $3

million, annually. Commitments against this amount include

Annual project area operations $ 550,000 Annual bond payment for Cabela's project $ 150,000 Annual loan payment for Fire Station #1 relocation $ 785,000 18% low/mod housing set aside $ 272,700

Total $1,757,700

This leaves approximately $1.3 million of tax increment available on an annual basis. However,since RDA #2 is a relatively new project area with no previous market debt experience, it isanticipated that the issuance of debt will require debt service coverage. Debt service coverage isthe amount over the annual debt service that bond purchasers require to provide them with acushion to ensure that the annual debt payments will be made. Staff anticipates a 1.5 times debtservice coverage for the RDA #2 bond issue. This means that revenue available to pay theannual debt service must be at least 150 percent of the annual debt service. Consequently, withapproximately $1.3 million available, the maximum annual debt service amount would beapproximately $900,000. Under current market conditions and assuming a twenty yearrepayment, this would equate to approximately $11.5 million of bond proceeds. After deductingcost of issuance and reserve requirements, it is anticipated that approximately $10 million ofproceeds would be available for projects.

As with any bond issue, the final details, such as the interest rate, debt service coverage, and netproceeds will not be known until the bonds are actually sold, which is anticipated to be inNovember or December 2008. A fiscal consultant will have to be hired to provide the fiscalanalysis necessary to sell the bonds, in addition to the typical finance team members (financialadvisor and bond counsel, etc.)

It is important to note that this potential financing mechanism is being considered to fund 2existing priority projects for RDA 1 at this time, the acquisition of the RTC CitiCenter site as


68/88

well as the construction of the White Water Course Extension project, which are also to beconsidered at the City Council/Agency Board meeting of 7/16/08.

Finally, when reviewing what could be considered a priority project it is important to examinethe cost-benefits of projects. Staff has primarily focused on projects that will have the highest

return to the Agency through tax increment financing or in the case of affordable housing havean impact on community well-being.

Legal Implications: None with this action.

Recommendation: Staff seeks additional direction from the City Council and RedevelopmentAgency and recommends the City Council and Agency Board: 1) establish Priority Projects forRDA 2 and/or 2) direct Staff to develop a list of Priority Projects for RDA 2 for possibleadoption.

Proposed Motion: I move to:

1. Establish priority projects for RDA2 as follows: ____________

and/or

2. Direct staff to develop a list of priority projects for RDA 2 forpossible adoption.


69/88

Attachment A


70/88

STAFF REPORT



B.6Subject : Staff Report: Discussion, direction and potential approval of a Memorandum of

Understanding Between the Redevelopment Agency of the City of Reno and the Fitzgerald

Group to explore the feasibility of developing a project with the University of Nevada,

Reno.

From: Mark Lewis, Redevelopment AdministratorJames Graham, Economic Development Manager

Summary: A Memorandum of Understanding (MOU) between the Redevelopment Agencyand Fitzgerald Group is proposed for Board consideration to guide negotiations and to assess thefeasibility of developing a mixed used project that would encompass recreational facilities, retail,housing, and offices. The 48 acres of property is currently owned by the Fitzgerald Group. Ifdeemed feasible, the Agency Board will be asked, at a later date, to enter into a DefinitiveAgreement with the Fitzgerald Group to assist with various financial tools available to theRedevelopment Agency. In addition, staff is asking for authorization to engage in furtherdiscussions with the University of Nevada, Reno concerning the proposed project. Staffrecommends the approval the proposed MOU between the Redevelopment Agency of the City ofReno and the Fitzgerald Group and authorization for staff to engage in further discussions with

the University of Nevada, Reno concerning the proposed project.

Discussion: The proposed MOU does not legally obligate either party in any manner except thatit is designed as a guide to determine the financial, managerial and operational feasibility of theproject and to assess which tools, if any, can be utilized by the Redevelopment Agency to aid inthe development of the proposed project. The Memorandum allows 120 days to determine if adefinitive agreement between the Redevelopment Agency and the Fitzgerald Group can bereached. During the term of the Memorandum of Understanding the following activities willtake place:

1. The developer will conduct various studies such as marketing, soils,

seismic/environmental, financial feasibility, and design studies;2. The Agency shall retain one or more consultants as well as utilize existing staff to

conduct financial, legal, operational, and managerial feasibility analysis;3. The developer will deposit $200,000 in cash with the Redevelopment Agency to pay for

any costs, including staff expenses, incurred by the City and/or the Agency for thepreparation of studies and findings; and

4. The Fitzgerald Group has stated that it would contribute at least five acres of land to theAgency and pay for construction of the development to further the Project after a


71/88

Definitive Agreement has been executed between all parties whose terms and conditionsshall govern development, construction and financing of the Project.

Financial Implications: All costs and expenses of the City and/or the Agency including andwithout limitation, all legal, Agency and/or City staff, consultant fees and other related expenses

shall be paid for by the developer by utilizing a deposit. The developer will make fourinstallments in the amount of $50,000 each on or before July 16, 2008, August 1, 2008,September 1, 2008 and October 1, 2008.

Legal Implications: The Memorandum of Understanding does not impose a binding obligationon the Agency to grant any approvals or authorizations required for the project nor does itobligate the developer to agree to any specific terms or obligations. This Agreement may beterminated at any time by either party. Upon such termination or expiration of the 120 day termwithout agreement of a Definitive Agreement, the Memorandum of Understanding shall becomenull and void without further liability or obligation of either party.

Recommendation: Staff recommends approval of the proposed Memorandum of Understandingbetween the Redevelopment Agency of the City of Reno and the Fitzgerald Group andauthorization for staff to engage in further discussions with the University of Nevada, Renoconcerning the proposed project.


Attachment: Memorandum of Understanding


72/88


73/88

This MEMORANDUM OF UNDERSTANDING (this Agreement) is entered into effective as of______________ (Effective Date) by and among the REDEVELOPMENT AGENCY OF THE CITY OFRENO (the Agency), and THEFITZGERALD GROUP, a Nevada corporation (the Developer). TheAgency and the Developerare hereinafter collectively referred to as the Parties.

WHEREAS, theAgency is a redevelopment agency formed, existing and exercising its powerspursuant to the provisions of the Nevada Community Redevelopment Law, Nevada Revised Statutes279.382et. seq. (the Agency Act);

WHEREAS, the Developer owns property within the jurisdiction of the City of Reno (theProperty); andat port io nb eing a

WHEREAS, the Developer anticipates expending funds to conduct certain studies that are neededto assess the feasibility of the development and construction of the Project and requests that the Agencyenter into this Agreement prior to making such expenditures;

WHEREAS, at a meeting on June 16, 2008 between the Developer and the Agency, the Developerstated that it would contribute at least five (5) acres of land to the Agency and pay for construction of thedevelopment to further the Project after a Definitive Agreement (Definitive Agreement) has beenexecuted between all parties whose terms and conditions shall govern development, construction andfinancing of the Project; and

NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forthand other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the Parties agree as follows.

Section 1. Negotiation of Definitive Agreement. The Parties shall use reasonable efforts tonegotiate a Definitive Agreement which shall describe the terms and conditions governing development ofthe Project on the Property. The Parties shall use reasonable efforts to obtain any third-party consent,authorization, approval, or exemption required in connection with the transactions contemplated hereby.This Agreement does not impose a binding obligation on the Agency or the City to approve a DefinitiveAgreement or grant any approvals or authorizations required for the Project. In addition, this Agreementdoes not obligate the Parties to agree to any specific terms or obligations.

Section 2. Term The term of this Agreement (the Term) shall commence on the EffectiveDate, and shall terminate one hundred eighty (180) days thereafter, unless extended or earlier terminatedas provided herein. The Term may be extended for up to a maximum of hundred eighty days (180)additional day term upon the mutual written agreement of the Developer, the Agency acting through and inthe discretion of its Executive Director/City Manager.

Section 3. Relationship of the Parties. The Parties agree that nothing in this Agreementshallbe deemed or interpreted to create between them the relationship of lessor and lessee, of buyer and seller,or of partners or joint venturers.

Section 4. Intentionally Left Blank.

Section 5. Deposit. In consideration for this Agreement and the costs the Agency will incurincluding the cost of Agency and City of Reno staff in furtherance of this Agreement and the expense of


74/88

negotiating a Definitive Agreement, the Developer shall, with the execution of this Agreement by theAgency and the City of Reno, submit to the Agency a good faith deposit (Deposit) in the amount of TwoHundred Thousand Dollars ($200,000). The Deposit shall be in the form of cash and shall be paid by theDeveloper to the Agency in four (4) equal installments each in accordance with the time period set forth inthe Schedule, attached hereto as Exhibit A. The Agency shall put the Deposit in an interest bearing account

and such interest, when received by the Agency, shall become part of the Deposit. If performance of thisAgreement results in execution of a Definitive Agreement, the disposition of the Deposit shall be as furtherset forth in the Definitive Agreement. If this Agreement is terminated pursuant to Section 17, any remainingbalances of the Deposits, after payment of expenses incurred by the Agency and the City of Reno pursuantto Section 11 of this Agreement, shall be returned by the Agency to the Developer.

Section 6. The Project. The negotiations hereunder this Agreement and in pursuit of aDefinitive Agreement shall be based on the development consistent with the following elements:

(a) Flat Field Facilities. Facilities that would enable the execution of such sports such as butnot limited to soccer, football, lacrosse, outdoor track/field and rugby; and

(b) In-Door Multi-Purpose Sports Facility. A facility or facilities that would accommodate theexecution of a variety of sporting events such as, but not limited to indoor track and field, indoor tennis,gymnastics, hockey, figure skating, speed skating, curling basketball, volleyball, batting cages, wrestling,and martial arts under one roof within a common structure or within a complex of adjoined or adjacentbuildings; and

(c) Aquatic Center. Facility(ies) that would house Pools co-located with multi-generationrecreation centers to increase usage and cost recovery. Multi-generation centers are recreation centers forall ages with amenities such as pools, classrooms, fitness rooms, gymnasiums, suspended jogging tracks,locker rooms, and kitchen space; and

(d) Student Housing. Development and construction of a variety of student housing optionsfrom rental apartments to condo style to time share type facilities; and

(e) Retail Development. Development and construction of a variety of eateries and other retailoptions catering to the concept of sporting outdoor and indoor for all ages with stores, entertainmentfacilities, restaurants, and office space.

Section 7. Developers Studies. During the Term, the Developer shall use its bestreasonable efforts to prepare, at the Developers expense, any studies, surveys, plans, specifications andreports (Developers Studies) the Developer deems necessary or desirable in Developers solediscretion, to determine the suitability of the Property for the Project. Such studies may include, withoutlimitation, title investigation, relocation analyses, marketing, feasibility, soils, seismic and environmentalstudies, financial feasibility analyses and design studies.

Section 8. Studies and Analysis. The Agency shall retain one or more consultants and legalexpertise to prepare feasibility studies and/or legal analysis that it deems, in its sole discretion, necessaryto assist it with any strategies to gather information or obtain approvals for endeavors to further the project.The Agency may expend the Deposit for costs incurred for the preparation of any study, analysis and/orfindings legal and/or financial associated with the development of the project as well as the cost of Agencyand/or City of Reno Staff involved in furthering studies, reports, and/or analysis.


75/88


76/88


77/88

Section 18. Entire Agreement; Amendments In Writing; Counterparts. This Agreement

contains the entire understanding of the Parties with respect to the subject matter hereof and supersedesall prior and contemporaneous agreements and understandings, oral and written, between the Parties withrespect to such subject matter. This Agreement may be amended only by a written instrument executed by

the Parties or their successors in interest. This Agreement may be executed in multiple counterparts, eachof which shall be an original and all of which together shall constitute one agreement.

Section 19. Successors and Assigns; No Third-Party Beneficiaries. This Agreement shall bebinding upon and inure to the benefit of the Parties and their respective successors and assigns; providedhowever, that neither Party shall transfer or assign any of such Partys rights hereunder by operation of lawor otherwise without the prior written consent of the other Party, and any such transfer or assignmentwithout such consent shall be void. Subject to the immediately preceding sentence, this Agreement is notintended to benefit, and shall not run to the benefit of or be enforceable by, any other person or entity otherthan the Parties and their permitted successors and assigns.

Section 20. Captions. The captions of the sections and articles of this Agreement are forconvenience only and are not intended to affect the interpretation or construction of the provisions hereof.

Section 21. Governing Law. This Agreement shall be governed by and construed inaccordance with the laws of the State of Nevada.

Section 20. Subject to Appl icable Laws. The Parties shall comply with all applicable andmaterial statutes, ordinances, laws, rules, regulations and requirements under Federal, State, Cityand other local authority applicable to the terms and conditions of this Agreement (collectively, Law or Laws ). All terms and conditions of this Agreement shall be subject to all applicableLaws and to the extent that any term or condi tion is in violation of any applicable Law, such term orcondi tion shall be void and unenforceable. The Developer acknowledges that the City and Agencyhave certain obligations under the Law including, but not limited to, the requirement that publicnotice and hearing be afforded for certain actions and that findings and determinations of fact bemade. Nothing in this Agreement is intended to prejudge or prejudice those findings anddeterminations. Any conflict between the provisions of this Agreement and any present or futurelawful exercise of the City's legislative prerogative shall be resolved in favor of the latter.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date firstwritten above.

REDEVELOPMENT AGENCYOF THE CITY OF RENO

By: _______________________________Robert CashellChairman

FITZGERALD GROUP

By: ______________________________Rob FitzgeraldPresident


78/88

ATTEST:

By: ___________________________Agency Secretary

ATTEST:

By: ___________________________Mark Bruce, Esq.Attorney


By: _________________________________City Attorney


79/88


80/88

STAFF REPORT

Agenda Item:B7To: Chairman and Agency Board Members Date: 7-16-2008


B.7Subject : Staff Report: Approval of the transfer of ReTRAC properties from City of Reno

to Redevelopment Agency and discussion and authorization of RDA to negotiate and enter

into agreements with Siena Communities / Freight House District, LLC and John Stanley

Shane, Jr. for the transfer and sale of ReTRAC parcels known as APN 008-370-03, 04, 05,

10, 12 and 008-381-13 and 31.


Anne DeBolt, Property Program Manager

Summary: Council is asked to approve the transfer of seven ReTRAC parcels (APNs 008-370-03, 04, 05, 10, 12, and APNs 008-381-13 and 31) from the City of Reno to the RedevelopmentAgency; and Council is asked to authorize Redevelopment staff to negotiate and enter intoagreements with Siena Communities / Freight House District LLC and John Stanley Shane, Jr.for the transfer and sale of ReTRAC parcels known as APN 008-370-03, 04, 05, 10, 12 and 008-381-13. Staff recommends the City Council and Redevelopment Agency Board approve thetransfer of the seven ReTRAC properties from the City of Reno to the Redevelopment Agencyand enter into agreements for the sale of these properties to Siena Communities / Freight HouseDistrict LLC and John Stanley Shane, Jr..

Background: As part of the DDA for the AAA Baseball Project, Siena Communities / FreightHouse District LLC property exchange, there are two industrial parcels that are scheduled to betransferred to Siena Communities/Freight House District LLC located on Commercial Row,West of Sutro Street. Siena Communities / Freight House District LLC now wants to purchase aportion of APN 008-370-12, the +/- 15,000 square feet of property between the Commercial Rowproperties and Sutro Street to make a full block available for their development. This portion ofproperty is currently owned by the City and is one of seven ground leases held by John StanleyShane Jr. and Reno Salvage Company. Mr. Shane, the ground lessee of all seven of the aboveproperties, has agreed to allow the City to terminate all the leases if he can purchase the fiveproperties he leases from the City of Reno located on the North side of the tracks. This would

make APN 008-370-12 available to sell to Siena Communities / Freight House District LLC.The remaining parcel, APN 008-381-31, would be available for potential sale or lease to WasteManagement, Inc, which owns property on the South side of Commercial Row.

Mr. Shane as Reno Salvage Company has had ground leases on the five North side properties forapproximately 50 years. Mr. Shane is the owner of all improvements on these City-ownedproperties. These five properties show evidence of environmental contamination. Mr. Shane isaware that he will be assuming this liability on the properties he is buying. Reno Salvage has


81/88

also had long term ground leases on the two properties on the South side of the tracks. Thesetwo properties show no evidence of environmental contamination in reports prepared for thetransfer of the property from UPRR to the City.

Discussion: In order to close a final part of the AAA Baseball project, Siena Communities /

Freight House District LLC would like to buy the westerly portion of the City-owned groundleased property known as APN 008-370-12. The approximately +/- 15,000 square feet portionSiena Communities / Freight House District LLC wants to buy is directly adjacent to the twoindustrial properties that are to be traded as part of the DDA and would allow SienaCommunities / Freight House District LLC to build on the full block. In addition, SienaCommunities / Freight House District LLC would like a ninety (90) day option to purchase theremaining portion of APN 008-370-12 located on the East side of Sutro Street. The two parcelson the South side of the tracks have been appraised at $7.00 per square foot because of theirlocation and access.

Mr. Shane has agreed to the termination of his two long-term leases on the South side of the

tracks if the Redevelopment Agency sells the North side ground leased properties to him at theirappraised value of $6.00 per square foot (150,000 square feet) for a total purchase price of$900,000.

Financial Implications: All proceeds from the sale of these properties would be applied to theReTRAC revenue bond.

Recommendation: Staff recommends the City Council and Redevelopment Agency Boardapprove the transfer of the seven ReTRAC properties from the City of Reno to theRedevelopment Agency and enter into agreements for the sale of these properties to SienaCommunities / Freight House District LLC and John Stanley Shane, Jr.



82/88


83/88


84/88


85/88

STAFF REPORT



B.8Subject : Staff Report: Discussion, direction, and possible approval of the financing plan

to acquire the RTC Site and/or construct the White Water Park Extension Project.

From: Andrew Green, Finance DirectorMark Lewis, Redevelopment Director

Summary: At the meeting of July 2, 2008, the City Council and Redevelopment Agency Board

approved the Purchase and Sale Agreement for the RTC CitiCenter site contingent upon theapproval of an acceptable financing plan. Two options are presented for City Council/AgencyBoard consideration to move forward with the RTC CitiCenter purchase as well as to providefunding for the White Water Park Extension Project. Staff recommends that Council andAgency Board: (i) approve the financing plan for the acquisition of the RTC site and/or theconstruction of the White Water Park Extension project; and (ii) authorize staff to hire afinancing team of consultants to complete the issuance of tax increment bonds for the RDA #2project area.

Previous Council/Agency Board Action: July 2, 2008 City Council/Agency Board approveda Purchase and Sale Agreement to acquire the RTC Citicenter site and directed staff to complete

the analysis of the options acquire the RTC site and fund the White Water Park Extension projectfor presentation at the July 16, 2008 meeting.

Background: Included in the Councils priority projects is the acquisition of the RTC sitelocated to the west of the National Bowling Stadium site, and the White Water Park Extensionproject. The original funding identified for acquisition of the RTC site was changed through acombination of reallocations by the Council and negotiations with RTC. The White Water ParkExtension project is being considered as a result of a Council directed concept change from aprevious water quality river project. As a result, staff has researched alternative financingmethods to fund these projects.

Discussion: Given the current economic climate and its impact on overall city finances, it hasbeen difficult to identify funding alternatives. However, two options are presented for Councilconsideration to move forward with these two Council priority projects. Both options involvethe use of RDA #2 bond proceeds. Staff has verified with bond counsel and the City Attorneysoffice that either option can be exercised legally, after the Council makes certain findings.Under both options, RDA #2 would issue debt supported by available tax increment. Under oneoption, bond proceeds would be loaned to RDA #1. Under the other option, bond proceedswould be used to purchase the RTC site. This makes available the $2.5 million of funds


86/88

currently set aside to help acquire the RTC site to be used to help complete the White WaterExtension project. The remaining gap could be included in the funding which will be identifiedfor various recreation projects throughout the City.

One potential financing mechanism identified by staff to fund the RTC site acquisition and

construction of the White Water Park Extension project involves the issuance of tax incrementbonds for the RDA #2 project area and loaning approximately $8.1 million of the proceeds tofund the amounts necessary for these two Council priority projects. The basic concept is asfollows:

Issue approximately $12 million of tax increment bonds in the RDA #2 project area.After deducting cost of issuance and reserve requirements, it is anticipated thatapproximately $10 million of proceeds would be available for projects.

Loan approximately $8.1 million of the proceeds to RDA #1 to fund the $4.1 milliongap in funding for the RTC site acquisition and $4 million for the White Water ParkExtension project.

The first component of the conceptual financing plan consists of the issuance of tax incrementbonds for the RDA #2 project area. Currently, RDA #2 tax increment totals approximately $3million, annually. Commitments against this amount include

Annual project area operations $ 550,000 Annual bond payment for Cabela's project $ 150,000 Annual loan payment for Fire Station #1 relocation $ 785,000 18% low/mod housing set aside $ 272,700

Total $1,757,700

This leaves approximately $1.3 million of tax increment available on an annual basis. However,since RDA #2 is a relatively new project area with no previous market debt experience, it isanticipated that the issuance of debt will require debt service coverage. Debt service coverage isthe amount over the annual debt service that bond purchasers require to provide them with acushion to ensure that the annual debt payments will be made. Staff anticipates a 1.5 times debtservice coverage for the RDA #2 bond issue. This means that revenue available to pay theannual debt service must be at least 150 percent of the annual debt service. Consequently, withapproximately $1.3 million available, the maximum annual debt service amount would beapproximately $900,000. Under current market conditions and assuming a twenty yearrepayment, this would equate to approximately $11.5 million of bond proceeds. After deductingcost of issuance and reserve requirements, it is anticipated that approximately $10 million ofproceeds would be available for projects. As with any bond issue, the final details, such as theinterest rate, debt service coverage, and net proceeds will not be known until the bonds areactually sold, which is anticipated to be in November or December 2008. A fiscal consultantwill have to be hired to provide the fiscal analysis necessary to sell the bonds, in addition to thetypical finance team members (financial advisor and bond counsel, etc.)


87/88

The second component of the conceptual financing plan consists of a loan from RDA #2 to RDA#1 of approximately $8.1 million to fund the $4.1 million gap in funding for the RTC siteacquisition and $4 million for the White Water Park Extension project. Completing these twoprojects will provide some direct benefit to the RDA #2 project area. This direct benefit isestimated at 20% with respect to the RTC site acquisition and 25% with respect to the White

Water Park extension project. These estimates were developed by RDA staff.

In addition, the White Water Park Extension project is anticipated to enhance water quality andaquatic habitat within the Truckee River through the downtown area. As a result, it is estimatedthat 30% of the value of the project will waste loading parameters of sewer treatment and helpmeet project costs. This proportionate funding could be derived from grants that fund waterquality enhancement projects or the sewer enterprise fund. Each area would pay its share of theloan based on the benefit received. The estimated annual payments would be as follows:

RDA #1 $ 35,000 (year 1); $350,000 (yr 2); $440,000 (yr 3) $497,000 (through

yr 20)RDA #2 $ 460,000 (beginning in year 1)Sewer Fund $ 302,000 (beginning in year 1)

RDA #1 would repay the loan from increased increment prior to 2028 which is the end of theproject area life. Since this loan would be an inter-agency loan it should not violate convents ofthe outstanding RDA #1 bonds. Currently, in addition to the annual operation and outstandingdebt service costs of approximately $6.2 million, there is annual commitment resulting from theAAA Baseball project DDA in RDA #1. Under the DDA, increases in revenues, within thenewly created baseball district, (excluding operations and debt service requirements existing atthe time the DDA was signed), up to $2 million annually, has to be paid to the AAA Baseballproject developers for 20 years. The baseball district generates approximately 20% of the taxincrement within RDA #1 and approximately 5%within RDA #2.

Based on these commitments and assuming a 4% annual growth of tax increment, RDA #1would be able to make payments beginning in the first year. The first payment, however, wouldonly be in the amount of $35,000. RDA #1 could begin full payments by the 2012 and couldhave the loan totally repaid by 2019. The interest rate on the loan would be 6%. Since the RTCsite would be given to the AAA baseball developer, it would not be available to secure the loan.Consequently, the backup security would have to be the General Fund if RDA #1 is unable torepay the loan. Loan agreements between RDA #1, RDA #2, and the City would be presented toCouncil in early October along with the RDA #2 debt issuance authorization documents.

Another option for consideration is to have RDA #2 issue debt and purchase the site for theentire $6.6 million. Under this option there would not be a loan from RDA #2 to RDA #1. Thesite would be owned by RDA #2 and discussions concerning its disposition to the AAA baseballdeveloper would include RDA #2. This would make the $2.5 million currently allocated towardthe purchase of the RTC site available to help fund the White Water Park Extension project. Theremaining cost of approximately $1.5 million to complete the White Water Park Extensionproject could be part of the recreation project funding program. It is estimated that funding


88/88

would be required by fall 2008 for the White Water Park Extension project to be completed bythe fall 2010. This will provide time to finalize the recreation project funding program whileproceeding with the acquisition of the RTC site, which is needed by September 2008.

In addition to the options presented, the City Council also has the option to use General Funds to

fund the projects identified.

Financial Implications: Under either option, RDA #2 would issue 20-year debt to be repaidfrom available tax increment.

Recommendation: Staff recommends Council and Agency Board: (i) approval of the[ preferred option] to fund the acquisition of the RTC site and/or the construction of the WhiteWater Park Extension project; and (ii) authorization to staff to hire a financing team ofconsultants to complete the issuance of tax increment bonds for the RDA #2 project area.

Proposed Motion: I move to approve the [preferred option] and the staff recommendation.

Documents

Staff Reports for July 16 Meeting