60 Fewer Weeklies

Nevada River Inn 322 N Arlington

Jacobs, just STOP.   Demo permits were submitted today to nuke the Deep Sleep Inn, the Star of Reno, and the Nevada River Inn on N Arlington Street to make way for the ephemeral “Fountain District”.  I am the biggest urban renewal fan out there, but this is 60 more units added to you clear cutting of W 4th Street and we haven’t seen a hint of what you plan in replacement.  I’m sure these weeklies were absolute hell holes, but maybe a more humane business model would be to improve the living conditions for the residents until you need (and have approvals for)  the land, whatever your project is going to be.  The somewhat historic The Patio bar on W 5th Street was also added to the scrape list.

It looks like Silverwing Development is gearing up for a 10 storey project called the Deco in downtown Sparks at 955 C Street.  In the mean time, I’m battling Reno Planning to build a 2 storey skyscraper in the Wells District in Reno.  Sparks has added over 500 new units of housing in their Downtown Redevelopment District over the last couple years, while Reno has managed to produce 30 or so.

I truly wish that I had news to post more often, but there is surprisingly little going on in Downtown Reno, my primary focus.  Jacobs is silent on the Fountain District.  W 2nd Street District  has finally stopped beating their own drum.  Park Lane seems to be moving along, but no permits or detailed plans have been made public, and their web site hasn’t been updated in months.  I have over 75 units in the working drawings in Downtown/Midtown/Wells, but can’t disclose until the permits are issued (and maybe not even then).

Wait a minute, 10 stories in downtown Sparks, and Reno’s primary thoroughfare S Virginia Street is capped at 5?  And a half a block off SVA is capped at 2?  Go figure where the development dollars are going.

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Lake Mill Apartments?

Code Enforcement  (you may have to enter 200-200 Mill) complaints against the Lake Mill Lodge at 200-200 Mill Street.  Permit applications to convert the hotel units to studio units 1 and 2.

Flea bag motel to flea bag apartments does not impress me. BRAR needs to step and make a firm commitments to upgrading the living conditions at the Lake Mill.  These permits should be denied or conditioned unless there are serious code upgrades included in the plans.  Reno has the leverage now.

Cryptonomicon

Am I getting old?  I never head of a blockchain until today, and Bitcoin was barely on my radar.  South Valley Acquisition LLC with Blockchains LLC as a director, just purchased all the remaining land at TRIC – Tahoe Reno Industrial Center.  All 64,000 acres, which equals 100 square miles.  The all cash purchase price was $35,876,222.80 according to the Storey County Recorder.  Google “Jeffry K Berns” and take a look at Blockchain.com  for more information.   Cybercurrency apparently became a big deal while I had my back turned.

Here’s a map of the biggest players at TRIC – click to enlarge.

 

Biggest Little Ferris Wheel

Are we about to get the Reno Eye?  Jacobs Entertainment has applied for a trademark for “Reno Eye” with the description of IDENTIFICATION
Amusement park rides; amusement park rides including Ferris wheels.  The full trademark filing document is HERE.  Jacobs has also applied for Fountain Hotel and Casino, Fountain Casino Hotel, Fountain Gardens, Reno Fountain District, and Reno Live.

I’ve been giving Jacobs a hall pass on the acquisitions and demolition projects.  They seem to be pretty responsible in aiding the residents displaced from their demolition efforts.  But my patience is wearing thin, and I’m not going to remain silent much longer unless a real build back plan is revealed soon.   I’m not sure a Ferris wheel is the solution to W 4th Street, and question the entire concept of an “Entertainment District”.  How did the Freight House District play out for us?  This Strongtowns article is a must READ.

  •  Park Lane filed a BLA (Boundary Line Adjustment) for their properties.  They didn’t have to go though the Parcel Map or Subdivision Map processes due to the number of original parcels.  The new parcels are at least generally aligned with the proposed development phases.  Reno Land / Park Lane isn’t really a “developer” but more of an entitlement flipper (Rancharrah, Meridian 120).  It is sort of comforting that the steps to the flip are falling into place, and manageable development tracts are being created.

 

  • You all know my war on required parking minimums – I believe parking should be a business decision and not a Planning ultimatum.  THIS ARTICLE from Strongtowns has some great graphic examples of what parking minimum policy does to destroy redevelopment in general, but especially in the areas of our cities we most cherish.

 

  • The stoopid MLS listing of the week goes to 8190 and 8220 Desert Way.  Advertised as zoned “High Density Residential” when in fact HDR is county High Density Rural zoning with a 2 acre minimum lot size.  Not to say the parcels don’t have some development potential, but over $100,000 per developable dirt lot (assuming Reno SF15) ain’t gonna fly.  The link is to Mitch Argon’s site, and it will probably ask you to subscribe to view the listing (or you could search for it on https://nnrmls.com).  The site is spam free, and is by FAR the best real estate web site out there.  I recommend subscribing to Mitch’s quarterly market reports – they rock.

Urban Density

That our urban core should be our densest development zone is sort of a given.  I’m going to highlight 8 or so projects either finishing up, in construction, or on the boards.  DUA = Dwelling Units per Acre.  This measures how dense the unit count is, and roughly compares to Planning designations like MF30 – 30 units per acre, 1450 SF area minimum.  “Built Density” is a term I’m making up, but it is sort of like FAR – Floor Area Ratio – for commercial buildings.  BD measures how many inhabitable SF of living space is being provided as a percentage of gross lot area.  All figures are rough estimates based on currently available public documents.

Midtown Lofts is an easy place to kick this off, since the RGJ can’t seem to get the “What does a $600K Townhouse Look Like” drivel article off their site.  Midtown Lofts (new construction only) is 9 units totaling 14,710 SF of habitable space on a 16,600 SF parcel.  23.6 DUA, and .886 BD.

Tonopah Lofts will be 8 units shotgunned across the site based  on the Midtown Lofts 210/212 Stewart model, 2/2.5 units with a mezzanine (since 3 storey buildings are banned in Midtown Commercial zone).  13,560 SF of building on a 12,780 SF site.  27 DUA, and 1.06 BD.

Martin 3×3 are 6 SFRs currently framed up.  The market wants SFRs, even if our antiquated zoning code won’t permit them even if they meet the minimum area density requirements.  This project went through a $30,000+ SUP process to get SFR approved.  9096 SF of buildings on a 14,000 SF parcel.  18.6 DUA (18 DUA is the minimum  on Midtown Commercial) and a.65 BD.

The Haskell Project is a project that has been floating around for a couple of years now, and the site is currently being cleared for new 1/1.5 units and some new/renovated commercial space.  On the residential side, 19,118 SF of buildings on what will become a 25,558 SF site.  37 DUA and .90 BD.

Tiny 10 is in the punch list stage and landscaping is being installed.  10 new units totaling 6724 SF on a 19,486 SF parcel.  22.4 DUA (close to Midtown Lofts) with a .345 BD.

Wells 4 is an infill project in Wells CC zoning.  4 1/1 units as tight as they come, meant to be built and rented affordable.  2106 SF of habitable area on a 3541 SF lot.  49 DUA (CC has no density cap) and a .60 BD.

Out to the burbs for some context and contrast, Vintage at Sky Mountain is a 288 unit affordable apartment development of 264,468 SF project area on 449,726 SF of land.  28 DUA, but only a .59 BD (open parking kills you).

Nearby will be Summit 61, a market rate 2/2.5 townhouse development meant for sale.  61 totaling 113,884 SF on a 126,286 SF parcel.  21 DUA and a .90 BD.

If you are still awake, here is what I’m really trying to say:

  • MF15, MF30, MU and CC zoning don’t come near describing development potential and constraints.
  • Reno’s zoning classifications are accidentally favoring anti-family 1 bedroom units in the urban core.
  • Current Development Code is allowing and promoting denser development in suburban areas than in the Downtown Core.
  • Unit counts do not equal development density.  What the units are matter a great deal.
  • The 1/1 8-plex on a 7000 SF urban lot is the hottest deal in town, even as Reno seeks to eliminate them.

Any thoughts?

 

 

 

60,000 Units

TMRPA has published a very informative list of PUD projects that are approved or at least approved to the Tentative Map level.  60,000 SFR and MF units.  You can kiss the 12,000 Spring Valley / Winnemucca Ranch PUD good-bye (hasn’t the land been sold?  Whatever happened to their plan to grow weird trees for carbon credits?), but Butler Ranch is asking to go from 1500 to 4700 units in a critical flood plain, Stonegate (at Council this week) and Train Town combine for new 7000 units, Ballardini Ranch is lurking around for 1700 units.  I think the 60,000 units is a pretty good estimate.  This number excludes development out of PUDs, like all of the “luxury apartment” complexes you see sprouting up on every vacant corner.  Reno has a list of all the PUDs in their jurisdiction if you want to dig a little deeper.  Where is the Master Plan required development within the McCarran Loop?

Tentative Maps usually have a 2 year fuse to complete their first Final Subdivision Map.  I have never seen a single PUD denied an extension or multiple extensions to their Tentative Map approvals.  It’s time for that to end, and force the developers to build or sell to parties better equipped to build.

Butler Ranch – Approved by the Planning Commission and City Council for 1500 units in 2006 before being blocked by TRPA, they are back seeking 4500 unit.  Interesting entitlement plan afoot.  The current developer bought the tract for less than $1000 per proposed raw lot with his eyes wide open, and knows that the 4700 unit proposal is a non-starter.  Compromise back to the previously rejected 1500 units with increased height and density outside the critical flood plain?  Reno is claiming critical housing shortage (“attainable” housing, Andy?) and will be hard pressed not to come the negotiation table on this one.

 Wood Rodgers is the current rock star of our local planning world, and has earned the respect of both the public and private sectors, and even a blogger or two.  Their decision to shill this project saddens me.

 

The Return of the NOD

Just when you thought that NODs (Notices of Default) were slinking back into our Great Recession past, 84 NODs were recorded in October.  84 is a big number – 14x the filings from September. They seem to be fairly evenly split between old NODs being refiled, bubble loans that have held on for a decade and are throwing in the towel, and new loans that are going into default rather rapidly.

Jan – 59

Feb – 63

Mar – 48

Apr – 41

May – 41

June – 11

July – 3

Aug 5

Sep – 6

Oct – 84

(Oct 2016 – 61)

Banter Bear Bait!  RRB is tracking 2 months of declining median prices, though this tracks exactly to what happened last year.  If the pattern holds, we will just sort of float along for the next six months or so.  I feel vaguely squeamish about the current market – there seems to be growing buyer resistance at the price points new developments are asking, nothing affordable on the horizon, and “luxury apartments” the hottest development trend.

What does a $599K Townhouse in Midtown look like?

Thanks for asking, RGJ.  What does a $46 per month newspaper look like?

Snark aside, S3 Development LLC has listed the first units of their Midtown Lofts project.  Photos at Downtown Makeover and RGJ.  Comments are generally about the nose bleed asking prices.

The Battle for the Soul of Midtown was lost a long time ago.  Midtown Lofts will look bargain basement when Martin 3×3 comes on-line in a couple of months, followed in the Spring by Tonopah Lofts @ 1401 Midtown.  I’m in Design Development on a $1M+ spec house on Mount Rose Street.  That’s Midtown’s future

I don’t know what all the other for-sale developments in the pipeline propose, but I can assure you they are not affordable housing projects.  And judging from the Cottage Row @ Midtown project, these will all be about 50% rentals or second homes.

Haskell Street will be seeing 20+ new rental unit, but they will be $1600 per month one bedroom units.  I know of 6 other alley infills in permit or under construction that will be asking $2/SF/Month rents.  The workers at Midtown establishments are going to have to start commuting in from Dayton and Stead to service the new Cake Eater class residents.

My job as an architect is to translate my client’s dreams and whacked out pro forma into profitable projects.  I have designs for shovel ready for “affordable” units in Midtown, but why would any developer go that direction?  Profit is King.

That said, I am stealth working on couple projects for workforce and age/income restricted housing projects both in Midtown and Reno/Sparks proper.  Are you able to feel good about a 4 CAP that does good over a 9 CAP that does well?  macnv@charter.net

FYI the lead photo is one of the Cottage Row units.  Why the perceived need for Wedekind level barred windows?

 

 

Part 2 – Setting Reno Up for Financially Sustainable Development

Now the fun part – bringing it local.  Can some of the Strong Towns (and others) case studies work here, where doctrinaire needs to meets Zoning code?

What can Reno do to be better?

  • Missing Middle: Right now our zoning code, as in most places in the country, draws a strong distinction between SFRs and multi-unit housing. Huge parts of our city are zoned only for single dwellings, and where multi-unit is allowed, planning and neighborhood review is difficult enough that the incentive is to build very large projects. This leaves out the kind of housing that we see in thriving older cities that developed before strict zoning small, multi-unit, 2-5 story piecemeal development. Planners call this the “missing middle,” and you can read about it here: http://missingmiddlehousing.com/

 

  • Progressive Density Increase: Before strict zoning, it was natural for property owners to add another story on top of their house, or another unit in back as the city grew. The increased value of their property over time derived from the higher use it could be put to, not limited supply and increased demand driving prices up regardless of improvement. Right now if you want to build another unit or two in your backyard for family or rental income or investment value, it likely requires a change of zoning or Special Use Permit, which take months, thousands of dollars in fees and consultants, all with no guarantee of success, since approval can be easily derailed by neighbor opposition.

    Reno has stated it is considering lifting the ban on Accessory Dwelling Units, which is a great way to allow some progressive density to develop organically at individual homeowner scale. I personally feel automatic upzoning by a single grade each 15 years (SF9 to SF6 to MF2 to MF3) would give owners additional rights but not obligations to add small-scale infill density. Strong Towns proposes a Floating Height Limit that lets you build more as adjacent owners do: https://www.strongtowns.org/journal/2014/11/3/the-case-for-height-restrictions The point is to automatically allow individual owners to increase the density of the existing city, to build vibrancy, individual income, and property taxes without relying on big out-of-state developers working on the margins or assembling derelict city blocks. To my knowledge this hasn’t been implemented in any major US cities.

 

 

  • Clean up the Planning Approval Process: Organic piecemeal development requires development rules and procedures that are straightforward for non-professionals to follow. If we want current owners to be able to improve the city by adding an in-law unit, or home business, we need rules they can follow. And especially if we want to encourage the kind of creative reuse and remodeling we have in our local small developers. I don’t have detailed insight on this, but it sure seems Reno’s process is not the easiest. An old ReReno post covers some of how Sparks is beating us on clarity of process: https://rereno2.wordpress.com/2016/03/06/what-sparks-does-well/

 

  • Boundary Rationalization: Regional planning is an important component of how we incentivize development. The cities of Reno and Sparks and Washoe County do collaborate on the Truckee Meadows Regional Plan, currently undergoing periodic review now and open for input: http://tmrpa.org/regionalplanupdate2017/ My personal feeling is that the excessive interfingering of Reno and Washoe in particular around West Reno, Verdi, Cold Springs and Suburban SW Reno creates a host of planning and services problems. The fire last week at Hunter Creek burned 50 acres, but had 3 separate fire agencies responsible for parts of it. https://twitter.com/washoecounty/status/910648099793600512 Shifting a bunch of County residents into the city and de-annexing a bunch of city land around Verdi and Cold Springs back to the County might not be popular, but it would make for much better service and development planning clarity.
  • Land Tax audit: Sustainable growth in cities needs to pay for itself not just with construction and connection fees, but with a tax base that continues to pay enough to maintain and improve our utilities and public services. A lot of the problem we face today is that our public services are a bit of a Ponzi scheme, where large new developments pay big fees, but also saddle the city with ever larger maintenance requirements that the property taxes won’t support. A way to identify productive versus problematic areas of the city is a review of property tax receipts and infrastructure liabilities by parcel like that done for Lafayette, Louisiana: https://www.strongtowns.org/journal/2017/1/9/the-real-reason-your-city-has-no-money

 

  • Ditch Historic Districts: I’m not opposed to targeted landmarking, where the property owner agrees. But landmarking needs to not be a pathway to avoiding normal planning rules, and the historic commission shouldn’t approve every mid-century bungalow that was built with cinderblocks from a different factory. But don’t do it to districts, it just halts redevelopment and enforces scarcity to the benefit of current homeowner property values, and detriment of organic city development. Every time we say we can’t let more development happen in the central city, we’re saying it has to happen on the edges, costing more in road, sewer, water and public servants.

 

  • Ban HOA oversight of private property: In many parts of Reno organic density increases are impossible not just because of the difficulty of the planning process, but because HOAs won’t let homeowners build what they want with their own money and property. I can see how HOAs fill some role in the maintenance of shared spaces, but the city has no reason to let them usurp planning review.

Right now our planning and development process is set up to incentivize large developers building big blocks of SFRs on the edges of our wildland in the same way that EDAWN is set up to give subsidies to companies big enough to plausibly claim hundreds or thousands of new jobs. The processes are so complex that they are only worth doing for highly paid professionals who can reap big margins over large volumes. But small business has long been the cradle of innovation and driver of employment in this country, and smaller scale real estate development could be helping to meet Reno’s growth needs while both improving affordability for our citizens and lowering infrastructure costs for our city.

Setting Reno Up for Financially Sustainable Development

This is the first of a 2 part guest post from geopower aka Danny Lazzareschi.  Danny and I connected back in the renorealtyblog.com days, and have a 5 year spirited discussion ongoing about Reno Development policy and politics.  In this first part, he looks at some general factors and best redevelopment practices.  Part 2 will look a little more specifically at Reno.  There are lots of great links that will challenge you think a little differently about what sort of redevelopment is effective and appropriate. 

Right now Reno is facing a dual challenge of housing affordability and public service funding. To continue to fund the police, fire, water and sewer systems, the city staff, planning commission and council are under tremendous pressure to approve continuous development and the attendant service fees. Most of the developments proposed and in construction are on the margins of the city and serve the high-end of Reno’s citizens.  The median listing price in new homes in Reno is $424k, and the average sale price is $477k according to my relatively unscientific review. The average household has an income of $47k. If a family with average income has zero preexisting debt and has saved a $20k down-payment, they could afford payments on a $234k house. The only new homes for sale that I’m aware of in that range are the smallest BR townhouses at Upstream, of which there are maybe a half-dozen units. The average new home being built is targeting people who make double the average income. At first glance it might seem that the development style and public revenue crunch have nothing to do with each other, or that a solution to one would exacerbate the other. After all, don’t high end housing developments pay more in taxes, and improve the city balance sheet as we build more of them? Doesn’t building low-income workforce housing mean letting the hippies undermine city finances with socialism?

In fact, many cities that are considered socially progressive and state the intention to protect and develop mixed income neighborhoods are actually doing lots of counterproductive things. The West Coast liberal bastions typically have worse affordability crunches than Reno. San Francisco and Berkeley have very aggressive renter protections, but both have essentially fully built-out cities that require redevelopment and increased density to accommodate growth. Their strong historic and neighborhood protections have effectively shut off the ability to tear down an old building to build something incrementally denser. Take for example these two stories from Berkeley this year: A court battle to tear down a SFR and replace with 3 units, and a landmarking against the will of property owners: http://www.berkeleyside.com/2017/09/08/long-legal-dispute-berkeley-approves-application-build-3-homes-haskell-street/ http://www.berkeleyside.com/2017/02/24/property-owner-fights-berkeley-landmark-designation-with-lawsuit/ Strong renter protections on top of no growth only creates a class of winners among long-term renters at the expense of new arrivals, or anyone who’s forced to move for personal reasons. Maybe that’s marginally fairer than the only winners being incumbent owners watching property values skyrocket, but it isn’t close to an affordability solution.

 

Preventing housing growth as the population and economy grow just means costs rise as demand outstrips supply. Reno is not constrained physically the same way Bay Area cities are, and a lot of our growth has been outward at low density on the margins. Pacific Northwest cities, Portland in particular, have promoted denser redevelopment over sprawl. Oregon and Washington passed laws mandating Urban Growth Boundaries on their cities that are periodically adjusted outward for planned growth. https://oregonencyclopedia.org/articles/urban_growth_boundary/ A lot of European countries do something similar by making it difficult to convert agricultural and forest land to housing (this of course wouldn’t work here where a lot of peripheral land proposed for development is relatively unused desert.)

 

Urban Growth Boundaries have been called out for a few problems, in particular promoting sprawling growth in nearby towns too small to be required to have their own boundary. I think the underlying goal for the city should not be arbitrary density but following the Strong Towns model of fiscal sustainability ( https://www.strongtowns.org/  ) that new development should be dense enough that the taxes coming from it can continue to pay for the services it requires. This isn’t true of the typical SFR development: https://www.strongtowns.org/journal/2016/9/2/a-thousand-hidden-subsidies

 

While Reno clearly needs to build new housing to meet the needs of our growing city, the typical high-end SFR development on the edge of the city benefits from huge structural subsidies that aren’t obvious on the surface. First, our planning process is so complex, that by far the easiest way to develop is hiring a team of professionals to manage it, and spreading the cost across a lot of units. Secondarily, neighborhood complaints can so easily derail a project that it is best to focus on the edges where you can easily get large plots of land and cause minimal disturbance to existing homeowners. Finally, all developers pay fees for sewer, water, road and other public service impacts. But the fees are based on the number of units. When those units are spread out over large lots, the maintenance costs for the future city are much higher than in denser townhouses and apartments but the fees aren’t proportionally higher.

 

New apartment developments pay a per-unit connection fee to the sewer and per-unit monthly user fees, just like SFRs. Apartments pay 85% as much in connection fees per unit as individual SFRs do, while requiring much less supporting infrastructure. So, in practice apartments subsidize the sewer costs for SFRs. http://www.reno.gov/home/showdocument?id=437 Long-term sewer costs are borne by all users, there are no special neighborhood sewer assessments to support specific developments. Apartments pay 82% the SFR monthly fee. You may think that if an apartment showers and flushes the toilet as often as a house, it should pay 100% of the monthly fee. But the city budget shows that the Sewer enterprise fund consistently spends more on Capital (repairs) than Services (sewage plant operations.) http://www.reno.gov/home/showdocument?id=69484

 

SFRs take probably 3x-6x the land area to build as low-rise apartments, with new public streets and sewers to serve them, at several times the public cost, while paying only ~20% more in fees. Because they require so much less supporting infrastructure, both when first built and in the long run, denser apartment development is subsidizing SFR sewer costs. New development also pays transit impact fees based on number of units (65% as much per apartment as a new SFR http://www.reno.gov/home/showdocument?id=67090 ) and pays to purchase water rights and deed them to TMWA to serve their use needs.

 

Apartment buildings of course also pay property taxes that support ongoing public services. For example, the western half of Iron Blossom village, 236 units built on 10 acres in 1984, will pay $111k in property taxes this year.  That many SFRs that old might pay twice that in property taxes, but require much more than twice that in roads and sewers.

 

The primary public service that does not collect fees to offset development impacts is schools, because the state constitution doesn’t allow it. http://www.rgj.com/story/news/2016/03/02/washoe-county-school-impact-fees/81187980/ Infill development shifts the unpaid burden of new students away from the already overcrowded schools on the periphery and to schools that are in built-out neighborhoods and under capacity: https://api.tiles.mapbox.com/v4/renogazette.mjdh1flk/page.html?access_token=pk.eyJ1IjoicmVub2dhemV0dGUiLCJhIjoiWEl5anRqcyJ9.Tttu7gZJbhpUX_pgAjczCQ#12/39.5138/-119.8361

 

One problem with the very dense infill development that we already have downtown and should avoid exacerbating is overzoning. When land is zoned for potential development that is worth many, many times more than the current use, the land value becomes the entire value, and there is no reason to invest in building improvement or maintenance. https://www.strongtowns.org/journal/2016/10/11/whats-the-matter-with-portland That’s basically the problem with downtown Reno from the river to I-80. Any parcel there could become a huge development, so the land owners are all waiting for their turn to make millions selling to big developers and the land sits vacant or full of unmaintained buildings becoming ever worse. The financial incentives of the zoning and development system make this the logical decision for property owners.

Part 2 to follow!