Legends

LegendsPieces of the Outlets at Legends (I think that is the current name) just sold for $29,800,000.  The sale included 89,558 SF of built retail including Best Buy as well as 2 vacant parcels.  HERE is what changed hands to an LLC tied to the Gerrity Group.  Gettity is the real deal, and I sort of wish they had bought the entire shit show that the Legends has become.

The proposed Wally Word at the legends has died due to a non-compete clause for a pharmacy in Target’s deed.  That is GREAT news for Sparks.  Legends is a STAR bond district, where 75% of the sales taxes generated return to the district to pay for infrastructure costs.  Lowe’s closed their Oddie location and moved to Legends – 75% sales tax loss for Sparks.  So did Target, 75% sales tax loss for Sparks.  Don’t get me wrong, I truly believe STAR bonds are an effective redevelopment tool if crafted well.  But the Legend’s was a scam and sham from the onset.  But a pretty mall as those things go.

Median SFR price was down a bit last month.  Despite all the industry hype, the median has remained stagnant for 10 months has not shown a single 2 month rise over that time frame.  Below $300K is red hot for 1st time buyers if they can beat out the investor class.  $500-700K is hot with RICCOHs (RIch Californians Coming Over the Hill) and the 10 or so Tesla related sales occurring weekly.  The dead zone is the $300-500K market, our traditional move up zone. Those don’t pencil for investors, and are beyond the means of Reno workers given lending standards (and lack of savings).

Is the W 2nd Street District for real or just a pocket-pool vanity exercise?  235 Ralston, the 1st building, appears to have its permit almost ready to go, though there is no recorded financing for the project.  The master developer appears to “own” only 4 properties in the district, including his massively underwater office at 250 Bell, and the Town House which has suspect transfer taxes paid to the County under the sale from Joey Laub (Bankruptcy Wednesdays).  I won’t opine until they come forward with better financial and land information and I wish them well.  But…

Quick Takes

  • MME BlockbusterA Zoning Determination request has been filed for a MME (Medical Marijuana Establishment) Production Facility at 100 W Plumb Lane next to the Motel 6.  Wow, I never thought a brownie factory would end up as the highest and best use in this retail corridor, officially Midtown.
  • This joins the Zoning Determination request for a MME Dispensary downtown at 232 W 2nd Street (the old Waterfront Tower sales office).  Perfect for cannabis tourism.
  • Permits have been filed for a clubhouse and 16 and 18 unit apartments at the SE corner of Sharlands and Mae Ann, directly across the street from the fire station that Reno still staffs.  This was once a DR Horton project similar to Esplanade with 3-plexes named Villa Something Italianish, then shit canned, sold to Junuine, who flipped it to the folks revamping the Silver Club / Bourbon Street property in Sparks.  Given the 20 acre site, I think there will end up being 300 or so apartments (condo mapped) here.
  • While on the NW action, permits have been filed for a 15,000 SF retail complex between the new Hampton Inn and United Federal Credit Union.  The new Starbucks looks almost ready to open.
  • Lifestyle Homes has a little 500 SF building with a  $750K price tag.  It is the well house for their new Van Dyke well.

Don’t get used to 3  a week posts, but there is a lot of fun stuff out there right now.

The Substandard @ Reno

Substandard RenoHere we go again.  Now that The Standard @ Reno seems to be a go with alley and street abandonments in place (though no permit application or land sale yet), Italian Capital has been busy TYING UP the remaining parcels that they don’t already on on the next block East.  I expect the same level of concessions will be requested here now that precedents have been established.

636 Lake for $405,000, 637 Evans for $170,000, and 645 Evans for $400,000.  The Assessor values the land at $6/SF, and they are selling at an average of $57/SF.  I ignore any Improvement Value since these will all be knock downs.  #1 – What has Mike Clark’s office been smoking to come up with these ridiculously low land assessments?  #2 – Property owners in the area should expect the maximum 8% increase in assessed value and property tax next year.  #3 – The land W 2nd Street District want to assemble is assessed (generally) at $7-8/SF.  Not only is their $208/SF estimate for state of the art bleeding edge high rise construction “aggressive” (aka whackadoodle), but their land acquisition costs appear to seriously underestimate the market when you “need” a parcel.  #4 – On the bright side, if this doesn’t tank the project, it will make their TIF projections very conservative.

Where Next?

Lifestyle-page-0So where are we going to build from here?  A decade ago, the Center For Regional Studies at UNR had a graphic showing 65,000+ lots at least the Tentative Map stage.  Many of these have lost their entitlements  due to noncompliance with their time triggers, but I have never ever seen a single project denied reinstatement.

HERE is a graphic I put together of the major projects I know of lurking out there.  I’m sort of winging it from memory in some cases and I’m sure I’m missing other major projects in the pipeline.  Some comments:

  • North Valleys is going to be a shit show.  15,000 units with 395 as the only way in or out.  Can you imagine the Spaghetti Bowl in 10 years?
  • Copper Canyon failed once, but may now be in the primo location of all.
  • Balardini Ranch was controversial and cost the County a $13M settlement.  Hate me if you want, but given its location on McCarran and in-place infrastructure, it should be massively up-zoned.
  • Everything happening to the West around Verdi will still not support new retail out there in the former sticks.  Watch for the TCA project to resurface.
  • A second loop road is need on the north side.  Just connecting Pyramid to 395 won’t cut it.

The sewer connection fee for a SFR at Bordertown is the same as in Midtown.  So is the Transportation Impact Fee.  How can that be right? Reno/Sparks/Washoe, time to get your acts together and work regionally to funnel growth where it is reasonable and where it can be serviced.

High Def Sim City

Building 16Here is the media package released for Clarksville.  Some of the files are huge.

I watched the developer presentation and was a perplexed as the Council was.  This was supposed to be a “simple” request to start the Development and Disposition Agreement process with the City, but turned out to be a full on dog and pony marketing presentation. Don J Clark group didn’t even do enough preparation to know how much time they had to present (not Cathexes’ first time at this rodeo).  Then a serial parade of “experts” to talk about things totally unrelated to the request before Council.

Council and RGJ have picked up on the big issues:

  •  Cathexes’ financial track record and current IRS liens.
  •  Ownership of properties vs. “control”, and the total misrepresentations presented.  I wanted to smack Susan Clark for her statements about the delays posting on the Assessor’s site, when we can all clearly see the information on the Recorder’s site.
  •  Transfer tax discrepancies on the Town House, one of only 4 properties the developer owns.

I hope this goes well for the developer and the City, because it would be a nice development.  The developers only have prove they have financing (they don’t, are trying to crowd funding 235 Ralston by reports).

I love the proposal – there was not one current architectural buzzword left out.

Clarksville

Clarksville MonkeesP.4 Staff Report (For Possible Action): Presentation, discussion and potential direction to staff to work with Secundo Vita, LLC on the West 2nd Street District Development. [3:00 PM]

That’s the mild mannered agenda item for this Wednesday’s Council meeting.  But when you open the staff reports, this is an opening salvo in a $1.2B redevelopment along W 2nd Street.  2000 thousand new housing units across 17 acres, 2 hotels, and a scad of retail and commercial space.  HERE is the project location.

What is actually being agendized is a discussion to enter into negotiations on a Development Agreement.  The city’s consultant has identified $46M in new property taxes from this development, and the Developer will most likely want it all credited back.

This a grand scheme to say the least, and would be a game changer for Reno as a City.  It spans 3 districts in the DRRC regional plan, but Reno will rewrite any and all codes to approve this project.

From my rough calcs, Clarksville will be about 120 units per acre minimum plus the retail and hotels.  Palladio and Riverwalk are about 165, Montage is 255.  I hope that gives you an idea of the proposed density – the entire site built out to Palladio density.

This is a developing project and story.  I wish the applicants the best of luck on this first baby step.  I’m not sure if I can support the proposed project in its entirety, but I haven’t seen the whole project yet.

This is going to get interesting! What exactly is the “City Deal” referenced in the report and map?

Density

DensityThe concept of Transit Oriented Development involves granting density bonuses to encourage infill development along mass transit routes.  Theoretically, the increased value of the land due to allowable density will spur development of office, retail, and residential projects with low impact on the urban infrastructure – it is already in place.

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This is not a transit corridor along a BART line in the Bay Area.  It is Fountainhouse in Victorian Square, Sparks NV.  230 apartment/condo units build on approximately 3.1 acres at 75 Dwelling Units per Acre (DUA).  Minimum density in the heart of the Sparks MUD district (formerly TOD) is 24 units per acre.  Sparks has done a phenomenal job creating GUIDELINES that explain the objectives of the MUD/TOD and how to achieve them.

HERE are Reno’s guidelines for the S Virginia Street TOD.  Minimum density of 18 units per acre 1 block either side of SVA, 16 DUA in the rest of Midtown with 30 DUA maximum and 2 story/35′ height maximums.  Does that sound like a real TOD?

One of the largest developable parcels in Midtown is the former Lost City Farms parcel at Center and Moran.  It is just out of the “good” zoning.  At 1.157 acres, only 35 units max can be developed there.  If developed at the same density as Fountainhouse, 85 units would be possible.  If Park Lane Mall was redeveloped to Fountainhouse standards, 3450 units would be possible.

This biggest issue in Midtown isn’t the S Virginia TOD zoning overlay, it is that the Midtown Plan has been applied as an additional overlay stripping away virtually all potential density and vitality.  This hasn’t happened (yet) in the E 4th Street TOD (Brewery District), and it is becoming the Next Big Deal.

IMG_1937

The largest land owner by far in the E 4th Street TOD is the City of Reno.  They need to look East one City to see how to get things done so that the disappointment of Midtown isn’t repeated once again.

Chutes and Blocks

GreyhoundIn Planning lingo, Chutes are achievable development opportunities to expand successful development into a larger area.  Blake Smith’s 1401 Midtown is a classic Chute, as are the Marmot and Dark Horse holding on Haskell Street.  Chutes need to be encouraged by all levels of government review and be encouraged and rewarded.

Blocks, on the other hand, are individual properties that are preventing otherwise successful redevelopment areas from spreading.  The Ponderosa (Methderosa) Hotel in Baja Midtown is a prime example of a Block.

The biggest Block preventing the Riverwalk District and the Powning District along the Truckee to merge and progress farther north has been the Greyhound bus depot at 155 Stevenson.  There is a glimmer of hope – the depot has been listed for SALE.  The price is mind-boggling at over 8x assessed land value and $80/SF, and I shudder to even think of the environment clean of costs after 50 years of underground leaking diesel tanks.  But it is a start removing a critical Block.  I hope the seller will get reasonable on the price, and I hope the City will get reasonable with their DRRC Truckee River District design standards which have killed all development since they were adopted.  That’s right, ZERO development since the standards were adopted.

Any project with the Siegel Group attached to it seems to be a Block to me.  They have just filed a permit to add micro-kitchenettes to 109 rooms at the Virginian at 140 N Virginia.  $520 permit value per door on units that retail for around $1000 each plus plumbing and electrical costs.  I suspect Community Development may take issue with the proposed permit value.  Most interesting on the Permit Application is the Code Enforcement section.  It appears that Siegel Group got busted trying to replace the boilers without a permit, and face a 2x permit fee penalty.  This would be 10x in San Francisco.  Siegel is up at the Redevelopment Agency meeting next week for more discussion on their Truckee River Lane building / land swap / rental agreement.  Nuff said.

I’ve been silent lately on my gut feelings on our housing market since it has been rather dour.  In spite of all the Realtor hype, our market median has been essentially flat,  bouncing around $290K last July 2015.  The initial Tesla Bump was premature.  But the demand is real as Tesla, Switch, Apple and their subcontractors gear up hiring and relocate employees.  I would not be surprised by a 30% year over year increase in the median home sale by the end of the year (we are currently at +8%, even with the lackluster performance over the last 3 Qs).  RICCOHs (RIch Californians Coming Over the Hill) are starting to run up the market, and the developers are systematically refusing to develop and add new inventory.  They know their target markets well, and it ain’t us locals

I’d be very interested to hear your views on other Blocks you see.  Also on other Chutes, as they are the Next Big Deals.  I’m watching Victorian Square and 7th and Keystone.

Around Town

Around TownAfter the generally favorable reception to their proposal to abandon the alley between Center and Lake Streets, the Standard is back proposing abandoning a 10′ strip of Lake Street along their property.  Somehow, they believe this will enhance the pedestrian experience (as well as increasing their building envelope).  OK guys, just put all your cards on the table so the City can evaluate the deal.  This development by 1000 cuts approach is unattractive.

  •  Airport Square hits the auction block next month.  The in-line retail is slowly filling up, but there is a gaping hole where Petco and Office Depot used to be.  Costco owns their own building and some parking, but I think they must have a shared parking agreement with the rest of Airport Square.  $5M opening bit on 18 April.
  • The Frankenwarehouse proposed next to Cabela’s has been redesigned into a slightly smaller 4 Building Complex.  The loading docks have been relocated into a central aisle, which will make 24 hour operations less offensive.  Breaking up the buildings will slightly mitigate the “White Cliffs of Verdi” appearance from Old US 40 and the River Oaks subdivision.
  • Reno’s Historical Resources Commission is holding a Special Session on Thursday the 8th.  This should be worth attending – the sold agenda items is discussion of the University’s plan to nuke the houses in the Gateway District.

 

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