Covid 19 and Reno Construction

I sent out 1 March billings covering February 2020 today.  It was a very good month.   I expect 1 April billings will be down 10% or so, and then 1 May billings to crater 50% or more as clients react and assess their projects.

Lending rates are at an all time low, and residential refi applications are soaring.  My Prime -1% HELOC is going to get $200/month cheaper and keep the dogs in kibble.  On the commercial end of things, rates may be lower but standards are higher – 70% LTV may be a thing of the past as “value” is re-calibrated.

I think the dream projects in the Casino core will be grinding to a halt if they were ever more than dreams in the 1st place.  CAI Investments at Harrahs,  Jacobs at 4th and Keystone, Compass Point at 5th and Center.  661 Center?  Woolworth’s at 101 NVA is already cancelled (WeWork).  T3 has no momentum with nothing happening around it.

I could never figure how you could buy $90/SF land in Downtown and create a viable project, and we have some $200/SF land purchases.  In  my opinion, the Casino Core is a “run away” sector.  I suspect the developers will soon agree.

The Lazy 8 Redux

Feel the need to build an “approved” 18,000 SF casino with an unlimited gaming license?  The Lazy 8 project is back!

The back story is ugly and even reached the Nevada Supreme Court for a ruling.  Just Google “Lazy 8 Casino Sparks” for background on the Ascuagas’ hissy fits when they still owned the Nugget and Harvey Whittemore’s rebuttals before he went to prison.

A unrestricted gaming license in Washoe requires 200 hotel rooms.   Will that fly in the North Valleys and at this project site?  Not.

 

 

Ballardini Ranch Annexation

Ballardini Ranch is back in play.  The 1019 acre property has been a hot topic for more than 20 years.  HERE is history that was lost when the RGJ accidentally deleted their archives a couple years ago (and still want $73/month!).  Glad someone thought to save the source document.

Washoe tried to take the property through Eminent Domain for open space, lost, and had to pay out $13,000,000 in damages.  They did get an easement for the popular trail head in return.

The last time Ballardini applied for annexation to Reno, it was a project of Regional Significance proposing upwards of 1850 new dwelling units.  The ranch is on the McCarran Loop, has a 2 minute fire response, and had all other utilities and public service easily obtainable.  We would all lose “our” views and open space (a “give”) but would have realized a “take” of dense housing in an appropriate infill location.

This newest annexation request is only for annexation and it APPEARS Reno is going to rubber stamp it (Record Information/Processing status on the drop down menu).  The final end game seems to be 203 5 acre ranchettes.  Are you frigging kidding me?  After more than 20 years of struggle, million dollar ranchettes because they require the lowest infrastructure investment by the developer?   This would be all “take”.  Where is the “give” to the community on a low density development that will destroy the existing views sheds and open space and yield hobby vineyards?  Is this what ReImagine Reno imagined?

I would love nothing more than to see Ballardini Ranch remain open space, but that’s not in the cards.  But give me a “give”.

Town House Motor Lodge

The Town House Motor Lodge at 303 W 2nd Street sold at a foreclosure sale this morning for $1,725,546.00.  In the fastest rush to Washoe I have ever witnessed, the transaction has already recorded.

 

This was pretty much the last vestige of the W 2nd Street District that Don Clark controlled.  He lost his own building on Bell street a couple months ago.  Secundo Vita bought the Town House for $4.4M on 9.15.2015.  There was a new $1.1M 1st loan, and the seller (Joey Laub) took back a 2nd for $3.3M which is an unusually risky loan.  They defaulted on 11.23.2016 as the project collapsed.  The original 1st Note holder sold it to Reno Property Manager LLC who low and behold turns out to be Jacobs Entertainment of Neon Line fame.

So Jacobs scored 79 hobotel unit for $21,000/key.  The current market is around $60K/key and several are asking $100/key right now.  This also works out to $35/SF land value, where Jacobs has routinely been paying $100+ to complete their assemblage.  And poor Joey ate dirt.

Cirque du Jacobs

Jacobs has submitted a Development Agreement / Special Use Permit application for their (temporary) events facility on W 4th Street.  It is an embarrassing piece of crap.

The full application is available HERE.

I get that this is meant to be a temporary fix until Jacobs finds a developer who has the deep pockets and “vision” to build $2400/month 1 bedrooms high-rise rentals on the site.  I believe Park Lane is going to crash and burn on the same pro forma, and their basis is much lower and their location is far superior.

– The 60’x120′ tent is heinously ugly, unfit for filming My Big Fat Greek Wedding III and certainly unfit for one of Reno’s arterial streets.

-1 single dumpster for a 2000 person events center?

– Porta Potties on W 4th Street?

-Fence heights?

The one saving grace is this is the first time we have had a look at the Neon in the Neon District, and what they have in inventory to install.  It appears that they actually plan to use neon and not fake the look with LEDs – DO NOT let this distinction be changed moving forward!

Do you like it?

MultiFamily Monday

Jessie Greer is a commercial broker at Avison Young that gets it – he is asking all the right questions of the right people and posting videos on his MultiFamily Monday series.  The current series about how to (try) to cure discrepancies between what the Assessor shows as unit count, what Reno Building/Planning show in their data bank, and what Business Licensing shows is an absolute must watch.

Stan Lucas

Next up at the Planning Commission next week is Stan Lucas or Mortensen Garson Plan Area 1.  668 million dollar stucco shit boxes in a pearl necklace across the slopes of Peavine.  How a vintage tire dealer from Long Beach ended up proposing a huge development in Verdi is a really long story.  This development is directly north of DR Horton’s West Meadows Estates, and access will be 100% through West Meadows.  It is directly West of Sierra Canyon and Somersett Village 6 ( Toll’s The Cliffs aka Sliding Hill Estates).

The Site Plan with Constraints is HERE.  I can see a rationale for developing the bottom  two thirds, but the top parcels with their Lombard Street access feel forced and will probably die on their own based on site development costs.  Reno Planning seems to be softening to the project, and their Staff Report will post in a few days (Ventana Ridge was told their project was not suited for production home development – will that be held over here?).

1000 Bogus Homes in 100 Days

Reno City Council will get an update on the 1000 Homes in 100 Days initiative.  This program allows developers to shift Sewer Connection Fees, Regional Road Impact Fees, and Park Fees from being due at permit pickup to Certificate of Occupancy or later if the developer can get it Council buy-in.  The program is totally ridiculous and does nothing to spur development, but it does give a little cash bonus to the developers already in the queue.

 

 

Here are the “marvelous” results so far.  ZERO new projects, just rehashes or projects already planned or even permitted.  But at least we now know Tesla Dad plans 250 units on the old Greyhound bus station site, and that Ryder is moving forward with their 49 unit downtown townhouse project.

It Flows Down Hill

Should sewer service monthly rates be based on sewer usage?  You would think so but that’s not now it is currently structured in Reno.  This 4683 SF SFR in Somersett with 4.5 bathrooms at 7530 Briargate with 23 plumbing fixtures is getting charged exactly the same rates and connection fees at my new 400 SF studio unit at 614 Elko with 6 fixtures.  Each will pay around $48/month.  Sewer connection fees are/were equal at $6376.

This is a structural problem that Reno continues to refuse to address.  Infill the the core needs to be incentivized with reduces fees.

Downtown Motion or Action?

Two of the “black hole” buildings downtown have recently sold.  100 N Sierra Street, home of Liberty Food Exchange and (maybe) Fitness for $10, sold for $5.7M or $102/SF.   210 N Sierra Street finally sold for $2.5M or $48.86/SF – 6000 SF is scheduled to become a nightclub.

Along with the announced (but unpermitted) renovation of 101 N Virginia Street, the is a lot of Motion downtown – all of it from out of state developers.  But will this translate to Action and real change?  I feels like herd mentality to me, though I hope I’m wrong.