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!


Building Affordable in Washoe

Anytime I come up with a neato infill affordable project, it gets turned into “how much can we charge based on the market?”  If we value inclusionary housing in our community, we as residents are going to have to step up and do it ourselves.  The development community has their focus so firmly on ROI and “luxury apartments” at $1600 for 1 bedroom unit that the $800 1 bedroom that we really need is a dinosaur.

If your care and want to change this and have the means, you can step up and contribute to your community.  Can you live with a 4% CAP rate instead of 9% plus fees?

I have a virtual shovel ready 30 unit complex on Prater in Sparks that could use angel financing – there is a very compiling back story.   I’m working up new 36 unit complex in Sparks with land less than $9000 per key.  Working through the County and State affordable housing grant process just doesn’t work for these “minor” infill projects – who has 2 years to deal with the system except Chip?

So if you want change, you have to personally step up and make it happen.  Let’s do it.





Parking Controls

New permit to add parking controls at 50 SVA / West Elm.  I’ve never seen the lot full (how is West Elm doing?  Patagonia?), but now that the office portion of the old Post Office is filling up and requiring 1 dedicated parking space per 385/SF of office area, the free ride looks to be coming to an end.

Apple Submits and Other Stuff

–  Apple has finally filed for the permit for their 27,000 SF receiving facility at 520 Evans Street.  Interesting that Planning has not updated the processing status on this one to show approval of the required Special Use Permit.  I remember when this facility was supposed to create 200+ consultant jobs.  Now it looks like 6 grunts to unload trucks.

  •  I don’t remember if you remember the NIMBY uprising a couple of years ago when Lakeridge proposed razing the Lakeridge East apartments and replacing them with denser 3 storey structures.  The owners eventually tanked, but an adjacent property is asking for a zoning change that would allow 240 or so new units on land currently Zoned Private Office.  It is a reasonable change ( I would have asked for CC instead of MF21), but expect a lot of noise on this one.


  • There are signs up on McCarran for the sale of the Ballardini Ranch property just south of Belserra.  You can search this site for earlier details, but the property is approved for about 1700 units and maybe up to 3000.  The sign is too small to read at 50 MPH – anyone want to stop and get the contact information for me?
  • 1130-1154 California is on the market.  One of the strangest and most charming developments in Reno.  Overpriced 50%, but the site of our real Tiny Houses.



Reno’s Puritanical Streak

Reno City Council just moved forward with an ordinance to force current Adult Businesses in the Downtown / Redevelopment Districts to get the fuck out in 6 months, or 5 years if they comply with business killing regulation.  I have never been more embarrassed by the gross stupidity of Reno government.

These 6 businesses are legally established today as non-conforming existing land uses.  The standard being used to boot them into de facto combat zones in Industrial zoned areas is the ephemeral “secondary effect” doctrine.  Titty bars and titty bars alone exert negative effects across the neighboring area according to the evidence presented at Council.  Oh wait, NO evidence was presented at Council whatsoever on secondary effects.  And certainly no evidence was presented representing Reno’s specific case as a downtown with unlimited gambling and Federally illegal recreational and medical marijuana retailers.

So Karl Hall, Reno’s elected City Attorney, sent private Dicks to the titty bars to check out the action in case they filed suit over the ordinance, which they rightly will.  The results of these questionably legal incursions were presented to each Counsel member evidently, with enough impact to apparently swat their votes.  Brekhus would never have voted for this, but was appalled by the PI report.  So what did Karl do?  Did he report the findings of his investigation to Reno Code Enforcement?  To the Reno Police Department?  Nah, protected by attorney/client privilege. Karl Hall’s skill set has cost Reno taxpayers over $1M and counting on his mismanagement of the Clinger affair, and look at Tittygate to cost another $10M (I’m dead serious about the costs) because he overstepped his authority.  I seriously double anything his incursions turned  up will be admissible, given the process.

This is all happening because of the Wild Orchid,

in spite of any city wide policy the talk heads espouse.  The Keshmiri family who owns it has constantly tweaked Reno’s nose, specifically about their (worst ever resolution) digital billboard at the corner of SVA and California.  It is actually the case that got me activated in Reno planning issues, and I had total respect for Reno Planning holding their nose and defending the sign.  I’m losing that now.  Keshmiri’s now promise to demo the sign, but to little to late.  There tackiness is having consequences.

Is the Wild Orchid really the problem, or is it the weekly Ponderosa weekly motel (also Keshmiri) behind it?  Code Enforcement knows, and they are silent to date.

The Council seems whacked out right now, and this ordinance has a couple more iteration to go through before it is enacted and becomes law.  Get involved.   Think about this lucidly.  Is banning architectural offices downtown because of our “secondary effects” next in line?  Are you really offended by the Men’s Club?

Suzie’s?  You’ve driven past it a 100 times and weren’t offended. Do you want to create a combat zone of strip clubs only accessible by a 10 mile car ride, then be oh so shocked by drunk driving arrests?  Tell you councilperson to stop this stupid initiative. Keep Reno Reno.


The Bigs

Some rather large transaction this week.

  • Sparks Legends – Sold for what looks like to me $85,536,861, though it appears to be an internal fund transfer.  The transfer generated a $405,261 in Transfer Taxes.  (Where do transfer taxes go? NRS authorizes $3.90/$1000 in Washoe, where is the other $.20/$1000?)
  • Kiley Ranch – 68 vacant but flat acres at Kiley Ranch (APNs 510-171-44 and 510-072-01) went to Lewis Investments for $9,584,100.  At 8 lots per acres net, that would be about $35,000 per raw lot.  Finishing an easy lot runs about $45,000 streets and utilities based on Meridian 120, so you are at $80,000 per lot before you start.  Add $15,000 in water, Sewer Connection Fees, Park Fees, and Transit Impact Fees, and you are at $95,000 per lot before you even start construction.  In a secondary location.  The houses will need to sell for $450K or so, 25% above our current median.
  • Great Western Marketplace – The GWM has finally given up the ghost and sold out.   $4,525,000 for 10.61 acres = $9.79/SF for the parking lot.  This will become the 288 unit Sky Mountain by Vintage project, subsidized to 40 and 50% AGI.  This is a fantastic location for a project like this based on need and public transit access.  The 8.93 acre parcel that included the building went for $3,685,000 = $9.38/SF, and will become storage for crap and RVs.  The building has negative value.  Why are we allowing storage uses on such a highly desirable potential housing site?  I ReImagine Reno a bit differently.

Verdi Today

Lots happening on the Western Frontier:

  • The long closed Taco Bell at Gold Ranch is transforming into a 24 Hour Subway with a drive-thru.
  • The Verdian Works is going vertical.  Still rumored to be a facility to renovate vintage trains.
  • West Meadows Estates by DR Horton continues terraforming for 323 homes.
  • Meridian 120 N just started site work for their 273 homes.
  • The new water tank to serve the private Boomtown system and the Meridian 120 projects is rising S out I-80.
  • Meridian 120 S is in front of the Planning Commission this week for a Tentative Map for 78 Units.  Reno Planning forced the developer to acknowledge that  this is in a Major Drainageway (thanks, Nathan!).  But I can tell you from over 15 years living in the neighborhood, this project is gonna flood no matter what accommodations are constructed.
  • Toll Somersett Village 6.  Everyone thought it was going to be sort of hidden away, but it is going to be one of the most prominently visible pieces of the Somersett PUD.  Treat yourself to a meal and a beer at the Sasquatch, and then take a look at what you see driving back East on old US 40 aka W 3rd Street.
  • No news on the Stan Lucas properties just West of Sierra Canyon and East of West Meadows Estates except some easement adjustments.  A potential of 666 homes, 132 only accessible from Sierra Canyon via Bennett’s Court.
  • Kronish owns 1000 acres above West Meadow Estates spanning from the Stan Lucas properties to above Riverdale in Verdi.  A few additional lots are being prepared in Riverdale, but the potential for another massive development exists.  General Rural Zoning is for suckers.

Affordable Housing in Reno

How do we get some?  Monthly rents at the scuzziest weekly motels are now $800+, Midtown 1 bedroom apartments are $1500, and suburban 2 bedroom apartments are $1600+.  The pipeline is full of high amenity luxury apartments, but virtually bereft of low amenity workforce housing.

The easy answer is that we need to make affordable housing more profitable to build  than luxury apartments. Harder is getting there.

  • Reno does have some programs increasing density and lowering parking requirements on certified projects at 50% AFI and below.  This threshold needs to be raised (80%?) to attract developers into this arena.
  • Sewer Connection fees and Transit Impact fees need to be drastically reduced within the targeted infill zone, inside the McCarran loop.
  • We need committed individuals willing to work in this arena.  I’ve been lucky enough to be working with a client who has added 48 workforce units to the Sparks market in the last 2 years.  Notice this was in Sparks, not Reno, where the Planning Code is more progressive.
  • We need massive public infrastructure improvements in our targeted redevelopment zones.  I have an inner city project being down-sized 50% because TMWA’s water system can’t support additional fire hydrants, and I’ve never met an infill project where NVE didn’t need a new transformer due to undersized existing capacity.

No solutions, but I wanted to get the discussion started.  What do we do to make housing affordable?