Carson Valley drivers aren't the only ones lamenting the loss of the Gardnerville Department of Motor Vehicles, which is closing today as a result of state budget cuts. Owners of the Center at Waterloo, the commercial mall where the DMV relocated to from Minden last year, said the closure is hurting their investment.
"It's tremendous, a huge financial crisis for the individual partners," said John Pinjuv, one of three local owners of the center. "It's a $2 million commitment thrown down the toilet. We'll be paying interest on a vacant building."
The Center at Waterloo consists of three buildings: two 20,000-square-foot buildings along Highway 395 and a 10,000-square-foot building along Waterloo Lane. Each of the two larger buildings contains about a dozen leaseable spaces, according to leasing agent Gary Moreira. The smaller building was designed for a single tenant. Powerhouse Gym was interested in leasing the space, but the deal failed to materialize, Moreira said.
In October, the DMV signed a 10-year lease for a 5,000-square-foot central office in one of the larger buildings. DMV officials had cited more office space and more parking as reasons for the move.
In March, JC&C Wireless, an authorized AT&T dealer, moved in a few doors down from the DMV. Other companies were expressing interest in the center, but then word came in late spring that Nevada legislators had cut funding for the Gardnerville, Reno and Sparks DMV Express offices.
According to DMV officials, the legislative move will save the department $478,434 over the next biennium. But the savings offer little consolation for Pinjuv and his partners, who estimate the now-voided lease is equivalent to a $2 million loss.
"There is a clause in all state leases that if they lose state funding they can terminate the lease," Pinjuv said. "They can say, 'sorry, it's not in our budget this year,' and there's nothing you can do. But what if a taxpayer owed the state $2 million and came in and said, 'sorry, it's not in my budget?'"
Pinjuv said his company also committed more than $300,000 worth of improvements and reduced first-year rates on behalf of the DMV.
"We, as owners, are the small guys; we're not a big company," he said. "We reduced rates for the first year to help fit their budget. We spent $375,000 on improvements. We built out the space and paid for furniture. It was out of our pocket, and, basically, the agreement was they'd pay it back over the 10-year period."
Pinjuv said he approached some legislators about the cuts.
"They said it isn't right, but there is nothing they can do," he said. "I guess there is no chance of reversing. We are going to seek legal advice, but going against the state, who knows?"
Pinjuv said landlords and developers should be wary when working with the state.
"Financially, we're the little guys, and a big incentive going forward with the project was the one building for the DMV," he said. "Now we're out millions of dollars, and it really sends a message to other landlords that when dealing with state leases, don't count on them performing. They can walk away, and you have no recourse."
Pinjuv said the closure of the anchor office will have a ripple effect on the local economy. He said prospective tenants have already backed off because of the closure. He said other tenants signed contracts under the impression that the DMV would be there for 10 years.
"We have negotiated a couple of leases predicated on the DMV being there," Pinjuv said.
After the DMV leaves, JC&C Wireless will be the sole occupant of the commercial center. Moreira said a Gardnerville insurance company is planning to relocate to one of the larger buildings in about three weeks.
"We also have a letter of intent from a food user," he said.
DMV spokesman Tom Jacobs said the department can't be faulted for the closure.
"It was not our decision, it was a decision by the Legislature," he said. "The DMV is not funded by the general fund. It's funded by the highway fund. It's a separate pot of money, and, by law, we're allowed to take no more than 22 percent of highway funding.
"Of course with the economic downturn, revenues coming in weren't as high as expected. We had to stay under the cap, and we asked the Legislature to rescind the cap, but they chose not to."
Jacobs said the department presented legislators with a variety of budget-reducing options. He said lawmakers chose to close the three express offices.
"We lost 132 positions. We lost our travel and training. The DMV found itself between a rock and a hard place," Jacobs said. "Of course, the last thing we want to do is pull back services. To close three offices felt like going backwards for us, but what other options did we have?"
Jacobs said all state contracts have an exit clause in case funding decreases.
"We're dependent on funding," he said. "We're not like a private business."
