Douglas County is asking a district judge to void a contract with the developer of property at the corner of Topsy Way and Highway 395.
The county sued Riverwood Partners on Nov. 1, claiming that the company failed to disclose that it had sold part of the property to Max Baer between the time that a development agreement for the property was approved and when it went into effect.
District Attorney Mark Jackson and attorney Mark F. Bruce charge that it was represented to the county by Jay Timon that Riverwood was the sole owner of the property on Oct. 18, 2007 when commissioners approved the development agreement.
Eleven days later, on Oct. 29, 2007, Riverwood sold a portion of the property to Baer for his Beverly Hillbillies Mansion & Casino.
The development agreement on the property took effect on Nov. 1, 2007.
"Riverwood did not own all the property when the development agreement was executed," court documents said.
An owner participation agreement with Riverwood Partners promised the company $24.7 million over the course of 16 years if they built 30,000 square feet of commercial space on five acres and kept 25,000 square feet of it leased.
Riverwood developers obtained a grading permit in 2008 and flattened a 25-acre portion of the site across from Walmart.
At the time a representative said they'd moved just over a third of the earth required to build the project.
Work was abandoned in December 2008 and the property has been a large empty lot ever since.
The Douglas County grand jury found that former County Manager Dan Holler, fearing a bidding war with Carson City, rushed into the agreement with Riverwood, which substantially favored the developer.
According to the lawsuit, the agreement exceeds the scope allowed for an agreement under local and state law. Court documents cite Nevada Revised Statutes 279, which deals with state redevelopment law.
"It seems that the prior county manager (Holler) established the owner participation agreement in the race to solicit developers. Perhaps, a sense of competition with Carson City and pro-growth stand from some in the county rushed the agreement in favor of the developer," jurors said.
The grand jury concluded that county commissioners were presented with outdated and "overly optimistic" research that did not allow for the current economic slowdown.
"The grand jury also recommends that Douglas County not enter into future owner participation or similar agreements with any organization that does not agree to release financial statements to the public for the duration of the agreement," jurors said.
As a private corporation, Riverwood LLC is not required to release financial data, however, jurors pointed out such information could have been required by the county in the redevelopment agreement.
