Officials confident City Center finance plan will work

Both city officials and Steve Neighbors of the Carson Nugget agree some of the details on how financing for the City Center Project will work are unclear at this point.

But Neighbors told the advisory committee reviewing the plans Monday those details can't be developed until and unless the project advances.

"We've finally reached a point where we can go no further unless the city says it's in," he said.

Carson City Public Works Director Andy Burnham agreed this week saying the lender will have some say in how the deal is structured but that, as Neighbors and City Manager Larry Werner told the committee Monday, the city will be protected from financial damage because they will legally just be leasing their space in the project - the new city library.

"The city is not on the hook," said Werner. "We're just a tenant. If there's no money, we move out."

"The financing partner will dictate how some of the financing works," Burnham said.

Asked what the worst case scenario would be, he said the city could walk away from the lease.

"If we walk, they end up owning the building and the land but the odds of us walking are fairly low," said Burnham.

Burnham said he has been told even if that became necessary, it wouldn't directly impact the city's credit rating because a lease isn't considered debt in the same sense as general obligation bonds.

While the advisory committee had questions about the financing, they were much happier with the overall plan, which has been significantly reduced in scope and cost. Where it was originally nearly $90 million, it's now down to $49.6 million.

That includes the knowledge center/library and auditorium, a high-rise parking garage and plaza on land now used as parking just east of the Nugget.

Of that total, $18.3 million will come from the trust and foundation.

Another $12 million would come from an eighth-of-a-cent sales tax imposed by the city and $11.3 million from the city redevelopment agency. Water and sewer improvements would be made with a one-time $500,000 grant from the city's utility enterprise fund. The $4.5 million in land would be donated by the Mae B. Adams Trust and the Hop and Mae Adams Foundation. Another $3 million will come in a federal Economic Development grant and finally, $10 million in donations and grants raised by the library foundation.

Neighbors emphasized that, just the opposite of a lot of public private partnerships, in this case the private sector is subsidizing the public, providing fully half the funding.

One of the issues raised by the committee was the foundation's ability to raise its share of the funding. Library Director Sara Jones said she has been told by the professional fundraiser hired to do the job that it is a goal well within reach. She said there are large amounts of money available from major national foundations. She said the same fundraiser she has hired raised more than $22 million for the University of Nevada Reno Knowledge Center and library. In addition, private money paid for the Cancer Center project and the Dawn Wells Children's Museum in Reno.

But if that piece or the revenue from the city's primary contribution - an eighth-cent sales tax increase - falls short, Neighbors testified the trust and foundation would make up the difference.

"We'll cover the gap," he said. "If the city wants to go forward with this, we can make it happen."

Werner echoed that statement: "Whatever they can't generate, the trust and foundation have agreed to fund the gap."

While he wouldn't be specific about how much money is in the Adams foundation and trust, Neighbors said there are "substantial monies" available if needed.

Once the Board of Supervisors gives the project the go-ahead, Burnham said the financing plan will get much more detailed pretty quickly.

He said a Limited Liability Corporation or non-profit group would be created with a board equally divided between the Board of Supervisors, Nugget and Library board.

"That entity is then going to go get financing for it," he said, adding that those involved are already talking to people.

Burnham said he doesn't expect real problems getting financing because "we're going to have a fairly large cash down, so it's not a huge risk to them."

"We've talked to a number of different developers and financing folks," he said.