Courtesy Carson City
A downtown redevelopment project that proponents are counting on to create jobs and restart Carson City's downturned economy will be presented to the Board of Supervisors this week after months of study and public debate.
P3 Development, the Sacramento-based group preparing the feasibility study and hoping to eventually build the project if it is approved, delivered the final draft of the study to the city late last week, and officials are set to discuss its merits at 2 p.m. Thursday in the Sierra Room of the Carson City Community Center.
The project, once estimated to be $87.3 million, has been scaled back to $84.2 million with $31.9 million in public investment and $52.3 million in private investment.
Carson City Manager Larry Werner said the final draft of the study was revised slightly since it was last presented to the City Center Citizens Advisory Committee.
"There is more emphasis on using general fund monies to bridge the funding gap," Werner said.
"We were initially concerned about whether we had a viable project because of its size and nature, but at the last citizen's committee meeting, we knew we had a project we could take a step further," he added.
More than a year ago, Steve Neighbors, sole trustee of the Mae B. Adams Trust that controls the Carson Nugget, proposed using the money to benefit Carson City through a public-private partnership. He said before she died, Mae Adams had instructed him to help Carson City because the Nugget, which the family owned, had done so much for them over the years.
In early January, about eight acres of property in downtown Carson City owned by Carson Nugget Inc., including other bits and pieces of land throughout the capital, were transferred to the Mae B. Adams Trust.
Neighbors said the move was made to prepare for the city's pending decision about the City Center Project that may be built on the land behind the Nugget by P3 Development.
Neighbors said the Carson Nugget's gaming operation will be administered separately within the trust, which means if the city decides to go forward with the development, it doesn't involve the gaming license.
Over the past year, the Carson Nugget has been buying parcels surrounding the casino. Neighbors said the trust spent more than $1 million buying out the property owners to make way for the project, if it is approved.
BEST- AND WORST-CASE SCENARIOS
In its feasibility study, P3 prepared costs and potential revenues sources for best-case and worst-case scenarios.
"The best case is defined as such because of the hope of securing funding beyond normal city revenues, i.e. significant federal grants and large donations," said Werner in his report to supervisors. "The worst case eliminates federal grant potential and does not include donations," even though both are likely to be acquired.
Also, he said, the range seen in the forecasted annual lease cost is because of the uncertainty of interest rates and by assuming interest rates would be at the highest level within the range.
With those adjustments, the forecasted annual lease cost is estimated to be $2.6 million with revenues projected also at $2.6 million.
Werner said anticipated revenues were reduced to eliminate any additional contribution from the redevelopment agency because of the uncertain economy and of concerns that property values could continue to decline for the next few years. A commitment from the general fund of $1.2 million is listed under revenues to help fill that gap and get to the $2.6 million mark.
"The issue at this point is whether or not to commit $1.2 million from the city's general fund to the project," Werner's report says. "The obvious concern is the long-term sustainability of the $1.2 million. Will it be available in future years? Does this leave any revenues for other programs?"
Officials should be able to rely a little more comfortably on sales tax revenues, he said, because of the fact that it looks like the bad days have bottomed out and revenues are on the rise.
If the trend continues, the funds generated by the 1/8-cent sales tax will increase, thereby decreasing the dependency on the general fund, and general fund revenues will also continue to grow, Werner said.
The annual projected revenues break down to:
• $884,000 from the 1/8-cent sales tax hike
• $500,000 in redevelopment agency funds
• $1.2 million from the general fund
"The city has a $60 million budget, and we can easily get one or two million out of that," he said. "I know it sounds like I'm talking out of both sides of my mouth with last year's layoffs, but I've talked to our labor groups, and the economy has changed. There is a little bit of a risk, but maybe it's worth it if we can turn things around."
OTHER FUNDING REQUESTS
Although not being suggested at this time, the city also could increase franchise fees to the statutory maximum by increasing the Southwest Gas franchise by .5 percent and NV Energy by 1 percent. This increase would amount roughly to a $40 annual increase to homeowners, and would generate about $760,000 for the city at today's utility rates, Werner pointed out in his report.
The good thing is that the project can always be scaled back, if needed, to fill the funding gap, he said, and federal dollars are a real possibility, even if they haven't yet been secured.
"We could seriously qualify for federal highway dollars, possibly for the plaza as a travel tourist rest area. Those funds could be fairly significant," he said. "And if Sara (Jones, library director) can help with fundraising for the library, that will make a big difference."
Werner also said there are two other financial areas that need to be considered by supervisors, although they are not connected to the City Center Project.
"The first is the ability of the city to respond to an emergency and the second is the current problem with paying the debt on the city's V&T bond from the existing 1/8-cent sales tax," he said in his report.
FEASIBILITY STUDY HIGHLIGHTS
• The parking analysis conducted by Carson City Planning Director Lee Plemel indicates that there would be enough parking within the project area - including on-street parking - to accommodate the peak weekday demand of about 754 spaces.
• The transit hub would stay in its current location next to the federal building.
• Operation and maintenance costs for the library could remain what they are for the present library. The year-round interactive plaza would be maintained and operated by the library through funds generated by the land lease payment which the trust will funnel back to them. The parking garage will be maintained and operated with help from the project management association.
• A hotel feasibility study indicates that a hotel is possible and should be located on Carson Street across from the Nugget at Arlington Square.
• The first office building would include Carson City Business Development and Community Development departments, a business incubator, general office space and a retail mix such as coffee shops, specialty retail, tourism-related business and food shops.
• The Knowledge and Discovery Center, the year-round interactive public plaza, office space and parking garage would be built as Phase 1a. Phase 1b would include the hotel and conference center and a second office building. Phase 2a, depending on market demand, would include an evening entertainment venue and residential space.
• Many business incubation spaces would be located away from the project area and throughout Carson City and surrounding areas, as best suits the needs of the incubated business The small incubation space within the project area would be reserved for those that rely on the continuous resources found within the project.
• If and when supervisors approve Phase 1a, the entire site would be deeded to the Hop and Mae Adams Foundation. The land under the library and the plaza would remain under the foundation's ownership during the term of the lease, but proceeds charged to the city during the entire term would be immediately returned to the Carson City Library Foundation as restricted funds to be used for technology and costs related to the plaza. When the lease term has expired, the Hop and Mae Adams Foundation would transfer the library and plaza land to the Carson City Board of Supervisors. The land under the parking garage could be deeded to the city as the Nugget's contribution toward costs of the shared-use parking garage.
• Time is of the essence because interest rates are at a temporary historic low.
• The mission of the City Center Project is to achieve long-term sustainable and focused economic growth by building a diverse, innovative economy that attracts high-wage, high-impact jobs that provide opportunity and prosperity for the city's residents, businesses and entrepreneurs throughout the community, according to the report.
