City Center Project: Study outlines financing options
In a report released Wednesday, P3 Development, the company tasked with analyzing the proposed City Center Project, said that the project is feasible, and “has the greatest chance of success from a financing standpoint through a public/private partnership.”
The structure would involve a substantial investment from the developer as well as from Carson City, the study showed.
“The financing structure that will be proposed for each sector of the project is not expected to impact the city’s debt limit, and the financing we believe is available, can be tax exempt,” the report said. “The city will not need to issue any new revenue bonds to complete the project. The city’s obligation would be a long-term lease subject to annual appropriations.”
P3 also determined that if the board of supervisors approves the project by the end of December and negotiation agreements are signed, construction could start as early as next spring or summer and be completed within 32 months. In addition, the city would not need to make its first lease payment until 2015.
Revenues to pay the annual lease cost of at least $1.3 million for the public portion of the project would come from a mix of a 1/8-cent sales tax increase, redevelopment agency funds, added property tax increment and added developer in-lieu tax.
P3 came up with a best-case and worst-case funding scenario. In a worst-case scenario, a funding gap could occur of between $460,000 and $620,000. The city has six options for closing the gap, including reducing the amount to be financed and reducing the cost of public improvements.
The report also outlines a land ownership proposal:
The site, now owned by the Nugget Casino, will be deeded to the Hop and Mae Adams Foundation if the project is approved. The land required for the library, public plaza and parking garage would remain under the foundation’s ownership during the lease term. When the lease term has expired, the foundation will transfer the land to Carson City.Carson City will pay the foundation market rate lease payments for public improvements to the land. It is proposed that the remainder of the project site remain under the foundation’s ownership and all private development will be required to lease the land at market rates.
Other highlights of the report include:
• A development budget of $87.3 million has been prepared with $30.9 million of public investment and $56.4 million in private investment.
• The proposed financing plan for the project is based on the assumption that the city is not issuing the financing and that there can be no impact on the city’s debt limit.
• The developer leases the land from Hop & Mae B. Adams Foundation.
• The development team designs and constructs the project for a guaranteed maximum price.
• The publicly funded portion of the project is leased to Carson City.
• Carson City makes lease payments from the annual appropriations.
• Carson City acquires the project at the end of the lease term.
• The private development opportunities determined to be the most feasible are a hotel with 125 rooms and 5,000 square feet of meeting space and an office building of about 50,000 square feet with tenants to include the Carson City Business Resource and Innovation Center, a business incubator, bus transit hub, retail and other general purpose office space.
• A 52,500-square-foot library can be maintained and operated within the library’s current budget.
• Land lease payments made by the city to the foundation related to the library will be returned to the library annually for its use during the term of the lease.
• Land lease payments made by the city to the foundation related to the public plaza will be returned to the city for operation and maintenance costs of the public plaza annually during the term of the lease.
• Land lease payments made by the city to the foundation related to the parking garage will be returned to the city annually for the term of the lease for its operation and maintenance.
• Private development’s land lease payments will be paid annually to the foundation for the foundation’s use.
The study also includes reports on the master plan, infrastructure analysis, parking, real estate issues, a financing analysis, development plan and construction jobs to be created.
P3 will present the report to the Carson City Center Advisory Committee during a public meeting Monday.
• The study will be presented to the Carson City Center Advisory Committee at 6:30 p.m. Monday in the Sierra Room of the Carson City Community Center, 851 E. William St. A copy of the report can be downloaded from http://www.nevadaappeal.com.