Nugget Project Questions: Who owns the land?
Submitted by Kirk Caraway on Mon, 03/08/2010 - 9:05am
One of the first questions I heard raised about the Nugget redevelopment project had to do with who would own the land.
Some people have the false impression that the Carson Nugget is donating the land to the city.
As it has been proposed, the new library, public plaza and other pieces paid for by the city would be sitting on land owned by the foundation created by Nugget President Steve Neighbors, in accordance with the wishes of late owner Mae Adams.
People who are questioning this project point out that such an arrangement means the city will be paying lease payments on this land in perpetuity. Depending on how those lease payments are based, they could be a significant drain on future city budgets. In 20 years or so, the annual payments may be more than what the purchase price of the land would be right now.
I asked Supervisor Robin Williamson about this arrangement, and she said that the project would not be doable if the city had to come up with an extra $5+ million to buy the land now. Mayor Bob Crowell told me something similar, saying that this lease arrangement makes it possible to take a relatively small investment of $12 million in money from sales taxes and turn it into a $100 million project.
Mayor Crowell also pointed out that the purpose of the foundation would be to take the money it receives in lease payments and use it to benefit the community.
However, according to a Feb. 21 story in the Nevada Appeal, there seems to be a significant loophole in this lease arrangement. Here is the quote:
Now that Neighbors is in charge of the Carson Nugget, the casino will donate about eight acres of its land for the project to the Mae B. Adams Foundation, which will in turn essentially give it to the developer for a substantially discounted price in the form of a long-term, low-price lease.
So, the city would be leasing the land from the developer, not the foundation. While the developer may get a discounted lease from the foundation, there is no guarantee that discount will flow down to the city.
In fact, it seems that this arrangement is designed as an incentive for landing a developer, ensuring them a perpetual income stream. Otherwise, the foundation would lease the land directly to the city.
This arrangement could lead to a scenario such as this: The foundation leases the land to the developer at a rate that just covers the property taxes. The developer then turns around and leases the land to the city at market rate, taking the difference as pure profit for the next 99 years. Then the only money that the foundation provides to the city is the property taxes, which would already be spent as part of the financing to build the project in the first place.
This is only one possibility. So many of the details of this project are in flux, especially since no developer has been selected yet.
One step toward answering those questions begins tonight with the first meeting of the Carson City Nugget Development Advisory Committee, at 6:30 p.m. in the Sierra Room of the Carson City Community Center.
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