Nugget Project developer gives upbeat status report

The developer of the Carson City Center/Nugget Project tonight presented an update on the progress made so far on a final plan to present to the city for approval.

The meeting of the Nugget Project Advisory Committee was supposed to see the final plans tonight, but those plans have been delayed by legal and financial issues, according to City Manager Larry Werner.

What they did get was an overview of where the project stands right now, along with a look at some numbers that could determine its feasibility.

Mike Courtney, project manager for P3 Development, presented best and worst-case scenarios on how the project could proceed.

He said that a couple of the options they looked at before, the large office complex for state agencies and a hotel structure, were not feasible at this time, but maybe in five years. We have detailed the problems with the state office portion of the project here and here and a bunch more here.

A smaller 50,000 square foot office building would remain as part of the project, Courtney said. He also said they have identified potential tenants that would include the city planning and business development departments that recently moved into the Fireside building next to City Hall. This building would also include the planned business incubator. The Nevada Insurance Association was named as another possible tenant.

Courtney said the the market for putting in a new hotel in this area at this time is very bad, thus delaying that portion.

However, both items were included in the best-case scenario, with the extra tax revenues from each of them helping to offset the gap in funding between the available dollars for the public portion of the project.

All told, the public portion of the project would stand at $30.9 million, which includes the 52,000 square foot library/discovery center, public plaza, parking garage, streets and sidewalks, and transit hub. They identified $3.1 million in public agency contributions that would bring the amount to be financed by P3 Development down to $27.7 million. (see page 25 of the presentation, download from here.)

The project planners also identified up to $7.5 million that might be obtained through federal grants, and another $2 million that might be raised privately by the library foundation. That would bring the cost down to $18.2 million. The forecast annual lease costs for that amount would range from $946,000 to $1.4 million, depending on interest rates.

On the other hand, the worst-case scenario would put annual lease payments between $1.6 million and $2.2 million.

Revenue slated to pay these payments include $884,000 from the 1/8 cent sales tax, $500,000 from the Office of Business Development, and $80,000 in added developer in-lieu tax. There is also tax increment financing available that would range from $56,000 to $246,000 a year. But the upper number includes the hotel and second office building that Courtney said was not feasible at this time.

That would put the annual revenues to pay off the leases at $1.4 million. Without more federal grants and private fundraising, that would leave a gap of between $145,000 and $691,000 per year.

The good financial news is that interest rates are at all-time lows, and that P3 would finance the project, so no city bonds would have to be issued. P3 also is offering a guaranteed maximum price to protect the city from cost overruns.

One of the biggest pieces of news of the night came from Carson Nugget President Steve Neighbors, who reversed his position on ownership of the land that the proposed library and discovery center would sit. Neighbors said that the Hop & Mae Adams Foundation would be willing to transfer a simple deed for the property to the library after the 30-year term of the lease for the building is completed.

The issue of paying a land lease in perpetuity to a private party for a public building has been one of the biggest bones of contention for critics of the project. Less than two weeks ago at the Nevada Business Connections breakfast, Neighbors insisted the foundation would not turn over the land, because the foundation could not dispose of its assets in that manner.

While Neighbors was very specific about the land for the library, he was less clear about if land used for a planned public plaza would also be turned over.

There are a lot more details in this presentation to digest, such as the parking garage and additional operating costs, which we will cover in the coming days.

Update: Here is the Nevada Appeal story about the meeting.