The Fall of Babylon…….Or In This Case, Reno (Opinion)

By Katie Di Lillo Coombs

There are a lot of amazing things occurring regionally to be excited and grateful about. Unemployment is down, wages are up, home values are high, vacancy rates are low, and the economy, at the moment, appears to be relatively stable. For those of you who lived locally during the “Great Recession,” you know that it was in many ways the exact opposite of this. Careers were endangered, many people owed more on their home than it was worth, and a general sense of desperation and fear was prevalent.

One of the most important local sectors is, generally speaking, development. This sector encompasses many trades: contractors, sub-contractors, design professionals, real estate professionals, mortgage brokers, and appraisers just to name a few. Most people are hard pressed to not know at least one person who makes their living due to a development related profession. In the mid-2000s, prior to the recession, things appeared to be fantastic. Borrowing money was easy, regardless of your financial position.

People gave very little thought to their debt position because they had faith in two things: 1) their house would be worth more tomorrow than it is today, and 2) when it came time to sell, someone would be chomping at the bit to buy it.

Looking back, one thing to note is that this fiery hot economy wasn’t backed by any tangible rationale. In a sense, it was basically just crazy for craziness sake. Then, as we all know and perhaps fearfully remember, the whole thing came crashing down more or less on New Year’s Day in 2008. Greediness, especially on the part of big banks, and rose-colored glasses had fooled us all.

Fast forward to today and many situations bear a significant resemblance to those times. However, there is one key difference in our local economy – employment. Our regional economic driver, the Economic Development Authority of Western Nevada (or EDAWN for short) has been for years, and continues to be, hard at work touting the benefits of our local area from a business standpoint, and their hard work has paid dividends.

We’ve all heard the stories of major corporations and businesses who have decided to make northern Nevada a major part of their future. Tesla, Google, Switch and Blockchains are the biggest and most prevalent you’ve heard of in our internet driven society. Beneath these behemoths are an even longer list of just as important entities who have chosen northern Nevada as a home.

If you get a minute, I’d suggest you reach out to EDAWN’s President & CEO, Mike Kazmierski, and thank him for all the hard work he and his team have been hammering away on for years. Whether you realize it or not, their work has made your life better if you live in northern Nevada. The employment generated by the influx of these companies to the region is a huge reason why our economy is thriving and, unlike the mid-2000’s, offers a strong foundation on which it can continue.

Now, here is where things take a turn. If a company, let’s take Tesla as the obvious one, is going to create a whole bunch of jobs, then the employees filling those job positions need a place to call home. As you all know, after a long day of work, a person needs a place to go home to, whether it be a house, an apartment, a condo, or townhouse. Some of those jobs will be filled by locals who theoretically already have a home. Many of those positions are going to require people to relocate to northern Nevada and they will need a home.

“Missing Middle” Housing

This is where we are falling short as a region and it’s dangerous. I have spoken with high ranking officers at Tesla and their recruiting efforts are already being hampered by their inability to demonstrate the availability of local housing to these potentially relocating employees, many of whom will also be bringing families with them. Quite simply, northern Nevada is drastically lacking in what many have termed the “Missing Middle” of housing.

Exactly as it states, this middle brand of housing applies to a reasonably priced residence that a future Tesla employee can move into. This doesn’t include a worn out 50-year old fixer-upper nor does it include a high priced home in an affluent community. It is a home that a hard-working couple with two kids can purchase and enjoy. The opportunities to purchase, or even rent, a home in this valuable middle is rare, and getting rarer with each passing day.

Economies, particularly regional economies, can be compared to the worn-out example of a shark. They must continue to move, or they die. Locally, we must support the companies bolstering our improved economy. One of the ways we can do this is to provide what those companies need in order to be successful. In this case, that support comes in the way of creating housing needed by the employees of those companies who will make those companies successful.

Development is needed. The employment projections by EDAWN have been freakishly accurate to date, and there is no reason to believe that moving forward those projections won’t continue to be spot on. Those projections tell us that thousands of homes are needed. A couple of new homes here, or a new 50-lot subdivision there, are not going to cut it. We need thousands of new homes.

Now we must consider the developer who is considered by many to be greedy vultures of society. This is a comparison I’ve never understood because, like any other hard-working person, they provide a service and, in this case, a service desperately needed. People assume that developers will come to town, pillage our local resources (water, infrastructure, roadways, etc.) all while not contributing anything toward the impact of their new development. It is assumed they will build their homes and laugh all the way to the bank with their profits.

Common Arguments

There is also a strong sense of NIMBY-ism (Not In My Backyard) prevailing locally that is exceptionally short sighted. At this point, it makes sense to address some of the most common arguments cried out whenever new development is considered:

The infrastructure needed by a new development should be built BEFORE the homes are built.

This argument is most typically applied to roadways. Nobody likes sitting in traffic and all someone considers is that “If they build 2,500 new homes by my house, then traffic is going to get worse, so they need to do the traffic improvements first.”

This isn’t reasonable, or even possible, for many reasons. There is a delicate balance between the progress of development and the surrounding infrastructure. Many, if not all of the new roads, or improvement of existing roads, will be the responsibility of the governing municipality to maintain once they are built, whether it be the City of Reno, City of Sparks or Washoe County. Taking care of roads is expensive and requires staff, labor, and materials, none of which is free.

Furthermore, none of these governing agencies are sitting on a big pile of money with which they can just go build new roads. They each have a limited budget which is managed by smart, hard-working individuals who I sincerely believe are doing the best they can with what they have. These agencies rely on impact fees and revenue generated by the new development to fund these new improvements.

Developers, in many ways, are in the same boat. Recently, many developers have agreed to front load some improvement costs, but there is a point where they can’t go any further down that road. They too, like the local governments, need revenue from their development to pay for needed infrastructure. They must walk hand-in-hand with their accompanying local government to get things done. Each one needs the other. Now, does this mean that there could be periods where traffic (or whatever else) gets worse before it gets better? Yes, it does. But that’s how it has to happen.

That is reality.

Also, for those of you who state that developers don’t have to pay any money towards the solutions needed to accompany the impacts of their development, this is patently untrue. I encourage you to contact your local government to get it straight from the horse’s mouth what they have to pay in the way of impact fees, water rights fees, connection fees, permit fees, etc.

These costs are thousands of dollars per unit, which over the course of a large development yields millions of dollars to local governments. The roads and utilities serving your home, in your subdivision, were created exactly this same way.

They want to build in a floodplain, which will make flooding worse.

It is true that some of the recently proposed projects are situated in floodplains. As Mark Twain famously said of land, “they don’t make it anymore.”

The reality is that some of the local large tracts of land that can accompany development of the size needed are in fact located in floodplains.

However, State law and local regional policies REQUIRE that the drainage impact of a development cannot worsen the limits of flooding in the area. Simply put, the development of land within a floodplain WILL NOT MAKE FLOODING PROBLEMS WORSE. In fact, some proposed developments in the North Valleys and south Reno have gone above and beyond what is required by current Code to offer more assurance that flooding will not worsen and, in some cases, will actually be improved to some degree.

Developing in a floodplain requires technical engineering solutions devised by highly trained professionals backed by years of experience and data. Skeptics will sometimes claim that engineers will “say whatever the developer wants so the project can be approved.”

I don’t know a single engineer who would ignore the results of their professional analysis for the benefit of a client. The entire basis of their career, and livelihood, is that they are governed by a responsibility to be honest and conscientious in regard to what they are designing. Engineers are not for sale. They are hired by a client to do a job, but to do that job within the confines of their professional licensure.

They should build less lots than they’re proposing.

This statement gets made often. However, if a developer is proposing to develop property in a way that conforms to the existing zoning and Master Plan, then they have every right to propose a specific number of lots. Now, if they are proposing a change to the zoning and/or Master Plan, then those waters get a bit murkier.

There are a ton of things to consider under that scenario and they must be looked at objectively. Higher density or a different type of use isn’t always a bad thing when all things get considered. The answer can’t always be “they should build less lots.”

Furthermore, developing property is an expensive proposition. In addition to the fees discussed earlier, there are construction costs, labor costs, design costs, all of which are high right now due to high demand. Certain costs are in a sense fixed and the only thing a developer can do to make them more affordable is to split them amongst more lots. These economics are many times what can make or break a project from a development standpoint.

I don’t want that property to get developed. I like it as open space.

This is more a pet peeve than anything. If a piece of property is privately owned and not designated as Open Space, then the owner has the right to develop it. Period.

Just because you’ve enjoyed it as a sagebrush field for years, doesn’t give you any preemptive right that it stay that way. Often time’s people will claim that they’ve used the property for years for recreation, or to walk their dog, etc. and, if developed, they won’t be able to do that anymore. Well, technically speaking you’re just losing your ability to trespass.

All of this just scratches the surface of the complexities of the development game. If we want our area to continue to thrive and all of us to enjoy a nice standard of living, then we have to get on board with what needs to happen to make that a reality. We must support the businesses that took a gamble on our region. We must provide housing for the employees of those businesses.

On a grand scale we need thousands of homes. Local governments must get more proactive. Current residents must be realistic. If we don’t, then just like the shark, our local economy will die. I will go so far as to say that this article can serve as a warning. If things don’t change then we will miss a massive opportunity and in a few years be regretfully reminiscing on what we could have done differently.

The Daybreak project in south Reno is the most recent and apparent display of this phenomenon. This project is comprised of privately owned property in the South Meadows area of town, which is one of the most attractive and active regions in the area for housing.

The developers of this project are proposing 4,700 residential units on one of the few remaining property assemblages that can accommodate a project of this size. It is a prime example of what we need to be developed in our area.

It was denied at the City Council by a vote of 6-1. I believe this denial was driven by NIMBY-driven outcry and politicking rather than sound judgment. The property does have some floodplain challenges, but all were mitigated by sound engineering practices, dedicated wetlands, open space and drainage ways. Furthermore, the developer agreed to conditions above and beyond what is required by City code such as:

• Fire equipment and station improvements, including the purchase of a new ladder truck for the City of Reno Fire Department. This is notable because a ladder truck is not needed for a development such as Daybreak. This offering by the developer is solely for the benefit of the Fire Department as a whole.
• The purchase of a new ambulance for the City despite the fact that REMSA is the primary ambulance service provider in the City.
• The agreement to pay $500 per lot into a land trust to build affordable housing in other parts of the City. I’ll do the math for you and let you know that this calculates to a $2,350,000 benefit to the City.
• The developer agree to a flood mitigation practice that is 25% more than is required by City Code.

Once again, not a single one of these offerings is required in any sense. The developer has gone so far as to call them “extractions” in order to get to a hearing at the City Council level, and I have a hard time disagreeing with them.

If we have a developer who is proposing a desperately needed development in an appropriate part of town, has paid millions of dollars to devise solutions for the challenges the property presents, is willing to offer considerations above and beyond what is required of them, and they still can’t move forward then what do we have?

If you ask me, the answer is a recipe for failure. Our elected officials, in this case the Reno City Council, need to do consider the present housing crisis and vote accordingly.

Submitted opinions do not necessarily reflect the views of This Is Reno. Have something to say? Submit an opinion article or letter to the editor here.