Home > Opinion > Of sewer fees and empty spaces (commentary)

Of sewer fees and empty spaces (commentary)

By ThisIsReno

In the latest Barber Brief, Alicia Barber shares her thoughts on a Reno Municipal Code change that is much more consequential than it may sound.

By Alicia Barber

There’s an item on the City Council agenda for May 12 that stopped me in my tracks: Item E.1, which proposes permanent changes to the Reno Municipal Code (RMC) regarding sewer connection fee credits. That’s right, sewer connection fee credits.

Stay with me here, because I promise it gets more interesting, and a lot more consequential than it may sound (Jacobs Entertainment is involved).

Proposed amendments to Reno Municipal Code (RMC) deserve our undivided attention because they permanently change city law, now and for the foreseeable future. So when one comes up, we always need to ask, “What would this change do? Why is it being proposed now? And what would its long-term repercussions be?”  So let’s start with the first question.

What would this change do?

As the Staff Report explains, the proposed ordinance would amend RMC Section 12.16.155: the city’s Sewer Connection Fee Credit Policy.

Here’s the deal: any new residential, commercial, or industrial construction project has to pay a sewer connection fee in order “to reserve sewer capacity for treatment and conveyance.” Those fees are calculated through a formula that I really don’t want to get into here, but feel free to read up on it if you’re interested. Suffice it to say, those fees add up, particularly in structures with a lot of fixtures that connect to the sewer (think sinks, showers, toilets, dishwashers, etc).

The proposed code changes involve sewer connection fee credits. If a building burns down or is intentionally demolished, the owner of that parcel gets sewer connection fee credits that can be applied toward the cost of the sewer connections for a new structure to be constructed on the same parcel or an immediately contiguous one. Currently those credits have to be “spent” within five years or they expire.

The proposed ordinance to be reviewed on May 12 would change that policy to enable that five-year expiration date to be extended if the City has entered into a Development Agreement with the property owner. And if so, then—according to this proposed amendment—not only could that time limit be extended through the length of the Development Agreement but additionally, that credit could be “cashed in” not only on the newly-vacant or a contiguous parcel, but anywhere that the Development Agreement governs.

Why is this change being proposed now?

The short answer is this: Jacobs Entertainment. The staff report openly admits that this proposed change is in direct response to one of the requests made by Jacobs as part of their proposed Development Agreement for the hypothetical Neon Line District (you can read my previous posts on that from April 13 and May 2).

In their April 14 staff report City staff created a table outlining all of Jacobs’ “asks” and offered brief commentary on each of them. One of those asks involved these credits, as seen here with the staff comment to the right.

So here we are, four weeks after Jacobs’ opening bid to City Council and we’re already seeing an item that would permanently change city code to accommodate one of their requests, even before Council has expressed any support for this provision or—at least publicly—for anything else in their proposed Development Agreement.

If that seems premature to you, you’re not alone.

The staff report states this proposed change is not solely in response to Jacobs, and that “other developers have requested extensions [to the connection credits] too” (which I don’t doubt) but in the short term, the only developer that would stand to benefit from a policy that applies exclusively to a Development Agreement “district” is Jacobs.

So why this particular change regarding sewer connection credits? And why now? Simple: the clock is ticking.

The demolition of the Carriage Inn on Fourth Street began today. Image: Bob Conrad.
The demolition of the Carriage Inn on Fourth Street by Jacobs Entertainment began Sept. 8, 2017 in Reno, Nev. Image: Bob Conrad / This Is Reno

Jacobs has accumulated sewer connection fee credits from every structure they have demolished downtown since late 2017. According to my calculations, the demolition count is up to twelve motels, in addition to some other structures. The mid-century motels they have razed between West and Vine Streets alone include the Carriage InnStardust LodgeStar of RenoKeno Motel #1Keno Motel #2El Ray MotelMardi Gras Motor LodgeIn-Town Motel, Lido Inn, Crest Inn, Donner Inn, and Town House Motor Lodge.

The main reasons posed for these demolitions were not just “blight cleanup” and occupant health, but the clear promise to redevelop those cleared spaces. Upon the demolition of the Stardust back in November of 2017, Jacobs Regional Vice President Jonathan Boulware told KOLO 8, “Being able to have a lot of property between Gold Dust West and the Sands Regency gives us a lot of opportunity for us to develop.”

How many permanent structures has Jacobs started to build on the sites they’ve cleared so far? None. And under the existing five-year time limit, the sewer connection credits from their first demolitions would start to expire next year. Getting those expiration dates extended would mean that they wouldn’t need to build anything on those sites anytime soon—or at all—in order to use the sewer connection fee credits.

A slide from Jacobs’ presentation to City Council on April 14 listed flexibility in the use of sewer connection fee credits among the components of its proposed Development Agreement. Jacobs Entertainment

In fact, if their proposed Development Agreement goes through, Jacobs could leave the motel parcels empty indefinitely, directing those accumulated credits toward anything else they want to build in the expansive district they hope to establish. Could that be one or both of the residential structures they say they might start building by 2026 on the two City-owned parcels they want the City to sell them at a massive discount? Sure. Or they could be applied toward their planned expansion of the Sands.

Either way, it would be a great deal for Jacobs. But what about the City? And anyone else who might be interested in buying those parcels down the road? And the public?

How would this change benefit the City? Read more on The Barber Brief.

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