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Affordable housing project faces setback after city pulls out of deal with housing authority

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The Reno Housing Authority’s Executive Director last week blasted City Manager Doug Thornley after the city of Reno backed out of an agreement with the RHA to fund a downtown affordable housing project.

Still in probate, the dilapidated Bonanza Inn at West Fourth and West streets was planned to be purchased by the Reno Housing Authority with the Covid relief funds allocated by the city of Reno. RHA was to use $6 million to convert building’s 58 units to housing for those with low-median incomes.

But early this month, Thornley emailed RHA Director Hilary Lopez to sever the agreement.

Thornley wrote: “The city council has invested quite a bit in housing affordability over the last few cycles, and the RHA received a tremendous amount of funding from the state – which gives the city an opportunity to consider other strategic investments.”

Lopez shot back:

“As your partner in affordable housing development, RHA staff was dismayed to receive this notification without prior discussion and given the fact that staff from the City of Reno’s Housing and Neighborhood Development Department recently attended RHA’s [Feb. 28] Board meeting where Commissioners reaffirmed their standing directive to proceed with this project.

“Further, while you contend that you decided to terminate the [agreement] because RHA allegedly received a ‘considerable increase in state funding,’ and RHA failed to meet the reporting requirements set forth in the [agreement], you invoked the no cause termination provision of the [agreement] as the basis for the purported termination,” she added.

Lopez called the city’s termination calloused. 

She said “RHA does not concede or admit your alleged basis for termination and must clarify not only its good faith compliance with the [agreement], but also its unwavering commitment to provision of fair, sustainable, quality housing.”

A city staff report alleges a report on the Bonanza project was not forthcoming by RHA because “previous discussions and [a] letter noted the project was not intended to move forward. No correction was provided by RHA that they needed any reporting documents for Bonanza Inn.”

Staff also said in February Lopez sent RHA staff an email with information on projects in lieu of Bonanza Inn. Staff reportedly told Lopez RHA would not receive more Covid relief funds. But the RHA board voted on Feb. 28 to move forward with the Bonanza Inn purchase.

Days later, Thornley terminated the city’s agreement with RHA for the project.

He said, “Reno is proud to have committed a significant portion of the federal monies distributed over the last few years to housing affordability – up to $8.5 in ARPA alone – and looks forward to an enduring and successful partnership with RHA.”

The Reno City Council on Wednesday approved new projects funded from Covid relief dollars, and $1.35 million was allocated to new affordable housing projects.

City Council member Jenny Brekhus raised the Bonanza issue at Wednesday’s council meeting. She asked if the money for the Bonanza was reallocated.

Assistant City Manager JW Hodge responded that the money was part of $28 million the council approved Wednesday for various projects. He also said RHA got more Covid-relief money than the city did — specifically for affordable housing.

RHA and the city are still partnering on another affordable housing project.

What’s next?

“At this point the RHA board of commissioners will have to reconvene and decide how they’d like us to move forward,” RHA’s April Conway told This Is Reno.

Former Council member, and RHA board member, Dave Aiazzi said he was disappointed.

“I find it disheartening that the Reno City Council, after continuously stating that housing was their primary issue, decided to take away the $6 million that was awarded the Reno Housing Authority last year to purchase and renovate the Bonanza Motel,” he said. “This would have removed a very blighted corner in Downtown Reno while also providing much needed housing.

“But I am happy that they took back that money and spent $5,212,312.11 on ‘Revenue Replacement,’ whatever that is….”

Bob Conrad
Bob Conradhttp://thisisreno.com
Bob Conrad is publisher, editor and co-founder of This Is Reno. He has served in communications positions for various state agencies and earned a doctorate in educational leadership from the University of Nevada, Reno in 2011. He is also a part time instructor at UNR and sits on the boards of the Nevada Press Association and Nevada Open Government Coalition.

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