Costco and city see first deal

Carson City officials have until Dec. 30 to respond to a formal letter of intent offered by representatives of discount warehouse chain Costco to buy 15.3 acres of land near Fuji Park.

The letter was the first official document to surface in the weeks-long debate to build a store on the city-owned property.

Earlier this week, Costco Chairman Jeff Brotman said if the plan to add 15.3 acres across Clear Creek Road from Fuji Park to the redevelopment district passed through city channels, Costco would definitely build at the south Carson site.

While not a binding agreement to either party, the letter of intent from the warehouse company is a precursor to a purchase sales agreement and sets out a few preliminary negotiating points for the city to follow.

The city's attorneys are examining the document and will respond, City Manager John Berkich said.

Berkich said he and Costco representatives discussed the price of the land, but no price has been set. The land has been appraised at $5.25 per square foot, Berkich said, which would put the property's value around $3.4 million. Land across Highway 395, however, was valued by a jury verdict earlier this year at $22 per square foot. The state had condemned property owned by John Serpa in 1994 to make way for a bypass near the Highway 395 and Spooner Summit junction and Serpa sued, charging that he was not paid fair market value. A jury agreed and awarded him $5.8 million.

The state is appealing that decision.

The letter offered by Costco this week also notes the city can't negotiate with a third party as long as there are negotiations with Costco.

City officials still have to deal with the U.S. Forest Service for three acres of land necessary to Costco's development.

City ownership of the state-maintained Clear Creek Road is also important to Costco's development. The State Transportation Board is tentatively set to decide Jan. 21 on transferring about a mile of the road to Carson City.

Deputy City Manager Dan St. John said owning the road will allow Costco to deal with one entity rather than going through several agencies. St. John said the city could reduce the right of way on the road to make additional land available for development.

Costco will meet with city community development, utility and development services staff on Jan. 18 for a major project review.

Community Development Director Walt Sullivan said the review will be an opportunity for the city to look over Costco's plans. Sullivan said some of the challenges could be drainage, grading the site and a traffic study of the area.

While traffic to Fuji Park doesn't warrant a traffic signal on Highway 395, St. John said Costco shouldn't have any problem with the Nevada Department of Transportation.

"With a project like this, they'll be able to demonstrate that the projected traffic will be more than enough to warrant the signal," St. John said.

Most of the utility infrastructure at the site is in place because of the anticipated growth of Fuji Park, although some improvements will have to be made such as the upgrade of the sewer line, St. John said.

Adding the parcel at the junction of highways 395 and 50 to the redevelopment district will allow the city to negotiate with one buyer rather than go through the public bid process. City supervisors will decide on the land transfer Jan. 6. If the ordinance is approved, the soonest the Redevelopment Authority could sell the land would be Feb. 17, Berkich said.

Douglas County developer Bill Wellman, president of Sunridge Corporation, said he also has a letter of intent from Costco on property two miles south of Carson City's site. While he said he isn't upset with Carson's action, he said he was disappointed.

"I guess a letter of intent doesn't mean anything," Wellman said. "I guess everyone can make up their own opinions as to what's going on. I'm disappointed in Costco's attempts to tell us we have a deal, and then we find out this second hand."

Wellman hasn't heard from Costco since before Thanksgiving, he said.