Only hours before last week's high-profile launch of a mixed-use redevelopment project in Victorian Square, negotiations to restructure the project's finances gave some breathing room to the developer.
Members of the Sparks City Council, wearing their hats as the board of the city's redevelopment agency, agreed to sell three acres of Victorian Square property to Trammell Crow Co. for an upfront price of $100,000.
Initially, the upfront price was set at approximately $1.45 million $10 a square foot.
In exchange for giving up $1.35 million of upfront cash, the city will get a piece of the project's revenues once sales top $71.3 million.
The new deal gets Trammell Crow back on track for the 171-condominium project known as The District at Victorian Square, said Par Tolles, a principal in the Reno office of the development company.
"It gets us within budget. We would have been out of budget without it," Tolles said.
In the 15 months since Trammell Crow and High Street Residential, its residential development subsidiary, presented their proposal for mix of condos and live-work spaces in Victorian Square, construction costs have risen sharply.
At the same time, the once-hot residential market in northern Nevada cooled.
City officials were understanding of the developers' ability to hit a moving target as they pulled the project together when both costs and potential demand were changing.
"They've had some cost challenges at the same time that there has been some softening in the for-sale residential market," said Armando Ornelas, Sparks' redevelopment manager.
Among the cost challenges, Ornelas said, is a requirement that Krump Construction, the general contractor on the project, pay the prevailing wage rates under federal law. Those wages often are higher than contractors otherwise would pay.
Along with the financial breathing space it provided to Trammell Crow last week, the city also will undertake $4.1 million in improvements to Victorian Square.
Among those improvements is underground utility work to provide service to The District at Victorian Square project. Lighting, landscaping and street improvements also are included.
Ornelas said the city views its investment and its flexibility on the financial terms as key elements to restarting the development process in Sparks' downtown.
City officials and residents alike have voiced hopes for more daily activity in Victorian Square, a busy location for special events but often quiet between them.
The next key step for Trammell Crow is pre-sales of the condo and work-live units. The developers hope to break ground in the spring and need at least 20 percent of the units to be pre-sold to finance construction.
"We're confident in the location," said Tolles. "We're confident in the product type."
The developers' research found a strong appetite among buyers in northern Nevada for an urban village community places in which they can walk or bike to many destinations, including work.
The District at Victorian Square will offer 20 floor plans ranging from 768 to 2,169 square feet. Prices start in the mid-$200,000s.
As the pre-sale push begins, Trammell Crow and High Street Residential also will be nailing down a deal with an equity partner. Tolles said the companies have fielded a number of inquiries from potential partners.
Design of the project is handled by the architectural firm of James, Hardwick + Partners Inc., RTKL landscape architects and Blue Water Studio interior deisgn.
The Reiser Group is overseeing sales and marketing.
