City council approves housing initiative
After approval from the Reno City Council, it was announced last week that developers would have 120 days to submit proposals to the City of Reno for new housing projects of 30 units or more that would receive deferrals for impact fees that are usually paid up front, including sewer connection and traffic impact fees. It’s a part of Mayor Hillary Schieve’s “1,000 Homes in 120 Days” initiative, announced last month in a city press release.
Two people made public comment before the council voted to proceed with initiative—which is being described by the mayor and her staff as a pilot program. The first was Melinda Smith of the Builders Association of Northern Nevada.
“As we all are very much aware, there is not enough housing to meet the current demand,” Smith said. “And anything that can help move that needle is an enormous relief to the community as a whole. We’re currently visiting with our builder and developer members on the implementation of this proposal. We received positive feedback and hope that, in working together, the mayor, city council and staff that some detailed building proposals will be forthcoming that will help address this critical need.”
Also present to provide comment on the initiative was JD Klippenstein, executive director of local social justice nonprofit ACTIONN, who expressed concern about the fact that the initiative doesn’t have any affordability requirements written into it.
“This would be kind of a one-off initiative, and I think we’re at a time in our housing challenges that we need bolder and larger policy solutions,” Klippenstein said.
He also said he wanted to draw the council’s attention to Senate Bill 103, which passed during the last state legislative session.
“It gives you the ability to offer greater incentives by outright reducing or waiving these impact fees—not having to defer them, in order to more greatly incentivize developers to build low-income or housing that’s affordable to folks making 60 percent of [the average median income] or lower,” he said. “My concern is that this initiative is close to that, but it does not offer enough of an incentive to build that level of housing.”
The mayor, who spoke next, was quick to reiterate that the initiative—which does not require affordability as a requirement for proposals—is a pilot program.
“First of all, so, obviously, we all know we’re in a housing crisis,” Schieve said. “Let me kind of start off with where we’re at. This is the very premature sort of level—and it was meant for more of a pilot, because sometimes we do things with unintended consequences. … We want to check the temperature of what kind of development we get in, what kind of interest we get in—and also to look and check the temperature, because what we hear a lot is, ’Hey, I can’t make affordable pencil.’ … We were curious—could we make it pencil by doing this?”
The initiative is designed to specifically target developments in what are known as “opportunity zones.” Created through the 2017 Tax Cuts and Jobs Act, these zones are geared toward driving long-term capital into low-income communities across the nation through tax incentives to encourage private investment into these designated census tracts.
Assistant City Manager Bill Thomas explained, “There won’t be a thousand homes built in 120 days, but, within this experimental window of 120 days, we’re asking people to come forward who are within opportunity zone areas, which are by definition blighted, economically challenged properties that the federal government designated under the Enterprise Zone process and the governor of the state of Nevada picked.”
A thousand homes within the city’s opportunity zones is the goal of the initiative, but Thomas explained that if there are more or fewer units proposed, the city council would have the option to hear from developers proposing new homes, even outside of those zones.
“And with each of these projects, we’re asking the people who are building them, ’Where’s the place at which you can pay us back that works for you?’ Thomas said. “So it’s not predetermined. It could be a payment schedule over years at a lower rate to pay us back. It could be a lump-sum payment after a certain number of years. We’ve not defined it. We’ve said to them, ’You need to ask.’”
Several council members had questions of their own to ask prior to approving the initiative.
Vice Mayor Naomi Duerr asked if the council could “provide yet another kind of incentive—even to go to SB 103—to waive, defer or even forgive” impact fees for those developers proposing affordable housing. The answer, according to assistant city manager Thomas, was that, yes, the council could consider these options, too.
Councilmember Jenny Brekhus, concerned that developers might end up passing on the deferred costs to home buyers, asked if the proposed developments would be limited to rental properties?
Thomas explained that the initiative is designed specifically to facilitate developments that include 30 dwelling units for more, not single-family homes, adding, “I think your concern about how it might relate to financing and carrying it forward, I mean, if we’re honest with ourselves, the cost is going to be borne by the buyer no matter how you cut it.”
Councilmember Neoma Jardon jumped into the conversation shortly thereafter to note that owners of property in opportunity zones receive tax benefits but must own the property for 10 years prior to receiving them.
“So they would not be in a position of individual-ownership condos, because, obviously, they would be selling them off before the 10-year term and, therefore, they would be losing their tax benefit of the opportunity zone,” she said. “So that’s kind of why there wouldn’t be individual ownership. It would be more on a rental … basis.”
“It is envisioned that most of these would be rental properties,” Thomas confirmed. “But, again, we didn’t want to limit it.”
Brekhus also posed the question of what, if any, safeguards would be in place in the event a development went south and remained incomplete after receiving impact deferrals, to which Thomas responded that the city would likely respond with a lien on the property.
After discussing the initiative, present council members—excluding Oscar Delgado and including Devon Reese via phone—approved it, with the general consensus of it as a first, not ultimate, step.
“I get a little frustrated with all of these people that are like, ’Oh, the mayor thinks this is going to save the housing crisis,’” Schieve said during the meeting. “I don’t. I don’t. We’ve got to be realistic, but we’ve also got to do something. And we’ve got to keep trying to do something—because that’s where we’d be really letting down the public, if we don’t keep trying.”
In the coming months, the city council will review each development proposal prior to approving or rejecting it.