Conversion of casino anything but obvious

Barely five months ago, Chicago developer Fernando Leal learned that the owners of the Golden Phoenix Hotel Casino in downtown Reno might be looking to sell.

After a furious 90 days of due diligence including the deployment of what Leal calls a SWAT team of architects, marketers and engineers he's ready to spend somewhere north of $110 million to adapt the property at 2nd and Sierra streets into condos, townhomes, penthouses and a little retail.

He's about a month away from starting the formal sales effort his L3 Development will sink $100,000 into models of the property and $200,000 into virtual tours for its Web site before then but the project known as The Montage already has drawn calls from 400 potential buyers.

Sales representatives are booked solid with appointments until early November.

One of the two mantras under which Leal's staff operates is "Implement the Obvious," but the answer to redevelopment of The Golden Phoenix property was anything but obvious.

Anyone, Leal says, could see what would be done with the 602-room hotel tower.

It will be gutted over a six-month period starting in December and rebuilt as condos ranging from studios to two-bedroom units with dens.

Less obvious was the potential for the building's base now the casino.

The base, which measures 56 feet upward from the sidewalk to its top edge, is composed of three clear-span slices a bottom slice that's 20 feet high, a middle piece that's 16 feet high, and a top piece that adds the final 20 feet.

The answer developed by L3's team calls for two-story row houses to be developed along the street-level slice.

The middle piece will be developed into New York-style lofts, perhaps with exposed mechanical elements.

And the top slice will be developed as threestory town homes that open onto a 25,000- square-foot rooftop garden with a swimming pool.

Prices will range from the mid-$200,000 level for studio apartments to more than $2 million for penthouses.

Along with "Implement the Obvious," the second mantra at L3 Development is "When You're Scared, Say You're Scared." For his part these days, Leal says he's scared about the depth of the previously untested market for downtown condos in Reno.Nothing could make him happier, he says, than to see other new condo projects in the area sell out quickly as evidence of strong demand.

Allaying those worries, however, are his instincts that good redevelopment markets tend to follow artists and there's a clear beginning of an artistic community in downtown Reno.

The region's strong and diversifying economy helps, too.

"We bought off on Mayor Cashell's vision, and the excitement of constituents who support him," Leal says.

L3 moved quickly to nail down the Golden Phoenix deal even as a competitor for the property prepared its own bid.

L3, for instance, hired one architectural firm to think about the building's exterior and a second to develop the interior floor plan a division of labor almost unknown in the architectural world.

"In anyone's terms, what we have done is move mountains in a very short time," Leal says.

It doesn't hurt that his company doesn't rely on investors to provide its capital but instead works entirely with its own resources along with bank loans.

L3 is scheduled to close on its purchase Feb.

28.

"There's no way we would walk," Leal says, noting his company's heavy investment in the property as well as millions of dollars of earnest money on the table.

The conversion is projected for completion in the second quarter of 2007.