Innovative development agreement key to TRIC success
Before new developments break ground, local governmental bodies usually have the responsibility to build roads, drainage, extend utilities, etc.
But what happens when a developer wants to build in a very small, poor county?
The developers of the Tahoe-Reno Industrial Center offered an innovative solution to cash-strapped Storey County with a private/public development agreement.
“The private public partnership has innovative, cutting-edge provisions that are key to the success” of TRIC, County Manager Pat Whitten said.
“It’s a great deal both ways,” said Kris Thompson, project manager for TRIC Properties LLC. “The developer got fast track zoning and fast track building permits.”
The agreement, incorporated into ordinance on Feb. 1, 2000, restricts the county’s ability to impose new development regulations, fees or exactions as well as details about how much will be paid back to developers and when.
In return, the developers pay up-front costs to construct roads, bridges, rail, storm drains, run utilities and establish a public safety facility. Water and sewer are paid for through a general improvement district.
TRIC Properties has invested $100 million in infrastructure improvements, of which the county will repay $47 million, Thompson said.
That’s at 0 percent interest, Whitten emphasized. And the first $5 million of net profit — revenue after all county expenses in the center are subtracted, including staffing of the government center and fire and paramedic station — stay with the county to help it “get back on its feet,” after the recession of the 1990s.
An independent auditor tracks the expenses and net profits.
“Fast forward 6-7 years,” Whitten said. “We have surpassed that $5 million net revenue threshold.”
Payback has begun with 35 percent of net revenues paying down the debt. The county has paid about $4 million toward the debt.
The amount owed to developers by the county fluctuates up and down as new infrastructure is installed and the county pays more against the debt.
The state agreement with Tesla and other businesses introduced another level of creative wheeling and dealing to get the job done.
Storey County will not receive property tax from Tesla for 10 years, and it will be 20 years before it receives sales and use taxes.
But the company is not drawing funds from county resources either, Whitten said, and, in fact, pays for two of the four fire and paramedic crew members.
“They are paying more than their way,” Whitten said.
“With the Tesla announcement (that the company would build its gigafactory at TRIC) interest just exploded. They are paying their way and they are putting us on the world stage.”
Inquiries about TRIC come in almost daily from around the world.
“It’s a fabulous private public partnership,” Whitten said. “The agreement and procedures between private and public (parties) should be a model in other places, at least in small counties.
“It certainly worked. The rest is history.”
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.