BOARD OF REGENTS BRIEFING PAPER 1. Agenda Item Title: Acquisition of Real Property located at 182 E. 9th Street, Reno NV Meeting Date: September 5 & 6, 2013 2. BACKGROUND & POLICY CONTEXT OF ISSUE: Location of Property: Directly adjacent to the southern border of the University of Nevada, Reno s main campus and within the University Gateway that contains several NSHE owned properties (see Exhibits 1 & 2). Property Description: Two story residential apartment building with approximately 3,942 square feet of living space, on a 0.11 acre lot. Zoning: MUUN (Mixed Use University of Nevada) as part of the University Regional Center Plan. Purchase Price: The purchase price is $450,000. Appraised Value: The current market value of the property is $450,000 as determined by both the Comparison Sales and Income Approach (see Exhibit 3). Other: No mineral or water rights are associated with this property. Offer and Acceptance Agreement: Written agreement between Buyer and Seller (see Exhibit 4). Mary Dugan, General Counsel for the University of Nevada Reno, reviewed and approved the attached agreement. Phase 1 Environmental Report: This assessment has revealed no evidence of recognized environmental conditions in connection with the property and no further assessments are warranted at this time (See Exhibit 5). Asbestos Report: Typical for properties within this area, laboratory results indicate the presence of asbestos content in the acoustic ceiling material, some sporadic wall surface texture/compound samples, and underneath the kitchen sheet vinyl. The report noted that the materials appeared to be in generally good condition and, if left undisturbed, should not pose a health hazard (See Exhibit 6). Disclosures will be part of any residential contract for lease typical of experienced Landlords within this area. Title Report: Preliminary title report reviewed and approved. Any assessments and liens will be paid in full by seller before close of escrow. Title report and insurance to be provided by First Centennial Title Company at the time escrow closes (See Exhibit 7). Closing Costs: Buyer and Seller will each pay their respective customary closings costs. NSHE s closing costs are estimated to be approximately $1,200. Intended Use: Currently 100% leased. Will continue to be managed as residential apartment rentals until needed for campus programs or future development. (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 1 of 32
3. SPECIFIC ACTIONS BEING RECOMMENDED OR REQUESTED: President Marc A. Johnson requests approval to purchase real property at 182 E. 9th Street, Reno, NV located on the southern border of the University of Nevada, Reno main campus for $450,000. 4. IMPETUS (WHY NOW?): Property is adjacent to the main campus boundaries and within the Campus Master Plan. Property is located next to other University-owned residential properties and campus parking lots. This acquisition represents a key assemblage of contiguous properties bordering the University campus and completes frontage ownership along 9 th Street from the east corner of Center Street to the west corner of Lake Street, two city blocks of frontage. Though not currently listed, the owner has agreed to sell the University the Property now. 5. BULLET POINTS TO SUPPORT REQUEST/RECOMMENDATION: Property is offered at appraised value. Property is within the main campus boundaries, the Campus Master Plan and is a key assemblage property for UNR. Acquisition is consistent with the University s Strategic Plan and Campus Master Plan. Property currently 100% rented for residential use with a 5%+ return until property is needed for future development by UNR. It is expected that the return will be over 6.5% after adjusting to current market rents within the immediate area. 6. POTENTIAL ARGUMENTS AGAINST THE REQUEST RECOMMENDATION: Requires expenditure of Property Acquisition Account funds. 7. ALTERNATIVE(S) TO WHAT IS BEING REQUESTED/RECOMMENDED: Pass on the opportunity to acquire the property at this time and 1) Risk purchasing it at a future date, if available, and possibly at a higher price. 2) Risk losing the opportunity to control contiguous assemblage of properties bordering the University campus which will complete frontage ownership along 9 th Street from the east corner of Center Street to the west corner of Lake Street, two city blocks of frontage (see Exhibit 1). 8. COMPLIANCE WITH BOARD POLICY: X Consistent With Current Board Policy: Title #4 Chapter #10 Section #1 Amends Current Board Policy: Title # Chapter # Section # X Other:_Procedures & Guidelines Manual, Chapter 5, Section 3, Preparation and Approval of NSHE Contracts. X Fiscal Impact: Yes X No Explain: Will require expenditure of $450,000 from the Property Acquisition Account. Reviewed by Chancellor Reviewed by General Counsel as to form (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 2 of 32
EXHIBIT 1 182 E 9th Street Locaon 10TH University of Nevada, Reno N VIRGINIA ST N VIRGINIA ST Campus E 9TH ST E 9TH ST E 9TH ST LAKE ST W 9TH ST N CENTER ST N CENTER ST N CENTER ST E 8TH ST N CENTER ST E 8TH ST I80WB FY I80EB FY White arrow shows the locaon of 182 E 9th Street south of the University of Nevada, Reno campus Designates University of Nevada, Reno owned properes (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 3 of 32
EXHIBIT 1 (Alt) 182 E 9th Street Locaon 10TH University of Nevada, Reno N VIRGINIA ST N VIRGINIA ST Campus E 9TH ST E 9TH ST E 9TH ST LAKE ST W 9TH ST N CENTER ST N CENTER ST N CENTER ST E 8TH ST N CENTER ST E 8TH ST I80WB FY I80EB FY White arrow shows the locaon of 182 E 9th Street south of the University of Nevada, Reno campus Designates University of Nevada, Reno owned properes Designates University of Nevada, Reno has current opon to purchase rights through 2016 (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 4 of 32
EXHIBIT 2 182 E 9th Street Parcel University of Nevada, Reno Campus E 9TH ST E 9TH ST LAKE ST White arrow shows the property parcel of 182 E 9th Street south of the University of Nevada, Reno campus (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 5 of 32
J P & A OHNSON ERKINS SSOCIATES, INC. R E A L E S T A T E A P P R A I S E R S & C O N S U L T A N T S Reno Lake Tahoe (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 6 of 32
Stephen R. Johnson, MAI, SREA Reese Perkins, MAI, SRA Cynthia Johnson, SRA Cindy Lund Fogel, MAI Scott Q. Griffin, MAI Daniel B. Oaks, MAI Benjamin Q. Johnson, MAI J P & A OHNSON ERKINS SSOCIATES, INC. R E A L E S T A T E A P P R A I S E R S & C O N S U L T A N T S Main Office: 295 Holcomb Avenue, Suite 1 Reno, Nevada 89502 Telephone (775) 322-1155 Lake Tahoe Office: P.O. Box 11430 Zephyr Cove, Nevada 89448 Telephone (775) 588-4787 FAX: Main Office (775) 322-1156 Lake Tahoe Office (775) 588-8295 E-mail: jpareno@johnsonperkins.com jpatahoe@johnsonperkins.com Reno Lake Tahoe Karen K. Sanders Gregory D. Ruzzine Chad Gerken (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 7 of 32
J P & A OHNSON ERKINS SSOCIATES, INC. R E A L E S T A T E A P P R A I S E R S & C O N S U L T A N T S Reno Lake Tahoe (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 8 of 32
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Reno Office 815 Maestro Drive Reno, Nevada 89511 Ph: 775.829.2245 Las Vegas Office 6280 South Valley View Boulevard Suite 604 Las Vegas, Nevada 89118 Ph: 702.260.4961 www.mcgin.com PHASE I ENVIRONMENTAL SITE ASSESSMENT 180, 182, 184, 186, and 188 East 9 th Street Reno Washoe County Nevada APN 007-22-01 Site Remediation Soil & Groundwater Investigations Closure Optimization Brownfields Redevelopment Prepared for: University of Nevada Reno Business Center North 895 North Center Street Reno, Nevada 89501 Permitting & Compliance Phase I Assessments Storm Water & Spill Plans Underground Tank Services Toxic Release Inventory Geographic Information Systems Groundwater Modeling Litigation Support & Expert Witness July 8, 2013 (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 18 of 32
Phase I ESA: 180, 182, 184, 186 and 188 East 9 th Street, Reno, Washoe County, Nevada iii EXECUTIVE SUMMARY This report presents the findings of a Phase I Environmental Site Assessment (ESA) performed on a single parcel containing multiple addresses including: 180, 182, 184, 186, and 188 East 9 th Street in Reno, Nevada. McGinley and Associates, Inc. (MGA) conducted this investigation for the purpose of identifying recognized environmental conditions (RECs) on the subject property and/or nearby properties in accordance with the 2005 American Society of Testing and Materials (ASTM) standards for the performance of Phase I Environmental Site Assessments (ASTM E 1527-05), as well as the standards established by the U.S. Environmental Protection Agency (EPA) in 2006 for conducting All Appropriate Inquiries (AAI). The subject property is approximately 0.112 acres in size and presently consists of a single parcel of land. The property contains one building that is currently being used as residential housing. The building is one story with a basement and has five separate units available for housing. The property can be accessed from the North via East 9 th Street. The layout of the subject property is illustrated in Figure 2. Utilities supplied to the subject property consist of power (NV Energy), gas (NV Energy), water (Truckee Meadows Water Authority), and sewer (City of Reno). The subject property is located within the Truckee Meadows region of northern Nevada at an elevation of approximately 4,520 feet above mean sea level. The climate of the region is described as Mid- Latitude Steppe, which is characterized by cold winters, hot summers, and semi-arid precipitation conditions. Average minimum and maximum annual temperatures for Reno, Nevada during the period from 1996 to 2013 were 42.0 and 66.6 degrees Fahrenheit, respectively, while total annual precipitation averaged 7.68 inches. The geology of the subject property area has been mapped as Tahoe Outwash. The unit is described as boulder to cobble gravel, sandy gravel, and gravely sand. Surface soils at the subject site have been mapped as Orr gravelly sandy loam, 0 to 2 percent slopes. The soil unit is described as well drained with moderate available water capacity. No streams, ponds, or wetlands were observed on the subject property. The nearest major surface water body to the subject property is the Truckee River, which is located approximately 0.7 miles to the southeast. Runoff from the site during storm events would most likely travel overland towards the southeast. According to the Federal Emergency Management Agency (FEMA), the site is not located within a 100-year flood zone and is listed as being in Zone X, which is described as an area outside the 0.2% annual chance floodplain. Based upon a review of well logs for the area, as provided on-line by the Nevada Division of Water Resources (NDWR), MGA estimates that depth to groundwater at the subject property is between 30 and 55 feet below ground surface (bgs). Groundwater flow direction is estimated to be generally towards the southeast. A search of the State of Nevada Division of Water Resources (NDWR) database did not indicate any wells on the property. However, the database lists several wells in the general vicinity of the subject property. A regulatory review was conducted using a one-mile search radius starting from the subject property. The subject property was not identified in the search as a regulatory site. In addition, the regulatory review found one Resource Conservation and Recovery Act (RCRA) Conditionally Exempt Small Quantity Generator (CESQG) site, 111 State Hazardous Waste Sites (SHWS), five Underground Storage Tank (UST) sites, three Solid Waste Recycling (SWRCY) sites, one RCRA Non-Generator site, one EDR US Historical Auto Station sites, one state BROWNFIELDS sites, three US BROWNFIELDS sites, one EDR Manufactured Gas Plant (MGP), and one EDR US Historical Auto Station. Based on a review of available information regarding the 1 listed sites, all of the sites appear to be located far from the subject property, are at locations that are considered likely to be hydrologically downgradient from, or cross gradient to, the subject property, have had no reported releases, have had no reported violations of hazardous waste regulations, and/or have received regulatory closure. UNR049 Phase I ESA 20130708 McGinley & Associates, Inc. (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 19 of 32
Phase I ESA: 180, 182, 184, 186 and 188 East 9 th Street, Reno, Washoe County, Nevada iv MGA conducted a Vapor Encroachment Screen (VES) investigation in accordance with the 2010 ASTM Standard Guide for Vapor Encroachment Screening on Property Involved in Real Estate Transactions (ASTM E 2600-10). At the request of MGA, EDR performed a VES for the area encompassing the subject property by reviewing federal, state, and local environmental databases. The goal of the VES is to identify the potential for vapors from hazardous substances and petroleum releases to reach the subject property. ASTM E2600-10 defines the term, vapor encroachment condition (VEC) as the presence or likely presence of chemical of concern (COC) vapors in the subsurface of the subject property caused by the release of vapors from contaminated soil or groundwater or both, either on or near the subject property. The VES was accomplished by reviewing government and historical records at specific search distances to identify contaminated properties within the primary and secondary areas of concern (AOCs). Seven sites upgradient of the subject property were identified within the primary AOC For each site, a VEC was ruled out due to the distance from the subject property, groundwater gradient, soil characterization, and/or potential to impact the subject property. We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E 1527 of a single parcel of land located off East 9 th Street in Reno, Nevada, the property. Any exceptions to, or deletions from, this practice are described in Section 9 of this report. This assessment has revealed no evidence of recognized environmental conditions in connection with the property and no further investigations are warranted at this time. UNR049 Phase I ESA 20130708 McGinley & Associates, Inc. (INVESTMENT AND FACILITIES COMMITTEE 09/05/13) Ref. IF-5, Page 20 of 32
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