City Council's Baffling Approval of the Jacobs Development Agreement

The deal relinquishes the City's power to help shape the west side of downtown

In my past few posts, I’ve been writing about the City’s proposed Development Agreement (DA) with Jacobs Entertainment, which was hastily scheduled for an October 13 City Council meeting, despite the lack of a promised public workshop to discuss its terms in advance, less than a week provided for the public to review it, missing “Exhibits” that were made available only a day prior to the meeting, and—most importantly—the absence of any clear benefit to the City.

The need for a delay to discuss these and other aspects of the agreement was obvious, as I urged in my October 12 Brief and as overwhelming public comment to City Council requested. And yet, despite those issues and concerns—and the Council’s failure to even mention some of the deal’s key components—Mayor Hillary Schieve and Councilmembers Oscar Delgado, Neoma Jardon, Devon Reese, and Bonnie Weber voted to approve the draft with minimal changes, sending it to City Manager Doug Thornley to finalize. The basic parameters were covered by the press, and I encourage you to read takes by This is Reno, the Reno Gazette-Journal, News4, and others.

The approval of the agreement was, frankly, shocking. And many of you were shocked, too; I’ve never received so many calls and emails wondering what is going on and what we can do about it. So to begin with, let me say this:

It’s not over yet.

Development Agreements require approval via City ordinance, and Council has scheduled a second reading of this one for their next City Council meeting on Wednesday, October 27 (it’s item F.3 and the staff report is here). If you think the City can do better than this highly disappointing deal, please reach out to City Manager Doug Thornley and our City Councilmembers as soon as possible. Public comment is the easiest way to register your concerns, so please do that (details at the end) and if you can do even more—call your Councilmember, write something on social media—this would be the time. And just to be perfectly clear: opposing this item would not mean opposing any Development Agreement with Jacobs, or general development of the area where their properties lie; it just registers opposition to this version of a Development Agreement, with the hope that a better one can be negotiated.

Why so urgent? Because in my 20+ years of studying Reno’s development I have never seen such a blatant giveaway of incentives, credits, fee deferrals, regulatory allowances, branding and other rights by the City of Reno to a private entity while in return guaranteeing the City literally nothing that the City isn’t already getting or doesn’t already have, or, moreover, with any clear plan or project for the area in question.

We have repeatedly heard assertions that this agreement will provide the City with a once-in-a-generation opportunity to remake a huge portion of downtown. And yet this agreement contains no descriptions of what kind of development the City wants to see in this massive infill area, what percentage should consist of housing (and what kind and in which area), whether any of it should feature pedestrian-level interest and activity in order to create safe and walkable neighborhoods, what height, size, density, and intensity the developments should be, what uses to prioritize along the busy thoroughfare of West 4th Street or near existing residences, how to treat specific historic structures in the delineated area—this agreement contains none of that.

These are all things that Development Agreements can do. And don’t take my word for it; here’s the slide City staff showed Council last summer making that all clear.

None of those measures would prevent Jacobs from selling their parcels to other parties. What they would do is hold Jacobs and others to a set of expectations laid out by the City, in order to qualify for the incentives, fee deferrals, and credits they would be receiving. In return, the City would be assured that those benefiting from these valuable incentives would be delivering what the City wants to see in this key area.

Jacobs might not want to agree to any of that, but that arrangement is what makes Development Agreements such a unique “tool in the toolbox”; they’re supposed to reflect a give and take, hammered out through negotiation until both sides come to a final agreement. The City ultimately holds all the cards here, but without putting any of those or similar provisions into place, this DA doesn’t do anything to leverage that power. It literally could not legally have been written to give Jacobs Entertainment much more flexibility in what they will actually do with the 70+ parcels under their control, and the City less of a say in the course and form of that development.

Why would the City agree to such a thing?

This is what remains baffling to me, and I can’t understand if perhaps these five City Councilmembers don’t understand what Development Agreements have the power to do, if they are getting very bad advice, if they genuinely don’t care what is built in this area (and how soon), or if they just want us to trust Jacobs to do the right thing. The Council’s discussion of this item on October 13 took more than three hours, so I’ve selected a few excerpts to discuss, as they reveal some key perspectives and points voiced by Jacobs representative Garrett Gordon, City staff, and some Councilmembers.

I have four clips here, one each of Councilmembers Jenny Brekhus, Naomi Duerr, and Devon Reese, and Mayor Schieve. For each I’m going to explain what they’re talking about and then discuss what was said. I’ll provide links to other points, too.

Any selection of clips of course runs the risk of being charged that words were taken “out of context” so I’ll indicate in each case where precisely in the YouTube video of the meeting each one can be found, and anyone can feel free to watch as much of that context as you like—and maybe even the full three-hour meeting if you have the time. [And keep in mind you can always view these posts on my Substack page.]

Jacobs Representative Garrett Gordon refuses to participate in a public workshop prior to the approval of a Development Agreement.

Let’s start with the two Councilmembers who voted against approving this draft of the Development Agreement. First, here’s Councilmember Naomi Duerr. This seven-minute exchange happened about 90 minutes into the hearing, at 5:37:54 in the video, after presentations from the staff and Mr. Gordon, the Jacobs rep/attorney.

Prior to this, Duerr had already expressed her dismay to City Revitalization Manager Jeff Limpert (watch here) that staff did not follow her direction to host a public workshop before any further discussion of the DA, as she had initially requested in April and which everyone, including Councilmember Bonnie Weber, fully supported at the time of the motion. Duerr again reiterated the direction to staff in July during the discussion of the sale of City parcels to Jacobs and clarified that the workshop was not dependent on whether or not the DA included Tax Increment Financing (TIF).

Both Duerr and Jenny Brekhus reminded staff last week that Council’s direction to the City Manager in April was for him to work with Jacobs on a more palatable Development Agreement and then bring it back to them—with a public workshop happening before any Council meeting. That’s what they were waiting for and what they expected to happen. Why it did not happen remains unclear. Apparently the request—which had no pushback at the time—was simply and inexplicably ignored.

Here Duerr is explaining that she, like the public, feels excluded from the process of creating this Development Agreement, explains to Mr. Gordon why a public workshop would also be in Jacobs’ benefit, and asks her fellow Councilmembers for a delay in their vote until one can take place. As you watch the clip, pay attention to how Gordon characterizes what this Development Agreement would (and would not) do.

Duerr refers at the beginning of the clip to having been very open to the idea of this DA and to Jacobs’ investments in general, having met with Mr. Gordon as well as with Jessica Sferrazza, the former Reno City Councilmember who now works as a lobbyist for Jacobs and other clients (Mayor Schieve discloses her personal relationship with Ms. Sferrazza whenever facing a decision involving one of those clients).

For his part, Mr. Gordon makes very clear the company’s reasons for seeking immediate approval of the agreement: Jacobs is courting “national builders” and wants these measures put in place so potential buyers of the parcels they have assembled can “take advantage of the regulatory framework” it would establish. Naturally, securing fee deferrals and other credits could allow Jacobs to secure easier and more profitable land deals, but that sense of urgency is not something the City is obligated to assume at the expense of thoroughness and clarity. In denying the need for a workshop, Mr. Gordon complains of being treated differently than the RED development at Park Lane, but that project had a firm plan for what would actually be constructed there and included no public rights-of-way. Of course it’s different.

Furthermore, in urging hasty approval of the agreement, Mr. Gordon repeatedly minimizes what it would actually do. What he refers to as “regulatory cleanups” and “regulatory clarifications” are in fact regulatory ALLOWANCES—deviations from standard City policy that Jacobs wants inscribed in a legally binding 20-year contract.

It’s to Mr. Gordon’s benefit to minimize the significance of these measures, but they are not minor and grant the company the right (among other things) to erect a huge archway sign over West 4th Street (something entirely new to this version of the DA, despite what Mr. Gordon claimed), to name an entire area something chosen solely by Jacobs Entertainment in order to advertise its own properties (honestly, what does “neon line” even refer to?), to unilaterally select a corridor streetlight design (something that has always been subject to a public process), and to enjoy an array of financial incentives and credits, including up to $4.6 million for costs associated with installing their wall, landscaping, lights, and Burning Man sculptures.

Much of this agreement is written in a way that allows for all sorts of subjective interpretation and leeway that operates solely in Jacobs’ favor. For instance, here’s the language regarding the “Archway Sign” they want to erect over West 4th Street:

What exactly are the standards for “on-premises signs in the Gaming Overlay District,” and who is to decide whether those standards are “unfeasible or undesirable for the Archway Sign”? Sounds like that’s a call Jacobs is being granted the power to determine, with flexibility that “the City” (who does that actually mean? the City Manager?) could provide. The nonprofit organization Scenic Nevada is concerned enough about this sign that they’ve issued an alert—read here for more about that.

Likewise, the section on Historic Preservation contains language that makes it unclear who gets to determine whether a historic resource is “valued” and when “preservation or relocation is not feasible”—again, according to whom?

At the very least, this section should require the property owner to consult with the City’s Historical Resources Commission, to grant the City a role in determining what is and is not “valued” or “feasible.” Otherwise, this section is virtually meaningless.

Mr. Gordon tries to make the case that the public will have plenty of opportunities to provide input down the road, saying he’ll be back in November and December with tentative map and street abandonment requests for the planned condos on West Second Street. This may be true, but it’s also an aberration. Condo projects do require approvals of tentative maps because they subdivide parcels into smaller portions, and the project on Second Street apparently would also require street and alley abandonments. But it’s not known if anything else in this entire area will, and in fact, most projects that Jacobs or any other builder might construct on the rest of their parcels would likely be able to proceed with no additional public review whatsoever.

While it’s true that a Development Agreement can’t be used “to circumvent the entitlement or discretionary review process” (City Code Section 18.08.805), most infill projects don’t require any such reviews, maps, or conditional use permits, so long as they comport with existing zoning code (which in this area is mostly Mixed Use-Northwest Quadrant, with some Mixed Use-Entertainment District east of Ralston and south of West 5th Street). All they’d need is a building permit, and away they’d go.

The clip ends with Mr. Gordon’s categorical refusal to appear at a public meeting before this Development Agreement is finalized. To him, the only reason to involve the public in this discussion is to get their input on how to distribute any tax increment that might be generated through the creation of a Tax Increment Financing (TIF) district—which he says Jacobs will be requesting in the future. (That should be a red flag, by the way—imposing TIF in this area could have a massive impact on the city’s existing—and struggling—redevelopment districts.) But whether or not the City holds a workshop is not Mr. Gordon’s decision to make. If the City wants to hold a public workshop, they can do so—with or without his participation.

As Duerr repeatedly says, this is the time to make critical decisions about the future of this area and to exert the City’s leverage. Jacobs may never return for a TIF request, and even if they do, the moment when the City could help shape what is actually developed there will have passed. The moment for a thorough discussion is now.

City staff admits this DA provides no public benefit to the City besides potentially getting something built in the area at some point.

In the next segment, which occurs at 4:54:24 in the recording, Councilmember Brekhus expresses concern that this Development Agreement, while purporting to apply only to parcels owned by Jacobs Entertainment, includes references to (and a map designating) a “Neon Line District” that includes properties the company does not own, with no explanation as to why (a concern I share). She also asks City staff to clearly state what they see as the public benefit of this agreement.

Brekhus begins here with her concern that any references in this document to a larger “Neon Line District” implies the City’s tacit approval of Jacobs Entertainment’s intentions for an area they do not entirely own and could be interpreted as privileging the Jacobs agenda over the interests of the area’s other property owners—none of whom, I presume, have been approached by the City to ascertain how they feel about their parcels being depicted as part of a “Neon Line District.”

Brekhus also refers back to something she had revealed earlier in the meeting, that the owner of a West 4th Street motel told her that City Manager Doug Thornley had called her (the motel owner) and encouraged her to attend a meeting with Jeff Jacobs at The Sands to discuss selling her parcel to him—something Jacobs had been pressuring her to do. That itself bears further explanation, but Brekhus’ larger concern here is that the City may appear to be conflating public and private interests.

As for her query about the public benefit of this DA, Mr. Limpert identifies it as “increased property tax revenue.” Now, while it is true that it would be advantageous to City coffers for something to be built on the vacant parcels that Jacobs has cleared, it is also true that Jacobs could construct something on those parcels without any incentives or fee deferrals whatsoever, and that they could still construct something on those parcels should the City better define what they would like to see on them.

If you’re going to go to the trouble of entering into a binding 20-year Development Agreement with a private entity, shouldn’t the benefit be a bit more robust than the possibility that something might be built? And lastly, to her answer of whether there were any performance measures in the agreement, the answer was no. [The final motion did ultimately include the provision that Jacobs must apply for building permits for 63 units within a year, but applying for building permits was already required under the terms of the prior City parcel sale, so it was nothing new.]

How is the City “remaking downtown” if they provide no direction?

This next clip, which occurs at the 5:00:43 mark, is from Councilmember Devon Reese, and in it he explains what he sees as additional public benefits of the Development Agreement and what he thinks it will do.

To Reese, additional benefits to the City include the improvement of an area of town that has “gone through some historic blight” (referring presumably to the motels), the ability of this agreement to “super-charge” the construction of housing and to add “art and cultural benefits to the community” (if he’s referring to the installation of Burning Man sculptures, then of course they’ve already been installed), and “the opportunity to really remake an entire area of town in an existing neighborhood.”

While it’s certainly true that Jacobs Entertainment has the opportunity to remake this section of downtown because they have purchased (and cleared) so much of it, how exactly does this agreement help the City to do that? The City can only help to remake this area if they impose some degree of regulation over what Jacobs or its successors can build there. This agreement can only “super-charge” the construction of housing if it includes a requirement for the construction of housing (and again, I’m excluding the hastily added provision that Jacobs apply for building permits for the condo units on West Second Street, since the City was already requiring that action).

Councilman Reese rightly states that this area “needs to have some better thought about it rather than go parcel by parcel, piece by piece, throughout a district.” But again, how does this Development Agreement accomplish that? While the description of the “project” in the Development Agreement lists among its features “the construction of 2,000-3,000 residential units,” the agreement itself does not hold the company to that number, nor to any of the other conceptual ideas mentioned in that description, which as I’ve quoted before, refers vaguely to “the expansion, renovation and rebranding of the Sands Regency Casino Hotel [how much you wanna bet that rebranding will contain the word “neon”?], world-class artwork from both local and international artists, and an array of other commercial, retail, plaza, green space, convention and entertainment venues.”

That’s it. No specifics, no locations, no timeline, nothing. So how can it be said that this agreement would do anything but allow Jacobs to proceed on a parcel-by-parcel basis, with all of its lucrative deferrals and incentives in place, no matter what gets constructed on each of those parcels, and when, over the course of the next 20 years?

Again, Development Agreements are set up to do so much more. And there are multiple findings that City Council needs to make in order to approve one, as outlined in City Code (Chapter 18.08.805). Below are just the first two of eight, but there are some clear parameters for when this mechanism would be appropriate.

Although the area Jacobs owns or controls is large, it’s hard to see how this agreement as drafted even pertains—how can this project be called “complex” when no project is even defined? There are no infrastructure requirements (being infill), no phasing schedules (just expiration dates for incentives), no conditions of approval (beyond the aforementioned handful of condo units), and serious questions regarding whether it would be “of benefit and in the best interest of the city.” I’m truly at a loss.

Reese ends by saying that “We’ve been engaged in this conversation for much more than just today. We’ve been doing this for months and months and months.” That may be true for City staff and for him, but of course it’s not true for the public. And I hope he would agree that our City Councilmembers have a responsibility to be engaged with and responsive to their constituents on an ongoing basis, rather than assuming that their role as elected representatives entitles them to negotiate on the public’s behalf without directly soliciting their opinions on a matter of this import.

Development Agreements should not operate on faith or as a reward.

My last clip took place toward the end of the discussion, at 6:25:41, when Mayor Hillary Schieve offered some final thoughts on the Agreement. At the outset, she repeats something she asserted throughout the meeting, at times quite aggressively—that Councilmember Brekhus should have been meeting in private with the developer and his representatives all along, as presumably the Mayor and others have done.

While meeting with applicants and lobbyists is a part of life for most elected and appointed decision-making bodies, the repeated insistence that such private meetings—and not public discussions—were where this agreement should have been hammered out was disturbing. Recall again, as Councilmembers Duerr and Brekhus kept reminding everyone (to no avail), the Council’s direction to staff in April was for the staff (not Councilmembers) to negotiate terms with Jacobs and bring a new draft back to them in a public meeting, preceded by a public workshop. Here’s the Mayor.

There’s a lot to unpack in these remarks, but here are some key points:

• She states that she’s sure that Jacobs would be happy to meet with residents after a Development Agreement is approved. This echoes something that Councilmember Neoma Jardon also suggested—that the public might feel better if Mr. Gordon agreed to meet with them to describe their “vision”—but only AFTER this agreement was set in place. Of course, by then it would be too late to make any changes to this deal. Residents don’t have the power to bind the company to anything—that power rests solely with City Council here and now, with repercussions to last for the next 20 years.

• She refers back to Jacobs’ role in demolishing motels and touts the company’s generous donations to various affordable housing initiatives, stating, “I have to believe that we have a good partner here.”

It’s clear that the Mayor has faith that Jacobs Entertainment will reinvent the west side of downtown (as Tony Hsieh did in downtown Vegas) without any specific prescriptions or requirements. But the rest of us—current and future residents of the City—don’t have that luxury. And as Councilmember Duerr stated earlier, the need to negotiate robust terms of this agreement is not about whether Jeff Jacobs is a good person. Likewise, it should not have any relation to what Jacobs or his company have already done, from donations to art installations. A Development Agreement establishes what a developer WILL DO, and what a City WILL PROVIDE in return, from this point forward. It’s a clean slate, oriented toward the future, not the past.

I heard a great many assertions in this meeting of “what the public thinks,” what the public wants,” and “what the public expected today.” The most common refrain expressed was that “the public wants to see shovels in the ground,” “they want something to go vertical,” or as Mayor Schieve said, “what we hear from the public is that they want things built. They want to see construction underway.”

But those characterizations do not reflect what I’ve heard people saying or what I read in the public comments. “The public” doesn’t want just anything built in their downtown. What I’m hearing is that the public wants housing, particularly for populations beyond the most affluent (Councilmember Delgado has repeatedly said so in the past, although I don’t believe he said anything during this entire item). The public wants a pedestrian-friendly downtown with street-level amenities that make it walkable and safe. They want services that will benefit existing residents. They want attractions that are appealing without negatively impacting adjacent property owners. They want a downtown that reflects and promotes equity and sustainability.

A Development Agreement is supposed to represent a shared vision, one that equally benefits both parties and reflects not just private or privately-expressed opinions, but the public interest. Just last summer, City Council gave themselves the power to unilaterally approve Development Agreements without initial review by the Planning Commission, bucking that commission’s own recommendations. This is the first test of whether decision was sound, and if this is any indication, I’d say the answer is no.

To our City Council and staff, I’d like to say this: Please do not move forward with a second reading of this ordinance on October 27. Instead, take a step back and consider how you can make this a deal that residents can believe in, and that you yourselves have the time to thoroughly discuss. Schedule the promised public workshop, where Councilmembers and residents can ask questions of staff, Jacobs, and each other, get answers, and work together to make this Development Agreement one that gives City residents something they actually want, need, and deserve.

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If you want to submit public comment in advance, view the instructions at the top of the Agenda here. You can submit a written comment via the City’s public comment form at www.Reno.gov/PublicComment or by emailing publiccomment@reno.gov or leave a recorded voicemail at (775) 393-4499.  Again, the item is F.3. Public comments submitted prior to 4:00 p.m. on Tuesday, October 26th will be provided to Council and entered into the record. After that, it’s probably best to offer your commentary live and in person to ensure that it’s received and heard before any action is taken.

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As always, you can view my previous e-newsletters, with more context, analysis, and tips, on my Substack site. Thanks for reading and have a great week.