The RRIF has been a source of funding for the RTC since 1996 and allows infrastructure developers to gain credits from the RTC for improvement projects done on local roads. Lee Gibson, executive director of the RTC, said the RRIF gives development companies options when planning and carrying out projects.
“(A developer) can build a facility himself through the capital contribution funding agreement or they can pay an impact fee,” Gibson said, adding that impact fees are due when a developer “pulls a building permit to construct a home or retail” building.
“The developer builds the facility and when the land is sold they use a credit, because the road has been built, instead of paying the impact fee,” he said. “Alternatively, they could have just paid the impact fee when they pulled the building permit, but the road might not have been there and might not have had the capacity needed and somebody would have had to go back and redo it.”
Gibson said there are about 902,000 credits being held by developers in Washoe County. He said a “historic balance between cash and credits” existed for several years, but due to recessionary budgets the cash flow has slowed dramatically. Because of a credit’s 20-year lifespan, the RTC now faces the decision of a buy-back plan to raise cash intake from developers.
“The only thing you can use those credits for is to pay what you would’ve paid in cash for your impact fees,” said Julie Masterpool, RTC project manager. “For the most part, I would say it has been a real promising program because we built $188 million of roadway improvements over the last 15 years between cash collections and local developers, who have built roadways that they have gotten the credits for. We have gotten a lot of road network through the Impact Fee Program.”
Masterpool said the credits can also be “traded on the open market between development corporations” as long as the credits are used in their Benefit District. For instance, a credit that was purchased for a project south of I-80 cannot be redeemed in Sparks.
“The reason being is you want the benefit of that road they earned the credit for to stay in some proximity of where it was generated,” Masterpool said, adding that the county is broken into three general districts: south of I-80, Sparks and northwest Reno.
According to a presentation given to the RTC Board on Friday, the RRIF committee surveyed credit holders on the amount of credits they would be willing to sell back to the RTC if given the option. The committee estimated the buy back of more than 187,000 credits, representing 21 percent of the total outstanding credits, totaling more than $40 million at today’s rate of $217 per credit.
Major credit holders Sparks Galleria Investors, Nevada Tri Partners and Spanish Springs Associates estimated to give 20,000 or more credits back to the RTC, if the buy back program went into effect, bringing in more than $20 million among the three developers.
Gibson said the RTC Board presented its hesitation to the committee outlining the possible problems that could come with the RRIF buy back program.
“The commissioners have concerns about legal issues,” he said. “They want input from the Attorney General’s office and perhaps legislative bureau and for us to continue to look at how the financial model will be constructed, how significant variables like growth rate and population, interest rate, discount rate, use of funds and volume and use of credits will come into play. The programmatic piece is what project would the RTC give up doing if it did a credit buy back program?”
The legal counsel’s opinion in advising the RTC said there is no specific law prohibiting the RTC from buying back impact fee credits, “the Legislature has repeatedly limited how the RTC may use funds…from impact fees … and the intent is clear that the funds may not be used beyond what is allowed by statute.”
The committee will meet Thursday to discuss further issues and strategies in implementing the credit buy back program. It will also develop a plan to inform the public of the program to be instituted in October.