Jacobs Entertainment’s deal to swap a to-be-constructed housing development on Second Street for the aging Sarrazin Arms Apartments on Third Street will provide the Reno Housing Authority with 65 affordable housing units.
Courtesy
Jacobs Entertainment’s deal to swap a to-be-constructed housing development on Second Street for the aging Sarrazin Arms Apartments on Third Street will provide the Reno Housing Authority with 65 new affordable housing units – but keys likely won’t be turning locks for several years.
Jacobs Entertainment Chief Executive Officer Jeff Jacobs last week spoke with Northern Nevada Business Weekly about the arrangement struck with the RHA to swap a $20 million housing development for the 60-year-old Sarrazin Arms, which has been valued at approximately $3 million.
The deal is crucial to Jacob’s master plan for J Resort, formerly the Sands Regency Casino Hotel, which Jacobs purchased in 2017. Jacobs master plan for the property on West Fourth Street includes three new towers offering more than 2,000 additional hotel rooms, along with convention space and a parking garage. The Sarrazin Arms Apartments at 531 W. Third St. sits within the footprint of the planned development, Jacobs told NNBW.
“We talked several years ago with the housing authority about Sarrazin, but we decided not to go forward,” Jacobs said. “Now that we are completing our master plan, I decided to continue the conversation to see if there was any interest. There was interest, and we came up with a plan that’s a win-win approach to economic development. We will create 65 new units that will cost over $20 million, and trade them to the housing authority for Sarrazin Arms.”
“Everyone benefits,” Jacobs added. “It gives us a site to continue to create our dreams. I have to create value on that property, otherwise I am out $20 million, but that’s why I get up and go to work in the morning. If we do grow as planned, that property is within our footprint.”
The new housing development will be located just east of the Gibson Apartments at Second and Ralston streets. The 20-unit Gibson building is also owned by Jacobs Entertainment, and it’s scheduled to be restored at a future date, Jacobs noted. The vacant parcel in between the new RHA apartment building and the four-story, 60-unit apartment building currently under construction at 245 N. Arlington Ave. also will be developed into a market-rate property, he added.
245 North Arlington, built by Frank Lepori Construction, will include 10 percent affordable housing, Jacobs said. The remaining units will be two-bedroom apartments ranging in size from 1,139 to 1,256 square feet, along with one-bedroom and studio units at 555 to 823 square feet. Rents for the studio apartments are $1,500, while the one-bedroom apartments rent for $1,800 and the two-bedroom units rent for $2,400. The project is expected to be completed by early 2025.
“It's our vision to see West Second Street become new housing all the way down from Arlington to Keystone (Avenue),” Jacobs said. “I made a commitment that anything we build will be at least 10 percent affordable housing.”
Jacobs Entertainment also recently announced its acquisition of the Bonanza Inn at 215. W. Fourth St. for $3 million. The ultimate goal would be to rehabilitate the property into market-rate apartments, with 10 percent set aside for affordable housing; however, Jacobs told NNBW that the property is still in escrow.
Jacobs Entertainment won the property at auction, but Jacobs said beneficiaries of the estate that owned the Bonanza Inn were unhappy with the price.
“They may challenge the value in court, which means we may not own it for another year or year-and-a-half,” Jacobs said.
Jacobs also told NNBW that his sweeping vision for West Fourth and West Second streets wasn’t on the radar when he bought the Sands from Truckee Gaming in 2017. Jacobs Entertainment also owns the Gold Dust West at 444 Vine St.
“A good real estate developer always wants another acre,” he said. “We do transformative projects, whether it’s on the waterfront in Cleveland (Nautica Entertainment Complex) or in Reno. They are inclusive projects with opportunities for people who can’t afford (market-rate housing). The housing authority is going to trade a $3 million property that’s 60 years old for a brand new $20 million property – I’d say the Reno Housing Authority negotiated a pretty good deal.
“At the same time, we are trying to grow our footprint and bring more people to town to visit our resort.”
Erik Fong with OneStudio D+A is the architect on the new housing project that will be part of the housing swap. Jacobs said the project likely won’t break ground for a few years, however, as he raises capital to fund construction.
“I will probably fund this when I refinance the gaming company, which is in three years. We will do the drawings, get ready, and when we do our refinance we will fund it and go.”
The property swap option agreement extends through 2028. Once completed, residents of the Sarrazin Arms Apartments will be given priority move-in to the new building.
Hilary Lopez, executive director of the Reno Housing Authority, said the deal was a win for both sides.
“We’re delighted that through this public-private partnership, RHA will not only be able to preserve quality affordable housing downtown, but increase the supply as well,” Lopez said in a statement.