City officials at crossroads with developer

The developer of a cornerstone to Henderson's downtown revitalization plans says she will continue pursuing the loans she'll need to revive the Fountain Plaza project, even though the Henderson Redevelopment Agency has ended its formal ties to her project.

The board of the redevelopment agency let the development agreement expire when the Phyllis E. Thompson Companies failed to meet deadlines to produce "verifiable and binding commitments" for financing. Thompson had already been given a 60-day extension to secure the bank loans needed to build Fountain Plaza, and on July 17 had sought another delay.

The redevelopment agency's board -- comprised of the mayor and city council members -- denied any further time and took the position that the contract giving Thompson exclusive rights to the development legally expired because the terms were not met.

City officials say they will soon seek proposals from other developers for the site, at Water Street and Basic Road -- where the city owns 17 parcels alongside property purchased by the Thompson Companies for a project that was to include a nongaming hotel, shops and restaurants.

In the meantime, the Nevada College of Pharmacy -- a sought-after tenant that was to move into the first phase of a completed Fountain Plaza -- will proceed with a two-year agreement to lease temporary space on city land.

Before those two years are up, according to Mary Kay Peck, Henderson's community development director, the city will seek a developer who can build a permanent home for the pharmacy college.

Fountain Plaza was one of the major projects undertaken by the Henderson Redevelopment Agency.

On July 17, frustrated elected officials said they could no longer wait for Thompson's company to get the firm commitments for bank loans. Thompson's attorney, Douglas R. Malan, had told the redevelopment board his client did provide two letters in interest from financial institutions.

That wasn't enough for the board.

Chairman James B. Gibson -- who is also the mayor -- bluntly said he didn't think Thompson's project passed the scrutiny given by potential lenders.

"It feels like the market is saying there's something about this project that's not financeable," Gibson said. "As much as I want to be loyal (to the Thompson Companies), I don't see anything that tells me this project is more financeable now than it was 60 days ago or 60 days before that."

Andy Hafen, a city councilman and officer of the redevelopment board, said, "I'm not convinced an extension of time will produce any fruits here."

Steve Kirk, another councilman and officer, agreed. "It seems like we keep missing deadlines," he said, "or things come in right at the deadline and then things are pushed back. I feel things can happen on that property that haven't happened because we've been so helpful (on extending deadlines)."

Thompson said after the meeting, "I was inches away from financing. I haven't worked three long, hard years for nothing."

She and Malan said they will continue to negotiate with lenders, in the hopes that -- if they secure the loans -- they can return to the redevelopment agency with a renewed proposal.

Malan said that redevelopment projects are difficult to finance, in part because the huge lenders who can come up with the $27 million needed for a project such as Fountain Plaza are reluctant and inexperienced with redevelopment projects.

"A good example is the city of Las Vegas," Malan said after the meeting. "They've had to try different avenues to get something going. There is no proven formula (for redevelopment financing)."

He said his client's experience with the project is an indication why redevelopment doesn't happen more often.

"Why go through all this headache," he said, "when you can go someplace else and build on barren land."

Thompson also said she didn't think she was given enough time, even with the 60-day extension. She pointed out that the disposition and development agreement has been formalized only since December 2000, even though her company and the redevelopment agency have been working on the project for two and a half years.

She said that since she bought land for the project, she's going to be a neighbor to the city-owned property that will now be the focus of a different development proposal.

Bob Wilson, the redevelopment manager, said the agency will be working soon on soliciting requests for proposals from other developers. He said the city owns enough land on the Fountain Plaza site to proceed with some sort of development.

The redevelopment agency owns 16 contiguous parcels, which are now paved parking lots at Water and Basic.

Also in the mix is the designing and planning for the entire downtown area, which includes four acres of city-owned land on Water Street near Lake Mead Drive.

Peck, the city's planning director, said the future will be "challenging."

"We will continue to look for a place downtown" for the pharmacy college, she said, adding that officials could be looking at locations other than the Fountain Plaza site.

At the same July 17 meeting, the redevelopment board approved spending $250,000 in rent subsidies to the Nevada College of Pharmacy, as part of the agreement for the college to locate downtown.

The college now has rented space in Green Valley for its three dozen students. When it moves to the temporary location in modular offices on a parking lot at 19 E. Basic Road in September, it hopes to have more than 120 students.

The college opened in January.

The $250,000 goes in part to cover the expense of the actual move.