Reno Seeks to Purchase Motels as Affordable Housing Instead of Letting Developers Demolish Them

Reno, ProPublica, Reno Housing Authority
The 19-story Sundowner, right, and the Bonanza Inn, below, are part of Reno’s plan to purchase and rehabilitate motels. David Calvert, special to ProPublica

The mayor of Reno did little to stop the razing of motels that housed low-income residents or to replace lost units. Following a ProPublica investigation, that may change.

Anjeanette Damon, ProPublica

This story was originally published by ProPublica.

For more than five years, the mayor of Reno, Nevada, has supported the demolition of dozens of dilapidated motels that provided shelter for thousands of residents squeezed by the city’s housing crisis, rather than rehabilitate the buildings to provide affordable housing. Now she’s changing course.

Mayor Hillary Schieve is proposing to spend hundreds of millions of dollars to acquire and rehabilitate motels in downtown through the Reno Housing Authority. In fact, the agency has already moved quietly to buy two shuttered buildings. Last week, the agency submitted an offer to buy the Bonanza Inn, a closed 58-unit motel with a history of code violations that is now part of an estate sale. It also submitted a letter of intent to make an offer on a much larger property — the 19-story former Sundowner casino-hotel.

Details of the offers — the prices, contingencies and financing — are not public. The RHA’s board of commissioners discussed the offers last month in a series of closed-door meetings allowed under an exemption in the state’s open meeting law. An RHA spokesperson said the agency has enough funds to purchase the Bonanza Inn but would need to secure financing for the Sundowner purchase. An early estimate by the RHA indicated it would cost $22 million to buy both properties and up to $50 million to rehab the buildings.

The purchases would be the beginning of a broader effort to increase affordable housing in the region, Schieve said. She supports using part of the city’s share of federal stimulus money from the American Rescue Plan Act and would like to see the state, the county and the neighboring city of Sparks chip in money, as they do for other regional projects such as Reno’s homeless shelter. Schieve also wants to explore whether the housing authority can use its existing housing stock as collateral for bonds to help finance more affordable housing. She’d like to borrow at least $200 million. She didn’t provide details on her plans for the additional funding.

“We have a real opportunity when it comes to workforce and affordable housing,” Schieve said.

The city’s about-face follows a ProPublica investigation that found Reno did little to deter the demolition of similar motels that housed some of the city’s most vulnerable residents. Nor did the city provide any incentives for landowners to replace that housing. One developer, casino-owner Jeff Jacobs, has been responsible for most of the motel demolitions, razing nearly 600 housing units since 2017. Schieve and other council members posed for photos during some of those demolitions, celebrating the elimination of what they said were blighted properties to make way for a proposed entertainment district.

After widespread criticism of the demolitions, Jacobs recently announced he would be willing to donate up to $15 million in land for an affordable housing and public parking project. The donation would be contingent on the housing authority financing the project and the city acquiring additional land, he said.

Jacobs has been assembling more than 100 parcels in downtown Reno for what he describes as a $1.8 billion entertainment district that would include hotels, restaurants and an amphitheater. He said the motels he demolished were slums that couldn’t be remodeled and said he provided relocation assistance to most of the people who lived in them.

The property sought by the Reno Housing Authority sits within Jacobs’ proposed district, directly across from his signature casino, the Sands Regency. In fact, the agency’s letter of intent on the Sundowner includes a vacant parcel on a block primarily owned by Jacobs.

The Sundowner has been vacant since 2003. The Bonanza Inn, however, was only recently listed for sale following the death of its owner. Her son told the Reno Gazette Journal that the estate was forced to sell the motel, which had been vacant for more than a year, following aggressive code enforcement efforts by the city. His family couldn’t afford to make the required repairs, he told the newspaper. The property had been cited multiple times for code violations since 2012, according to public records.

In an interview with ProPublica, Schieve reiterated that she doesn’t think “slumlords should be landlords,” but also said she doesn’t favor wholesale demolition of the hotels.

“If you can rehab something, then that’s great, obviously, and if it makes sense to,” Schieve said. “I honestly believe in saving everything you can.”

She added, “I’m not like, ‘Let’s demolish everything.’ That’s not who I am.” Rather, she said, she doesn’t believe people should be forced to live in terrible conditions.

This is the city’s first attempt, however, at preserving such buildings. In addition to supporting Jacobs’ razing of mostly squalid motels, the city used its blight fund in 2016 to finance the demolition of two vacant motels despite pleas from the community to preserve them as housing.

Schieve said the city hasn’t had the financial resources to buy and rehab motels for housing. Federal stimulus money has now made it possible to pursue such acquisitions, she said.

“It’s tough to build it. It’s expensive,” she said. “With the ARPA funds, it really gives us a foot in the door.”