The Trust said a total of between $8 million and $11.5 million could be raised in two to five years.

But somewhere in the time frame between the November resolution and the March meeting, the City Council apparently decided that the Trust would raise $6 million and turn it over to OliverMcMillan.

The reason: OliverMcMillan needs that amount to close a hotly debated financial “gap.”

Fall Into The Gap
The gap is the difference between the amount of money needed to restore the Mapes, vs. the amount of profit the facility would generate for the developer. OliverMcMillan said, based on a November 1997 analysis, that the “gap” was somewhere between $6 million and $9.6 million.

Members of the Heritage Trust say that analysis, which they say is based on wildly inaccurate estimates, is the biggest obstacle in its efforts to save the Mapes.

For example, the second floor was counted twice in figuring construction costs. Also, simple addition errors skewed the total by more than $630,000, and costs for some parking spaces were added twice.

Even so, the City Council persists in treating OliverMcMillan's statistics as though they were accurate.

“Nobody is convinced the gap exists,” said John Crandall, research director for the Trust. “Other people have come in and told us, 'Hey, there isn't a gap.' The only gap is in OliverMcMillan's ability to do anything without other peoples' money.

“They don't have a history of restoration, and they don't have their facts all together. I think the critique we were able to put together in a very short time shows the gap is exaggerated. OliverMcMillan didn't even know the number of floors—they thought the second floor and the mezzanine were different, so they duplicated it.”

In fact, not even OliverMcMillan stands by specifics of the report, which was prepared by its own architect, Richard Bundy.

In a March 24 letter from Charles W. Davis Jr., OliverMcMillan's development manager, to the Reno Financial Advisory Board, the company conceded its numbers might be off.

“It is extremely important to understand that Mr. Bundy in preparing his estimate was working at a very conceptual level,” Davis wrote.

Crandall said the City Council should take a leadership role in deciding whether to restore the Mapes, or at least in getting accurate, unbiased information about whether it can be saved.

“The city owns the building—the people own the building—but the City Council doesn't treat it as if we do,” he said. “They treat it as if OliverMcMillan owned the building, and they treat it as if they do anything to thwart OliverMcMillan's desires, OliverMcMillan will pack up and go home.”

Crandall said local officials would be wise to let other experts take a look at the project.

“The mayor and the City Council need to reopen the process to people who know how to do it, and then they can make an objective decision as to whether the Mapes can be or should be saved,” he said. “The council has not opened it up to bringing in those people capable of giving them straight answers. They are unwilling to look at the questions that are raised by the evaluation of OliverMcMillan's submittal, because OliverMcMillan's submittal has been taken at face value.”

By The Numbers
Ron Olsen, a licensed commercial real estate appraiser for nearly 15 years, said OliverMcMillan's proposal is flawed in other ways.

Olsen is a member of the Heritage Trust and concedes that he hasn't done an appraisal on the Mapes.

But he said OliverMcMillan's proposal lacks documentation—for example, the report says the renovation cost is $11.2 million, but it doesn't give a line-item estimate. In other words, the company's report doesn't show how it got to that figure. OliverMcMillan has refused repeated requests for the data.

OliverMcMillan did, however, rebut the Trust's analysis in a letter:

“The Truckee Meadows Heritage Trust analysis suggests that the 'gap' for rehabilitation of the Mapes can be reduced to $1.5 million through a combination of cost savings and increased income,” the March 24 letter said. “OliverMcMillan's review concludes that that analysis is severely flawed in that it counts significant cost savings which were already considered in the original analysis and also counts income which was also included in our original analysis.

“Further, this added income cannot be achieved without significant added expense which the Trust's analysis did not include in their analysis.”

Olsen said that is gibberish.

“What they're doing might be OK for an internal discussion among themselves,” he said. “Our fundamental point is that they've got a locked-in agreement with the city, and they say, 'Hey, based on these numbers, we've concluded you should should tear it down.' And the city has signed off on that.”

Olsen said the most glaring inconsistencies in the OliverMcMillan report concern so-called capitalization rates, or cap rates.

Cap rates are the most common method prospective buyers use in deciding whether to purchase commercial property.

Olsen said that when he does an appraisal, analysis of cap rates, which include such variables as potential tenants and location, take up the bulk of the appraisal.

In simplest terms, the higher the cap rate, the worse the prospective deal and the higher the risk.

“When they came in with their first proposal in June,” Olsen said, “they did a rehabilitated Mapes at a 9 percent rate. When they came in in November, they did a rehabilitated Mapes at 10.5 percent to 12.5 percent.”

There was no explanation by OliverMcMillan as to why the cap rates changed, Olsen said.

The difference in rates is significant; if the June cap rates had been applied to OliverMcMillan's November income stream, the difference in projected income would increase by more than $5 million dollars and the gap would largely vanish.

“Why do you have 10.5 here and 8.5 here [in the same document]?” Olsen asked. “We don't know. We're just dumb people reading the report. We're just looking for consistency. If you're consistent, you choose one number or the other number; you don't use both of them.”

“Nobody is convinced the gap exists,” said John Crandall, research director for the Trust. “Other people have come in and told us, 'Hey, there isn't a gap.' The only gap is in OliverMcMillan's ability to do anything without other peoples' money.”

Olsen said the City Council and OliverMcMillan are creating their own problems.

“The city and OliverMcMillan have led with their chin by presenting flawed documents,” he said. “It was just waiting for somebody to say, 'Wait a minute, how come this is like this?' What they need to do is make the consistent, clear, logical, well-substantiated case for their conclusions.”

Indecent Proposal
Heritage Trust member David Ward said the the trouble with the Mapes project is that other companies qualified to do, or interested in doing, historic preservation weren't invited to bid for the job.

“There were problems with the request for proposals that were done back in April,” Ward said. “It didn't emphasize historic restoration, and it didn't show a picture of the building. It only mentioned restoration once in the entire six-page document. It talked about demolition. It was poorly conceived.

“If you are a city and you want to do a historic restoration, there are well-known places, like the National Historic Trust for Preservation magazine, you can advertise for proposals,” he added. “There are places that historic restoration experts look at all the time. The city simply didn't advertise it to those people.”

Groups like the State Historic Architect, the Reno Historic Commission and the National Trust offered to help the city find tax credits and developers, but their pleas fell on deaf ears, Ward said.

“You can't make important decisions unless you have the facts,” he said. “The city hasn't done what's necessary to get the facts. There are people out there who are ready, willing and eager to put forth proposals. They aren't interested in trying to team up with OliverMcMillan, who is a firm that has enormous incentives to not renovate this building.”

Ward said OliverMcMillan actually will make money if the Mapes is destroyed. Here's how he came to that conclusion:

The land under the building is on Washoe County tax rolls with a market value of about $3.2 million. The structure itself is assumed to have no value. OliverMcMillan has offered $1.3 million for the property.

That means OliverMcMillan gets $3.2 million in property for $1.3 million if the deal goes through.

The cost to refurbish the hotel, of course, would be a lot more expensive than just tearing it down.

Money For Nothing
Ward said many historical rehabilitation developers have stepped up, including Cort Companies, Wells and Company, NorthCoast Hotels and, most recently, Ian Waddell of Pacific Highland Builders.

At the April 2 Financial Advisory Board meeting, Waddell said he would put down $100,000 as a good faith deposit next week, which the city could keep if he received the project.

Ultimately, what the Heritage Trust wants is for the city to end the exclusive negotiating agreement with OliverMcMillan and send out new requests for bids.

Ward said it would only take up to four days to prepare bid requests.

He said the City Council could then impose a 60-day deadline.

“So 64 days from the time they started could be the deadline for getting those in,” he said. “Then it's going to take realistically two or three weeks, a maximum of 30 days, to review and select from those proposals. So we're seeing a whole entire process of approximately three months.”

Bill Osgood of the Downtown Improvement Association also wants to speed up the process of redeveloping downtown.

Fundraising efforts by the Heritage Trust have been inadequate, Osgood said at the April 3 Citizens Advisory Committee meeting.

“The redevelopment investment is held hostage while a well-meaning nonprofit attempts to fund the gap,” he said.

Osgood said with the approval of the Boomtown Hotel-Casino expansion west of Reno and pending gambling legislation in California, the time is critical for Reno to move forward on creating downtown tourism attractions.

Tourists won't flock to Reno to see an apartment building, which some pro-Mapes advocates have in mind for the structure, he said.

If the Mapes restoration is delayed, Osgood said, the timing of the riverside redevelopment project would be set back, which could close the window on Reno's drive to boost tourism downtown.

Heritage Trust member Ward disagrees.

“If they go to rehabilitation instead of demolition, it will actually speed up the process of saving the river area,” he said. “If you bring in a rehabilitator, they're going to get the job done a whole lot faster than OliverMcMillan, who has to both demolish and rebuild.”

Last-Ditch Effort
Rather than relying on developers and politicians to decide the Mapes' fate, Ward wants to the public to make the call.

“We've begun an initiative petition which, if enacted, and if the Mapes is still viable at that time, will prevent the City Council from doing the wrong thing and require them to do the right thing,” Ward said.

The petition reads: “The people of the City of Reno declare their purpose and intent in enacting this measure is as follows: (1) To preserve Reno's important historic properties for the enjoyment and benefit of its citizens. (2) To enhance Reno's primary industry of tourism through historic preservation.”

The law requires organizers to gather 7,945 signatures from registered Reno voters, Ward said.

“If we're successful in doing that,” he said, “then the next step is that the petition has to be reviewed by the city attorney, and then the signatures have to be reviewed by the registrar of voters and certified to be correct.”

“We will fight with every ounce of strength we have in our bodies. We will look for every avenue to prevent the City Council from making an irrevocable mistake.”

From there, the petition would go before the City Council, which would have the option of enacting the ordinance into law or putting it on the November ballot for the voters to decide.

Ward said the Trust will have no problem getting the signatures.

“The first three days out, we got more than 900 signatures,” he said. “We're optimistic that we're going to gather enough signatures; we're just nervous it's going to be too little too late.”

Even if that doesn't work out, Ward vowed to be persistent.