BLM called too rigid on land auctions

Monday, July 24, 2000 | 11:23 a.m.

The auctions of Bureau of Land Management parcels in the Las Vegas Valley have not been as successful as they could have been because the federal government is too rigid a seller, local developers say.

In fact, they predict, the sales of the remaining 25,000 acres of public land surrounding the Las Vegas Valley will continue to be disappointing if the government does not start budging.

The requirement that the bidding begin at the government's appraised value and cannot go lower is a major stumbling block, said Scott Gragson of Colliers International, a commercial real estate company.

However, Gragson gives the BLM its due. He said he was shocked at how well the BLM has done on its two land auctions so far given the lack of flexibility.

Of 23 parcels for sale in November, 20 were sold. But in June, only 35 of 87 BLM blocks attracted buyers. A total of 400 acres has been sold for $26 million.

BLM officials expressed disappointment after those auctions that more of the property did not sell. Especially frustrating was the June sale at which 100 of the available 360 acres went without bids.

Those unwanted parcels will show up again at the next BLM auction, scheduled for November.

The way the BLM puts a parcel up for sale doesn't give a prospective buyer the time or the incentive to investigate zoning, do soil tests or look at compatible uses with other lands in the area, Gragson said recently at a quarterly briefing on Southern Nevada real estate trends presented by the Las Vegas office of Colliers International.

Successful bidders must put 10 percent down in a cashier's check the day of the sale, Gragson said.

As land prices continue to rise and appraisals skyrocket, the BLM may find itself stuck with its vacant land, he said.

BLM land sales manager Mike Dwyer said the problem is rooted in the way the federal law is written.

The bidding starts at an appraised value so the land is not sold for less than fair market prices, Dwyer said. However, appraisals can be challenged.

Congress passed the Southern Nevada Public Lands Management Act in 1998 after federal investigators raised questions about the BLM's exchange process, noting that millions of dollars have been lost on land swaps in Nevada.

The act replaced land swaps with a system of selling BLM land in the urban Las Vegas Valley, then using the proceeds to buy environmentally sensitive land within the state.

A General Accounting Office report released last week called for a halt to further land exchanges.

When the BLM swapped land in the past, it was done over a long period of time, with the federal agency offering areas ripe for development in exchange for environmentally sensitive lands held by private owners.

The exchange process allowed any private owner to approach the BLM with an appraisal. Then the BLM placed its own appraisal on the table. The details were worked out during negotiations, Dwyer said.

The new sales process hammered out in the Southern Nevada Public Lands Management Act creates a fund from the sale of BLM lands locked in developing urban areas, Dwyer said. Proceeds from those sales go to buy environmentally sensitive lands in private ownership.

The BLM has to do the environmental assessment, an appraisal and publish the legal notice before putting parcels on the market.

The BLM is listening to its critics, Dwyer said.

As a result of feedback, it plans before the November auction to post a list of available lands on the BLM website, Dwyer said. Before would-be buyers had to go to the BLM offices on Vegas Drive to see a map and get information on available parcels.

It also plans to post "For Sale" signs on the available property and send notices to adjacent landowners.

The agency also worked closely with North Las Vegas officials on the sale of 7,500 acres in North Las Vegas at the north end of the valley, the first portion of which will come up for sale in June. City officials persuaded the BLM to offer from 1,200 to 1,700 acres as a single block in the southwest corner of the property, Dwyer said. It's the area where the future Las Vegas Beltway will cut through the property and will become an anchor for future development.

City officials hope to see a master-planned community developed on the site.

The BLM's goal in the law is to assure compatible uses of the land it sells, Dwyer said.

Ultimately that could be unfair to a developer, Gragson said. While the county is restricting uses of its new BLM acres around the airport to warehousing or industry -- no residences, no parks, not even a zoo -- private landholders can put anything they want on nearby parcels, even a high-rise apartment building, he said.