Las Vegas Sun

August 22, 2014

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BLM land sale brings in $232 million

A Bureau of Land Management sale of land throughout the Las Vegas area Thursday morning brought in $232.3 million, $102 million more than the appraised value of the property.

The federal government sold 997.5 acres, some of it in parcels as small as 2.5 acres. Most of the smallest pieces, some of which are within the existing urban area, attracted spirited bidding. But even those who had lost earlier bids stayed in the crowded Clark County Commission chambers to watch the combat over the largest property: 485 acres in the northwest. The land was appraised at $58.2 million and sold for $113.5 million to Focus Property Group.

Focus had to outbid Mountain West Associates, a company sharing the same executive officers as local developer Olympia Group. Focus and Mountain West also squared off over the second-largest piece in the auction, a 248-acre parcel in southwest Las Vegas. The southwest property was appraised at $34.1 million and sold for $62.6 million to Mountain West.

For Focus, the bidding was a replay of last year's successful effort to acquire 990 acres in the southwest valley. The company paid $159 million for that land last year. Focus wound up combining that land with thousands of acres it had already acquired to build a large, master-planned community.

John Ritter, Focus' chief executive, said his company will follow a similar strategy with the new purchase.

The northwest project is a patchwork of individual lots roughly bordered by the Red Rock Canyon National Conservation Area to the west, Centennial Parkway to the south, Grand Teton Drive to the north and Hualapai Way to the east. Focus will add the 485 acres to about 700 acres the company already controls in the area for a master-planned community of about 1,200 acres.

Last year's purchase led to the creation of the Mountain's Edge community. Focus has dubbed the new project Cliff's Edge. Ritter said it will be the company's fifth master-planned community in Las Vegas.

Mountain West's effort in the southwest will also be a master-planned community, Mountain West and Olympia principal Guy Inzalaco said. The community will be contiguous with Olympia's Southern Highlands community, he said.

Inzalaco said his company dropped out of the bidding for the northwest land in large part because of the cost of bringing infrastructure to the area.

"We knew what our number was," Inzalaco said. Analysis by his company of those infrastructure costs over the last week pushed the number much higher than originally estimated, he said.

Inzalaco declined to say what his company's estimate of the infrastructure costs for the northwest community would be, but Ritter pegged the cost at about $90 million.

Focus and Mountain West's bidding pushed the final cost for the two parcels at more than $83 million above the BLM's independent appraisal. Inzalaco said the cost of land is continuing to climb because large pieces are becoming scarcer in the Las Vegas area.

But the Interior Department, the agency that oversees the BLM, will work to relieve that pressure. Interior Secretary Gale Norton kicked off the federal auction by telling hundreds of would-be landowners that the sale is "innovative good government."

The sale was the 13th authorized by the 1998 Southern Nevada Public Lands Management Act.

"The act allows us to sell public lands that are more appropriate for private ownership and development and turn the funds around for education, water and conservation in the state," Norton said.

"You are betting on smart growth and rolling the dice in favor of conservation with the money you spend today," Norton told the auction crowd.

A few minutes later Norton, speaking outside the cacophony of the commission chambers, told a small group of national and local press that the urban growth fostered by the sales is a local issue -- and that local governments largely determine where the land sold at the auctions will be.

"The appropriate response for us is to work closely with local planners," Norton said. "They are the ones that have the primary responsibility."

Norton, who is also the federal rivermaster for the dwindling resources of the Colorado River, said pressure on water supplies due to growth also is a local issue. The water level in Lake Mead, the source of nearly 90 percent of Las Vegas' water, is dropping while a thirsty local population continues to grow by tens of thousands each year.

Not everyone agrees that the depletion of the water supply and other growth issues are disconnected from the BLM land sales.

Bob Hall, president of the Nevada Environmental Coalition, has filed suit to block the sales. His effort has been entirely unsuccessful so far, but he argues that the Interior Department did not fully study the environmental impacts of continued urban growth engendered by the sales.

John Hiatt, president of the Enterprise Town Advisory Board which provides advice to the Clark County Commission, said he is concerned that the sales, instead of promoting "smart growth," are instead establishing a ring of high-density housing on the periphery of the urban area.

"As prices are bid up very, very fast, it changes the character of what will go in," Hiatt said.

Enterprise, in the southwest corner of the Las Vegas Valley, is one of the areas where BLM land sales have made hundreds of acres available for development. Some of those developments are coming in at over 10 housing units per acre. In contrast, there are neighborhoods in the center of the urban area with densities of one house per half acre.

The "doughnut" of higher density on the outskirts of town creates huge infrastructure challenges for such needs as water and transportation, Hiatt said. Smart growth generally would encourage higher densities at the center of the urban area.

"Local governments are behind in terms of planning for the incredible density we will see in the outlying areas of the county," he said.

Hiatt said the 500-acre parcel in the northwest and the 250-acre plot in the southwest, in Hiatt's own township of Enterprise, are just two examples of the push to develop farther and farther out, with higher and higher densities.

Inzalaco, with Mountain West, agreed that to keep housing affordable, higher housing density is needed to offset the higher cost of new property.

The developers at Thursday's auction also said they work closely with local government to avoid the negative effects of sprawl.

Margo Wheeler, planning manager for the city of Las Vegas, agreed that Focus has worked with the city on a development plan that works for the northwest property, which is within the city limits.

She said the property may be on the edges of the Las Vegas Valley's urbanized area, but in other ways it is not a "peripheral development."

Both the growing Interstate 215, or Las Vegas Beltway, and U.S. 95 serve the property, Wheeler said. And the planned development lies just outside the city's Town Center development, so services will be relatively easy to bring in, she added.

Norton also dismissed the criticism of BLM land sales coming from some environmentalists. She said the the sales program is a template for good government, and the sales foster environmental preservation.

Under the act, 5 percent of sales proceeds go to education statewide, 10 percent goes to the Southern Nevada Water Authority and the rest goes to environmental and recreational needs in Clark County and at Lake Tahoe.

"Since passage of the Act, we have disbursed more than $23 million to the water authority and $14 million to the state's school fund," she said. "Forty million has gone to help preserve Lake Tahoe under another section of the law.

"We have purchased more than 750 acres of private land that were inholdings within the proposed area for the Clark County Wetlands Park," Norton said, targeting one of the county's primary conservation and recreation projects.

The Clark County departments of Comprehensive Planning and Parks and Recreation started the 8-square-mile park in 1999. The park controls erosion of Las Vegas Wash, it increases wildlife and plant diversity, and provides recreation with viewing areas and a visitors center that provide glimpses of rare desert wetlands and the wildlife that depend on them.

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