Land use dilemma

Dan Kulin

Saturday, Oct. 29, 2005 | 9:50 a.m.

Armed with new reports, the Las Vegas City Council is heading toward a scheduled Wednesday vote on whether to make it possible to convert Royal Links Golf Club to a 1,200-home development.

Royal Links owner Billy Walters has offered to pay the city $7.2 million to eliminate a restriction confining the 161-acre site's use to a golf course.

Two appraisals conducted for the city place the value of lifting the deed restriction between $24.1 million and $28.7 million.

As part of the deal, Walters would allow the city to end a contract under which the golf course receives treated wastewater at a reduced rate -- water that could be pumped into drought-afflicted Lake Mead or, he argues, sold at a higher price.

Another new report concludes that allowing homes to be built on Royal Links could cause Las Vegas to spend at least $5 million more than it would otherwise to reduce odors from a city sewage treatment plant next to the course, if it chooses to do so.

Clark County already has approved 4,000 homes near the sewage plant, some as close as 150 feet to it, Walters said. The Royal Links proposal would bring homes to within 20 feet of the facility.

Walters admits that ending the deed restriction and making the land available for residential development would substantially increase its value. But he also argues that the deal he is offering the city is generous.

From Walters' perspective, what makes his offer fair, even attractive is that he is offering to pay Las Vegas $7.2 million for land he already owns, while also letting the city out of the water deal.

What the City Council has to decide, he says, is whether to take the deal -- or miss out on the $7.2 million windfall and continue to see the water go onto his golf course instead of into the lake, which has been hurt by years of drought.

The $7.2 million offer is based on the difference between the $894,000 that Walters paid the city for the land in 1999 and its potential value at that time without a deed restriction.

But Walters said that today the deed restriction's value should be much less than the $24.1 million and $28.7 million identified in the appraisals.

That is because he is the only market for the deed restriction, Walters said. It follows, he argues, that it would not make good business sense for him to pay the full value.

"If I couldn't gain something by lifting the deed restriction, why would I do it?" Walters said. "Why would I do it if 100 percent of the benefit goes to someone else?"

The roughly $50 million he has invested in the property and the business over the years also deserves to be a factor in the council's decision, Walters said.

City Office of Business Development Director Scott Adams says that what Walters has invested in the golf course is irrelevant when determining how much the city should receive in return for lifting the deed restriction, because the city is not trying to buy the land.

Councilman Steve Ross said that the up to $21.5 million gap between Walters' $7.2-million offer and the appraisals' much higher figures gives him pause in weighing the deal.

"That's a chunk of change. Quite a big difference," Ross said. "Billy Walters, being as professional as he is, will realize -- he'll see there's a difference there and he might come back with a different offer."

Walters, though, said he does not plan to change his offer, and Councilman Gary Reese said Walters should not have to up the ante.

"I don't own the land and that deed restriction was only worth so much when we sold that land," Reese said.

To demand a higher price from Walters would be equivalent to "blackmail," because it is not Walters' fault that the value of the deed restriction rose during the last six years, Reese said.

If the city removes the deed restriction, any homes built on the 161 acres would require approval from the Clark County Commission, which has approved other residential developments in that area.

Even without residential development on the entire Royal Links land, a report released Thursday said the sewage treatment plant will need at least $13.3 million, and possibly as much as $71 million, in upgrades to cut odors that could affect nearby residential developments.

Without the spending, the city could find its plant in violation of county air quality regulations -- which could keep the city from being allowed to expand the plant in the future, the report said.

Royal Links, like the surrounding property along Vegas Valley Drive near the eastern edge of the valley, is outside the city limits, and under county jurisdiction.

According to the report, if Royal Links is built, the city would have to spend $5 million to upgrade the existing plant -- and an additional $23 million if it expands the treatment plant, as could happen in the next decade.

But Walters disputes those predictions.

The report, by a panel of environmental and engineering consultants, envisions a situation that does not yet exist and a level of odor control that no one has asked for yet, he said.

"If you decided to eliminate 100 percent of the odors, which no one is asking for anyway, you would have to spend $5 million," Walters said. "And if you use modern equipment, with expansion you shouldn't have any odors anyway."

Walters also emphasizes the reduction in water use as a positive part of the deal for the city and the community.

Eliminating that agreement, however, does not appear to be a necessity for the city.

Walters can use the treated wastewater only on the Royal Links land. Because the water could not be used to supply a residential development, for the city to benefit, it would have to have another customer to replace Walters.

"It's correct that with him out we would have more gray water, but there's no one knocking down my door for it," City Finance Director Mark Vincent said. Treated wastewater is sometimes referred to as gray water.

"I don't believe there's a market out there for that water, and the proof of that was that he built his own distribution system and he's next door," Vincent added.

Walters built the pump and pipes to bring the treated wastewater from the city plant to Royal Links, and in return received a $1.7 million credit on future bills for that expense, plus a low rate on the water the course used.

Through December, Royal Links had used $1.1 million of that credit. The remaining credit, about $600,000, is proposed to be applied to future bills of Walters' nearby Stallion Mountain Golf Course. The council also is scheduled to vote Wednesday whether to transfer that credit.

Southern Nevada Water Authority spokeswoman Tracy Bower said reducing water use by switching a golf course to a residential community is desirable.

For every gallon of treated wastewater that is returned to the lake, the Water Authority is allowed to remove another gallon from the lake for municipal use.

A letter from the Water Authority supplied by Walters estimates that the conversion of the golf course to a residential development would save 186 million gallons of water a year. After being returned to the lake and later receiving additional treatment, that water would be available for residential use.

Prior to Wednesday's vote, the council also expects to receive another report from Metro Police, which is investigating why there were two versions of an earlier environmental study on the potential problems of allowing residential development next to the sewage treatment plant.

Las Vegas Mayor Oscar Goodman, who was Walters' attorney in the early 1980s, would not say what he thinks about Walters' offer. But Goodman said he "feels comfortable going forward on Wednesday" with the vote.

Councilwoman Lois Tarkanian and Ross, though, expressed concern that crucial information about the deal is reaching the council too late to be fully digested before the scheduled vote.

While the offer moves through the city process, Walters' plan also is heading to the county commissioners.

The Sunrise Manor Town Board is expected to consider Walters' development proposal Nov. 10. The matter is scheduled to go to the County Commission for a final vote Nov. 16, said Greg Cerven, a county senior planner.

Its chances for approval seem good, given that the commission has approved residential developments nearby, including one across the street to the south of the sewage treatment plant and Royal Links.

Commissioner Bruce Woodbury said that in light of the ongoing drought, he would like to see land now used for a golf course switch to a less water-intensive use.

Woodbury added that, in such matters, he typically is influenced by the wishes of the commissioner whose district includes the land in question.

Commissioner Myrna Williams, whose district includes Royal Links, would not say how she will vote, but admitted that she is "inclined to seriously consider" the development.

People moving into the area are required to sign a disclosure and odor easement, acknowledging that they will be living next to a sewage treatment plant, Williams said. Over the past three years, there have not been any odor complaints from residents, she added.

In making her decision, Williams said, she will consider both that fact and that there is a need for more housing in the valley.

Dan Kulin can be reached at 259-8826 or at dan@lasvegassun.com.

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