Thursday, July 27, 2006 | 7:38 a.m.
A year ago, a company called the 702 Group bought a 1.1-acre site in downtown Las Vegas for about $5 million, then later won City Council approval for a 55-story condominium and retail project on the property.
Now, having not moved ahead with that 349-condo project, the partnership has the land at Las Vegas Boulevard and Garces Avenue - still with a nondescript one-story building on it - on the market for $9.5 million.
Impatient to see more high rises and fewer "For Sale" signs on downtown sites pitched to the council as the future home of glitzy, skyward-soaring projects, Mayor Oscar Goodman wants to put developers on a shorter leash by giving them less time to deliver on their promises - and, more important, less time to try to "flip" their land.
"Two years is plenty of time to flip," Goodman said, referring to the practice of buying land, securing development approvals - also known as entitlements - and then selling the land for a higher price.
"But if they flip it, the project never gets done, and that's not what I want," he said. "That's not accomplishing our dream and vision."
During the last few years, the council has approved more than 30 high rises for downtown . To date, however, only one has been completed and three are under construction.
Like the 702 Group's property, some of those other sites - none showing any physical evidence of the high-rise projects promised - also are for sale. And in the near future, some city officials fear, more could be.
Determined to squeeze out the speculators and limit permits to those who actually intend to build, Goodman hopes to shrink the period for which downtown high-rise plans are valid from the current two years to one year. At the end of the year, plans would expire and developers would have to get the council to reapprove them, which typically hinges on whether a developer is securing financing or obtaining building permits.
The shortened time frame could deter speculators by making their initial land purchases riskier, given that they would have less time to try to sell the property to someone else.
But 702 Group co-owner Paul Freed argues that Goodman's plan ultimately could harm rather than expedite downtown high-rise development.
Freed said companies like his provide a necessary service for the development community by securing land, wading through the approval process and assuming the risk of permit denials so that builders don't have to .
"The mayor and council have done a great job of creating an environment that attracts developers from all over the world," Freed said. "But reducing the time frame would indicate they are pulling in the reins and have a psychological effect on developers."
Developer Paul Murad said he agrees with the mayor's objective but is not certain that his proposed solution would work.
"I agree you need to slow down the entitlement and flipper schemes," said Murad, who is working on securing financing for a 39-story condominium/hotel project at Charleston Boulevard and Fourth Street, which the council approved in March.
"The flippers drive up the price of land and that stifles development, and you have extra middlemen involved," Murad added. "But obviously having more government control is not always welcome."
Tightening government regulations, Murad said, could undercut Las Vegas' developer-friendly reputation. "Right now it's a very easy place to do business."
Although Goodman is accustomed to getting his way on downtown-related matters, it is uncertain whether the council would go along with his idea. Some have expressed concerns about meddling with development regulations.
Councilman Larry Brown said while he needs more time to examine the mayor's proposal, he questions the wisdom of changing the rules.
"That's a market-driven process," he said, adding that more government regulations might make downtown less appealing to developers.
Brian Gordon of Applied Analysis, a real estate advisory firm, said he is not sure how tightening the timeline would affect development.
The market, not the city, dictates timing of the development of a high-rise project, he said.
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