Land for development is in short supply

Tuesday, March 6, 2007 | 7:04 a.m.

The supply of land for residential development in the Las Vegas Valley is expected to last only six years at the current rate of building, triggering a call by Gov. Jim Gibbons for the federal government to release more public land in auctions.

A study by real estate consultant RGR Group of Las Vegas showed nearly 36,000 acres of federal and private land available for residential development.

Residential developers have used about 5,400 acres annually during the last three years. At that pace, available tracts will dry up by early 2013, RGR said.

The analysis was presented at the Southern Nevada Housing Day seminar last week. Gibbons used the event to say Congress should expand the boundaries of federal land that can be sold to developers.

"We need to keep the pressure on the federal government to open our federal land for development," Gibbons told members of the housing and real estate industry who attended the event.

RGR's analysis found that in November, about 43,000 Bureau of Land Management acres and 62,000 private acres were available for development in the Las Vegas Valley. About 36,000 acres were for residential use.

Jon Summers, a spokesman for Sen. Harry Reid, D-Nev., said the situation didn't yet make a compelling case for the release of more federal land.

When the supply dwindles, lawmakers will have to balance the need for growth with the environment, Summers said.

Without more land, real estate prices will soar, Las Vegas housing analyst Dennis Smith said. Builders are having difficulty finding parcels of 10 to 20 acres, and property owners aren't cutting their prices, he said.

"If you don't have any more federal land, how do you expect prices to stabilize?" Smith said in an interview. "We have been talking about this for 10 years, and eventually there is going to be a serious problem with land supply."

In September the BLM said it would allow the market to drive decisions on releasing land, and that it would not sell land when the real estate market is soft.

The timing and scope of BLM land auctions are driven in part by a profit motive: In a hot real estate market, federal land can fetch top dollar - money that is mostly spent, in turn, on developing parks, trails and other desert projects.

The BLM canceled an auction for 2,200 acres in Henderson in December when developers were dropping their construction plans because of the soft market. On Wednesday the BLM will auction only about 50 acres. Prospects for a November auction are unclear.

Juan Palma, the BLM's Las Vegas field manager, said he takes cues from local government on when to put federal parcels on the market. Municipalities, in turn, get their cues from developers.

Even if the disposal boundary were expanded to increase the pool of government land that could eventually end up in residential development - and help cool land prices to promote more affordable housing - there are limitations on development. Off limits are the Sloan Canyon National Conservation Area and desert tortoise preserve south of the Las Vegas Valley on the west side of Interstate 15 and the Red Rock Canyon National Conservation Area on the western edge of the valley.

To allow for development to meet future housing needs, the BLM may have to revisit some of those land protections and find other areas in the state to preserve instead, said Richard Lee, vice president of First American Title.

Such changes would face stiff opposition from environmentalists, Lee said.

"It makes me shake in my shoes," said Jane Feldman, conservation chairwoman of the local chapter of the Sierra Club. "This idea if we give away public land, which is a public treasure, will help poor people with affordable housing is dangerous thinking."

Feldman said developers should focus on building on vacant, urban lots and that government should adopt policies to promote more affordable housing.

A version of this story appears in the current issue of In Business Las Vegas, a sister publication.