When a long lease becomes a sale

Friday, Sept. 7, 2007 | 7:28 a.m.

The recent approval of a pair of 50-year leases has some in Boulder City questioning whether the City Council has found a loophole in an ordinance requiring voter approval of the sale of any city-owned land.

Although Boulder City is Nevada's biggest city geographically, the ordinance has allowed it to remain a small town where population growth is effectively curtailed through the need to seek voters' blessing for any city land sales.

The same barrier, however, does not stand in the way of land leases. With a supermajority of four votes, the council can approve any lease for any length of time.

The recent approval of a controversial half-century lease for a Hawthorn Suites near the Boulder Creek Golf Course has focused attention on the issue - and prompted critics to argue that such lengthy leases circumvent voters and the growth-control sentiment behind the ordinance.

"After a while it becomes tantamount to a sale," new Councilman Travis Chandler said of the long leases.

Chandler, who has been making waves since joining council, plans to introduce an amendment to the city charter that would allow voters to decide whether the city should lease large or significant chunks of land.

"I don't want to vote on every trivial lease that comes along," he said. But he said he does want the public to vote on long-term leases on vital pieces of city property.

Others counter that the leases are more beneficial to the city than land sales, noting that leases bring in a constant revenue stream while allowing the city to control the land's future. In addition, setting up a citywide vote every time the city enters an agreement would be costly and cumbersome, and many developers would be unlikely to wait for an approval that may not come.

"A lease enables the city to project into the future," Councilman Mike Pacini said. "You're always going to have that money. If you sell the land it's a one-time payment. And you've lost control of the land."

In June the city entered a 50-year lease for a Hawthorn Suites hotel on 50 acres near the city-owned Boulder Creek Golf Course. The deal, which would net the city $173,000 annually, was approved at the last council meeting before Chandler and Councilwoman Linda Strickland took office.

However, the Hawthorn hotel is not yet a done deal. Strickland questioned the legality of the agreement and the state attorney general is reviewing it.

At that same June meeting, the city entered another 50-year lease with Volunteers of America for a 30-acre seniors housing complex at Adams Boulevard and Veterans Memorial Drive. That lease will pay the city $35,000 per year for 16 acres, with the other 14 acres being used as open space.

The leases have a significant effect on city finances. In the past fiscal year leases earned Boulder City more than $3.6 million of its $20.8 million general fund budget.

Energy plants on leased land, including Eldorado Energy, a gas-fired power plant, and Solargenix, a solar power plant, accounted for more than $1.5 million of that total. Other lease revenue comes from the Cascata Golf Course at the western edge of the city - operating under a lease that runs through 2038, with extension options - a newly built dirt bike track off U.S. 95 and more than a dozen communication towers.

Both power plants, in the midst of 30-year leases that could be extended, and the track are on some of the 107,000 acres that the city purchased from the Bureau of Land Management in 1995 for $12 per acre. That transaction made Boulder City the largest city, in land area, in Nevada.

However, it has maintained strict growth ordinances, including the requirement for public approval of city land sales, that have limited the population to 15,000.

Although many residents support keeping the town tiny, they also recognize that it has to get money somewhere.

"I'm for growth control," resident James Budd said. "But as far as industrial, they have enough land ; they can sell it or lease it."

Eighty percent of lease revenue goes into the city's general fund for day-to-day operations. The rest goes toward capital improvements. Money earned from any land sales must be used only for improvements.

"We're not growing, so we don't have a growing revenue stream," Councilwoman Andrea Anderson said.

Although critics complain that long-term leases lock up land for decades, Anderson said the lengthy commitments are needed to persuade developers to make major investments in hotel, housing or other projects.

City leaders hope the Hawthorn, if built, helps turn around the financially unstable Boulder Creek course by drawing out-of-town golfers, as well as provid ing a new social option in town.

"I think the hotel could make a lot of difference at the golf course," Anderson said. "And a lot of people in town want to have a better place to have wedding receptions or things like that."

Chandler counters that Boulder City should investigate whether the course - which since 2004 has cost the city more than $4 million - can ever earn money for the city .

Many in town support that study, but the rookie councilman may find less support for the idea of putting leases before voters.

Strickland said although caution must be used, especially regarding future water usage, when entering leases, she's not convinced voter approval should be required.

"I do think residents elected us to make decisions," Strickland said. "The average working person with his family and day-to-day life to live doesn't have the time to do the research to find out the long-term impact of these leases."

Many residents agree.

"We have to pay to maintain the beautiful parks and the city services," resident Peggy Caspar said. "I feel we elected the council members past and present. I think they should make the decisions. We elected these people to do the research and make good decisions."