Saturday, May 24, 2008 | 2 a.m.
Beyond the Sun
Everything seems fine out at Lake Las Vegas. It looks like a lazy afternoon in Tuscany, except for the backdrop of brown desert mountains.
Couples sip cappuccinos on the water. Young folks shop for overpriced designer jeans and elderly people eat dinner at 4. Bellhops hustle in with Louis Vuitton luggage.
It’s a carefree life — except for the developer who couldn’t pay the mortgage, the four-diamond hotel that just filed for bankruptcy court protection, and home foreclosure rates roughly the same as in the rest of the valley.
At the beginning of the year Atalon Group, a firm that specializes in turning around financially troubled companies, acquired Lake Las Vegas after its original developer, Transcontinental Corp., defaulted on a $540 million loan.
The acquisition included 400 acres of undeveloped land, three golf courses, a fourth golf course under development, a few businesses and an interest in the Ritz-Carlton hotel.
“Everybody who was there is out,” said an investor familiar with recent changes at the community around a man-made lake southeast of Las Vegas. “The people who were there from the beginning are just gone.”
At least two area businesses, B&P Advertising and developer Fountainhead Partners, are owed money. And a homeowners association has filed a construction defect suit against Transcontinental.
Representatives of the Atalon Group declined an interview.
“The new ownership is assessing its alternatives to work through the many financial, legal and liquidity challenges that existed well before the change in ownership and that continue today,” spokeswoman Barbara Casey said in a written statement in response to the Sun’s inquiry. “The challenging real estate market conditions have exacerbated these efforts.”
If the image of Lake Las Vegas is that of an upscale community providing distance — physically and psychologically — from the grittiness of Las Vegas, the reality is that, while it indeed offers those benefits, it also faces most of the real-world problems felt throughout the valley. In short, being 17 miles from the Strip does not stop reality from intruding on the tranquillity of life on the lake.
In April the owner of the Ritz-Carlton in Lake Las Vegas filed a Chapter 11 bankruptcy petition to stop foreclosure of the $103 million mortgage. Village Hotel Investors LLC has owned the 15-acre, 349-room resort since it opened in 2003. In addition to not paying the mortgage, the group owes Henderson more than $177,000 in taxes.
Additionally, two default notices were served last month to Southshore Golf Club LLC on payments for a section of one of the resort’s high-end golf courses.
Loews Las Vegas Resort, MonteLago Village Resort and MonteLago Casino are not affected by the transaction. All the hotels remain open, as do the shops and restaurants around the lake.
Spokeswomen for the three hotels, which together have nearly 1,200 rooms, said occupancy has been strong the past few months — more than 90 percent even at the Ritz. “It’s been business as usual,” the Ritz-Carlton’s Katie Conway said.
Lake Las Vegas’ new owners refuse to let bankruptcy filings and other troubles sully their vision for the future. Casey said the resort will continue to market the area as “the most iconic and unique master-planned lake community throughout the Southwestern United States.” Celine Dion is among the VIP residents.
The Lake Las Vegas area boasts a median household income of $85,580, making it one of the wealthiest areas in the region, according to the 2008 Las Vegas Perspective, a Nevada Development Authority publication. (That includes statistics for Henderson homes, so the income figure for Lake Las Vegas alone would be even higher.)
Plans call for about 9,000 homes near the 320-acre lake. Today, 1,500 houses exist.
Clark County recorder documents show that 142 of those residences — roughly one in 10 — have been foreclosed on or have been on the brink of foreclosure since January.
A large portion of this recent activity comes from a rising number of default notices sent to condominium owners in the area. Fifty-three such notices were recorded on condos, about one-third of them for unsold units at one complex.
Many expensive homes also have ended up on the public auction block, including 25 this year. Another 30 could follow in the next few months.
Even so, real estate figures show home buyers in Lake Las Vegas can still expect to pay at least double what they would elsewhere in the valley for a property of similar size.
Perhaps not surprisingly, the recent upswing in foreclosures comes when sales at the resort, like everywhere else in the region, are sagging.
More than 400 houses and condos were sold in 2006 during the boom in residential construction. In 2007 that number dropped to 234. This year only 54 have been sold.
This is not the first time the area has faced serious financial concerns. The resort has a history of hit-or-miss investments.
Lake Las Vegas was conceived four decades ago by actor and sometime hotel owner J. Carlton Adair, who bought the land and water rights to develop what he dubbed Lake Adair.
But Adair declared bankruptcy and another developer failed to complete the project.
The most recent idea for Lake Las Vegas began when developer Ron Boeddeker flew over the area in 1986. Where others saw a swamp filled with Las Vegas’ sewage, Boeddeker saw something he could mold into a replica of Lake Como in Italy.
In 1990 the California-based Transcontinental Corp., headed by Boeddeker, purchased the land.
It took $7 billion and 4.1 million cubic yards of dirt to make it what it is today, a place the international travel media fawn over and that bills itself as a getaway for the rich and famous, where operas are held on the water in the spring and skaters twirl on a floating ice rink in winter.