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StumbleNew communities falling short of their master plans
Developers slash spending on promised amenities, angering residents
Families enjoy Exploration Peak Park, the only completed green space at Mountain’s Edge. Many marketed amenities have not materialized.
Tuesday, Aug. 10, 2010 | 2 a.m.
Sun Coverage
Beyond the Sun
When retiree Peter Bernasconi left New York for Las Vegas, he was drawn to Mountain’s Edge, a master-planned community in the southwest valley that promised a swath of parks and a well-plotted system of roadways with easy access to nearby businesses and services. It seemed the complete package.
Three years later, much remains unfinished. Roads such as Durango Drive and Mountain’s Edge Parkway lack curbs, shoulders, sidewalks or a top layer of pavement. Others, such as Rainbow Boulevard and Cactus Avenue, are still dirt and gravel paths for long stretches between villages.
One park has been built and one is on the way, but another has been dropped from the plans and two other planned parks are in doubt.
Road to Nowhere - A view of Via Firenze Road, which ends in the desert at the Inspirada master-planned community in Henderson Friday, August 6, 2010.
Undeveloped property and incomplete projects are daily reminders to residents that the new homes they bought in Mountain’s Edge and elsewhere in the Las Vegas Valley are not accompanied by the amenities they expected, as a result of developers cutting back to survive the brutal economy.
“We’re getting much less than we were promised,” said Bernasconi, 58, a former utility company manager and one of two homeowners on the Master Homeowners Association’s board. “Some of the homeowners are upset. A lot of this work is dragging out.”
At Inspirada in Henderson, a different but equally troublesome problem exists: a path of paved roads that lead to nowhere. A driver could turn onto Amigo Street off Volunteer Boulevard, take a right on Dale Avenue and find a dead end. The intersections are surrounded only by desert and some loose trash.
Pictured is part of Reflections Bay Golf Course at Lake Las Vegas.
Meanwhile at Lake Las Vegas, a 3,600-acre development planned for 9,000 homes, two of three golf courses have closed, as have a casino and a Ritz-Carlton hotel, while sales have stalled. Only 1,600 homes have been built.
As buyers scout new homes in the valley, Dennis Smith, president of Home Builders Research, said concerns abound over incomplete developments.
“Consumers want to know if it will be finished the way it was designed,” Smith said. “Buyers are pickier. They are concerned about getting the best value.”
So do the 20,000 residents of Mountain’s Edge, a 2,582-acre community that ranked first in the U.S. for sales in 2007 and 2008.
Clark County allowed Focus Property Group, the developer of Mountain’s Edge, to cut one of the five planned parks and slash spending on remaining recreational areas by more than half, to $6 million.
Funding for future parks now depends on new building permits being issued and taxed, a dubious prospect as Las Vegas has been labeled the nation’s second worst housing market. At Mountain’s Edge, for example, sales have fallen about 75 percent from a peak of 2,300 in 2006.
“It’s a bait and switch,” said Lisa Lethi, a resident who described the original park designs as filled with soccer fields and basketball courts. An abandoned regional park, the one cut in the new agreement, would have offered a swimming pool.
Because developers overstretched themselves, buying property and starting ambitious projects in the years before the market went bust, residents may receive less and be burdened with more maintenance and utility bills for what they do get, as happened in Mountain’s Edge.
Homebuyers in master-planned communities pay a premium for amenities and contribute to the cost of road construction by paying assessments into a special improvement district. Focus heavily advertised the parks in its promotional material, and residents paid as much as $12,000 in assessments per home. Coupled with this hit are radically devalued home values.
Lethi said she paid $400,000 for her house in 2005 and now it’s worth less than half of that. Bernasconi bought his two-bedroom home for $460,000; it’s now appraised for a little more than $160,000, according to the Clark County assessor’s office.
New homes at Mountain’s Edge sold for an average of $190,000 in 2009 versus $460,000 in 2006. The community is planned for 14,500 homes, and about half have been sold since homes opened in 2004.
Focus acknowledged its planning had flaws, but argued nobody expected the housing market to bust as it did in December 2008.
“If we could rewrite history, there are things we could have done differently,” said Mark Fiorentino, the company’s senior vice president for government affairs, pointing to the “gold-plated” $8 million Exploration Peak Park, the only completed green space, as an example of overspending.
Still, the developer’s planning errors have had an effect on residents. Its financial troubles led Focus to come to the county to renegotiate its public obligations.
County Commissioner Susan Brager, who represents the Mountain’s Edge area, said commissioners must balance the differing opinions of residents — some just want the parks; others are wary of Focus shifting more fiscal responsibility to the county or homebuyers.
She also said keeping developers such as Focus, which has $1.7 billion in taxable property value, out of bankruptcy is important.
Some residents have suggested pulling performance bonds for incomplete projects. But if the county forced Focus to forfeit a performance bond for an unfinished road, for example, the insurance company could find Focus in default and send the company into bankruptcy.
If withdrawing bonds weren’t a risk, “I would have done that in an instant,” Brager said.
Incomplete housing projects have produced a slew of lawsuits elsewhere in the valley.
One example:
Inspirada, a master-planned community in Henderson, is shown May 11, 2009.
KB Home, one of Focus’ partners in Inspirada and Mountain’s Edge, was sued in 2009 for allegedly inflating prices by tens of thousands of dollars and rigging appraisals in coordination with Countrywide Financial and LandSafe Appraisal Services. The lawsuit claims inflated prices were partially based on the promise of a well-developed master-planned community with full amenities.
Focus’ cash flow not only led to the cutbacks at Mountain’s Edge, the developer’s money problems even forced entire projects to be canceled.
Focus and eight homebuilders paid $510 million for 1,710 acres at Kyle Canyon in 2005, but Wachovia Bank foreclosed in 2008 without any of the planned 16,000 homes being built there.
The company’s financial troubles will leave a mark on Mountain’s Edge residents.
The new agreement between the company and Clark County placed almost all responsibility for maintaining parks and flood control channels on the Mountain’s Edge homeowners association.
Bernasconi estimated the additional bills will double or triple the $25 monthly fee residents pay, while home values remain decimated.
No timeline exists for some remaining roads. Others are years behind schedule. Durango Drive, which was supposed to be expanded to four lanes by December 2007, might be completed by the end of the year.
The same goes for the flood channels, which should have been done by April 2009, a deadline extended by the county.
Gene Leed, who moved to Mountain’s Edge in 2005 and protested the new development agreement, said he sees the move as a developer trying to loosen itself from financial obligations.
“This is an exit strategy,” he said.
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Another example of too big to fail.
And what did the down-line consumers receive to offset the additional costs of home ownership in Clark County?
Who are the performance bonds supposed to protect? Who do they protect if they won't be pulled? Kind of like a shell game, there is nothing there.
In the future, home buyers in Clark County would do good to realize that performance bonds provide NO SECURITY for them since the county won't pull them because the home builders are TOO BIG TO FAIL.
Of course, it would be very interesting to know the size of the salaries for the executives involved at FOCUS and the other companies.
do not look for any improvement in any real estate market for a long time. both areas, henderson and LLV, were overpriced in the beginning and got caught with their shorts down. who would pay 150k for a house w/ a developers fee of 12k? who would pay the same to live next door to a closed golf course? ole bouvier must be happy as a clam.
I would get an attorney and find more unhappy buyers. Although I bet the developer has some good weasel words in the sales contract.
The blame goes to the Zoning Board and County Commissioners who allowed homes to be parceled with no land! Drive around town and 99% of new homes look like army barracks homes built on top of one another and then a concrete wall for a backyard that has no land. With all the massive amount of land out here (not to mention the lack of water) the minimum home should be 1/2 an acre or more. This would have prevented the ludicrous overbuilding in the area and kept pricing more stable. The local corrupt government is totally to blame for their zoning practices
What can possibly go wrong when business is allowed to do as it pleases without pesky Big Govt getting in the way?
They're the pros, right?
Gotta love these names on these developments -
"Mountains Edge" "Inspirada"
I imagine these names were selected to inspire people to move to the edge of civilization and spend a mountain of money on styrofoam box in the sweltering desert.
Guaranteed Amenities? Dry heat !
who in their right mind would spend $400k on a vegas home???
$150k-$180k sounds a little more in line with a median income.
i moved from california specifically to buy a few discounted homes in the nicer areas of vegas and henderson. thank you to the people who never paid attention to economics and simple math... i get to live like a king because of you.
I don't know a single person who lives in a Planned Community in Vegas who is happy with it--even older ones in Summerlin. The rules are onerous, the enforcement is either sketchy or draconian, and the fees are insane.
Sure, my older house needs work periodically, and yes, my neighbor keeps junked cars in his driveway every now and again. But under no conditions would I buy into a lot where I was tied to a third-party set of rules and under the control of a committee.
"KB Home, one of Focus' partners in Inspirada and Mountain's Edge, was sued in 2009 for allegedly inflating prices by tens of thousands of dollars and rigging appraisals in coordination with Countrywide Financial and LandSafe Appraisal Services."
Why are the crooks behind this strategy not behind bars?
This all thanks to the liberal mortgage requirements that were allowed, in large part, by Barney Frank and other democrats. They wanted to ensure that everyone was able to own a home and in their effort to guarantee minorities could have home ownership, qualifying requirements were loosened for Fannie Mae and Freddie Mac. As a result, it was like printing money and everyone could own a home. This meant the greedy builders could work with the greedy banks and the greedy appraisers to drive up home prices artificially because guess what, everyone can own a home. Including illegal aliens. I personally know illegal immigrants who have figured out a way to own a home. Of course, it's in foreclosure now but that's another story. Well, that's a fine mess we've gotten into. Thanks Barney and friends.
Brager is a joke. Her concern through these debates has been to please FOCUS GROUP. When we went to the sales office (Several times) we were told that the parks including A REGIONAL PARK would be built. That money was not tied into home sales. That money was already set aside. We were flat out lied to by the sales office at Mountains Edge.
For the first time in our lives, we are considering walking away from a financial obligation, like our neighbors have. I believe that our house was over valued by the developer (Woodside HOmes) and the appraiser.
Brager built a lovely community center with a pool in the community of Blue Diamond but has not done anything to improve our quality of life at Mountains Edge. She is running for relection.
I am curious how much she has done for residents in comparison to business.
I dont think theres many people who can honestly say they never made a bad investment.I know I've made a few so I cant condemm anyone for buying into one of these places if this is the lifestyle they want.My home is still worth more than I payed 8 yrs ago,but I'm just lucky,right place and time.I wish these people well,and hope someday things get better.
@LastThroes-
So, the rules handed down to FMA by the Clinton Administration and then by Barney Frank and Chris Dodd easing credit requirements and flooding the market with unqualified buyers had nothing to do with it?
It was PRECISELY big government regulation, which is almost always crafted with end-runs around and loopholes through to benefit the big corporate donors to political campaigns, driving smaller competitors out of business while avoiding real oversight until it's too late. The fat cats' pockets are lined, the politicians campaigns are funded, and the middle class is left holding the bag.
The absolute genesis of the whole mess were government regulations aimed at making home-ownership accessible to those who lacked the financial wherewithal to partake in this mythical segment of the "American Dream". Cheap, easy credit was a product of the left's desire to artificially elevate "lower classes" leading to the ridiculous compromise resulting in the lifting of Glass-Steagal to put in place risk-spreading mechanisms that enabled such irresponsible lending. A perfect example of the what the road to Hell is paved with.
The economy was losing 500,000 jobs per month in 2008. Freefalling to collapse.
Now it's at least stabilized. U.S. GDP grew in each of the last 3 quarters, jobs are always lagging the numbers recovery in each recession -- a cool site; Balkingpoints ; incredible satellite view of earth
The housing boom, bubble, bust... The end result of government forcing financing down to folks who can't buy lunch. Homes are a place to live first. They may be a long term investment. Those who bought thinking they would make big money fast and it would never end were foolish folks without any knowledge of history. This is not the first significant home price drop and it probably won't be the last although the next one will be decades away IF we recover without a double dip or complete crash. That... is yet to be seen. The congress (democrat), Freddie Mac and Fannie Mae are again trying to force loans to those who can't afford them, the exact scenario that got us here to begin with. And congress exempted those two entities from financial regulation, left their TARP access open ended and are about to pump billions of additional cash into them... again.
They won't be satisfied until everyone is equally broke and no one has success. Except them.
A growth cap, like in Boulder City would have stabilized the market.
bring on interest rate increases, judging the FED statement it won't be long before rates do rise, also expect some severe cuts soon as the ratings agencies are looking to cut the credit rating of USA, this would turn us into Greece overnight.
GW Bush's two favorite words: (at least until the housing market collapsed)
OWNERSHIP SOCIETY
Google it. You'll see why lenders were encouraged and happy to make those lucrative subprime loans.
Gordon,
Excellent comment.
I posted Bush's favorite two words --OWNERSHIP SOCIETY -- before I read yours.
All you fear-mongers are the same people that thought we'd all die from Mad Cow, h1n1, and the world is coming to an end in 2012.
... so since the world is coming to an end, you don't need your money, transfer it all to me.
thank you, and have a great life!
Over the past 40 years, I can name dozens of developments in California, Nevada and Arizona that have had similar endings. There'a a brand new Jack Nicklaus designed golf course a few miles from my house that has a nearly complete clubhouse, partially finished roads, walls, etc. that never opened and the very nice greens, fairways and landscaping have had the water shut off and died out and weeded up. Millions of dollars spent have been wasted. Hundreds of empty lots surrounding the golf course that builders paid 5 or 6 times what they should have. Hundreds of millions have been lost on this one development alone. Developers come and go with the economy and bankruptcy absolves them of their obligations. The next developer to buy it usually gets many concessions from the city/county requirements in order to take it on. In other words, fewer parks, lakes, recreation, etc. It is a real risk to be one of the first buyers if those "amenities" are important. I know od another failed development where the land has been offered FREE to anyone who wants it. However, they have to pay the delinquent water and sewer district fees which were in excess of 12 million last I heard. No takers in over 10 years. And who in their right mind pays $460k for a 2 bedroom house? One thing for sure, there are deals to be had for those with cash right now.
Sad for the owners - yet happy for me. We looked at Mountain's Edge but didn't buy there for one main reason. To me, it was HOA on crack - they wanted two fees each month for a total over $100 but everything was "promised", it just wasn't there! I'm sorry, a lot of these owners got what they bought into - nothing more than an "idea" that may in time come to be if the economy ever gets better or even a little bit better - but you better have money to spare if you buy into "ideas".
"The end result of government forcing financing down to folks who can't buy lunch."
Not exactly...Loans can still be had for 3-3/2 down, courtesy of the backing by the US taxpayer. Don't believe that Obama BS of financial reform
If you're going to buy, look for a 'finished' community. There are lots out there with new homes (seven hills, summerlin, etc...). I'd never buy in a community that's not finished, that's just dumb.
It is very evident to me, based on the economic downturn of the last 4 years and the well thought out comments above, that the Clinton Administration (and the subsequent Bush Administration) had a hell of a plan in regards to home ownership for the 'working poor' of America. I thought the PLAN was ingenious and quite forward-thinking. But the IMPLEMENTATION was atrocious! America (the money/power brokers) could have made the PLAN viable and profitable if totally unrestrained greed had not shown it's ugly head. However, American-style Capitalism almost always breeds greed. I'm not knocking my beloved country (I wouldn't want to live anywhere else) but it seems our success in life is based on our financial prowess and position. AND THAT'S OKAY TOO! But not to the detriment of others!
The 'working poor' and low-income members of our society could have experienced the American dream of home ownership (after all, these people pay rent) had the IMPLEMENTATION of the PLAN been geared toward their financial status and ability (to pay) and not the over-the-top profit of the money-brokers. A 40 to 50-year mortgage, without ballooning, could have been one method.
Gordon, you're a real piece of work! How dare you, sir!?! How dare you throw around facts and quotations and suggest that this is G.W. Bush's fault?!? Have you no shame?!?
Next thing you're going to suggest is that the immigration problem in this country is the fault of the Republicans. They so desperately wanted to do something to stem the tide of cheap, undocumented labor into this country. Do you remember in the early years of the Bush administration when all we heard was banker after banker and CEO after CEO complaining about this cheap labor? The Republicans and big business were appalled by the immigration problem and introduced countless bills--reasonable ones at that--to stop it. And even when the Republicans controlled the White House, Congress and the Senate, the Democrats were able to scrounge up enough votes to effectively kill anything introduced.
So get your facts straight before you go around blaming this mess on the Republicans. They, like the bankers and investors, wanted nothing to do with these high-risk loans. They didn't make any money off of them and because the Democrats forced them to give them out anyway, countless CEOs went years without bonuses.
They sacrificed for our country and now you're trying to paint them as the bad guys? I'm simply appalled.
nice sarcasm,rusty. wall street took uncle sam foe a ride with billions in bailout money, but alas, when the voters needed help with their overvalued homes, the republicans were no where to be found. if all else fails, dont forget to pay the electric bill, it gets hot in las vegas!
All over California, real estate developers are defaulting on subdivision improvement bonds, and bonds to build public parks and roads. Cities and counties are aggressively suing on those bonds, without any fear of the developer filing bankruptcy.
The way "bonds" work is that the surety company or insurance company which issued the bonds has to pay for the originally promised improvements, regardless of whether or not the developer files bankruptcy. That is a principle of national bankruptcy law, not some weird reality that is in effect in the 49 states other than Nevada.
See, for example:
http://www.ocregister.com/news/marblehea...
As a consequence, Commissioner Susan Brager is either an idiot or a developer's shill.
You decide.
If these guys are afraid to withdraw the bonds...what was their purpose in the first place? It's the equivalent of getting insurance and then never using it because you are afraid of the consequences. If that's the way it is let me into the bond and insurance market. There seems to be no risk.
"Gordon, How dare you, sir!?! How dare you throw around facts and (true) quotations and suggest that this is G.W. Bush's fault (it is) ?!?"
_____________
Talk about feigned outrage "How dare you -- blah blah blah..." LOL!
In my next life I want to come back as a republican because then, no matter how badly I fail, it will always be the fault of someone else. I'll take credit for all that goes well and blame the opposition for all that doesn't.
If I decide to invade a country without any real reason and it ends up costing $2 trillion instead of the promised $50 billion, and last 8 years instead of the promised 6 months I'll blame the other party for voting to give me the power to invade.
I'll always have a heads I win, tails you lose advantage.
The icing on the cake is this: While I'm shirking my own responsibility I'll be a back-slapping member of the party that champions the virtues of taking personal responsibility.
Sounds almost too good to be true. How soon can I join?
.
"She [Brager] also said keeping developers such as Focus, which has $1.7 billion in taxable property value, out of bankruptcy is important."
Another fallacy peddled by Ms. Brager, the Democratic Party's intellectual equivalent of Sharron Angle and Sue Lowden combined.
If Commissioner Lowden had bothered to educate herself about what happens to a city or county's right to collect real estate taxes on the property of a company in bankruptcy, she would find out the answer is "Nothing". The city or county has a statutory first lien, ahead of all mortgages. The bankruptcy judge DOES NOT have the power to strip away the statutory lien on the property for real estate taxes through a Chapter 11 Plan.
Delinquent real estate taxes on property in bankruptcy get paid either through the bankrupt developer's Chapter 11 Plan or when the property is resold after foreclosure.
Any half witted realtor who has been involved in the sale of even a foreclosed single family house knows that.
As a consequence, Commissioner Susan Brager is either an idiot or a developer's shill.
You decide.
nothing is over-priced or under-priced. things are worth exactly what people will pay for them.
people paid $400K for a home in mountain's edge because THAT'S what they were "worth" at the time.
that southwest side of town really is kind of "ground zero" for the real estate market. most it was built in 2005 - 2007 and almost everyone that bought new there is stuck.
Three words: class action lawsuit.
Back in 1987 during the last pull back of housing there was a development in SW Florida called Lehigh Acres and it was a planned community that was started in 1981, today 2010 nearly half is still unfinished. Paved roads, crosswalks, stop signs, fire hydrants etc were taken over by mother nature. Court battle after court battle was the norm because people dropped their life savings into something that the main people knew would not fly. The problem is that when you drop you money into something that is being planned or built as they go you take the ultimate gamble with your money. When I read about people being suckered into these bad real estate deals I often wonder if they were really comfortable with their plans.
p
Gordon. You're drinking the Kool-Aid.
First, I'm not a huge Bush fan but I do believe in relaying the facts. Bush as part of his plan and attempts at reducing bi-partisan government allowed Congress to pass laws that they had approved. Barney Frank was the driving force behind the legislation for these lending requirements to be relaxed because he, and many Democrats, felt that those lower income - and less qualified - citizens weren't being afforded equal opportunity for home ownership. Bush merely went along with a Democratic house and senate in an attempt to reduce bi-partisanship. As a matter of fact, Bush didn't use his first veto until 2006.
So put your drink down, relax and do a little more research before you spout off.
I have been to Virginia City and Silver City and Bodie, California. All are ghost towns. Soon Las Vegas will be the biggest and best ghost town in America which will bring more tourists in to see what once was.
The dollar is taking a beating against the Yen and the Yuan. Nobody will be wanting our bonds and treasury obligations. The printing presses will go wild at the bureau of engraving in Washington. Whoopee, want to throw down a million bucks on the black jack table? Go right ahead, there is our future. Sad to say its part of living. We went through a terrible depression. Prosperity is just round the corner however I live on a circle without any corners. Bye folks. Just mention my name in Sheboygan, property prices are holding firm there.
LastThroes, take a deep breath, count to ten and then look up "sarcasm" in the dictionary.
@Gordon-
The Republican controlled Congresses were not filibuster proof and required a lot of wheeling and dealing to get legislation through.
Bush's fiscal policies were wildly out of sync with the majority of conservatives, however, it was his administration that wanted to look into FMA underwriting practices and the underpinning mechanisms of CDFs (enabled by legislation signed into law by Clinton)- efforts blocked by Barney Frank and Chris Dodd. It's not a matter of Republican vs. Democrat in who's to blame, it's a matter of fiscal policy derived from liberal vs. conservative philosophy.
The "American Dream" of home-ownership is a myth, a short-term expectation driven by monumental preceeding events like WWII and the Great Depression. It is the "chicken in every pot" campaign slogan of the latter half of the 20th Century taken to the level of "Chicken Kiev on every platter" used by both sides to curry favor and ensnare power. In a free-market society, it is a political deliverable unachievable without damaging the foundations of said society. The "American Dream" is much bigger, more nebulous, and more personal to each individual.
The whole thing is an example of crumbs from the table to ensure the masses won't storm the larders.
Uh oh, the rhinocerous is waking up!
http://www.usatoday.com/money/economy/ho...
Make no mistake, Focus has some responsibility for the over priced home values of the past. They spent the allocated money for Mountain's Edge ammenities to buy more land and continue to increase land values/home values in the valley and this backfired and now the County is letting them off the hook.
don't forget about the massive master-planned community/failure in the NW, Providence.