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July 23, 2014

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Clark County Commission:

After Chinese back out of Laughlin solar project, commissioners go back to drawing board

Image

Leila Navidi

The development in Laughlin, Nev. is seen with Davis Dam in the background on Monday, September 10, 2012.

Clark County commissioners though they’d hit the jackpot in 2011 when a Chinese company offered to buy 9,000 acres of county-owned land near Laughlin with the intent to build a multibillion-dollar solar panel factory and farm there.

The project seemed like a perfect fit and offered the tantalizing prospect of growth for the unincorporated border town of 7,300 people 90 miles south of Las Vegas.

Laughlin’s economy, which is heavily dependent on tourism, would get a boost from the thousands of temporary and permanent jobs the project would create, while the county would benefit from increased property and sales tax revenues. It would also able to sell the entirety of its 9,000 acre plot in one transaction, all while supporting a project that would bolster the region’s reputation in the burgeoning solar industry.

Commissioners were so excited about the deal they agreed to sell the land to ENN Mojave Energy LLC for $4.5 million, a steep discount from its appraised value of between $29.6 million and $38.6 million.

But when ENN was unable to secure the needed agreements with utilities to sell the power it generates by a recent June deadline, the company informed the county it was backing out of the deal to purchase the land, effectively putting the property back on the market.

With the deck reshuffled, commissioners face the tough reality that a project of the size and scale proposed by ENN won’t come around again anytime soon.

Instead, the property will likely have to be developed in more manageable pieces that attract multiple businesses in a variety of industries.

The stakes are high for the county— there are few contiguous parcels in Southern Nevada as large as its 9,000 acre plot, making it one of the most significant and attractive assets in the county’s real estate portfolio. If fully developed, it could transform the Laughlin area and provide a boost to the regional economy.

“This land has the whole potential future of Laughlin tied up in it,” said Commissioner Steve Sisolak, whose district includes Laughlin. “If you go down to Laughlin, it’s basically a strip along the river. There’s a little bit of shopping, a couple of restaurants and some residential. Most of the shopping is done in Arizona. There aren’t any big box stores or necessities there. The hope is we can expand down there to give it more of a chance.”

Sisolak envisions the property being developed into an industrial park that could support manufacturing, shipping or other warehouse type uses. If those initial businesses catch on and begin creating jobs, residential and retail uses might also make sense on part of the property, he said.

For residents in Laughlin, successfully developing the land means an opportunity to grow into a self-sufficient town with local access to services from doctors, pharmacies, dentists and other basic necessities.

“It’s the shot in the arm Laughlin needs. Before we can get Walgreens and people like that to come here, we have to build up our population,” said James Vincent, chairman of Laughlin’s town board.

Laughlin residents were surprised and disappointed to hear the solar plant wasn’t happening, he said, although some had remained skeptical of the project’s chances since it was announced.

Vincent said he’s glad the county was able to make a clean break with ENN once the project failed and that he’s looking forward to what new proposals come forward.

He dreams of Laughlin hosting a southern version of the Tahoe-Reno Industrial Center, a 30,000 acre industrial park with 130 businesses in the shipping, manufacturing and distribution industries.

“That would put Laughlin right where it needs to be,” Vincent said.

The biggest challenge inhibiting development will be building out the water, sewer and road infrastructure needed to serve businesses at any industrial park, according to local economist John Restrepo, principal of RCG Economics.

A shortage of large plots of land zoned for industrial uses in the valley’s urban core make the county’s parcel an attractive option, as does its proximity to Interstate 40 and a nearby railway, Restrepo said.

“This project if done properly would be pretty beneficial to Southern Nevada if you can solve some of the utility infrastructure and transportation infrastructure problems,” he said, but the county will likely need to partner with a private company to manage the development.

“Trying to do something of this size managed directly by public sector would be, in my opinion, problematic,” Restrepo said. “(The county) should consider hiring a development management team to make sure it’s managed properly and sold properly because they have the expertise to do it.”

Commissioners will discuss the future of the property Tuesday during their regular board meeting and could give staff guidance on the next steps to take. Sisolak said he’d like the county to engage outside help to market the property to interested buyers.

Even though that might cost the county some money up front, he says it will be a wise investment that pays for itself.

“I’m not talking about a little multiple-listing Realtor. I would like to get somebody that had nationwide or even international reach to be able to talk to folks and do some advertising,” he said. “The cost would be minimal compared to the potential upside.”

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