Las Vegas Sun

November 12, 2018

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Airport land woes still developing

Homeowners who cherish a rural lifestyle are getting the feeling there may soon be nowhere left to hide from Clark County's sprawling commercial development.

Paul and Lori Schima bought a home south of Blue Diamond six years ago, where the only nearby activity was the occasional passing tumbleweed.

Lori Schima was raised in Las Vegas and is well aware of how urban development can swallow isolated ranch homes. Still the Schimas were sure their eventual neighbors would be homeowners, not businesses.

But two years ago the Schimas learned they were on the southwestern fringe of 5,300 acres McCarran International Airport acquired from the Bureau of Land Management. Now one thing is certain: No more homes will be built near them.

McCarran International Airport is the only airport in the nation that doubles as a real estate agency. It took hold of the BLM land to control the type of development below its increasingly busy flight paths.

The airport wants to stifle noise complaints and lawsuits that typically follow neighborhood development. In short, none of the land will be used for projects like houses, hospitals, schools, zoos or theaters.

It can be used for golf courses, parks, commercial complexes and industrial parks.

"We looked at places where you don't want masses that would be bothered by noise," Aviation Director Randy Walker said.

Since McCarran acquired the checkerboard of properties in 1998, Walker has become a real estate agent. He has brushed up on land use plans and dedicated staff members to property transactions.

After spending more than a year amending the county's master plan, the airport staff recently began cutting deals that will ultimately help McCarran and Nevada's environmentally sensitive land.

Until the master plan was adjusted, land below the airport's primary flight paths was zoned for densely populated neighborhoods.

The deal with the BLM, referred to as the Cooperative Management Agreement, came in the nick of time. Developers had yet to start on the new homes, and the valley's booming growth hadn't blanketed the southwest between McCarran and Durango Drive.

Because of a lack of foresight, county officials never created a formal buffer for McCarran -- a mistake Walker vows will not be repeated when the county builds its new Ivanpah airport south of Jean.

"Nobody envisioned an airport of this magnitude in the valley," Walker said of McCarran. "Nobody envisioned the compatibility issues that we're addressing today."

Although the airport is scurrying to protect open land, it is also paying the price for past oversights.

Neighborhoods that have crept up to McCarran's boundaries interfere with plans to build new runways. The airport is buying homes in a neighborhood south of Russell Road and east of Burnham Avenue. The airport has spent $31 million purchasing property and relocating residents.

For more than a decade the BLM and the airport had worked cooperatively on federal lands sales. But it became increasingly rare for land to be dealt because the county blocked sales, fearing unsuitable projects would be built.

Mike Dwyer, manager of the BLM's Southern Nevada Public Lands Management Act office, said before the 1998 agreement he sent applicants to the airport for final approval before land transactions were completed.

"I sent so many people over there and never saw them again," Dwyer said. "The airport a lot of times held a hard line. It opted on the conservative side to make certain land wasn't developed in an incompatible way."

The management agreement between the BLM and the airport allows McCarran officials to control development by leasing, auctioning or swapping land, placing deed restrictions on all pieces.

Eighty-five percent of the proceeds are returned to the federal government, which purchases environmentally sensitive land. Proceeds of property sold north of Warm Springs Road benefit the Lake Tahoe Basin and profits from sales south of Warm Springs stay in Southern Nevada.

According to the office of Sen. Richard Bryan, D-Nev., the airport's land deals have already generated $4.6 million for the Tahoe area. It is expected to bring in $50 million over the next decade.

The county keeps 10 percent for administrative costs, and 5 percent is invested in the state's special education coffers.

The program, however, is not without its critics.

Although Walker emphasized that the airport's goal is to set the character of a neighborhood and not change it, the Schimas can't help but wonder how quickly land near their Vicki Lane home will be developed.

For some residents it's a true Vegas gamble. Some homeowners might find themselves living next to parks, while others might soon live near a business complex.

"It stinks," Paul Schima said. "I'm not an isolationist, but I don't want neighbors right next door. I guess we'll have to move again."

Developers also have been skeptical of the land disposal process, saying the auctions bump land prices up too high because the minimum bid allowed is the appraised value of the property.

Scott Gragson, a commercial real estate broker with Colliers International, said when land is appraised the cost buyers incur conducting feasibility studies is not taken into account.

A buyer, for example, might spend between $3,000 and $50,000 testing the soil and identifying utility lines on the land. Because the airport does not extend developers the traditional 60 days to conduct studies after a deal is cut, the buyer must complete tests before the auction.

Gragson said there is no guarantee the developer will win the bid. Traditionally, buyers can refuse to close deals if they discover the land is not suitable, but with airport transactions they are stuck with the land.

Further, Gragson said, fewer developers engage in the airport auctions because the minimum bid is fair market value. He said the airport would receive more money if more bidders participated.

"If nobody is bidding on it, you are thinking maybe they know something I don't know about this piece," Gragson said. "In a normal process they start real low to get as many people involved as possible. You need to get emotions involved."

Sharon Jolley, who oversees the land transactions, said since the airport began releasing its land six months ago developers have flocked to her division. She has nearly 100 applications for land auctions or exchanges.

"We don't necessarily look at the highest offer, we go for the best offer," Jolley said. "But if bids go up, it means more money for environmentally sensitive lands."

Because the airport is picky about development on its land and aggressively protects its vacant property, it has been accused of being a land baron.

Dennis Olson, a full-time airport employee, drives from property to property every day to ensure contractors working on adjacent developments don't use airport-owned land to store equipment or for temporary access roads.

Olson also shoos away any homeless camps set up on lots.

Walker said because the airport can be fined for causing dust pollution once the land has been disturbed, he comes down hard on offenders. If work crews are found on airport property, they will be penalized.

"We want the word out," Walker said. "If you deal with the airport, they're tough, they toe the line. We want them to know that."

Walker denies being any sort of baron; the airport isn't wheeling and dealing to make money. In fact, he said, the airport doesn't make enough from transactions to cover its administrative costs.

Some have questioned whether McCarran -- the 16th-busiest airport in the world -- even belongs in the real estate business.

County Manager Dale Askew said county planners are more polished in zoning issues, but aviation experts are most knowledgeable about what developments make good neighbors with an airport. The two work together with the airport taking the lead.

"We have a huge investment in McCarran International Airport where it is located today," Askew said. "To move it later because of litigation due to encroachment and noise is cost inhibitive. It was in the nick of time that we received the land from the BLM.

"The property is of concern to the airport so they have been authorized to lead negotiations."

So when will the airport duck out of the real estate business? "Not soon enough," Walker answered without hesitation.

The county was fortunate to acquire the BLM property, but it has learned its lesson with McCarran and the headaches that accompanied development that bumped against its 2,800-acre property.

When the county began planning its new airport in Ivanpah, 30 miles south of Las Vegas, its priority was to claim 6,500 acres from the federal government to avoid conflicts with future development.

"We have a much better opportunity with Ivanpah," Walker said of the new airport, which is expected to relieve congestion at McCarran within a decade. "We will be more aggressive because we know better. It's a great opportunity to start an airport from scratch. We will avoid the conflicts we have in the valley today."

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