Las Vegas Sun

March 29, 2024

Airport land sales a high-stakes game

Las Vegas real estate broker Lawrence Goldman this week became the most recent casualty of a process Clark County uses to dispose of land controlled by the airport.

County commissioners on Wednesday considered three deals involving parcels included in 5,300 acres conveyed by the Bureau of Land Management to McCarran International Airport two years ago.

Goldman watched as the board approved two other land exchanges but postponed a decision on his own offer, one which he maintains was fair -- $1.5 million in cash for 12 acres of airport land.

"I'm just wondering why the County Commission held this one. My offer was 25 percent above the appraised value of the land," Goldman said Wednesday. "This is the first bid I've made concerning the airport."

Airport officials are responsible for managing the land -- the cooperative management area -- to ensure that unsuitable developments, such as homes and apartments, aren't built under noisy flight paths.

Eighty-five percent of the proceeds from sales, leases or exchanges of the property are returned to the federal government, 10 percent are funneled back to the airport and the county's school system receives 5 percent.

The program is designed to keep residents away from high-noise areas, but Goldman isn't the first to question the way the airport accomplishes its task.

In October 2000 Commissioner Yvonne Atkinson Gates raised concerns about the process and asked that all transactions be halted until a clearer policy can be developed.

"What I didn't like was there was so much confusion. There was not a process in place on how we were going to handle land transactions with the airport," Atkinson Gates said. "There was so much confusion and pointing of fingers."

Atkinson Gates spoke up after developer William Gayler's Sunset III LLC was sold airport land despite a $10 million cash offer from developer Randy Black. Gayler offered the county $5 million in property and $3 million cash.

Since the contentious, last-minute auction, which Black called "weird," the airport developed a policy governing the process; it states officials will not approve land exchanges unless cash offers are 15 percent more than the appraised value of the property offered.

Goldman's offer exceeded the 15 percent stipulation, but commission Chairman Dario Herrera said the decision was delayed because Goldman's competitor on the bid -- GKT Acquisitions -- stated that property it listed in a proposed exchange was under-appraised.

"We are trying to realize the better benefit to the county, land and money or a straight-up sale," Herrera said.

The two land exchanges approved Wednesday involved GKT Acquisitions -- a trio led by Las Vegas native Scott Gragson, who has proven to be an expert in the land exchange game.

Of 20 land exchanges during the past two years -- prior to Wednesday's meeting -- GKT Acquisitions had been involved in nine. Gragson's company has exchanged about 173 acres of its property for about 380 acres of airport land.

On Wednesday GKT swapped 15 acres for 27 acres of airport property. The company owes the county $790,000 -- the difference in land values.

Though county records show that in the past the land GTK gave up is of equal value to property it received -- the difference would be owed to the county -- Gragson has benefited from its swaps and land acquisitions.

In January 2001, for example, GTK combined two parcels acquired from McCarran in exchange for $2.7 million worth of land, then sold the assemblage to Nevada Power for nearly $5 million.

Gragson said his profits were not as they appeared. He swapped valuable acreage with a private land owner for property adjacent to the Nevada Power site so the larger parcel could be pieced together.

"We didn't want those other parcels. We picked those for Nevada Power," said Gragson, the grandson of former Las Vegas Mayor Oran Gragson. "We are investors. We speculate on land, and we've been doing it for years."

Property is required to be appraised at its "highest and best value," Aviation Director Randy Walker said. The two parcels, according to airport records, were appraised at $2.7 million. The appraisal, however, was not based on the assemblage eventually sold to Nevada Power.

Gayler has also had success with the airport and in October 2000 swapped 10 acres for 7.5 acres of airport land.

Three months later, according to Clark County assessor's records, a 2-acre parcel at Rainbow Boulevard and Post Street -- initially appraised by the county at $350,000 -- sold for more than $1 million.

BLM officials said they have taken no complaints regarding the airport's land disposal policies. In fact, BLM Sales Manager Mike Dwyer commended Walker for making money for the federal government, airport and schools while developing a solid master plan.

"There were no strings attached when we conveyed land to the airport," Dwyer said. "The whole purpose was to ensure whatever land uses were proposed were compatible with the noise zone."

The proceeds from the public land transactions have brought in $25 million; the airport received $2.5 million and the school system has received $1.25 million, said Roy Morris, a BLM project manager.

Walker, who oversees land transactions, said he could make more cash for the airport and schools if he and other airport officials were in the real estate business.

"We're managing it from our selfish perspective," Walker said. "Other people benefit when we dispose of the property, and I'm glad they do. We're not in this for the cash; we're in this to make sure we don't have incompatible uses at the end of our runways."

Walker said auctioning off property for the minimum of fair market value would simply create a hodge-podge of development within the management area boundaries south and southeast of McCarran's runways.

Whether real estate brokers are "flipping" land by turning and making huge profits isn't the airport's concern, and Walker said the county and potential buyer use the same appraiser before a land exchange or sale is negotiated.

Walker emphasized that, in a legal sense, the airport could hold onto all of its land, and that it isn't required to dispose of any property within the cooperative management boundary.

Unlike private developers, the airport doesn't have the cash to purchase land and assemble larger, more valuable blocks -- a strategy that has been profitable for companies eyeing airport land.

The airport's process receives little oversight from the BLM or Clark County, but commissioners have raised the prospect of politics creeping in as well as whether the county is indeed getting the best deal.

Gayler said he didn't receive favorable treatment by the airport when he outbid Black. He said he purchased $5 million worth of land he knew McCarran officials wanted because it was mostly zoned residential.

Gayler said his purchase was risky. He feared Black's political influence could have convinced the board to side with Black, leaving Gayler with property he did not want.

"It can be political," Gayler said. "In that case, (Black) is a political guy, and he tried to pull as many strings as he could to influence the board to sell the land to him."

While critics question whether real estate brokers are profiting more from CMA land deals than the intended beneficiaries, Walker said the exchanges are enabling the airport to assemble blocks of land, which it plans to lease to industrial or commercial developers for larger projects.

The 50-year leases will ultimately bring the federal government, airport and school system more money through payments than they would have received had the airport sold the land for the highest cash offer.

"They will master plan and develop and we will collect rent," Walker said. "Five percent of that rent will go to the school district for the next 50 years."

archive