Monday, June 3, 2002 | 11:09 a.m.
A city-backed redevelopment deal worth as much as $40 million to two developers who sat on the board that recommended it has prompted some Henderson elected officials to call for a review of city ethics codes.
The proposed 525-acre Tuscany subdivision has raised ethical concerns because Las Vegas Strip developers Barry Fieldman and Bob Unger sat on the Henderson Redevelopment Advisory Commission while city staff custom-built a redevelopment area around their project.
Fieldman and Unger -- who built Showcase Mall, a thriving Strip non-gaming entertainment complex, and who are developing World Ports Resorts, a $4 billion London-themed resort just south of Mandalay Bay -- abstained from votes on the project during the two years that staff ferried it through the approval process. They resigned from the board just weeks before signing a contract for city aid.
Less than 10 months after leaving the council, former City Councilman David Wood returned to city hall to lobby staffers on behalf of Fieldman and Unger.
In Las Vegas, Wood's actions would have been prohibited by city ethics codes, and the developers' behavior would have crossed the ethical line.
But in Henderson, despite questions about a conflict of interest, the deal was legal and had the backing and clearance of top city officials. City Attorney Shauna Hughes advised Fieldman and Unger to stay on the board, saying as long as they abstained, there was no conflict, according to city officials and meeting records.
Legal or not, the Tuscany project has resulted in calls for a stronger code of ethics in Henderson.
"Henderson has aspirations, so that means this is one of the tone-setting moments in the history of the town. We're talking about what Henderson is going to become," said Craig Walton, a professor of ethics and policy studies at the University of Nevada, Las Vegas.
"If it's going to be a plutocracy (government by the wealthy) with sweetheart relationships with developers, maybe that's understandable in an anthropological sense -- the bigwigs powdering each other's wigs. But that doesn't make it good."
Three elected officials -- Councilman Steve Kirk, Councilwoman Amanda Cyphers and Assemblywoman Sandra Tiffany, R-Henderson, -- say the Tuscany deal enters an ethical gray area that doesn't cast the city in its best light. The city needs to review its ethics codes to discourage similar deals in the future, they say.
"Henderson is the second-largest city in Nevada now and I think it's an appropriate time to look at clarifying our ethics codes," Tiffany said. "We're a big city now. We need to act like a big city." Kirk also has his doubts about the advice given by the city attorney's office.
City Attorney Hughes declined repeated requests for comment for this story. "If somebody serves on a board and has a financial gain at stake, it's not right," Kirk said. "They should be there to serve the community, and if there is financial gain, it taints the whole process."
Still, Kirk and Cyphers, along with Councilmen Jack Clark and Andy Hafen, voted unanimously in April to approve city aid for Tuscany, a planned upscale residential subdivision of 1,900 homes with prices as high as $400,000 on the east side of town. At the time of the vote, Kirk, Cyphers and Clark said they were unaware of the extent of Fieldman and Unger's potential conflict.
Mayor Jim Gibson, who was absent for the vote, said he understood the men's dual roles clearly. But he says he was comfortable with it. He saw their purchase of the stalled subdivision in January 2000 as a fortunate turn for the city, he said. The site, north of Lake Mead Drive off of Athens Avenue, is an abandoned gravel pit.
Under the previous owner, developer Jim Rhodes, little work was completed on the project that was then known as Palm City beyond some preliminary site grading. The site was given residential zoning in 1995.
With the arrival of Fieldman and Unger, who manage Commerce Associates, the company that bought the site, Gibson saw an opportunity for project to succeed and for the city to establish a stronger tax base in an area of town that had seen mostly mobile homes and starter home developments over the past 40 years.
Fieldman and Unger run Commerce Associates as minority owners. Las Vegas homebuilder Rolland Weddell and Tom Gonzales, co-founder of Commerce One, a California computer software company, are majority owners.
The council vote approving Tuscany marked the end of a two-year effort to custom-fit a new redevelopment area around the planned $500 million development.
Cities more often create redevelopment areas on their own to entice developers to rebuild in blighted areas. The city offers a cut of future property tax revenues in the area to help offset construction costs.
But it was Commerce Associates, not the city, that proposed the redevelopment area. Two months after Commerce paid a reported $30 million for Palm City, Wood approached the city to request the creation of a redevelopment area around it.
Wood could make that request because in 1999 the state Legislature approved a law establishing the sites of abandoned mines, including gravel pits, as appropriate areas for local governments to spend redevelopment money, in part because of the high costs of cleaning them up once they have been stripped of ore.
Without the new law and the city aid, Fieldman said, he and his investors would have lost "a ton of money." It was unclear how much it will cost to clean up the mine, but developers said the work being done could cost millions.
According to the redevelopment agreement, between $27 million and $40 million in city tax revenue will be paid to Commerce Associates as improvements to the Tuscany Hills Redevelopment Area are made.
The money, paid quarterly, is tied to property value. As the property value rises, and city tax revenues increase as a result, the city will reimburse Commerce for building public works projects such as flood channel improvements, streets, a fire station and a school.
Under the agreement, the money could be paid out over 30 years, but Bob Wilson, manager of the city's redevelopment agency, said he expects the property value to rise quickly. According to city projections, Henderson is likely to finish paying Commerce within four to seven years. "The return on our investment will be huge," Clark said. "We're betting on the success of the project, and we only pay the bet if we win. I think that's better odds than any casino is paying."
Over the 30-year lifespan of the redevelopment area, Tuscany is projected to yield a total of $263 million in new tax revenue for Henderson.
But as good as the deal is for the city, it still raises questions that Las Vegas city ethics codes could have answered easily.
Wood pitched the idea of a new redevelopment area to city staff he had overseen less than a year earlier as an elected official. Staff then drafted the redevelopment area and presented it to the board Fieldman and Unger served on, with Fieldman as chairman.
Ultimately, the city created the Tuscany Hills Redevelopment Area, including nearby industrial businesses in the district "to make sure we met state law," said Wilson. The redevelopment area includes Tuscany's 525 acres and 325 acres surrounding it.
By counting the mine acreage as developed and including an ice cream factory, a mini-storage facility, a Nevada Power substation and similar businesses, the city was able to meet state law requiring that 75 percent of a redevelopment area is developed.
Then came the recommendation for up to $40 million in city aid for the project.
"I can assure you that no one ever approached me about a quid pro quo," Mayor Gibson said. "I spent more time than I cared to trying to make sure we were on the right side of the law and I think we are."
Fieldman also said his conduct was ethical.
"In the beginning, there were no agreements that gave us a dime," Fieldman said. "But when it got down to specific agreements, that's when I decided it was no longer appropriate (to serve on the board)."
Wood's lobbying of city staff would have been prohibited by a 1993 Las Vegas city law that requires its elected officials observe a "cooling off" period of two years after leaving office. They are prohibited from lobbying city staff or officials during that time. In Henderson, no such law exists.
As for appointed board members, the laws are not as strict in Las Vegas, but the city attorney's office has been watchful of potential conflicts.
In December 1999, Las Vegas city attorneys advised an outright resignation -- rather than repeated abstentions -- for a board member with a potential conflict of interest.
Las Vegas architect Thomas Schoeman voluntarily resigned from the Las Vegas redevelopment board after his firm, JMA Architecture Studios, received a succession of job offers from developers working in the city's redevelopment area.
"We found that many developers 'just happened' to be selecting JMA," Las Vegas City Attorney Terri Ponticello said.
But in the case of JMA, Ponticello said, the potential for a conflict of interest was "more removed" than with Tuscany because the developers seeking out JMA had no other direct connections to the board.
The Las Vegas redevelopment board has never had developers propose their own redevelopment projects while serving on the redevelopment board, she said.
In April 2000, another redevelopment board member and longtime chairwoman of that board, Las Vegas attorney Jodi Goodheart, resigned. She cited her involvement with a trust that owned property in the downtown redevelopment area.
To avoid even the appearance of a conflict, Fieldman and Unger should have resigned from the board as soon as they proposed Tuscany as part of a redevelopment area, UNLV professor Walton said.
That way, a full seven-member board with no financial stake in the project could judge the creation of the redevelopment area on its own merits. There would be no suggestion that the developers used their appointed government positions to help ensure the success of Tuscany, Walton said.
By resigning ahead of the contract for city aid -- in Unger's case, by one week -- Councilwoman Cyphers said that Fieldman and Unger had "technically" avoided a conflict of interest.
"But you're either ethical or you're not," Cyphers said. "It's a true heart of darkness. You cannot not be ethical one day, and then pretend you're ethical the next day."
Assemblywoman Tiffany said she encourages Henderson city officials to review the city ethics policy. Cyphers and Kirk say they're up for it.
"I would be open to the conversation. I think it would be good," Cyphers said. "I've always prided myself that the good old boys' network is dead with me."
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