Thursday, June 20, 2002 | 11:16 a.m.
Pulte Homes Inc. said today it bought a big land parcel in far northwest Las Vegas and may build as many as 1,800 homes there.
The parcel is the residential component of Mountain Spa, Jack Sommer's stalled luxury golf-course and resort development.
Pulte bought the 325-acre property for more than $75 million, said Steve Petruska, Nevada area president for the Michigan-based home builder. The deal does not include 15 model homes that Sommer built before halting construction. Those homes remain unoccupied.
The other half of the 630-acre community will remain under the ownership of Meadowbrook Golf Group Inc., the Florida-based golf course developer that built the 27-hole Silverstone Golf Club on the site.
Pulte struck an agreement with Meadowbrook to rebrand Mountain Spa as Silverstone Ranch to develop name recognition for the golf course and its surrounding community, which is located at Buffalo Drive and Racel Street near Floyd Lamb State Park.
"We had been looking for larger land parcels specifically in northwest Las Vegas," Petruska said. "We wanted a larger land parcel that would give us multiple product penetration and give us a land supply that would be out there for a few years."
Steve Bottfeld, a senior analyst with real estate research firm Marketing Solutions, said the deal is good for the Las Vegas housing market.
"It's a powerful positive for the market at a time when (new-home) inventories are being depleted," Bottfeld said. "Pulte once again has shown they have outstanding market acumen. They're buying a large piece of dirt at a time when land has become much more precious, and the community already has some of its (building) entitlements in place."
Development at Silverstone Ranch will not include Pulte's Del Webb brand.
"Silverstone Ranch will be branded under the Pulte name," Petruska said. "With Del Webb's involvement in the North Las Vegas joint venture (with American Nevada Corp.), their growth will come from the Sun City community there."
Petruska said Pulte approached Sommer about 15 months ago to inquire about the property.
He said Sommer was willing initially to give Pulte about 40 acres to develop within the community, but as both parties "got further along into the transactions, we thought it would make sense to buy the entire piece," Petruska said.
Petruska said Pulte would replace plans for a 40-acre casino development with up to 160 home sites.
Instead of a casino and hotel, the community will offer amenities such as parks and sporting areas, Petruska said.
"Certainly the golf course is the biggest amenity to our buyers (at Silverstone Ranch)," he said. "We're working to provide residents with preferential golf rates and tee times."
Silverstone Ranch will ultimately contain anywhere from 1,400 to 1,800 homes. Pulte expects to have model homes under construction in August or September, with sales scheduled to begin late this year or early next year. Build-out for the entire community is expected in 2007 or 2008.
Pulte will offer five product lines at Silverstone Ranch, with prices ranging from $200,000 to more than $500,000.
That's significantly lower than the $500,000 to $1.4 million per home Sommer was asking. Sommer also planned to sell estate lots at the site for between $150,000 and $1 million.
"(Silverstone Ranch) will certainly be one of the higher-end developments in Las Vegas," Petruska said. "But there really isn't a demand for 800 half-acre lots, all priced north of $1 million. (Sommer) recognized that selling out those half-acre lots would have had a much longer timetable than what he was willing to keep investors on the hook for."
Bottfeld called Pulte's lowering of the price range at Silverstone Ranch a savvy move.
"They're building in the most popular price range. The market is actually moving into the price range they're planning," he said.
SalesTraq, a Las Vegas real-estate research and tracking firm, said the median new-home price in Las Vegas shot up to $184,000 in April, a 9 percent rise over the median price in April 2001.
Many valley real estate analysts are predicting the median new-home price will reach $200,000 sometime in the first half of next year.
But even as prices creep upward, the universe of homebuyers seeking million-dollar homes remains limited.
"In the 12 months from March 2001 to March 2002, only 227 homes priced at more than $1 million sold in the entire market," Bottfeld said. "How rapidly would (Mountain Spa) have been able to sell 1,800 homes at that price, assuming they had the entire market? The answer is way too slow for anyone to contemplate. Pulte deserves a lot of credit for not only looking at what is, but what could be."
Petruska said Pulte doesn't plan to carve out individual lots for custom-home development, but he refused to rule out the possibility that such home-site sales would occur at Silverstone Ranch in the future.
Pulte's purchase caps two years of trouble for Mountain Spa.
Litigation, a failed hotel deal and the economic slowdown have all plagued the property since 2000.
Sommer, whose Sommer Family Trust also developed the bankrupt Aladdin resort on the Las Vegas Strip, originally conceived Mountain Spa as a high-end community that would resemble the five-star La Quinta Resort & Club in California. Sommer had to revisit those plans after a deal to bring hotel chain Ritz-Carlton to the community failed in 2000.
Mountain Spa's problems are unrelated to Sommer's financial issues with the Aladdin.
The upscale community fell on harder times with the onset of a national recession in spring 2001. Sales of luxury homes, already lagging due to the recession, were affected further by the terrorist attacks of Sept. 11 and the ensuing economic fallout.
Also last year, several Mountain Spa contractors filed lawsuits against the community and its developer over alleged unpaid work for six model homes at the site.
A Mountain Spa spokeswoman told the Las Vegas Sun in February that the lawsuits had been settled, paving the way for the company to look at alternatives for disposing of or completing Mountain Spa.