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October 18, 2018

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City Council sees flip side of ‘flipper’ argument

Two weeks ago there had been strong words at Las Vegas City Hall about getting tough with property "flippers" trying to make a quick buck at the city's expense.

Wednesday was to have been the showdown when Mayor Oscar Goodman led the charge to slam the door on two developers whose proposed mixed-use developments today seem further from reality than when the City Council approved the projects more than two years ago.

Instead of getting tough, however, the city got conciliatory and gave both developers another six months to show some tangible progress.

That doesn't mean, Goodman stressed, that he's softened his stance on "flippers" - developers who secure project approvals that raise the value of their land and then, having no intention to actually build, sell or "flip" the property for a tidy profit.

It's just that he became convinced, Goodman said, that these developers have legitimate reasons - among them, a changing market with rising construction costs - for why their projects have yet to get off the drawing board.

In giving Club Renaissance Partners LLC and Sandhurst Development six-month extensions, the council followed the lead of Councilman Larry Brown, who warned that an overly tough stance could scare off potential developers.

And so Goodman, who two weeks ago said of Club Renaissance Partners' proposed 60-story project, "I've been to three groundbreakings and I haven't seen ground broken," now has to hope there will be a fourth occasion to bring out the shovels.

That could prove problematic. Club Renaissance Partners recently received a foreclosure notice for land included in its project at Casino Center Boulevard and Bonneville Avenue. And Sandhurst Development no longer owns the property on Iron Horse Court where its 35-story project is to be built.

Last year Goodman, frustrated by the growing number of projects that failed to materialize, persuaded the council to cut entitlement time in half, to one year. (The Club Renaissance and Sandhurst projects predated that measure, which is why their preliminary day of reckoning did not come until now.) Developers who need extra time can get an extension by demonstrating to the council that they are making satisfactory progress on a project.

When representatives from Club Renaissance and Sandhurst sought extensions from the council two weeks ago, Goodman told both developers: "I'm not inclined to give you any more time."

Brown, however, expressed concerns that denying the extensions would send the wrong message to other developers at a time when soaring construction costs and a tightening market have made attracting new projects increasingly difficult.

Goodman agreed to allow the developers two weeks to make their cases. On Wednesday he said they had demonstrated their commitment to the projects and appeared to have no intention of "flipping" the properties.

The vote to give the developers more time highlights a policy disagreement between Brown and Goodman on the issue that could frame future "flipping" debates.

Brown says he is not convinced that there is anything wrong with flipping and, in any event, believes that it is not the city's call to make.

"I've been very adamant that our role is to be a resource and a partner in major projects," Brown said. "We cannot start dictating how the private sector works."

Brown emphasized that he does not want to extend the entitlement time beyond one year as long as developers continue to have an opportunity to request extensions. That will enable City Hall to monitor projects' progress while still allowing developers the flexibility needed to adapt to changing market conditions.

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