When a developer from Tennessee wanted to build a luxury apartment complex on Symphony Park, the City of Las Vegas stepped up with a cut-rate deal — $4.25 million for the 5.25 acre parcel within the city’s redevelopment area. Appraisals for the property ranged from $6,187,000 to $20,580,000.
“The only way the City will see Symphony Park built out as a mixed-use development is by departing from the highest and best use of the appraised value,” City Manager Scott Adams said in 2017 of the old Union Pacific rail yard, dubbed by former Mayor Oscar Goodman as the “Jewel of the Desert”.
When a local non-profit trying to chip away at the number of veterans living on the streets in Southern Nevada wanted to expand, Arnold Stalk, the man behind Veterans Villages, tried to line up financing to add 20 units to the growing complex of about 100 beds.
“I went to every bank in town. They all turned us down,” Stalk told the Current. “I don’t have a financial statement worth $20-something million. And that’s what it takes.”
Stalk’s last resort was a hard-money lender, who he’ll pay double-digit interest for the term of the $1.9 million loan.
“It’s temporary — a way for us to line up permanent financing,” Stalk says.
Such is the state of the effort to add to Nevada’s housing inventory — incentives for luxury builders, and financing obstacles for low-income projects, which often fail to “pencil out.”
Nevada’s extremely low-income households — those earning 30 percent or less of the area median income (AMI) — are particularly challenged to find housing. The state is last in the nation for the number of affordable rental units for extremely low-income households, with only 19 units available per 100 renters, according to the National Low Income Housing Coalition.
During Carolyn Goodman’s term as mayor of Las Vegas, the city has invested $187 million in redevelopment efforts — almost all of it downtown. Only $22 million has gone to the blighted westside, just blocks from the city’s prized Symphony Park.
“Well, you know, we have to be very careful,” Goodman told the Current Tuesday at the groundbreaking for Auric, the high-end apartment development at Symphony Park. “I want to be sure we are doing streetscaping and the lights and giving the families that live there who have called the area home forever, the opportunity to enjoy a fixed-up area.”
Goodman says she’s concerned about gentrification of the Westside.
“What happens is you get developers come in and they put up something that’s high-end, and then the people that live there and call an area home are forced out because property values go up,” Goodman said, adding she’s been working with Councilman Cedric Crear to “make sure that doesn’t happen to our historic Westside. I want the city involved in fixing it up for families that have lived there for generations.”
“The city understands the need for affordable housing and we’re working on it,” Crear told the Current at the groundbreaking for Auric, which will be a 324-unit apartment complex and the first residential development at Symphony Park.
Although redevelopment efforts were designed to revitalize blighted areas, Crear, who represents the Westside, defends the city’s largesse, which has largely bypassed the lower-income in his minority-majority ward, where African Americans and Latinos comprise more than 80 percent of residents.
But shovels and cranes, he says, are bound for the neighborhoods.
“We have strategic relationships we’ve established and we’re going to be executing on,” Crear said, declining to reveal specifics.
And Crear has no suggestions for those like Stalk, who are attempting to provide housing to at-risk populations such as veterans.
“It’s his project,” Crear said, noting Stalk has received redevelopment funds from the city for one of his projects. “You’d have to ask him how to make it pencil out.”
The disparity between the haves and have nots is not lost on Tim Downey, the developer of Auric and CEO and founder of Southern Land, which has $3 billion in projects underway in the U.S., according to its website.
“You need more than low-income housing,” Downey says. “Las Vegas needs any kind of attainable housing it can get.”
Downey says low-income and affordable housing is unlikely to materialize without the government mandates employed in other cities.
“The best place I’ve seen do that is the New York area. They’re in a housing crisis,” Downey says. “They have different incentives for including housing for families earning 40, 60, 80, 100 and 120 percent of AMI. Say you have an approval for 100 units. If you provide housing that is affordable for those earning 40 percent of the AMI, you get a density bonus and 20 years of no taxes.”
“It is a mandate, which I find interesting,” Downey says. “It’s kind of working. If they didn’t make it a mandate, nobody would do it.”
Downey says he’d look at low-income or affordable housing in Nevada, if incentives were involved.
“They (governments) make it where it’s beneficial for you to do it,” Downey says. “You get tax incentives, density bonuses. It actually pencils out better.”
Senate Bill 398 in the Nevada Legislature would let county and city governments enact such programs, known as inclusionary zoning, along with rent control policies — but only if local governments chose to do so. If they did, the law would also let builders escape mandates by paying a fee to local governments. The money must be used to build low-income units.
Senate Bill 448 would provide $10 million in transferable tax credits to developers of low-income housing. It has passed the Senate.
Meanwhile, where do the Las Vegas City Council candidates stand on using Redevelopment incentives for luxury housing?
Robin Munier says she’ll evaluate projects as they come before the council but she has no objection to using redevelopment incentives in thriving areas.
“My philosophy is the that the city needs to work with businesses and developers. I will be a strong advocate for business development as well as always protecting the public interest. We just need to do it responsibly.”
“I’m excited for the development opportunities in Downtown Las Vegas and I believe we will need to work hard to strike the balance between working collaboratively with the development stakeholders and utilizing public resources in the best interest of our entire community,” candidate Brian Knudsen said in an email.
Longtime developer Richard Plaster says the Auric Symphony Park transaction “seems like a sweet deal.”
“If I read this right the per door land cost is under $15k a door, (developer lingo for land cost per marketable housing unit) and that’s valuing the retail at zero,” Plaster wrote in an email. “The location with views across Symphony Park of the Smith Center arguably are New York Central Park quality. My guess is that if this deal was put up for auction (only to reputable experienced developers) it would sell for twice as much.”
Candidate Bruce Feher is opposed to the use of redevelopment resources in areas such as Symphony Park.
“My concern is why are taxpayers subsidizing a luxury apartment complex? I would rather see the City focus more on affordable, safe housing for the poor and needy,” Feher said. “Once we eliminate homelessness then, I would support projects like this.”
Five other candidates in the race for Ward Two did not respond to requests for comments.
Candidate Melissa Clary supports providing incentives to the luxury apartment complex because it adds to the housing supply and utilizes “previously unsavory railroad property at that.”
“While this particular project does not directly provide relief to our most vulnerable, homeless and near-homeless populations, it indirectly filters through the housing supply to free up other housing potential,” Clary says. “It provides varied options for the Medical District and adjacent employers and adds to the residential construction tax base. The City Council can prioritize new funds from this and future urban core projects toward homeless housing and outreach services.”
Olivia Diaz, who came in first in the primary race for Ward Three, says she wants to see a balance in redevelopment efforts.
“Speaking to the small business owners downtown, they feel the investment has been good for business. Downtown has become a tourist destination. We also need to be able to take care of our residents. People can’t find housing units.”
Would she support imposing mandates on developers?
“Mandates are tricky,” says Diaz, adding she favors negotiation. “But after some unsuccessful negotiations, that would be next.”