Expert urges officials ‘do the math’ on development

By: - June 3, 2022 6:00 am
little boxes

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Infill. It’s a dirty word among Southern Nevada developers who have raced for decades to sate demand for housing by building master-planned communities along the perimeter of the valley, even as parcels in the core stand vacant for decades.

“I’ve been here my entire life and every time that we build, we always think about building outwards versus looking at what’s around us,” says Cinthia Moore of the Nevada Environmental Justice Coalition. “I think part of the Las Vegas culture, in general, is to look outward versus inwards.”

“We are so used to the American dream of having a home and a backyard and a white picket fence,” says Moore, who is also a real estate agent. With a climate crisis gripping the planet and a local water shortage on tap, she says it’s time to “start looking into walkable communities.”

But neighborhoods uniquely suited for walkability, such as the Historic Westside, a once-predominantly African-American neighborhood, are blighted and overlooked by developers. The City of Las Vegas owns more than two dozen vacant parcels in the heart of the Westside. Some have languished for a quarter of a century.

Additionally, Moore says, commute times are on the rise “and we don’t really have a reliable source of public transportation. It just makes it harder and harder for people to get around the city, and we’re adding more single-occupancy vehicles on the road.”

Now, a proposal in Congress, the Southern Nevada Economic Development Act, known as the Lands Bill, would extend the sprawl south on I-15 to Hidden Valley, an environmentally-sensitive area near Sloan that is rich in wildlife and petroglyphs. The measure, championed by Sen. Catherine Cortez Masto, rewards developers while setting aside acreage for wilderness.

It would also generate an estimated $8.5 billion from the sale of 30,000 acres of public lands through the Southern Nevada Public Lands Management Act, which funds a variety of services and has been wildly successful auctioning parcels to developers.

Environmentalists divided

“When it comes to infill, if every acre were made available for development, there’s still a shortage of 34,000 acres,” to meet the demand of inevitable growth, Paul Selberg of the Nevada Conservation League told the Current last year. 

“I will say that we are here because of an elephant in the room – the Lands bills,” Kyle Roerink of the Great Basin Water Networks said Wednesday during an online panel on smart growth. “But we’re not here to cast aspersions or place blame or call people out. We are here to ask a very simple question: Are we doing the math? Are we looking at our long-term costs for ratepayers and taxpayers? Are we looking at equity in our communities?”

Critics suggest sprawl results in the phenomenon known as “white flight,” in which white, middle-class families flee the inner-cities in favor of suburbia and new schools.

Joe Minicozzi, founder of Urban3, a North Carolina economic consulting company that provides clients a three-dimensional map of their city’s profitability acre by acre, says most municipalities are failing to do the math, favoring expensive, maintenance-intensive sprawl over less-expensive dense development.

The factors that determine land profitability, he says, are the basics of the game Monopoly – assemble properties in a good location and build.

Suburban shopping malls, essentially a sea of undeveloped acreage for parking surrounding an island of big box stores, are less valuable to local governments because they pay a fraction in property taxes per acre compared with ‘mom and pop’ stores on a downtown block, Minicozzi says.

In the same vein, services for sprawling suburban neighborhoods, which require lots of expensive infrastructure but produce relatively little via property tax revenue per acre, are being subsidized by mixed-use residential developments, which generate far more tax revenue.

Property taxes make up 20 to 60 percent of revenue in Nevada counties, according to officials. 

Caps imposed on Nevada property taxes in 2005, as pre-recession land and home values skyrocketed, have since saved tens of thousands of dollars for individual property owners while costing the state’s cities and counties billions. Efforts to revise the formula have failed.

Experts have long acknowledged racial disparities in property tax assessments in which less valuable homes are assessed at higher rates than more valuable homes, meaning low-income homeowners pay a higher share of their income.

A study of property tax assessments in Clark County between 2009 and 2018 found that the most expensive homes sold were assessed at 33.7% of their value, while the least expensive were assessed at 43.4%, which is 1.29 times the rate applied to the most expensive homes. 

The study, performed by the University of Chicago, found that 60% of the lowest value homes in Clark County are overassessed while 46% of the highest value homes are overassessed.

“There’s a way out of this,” says Minicozzi. “You want to start analyzing this stuff. You want to start seeing how things operate and be honest with your citizens to show them what’s happening.”

Minicozzi says tax codes determine the climate for development. He suggested that Nevada officials “establish a two-drink minimum” from developers by extracting commitments in exchange for building rights.  

He says developer contributions to police and fire services usually “get the attention” because they make up a big chunk of municipal budgets, while exorbitant costs such as replacing roads go unmentioned. 

Residential property. Commercial use.

As the line between residential and commercial use becomes blurred, Minicozzi says properly categorizing properties for tax purposes is critical. 

Clark County is currently home to an estimated 10,000 to 12,000 unregulated short-term vacation rentals. A legislatively-mandated ordinance to regulate them must be on the books by July 1.

Minicozzi urged municipalities that regulate short-term rentals to view them as the commercial endeavors they are and “don’t undertax them.” 

Investors are gobbling up short-term rentals and taking housing stock off the market, Minicozzi said. “And that’s going to change and distort what the price of a house is in the marketplace if you’ve got that kind of buyer.”

When it comes to doing the math of sustainable growth, a vacation rental, he says, “is a hotel room” and should be taxed accordingly.

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Dana Gentry
Dana Gentry

Dana Gentry is a native Las Vegan and award-winning investigative journalist. She is a graduate of Bishop Gorman High School and holds a Bachelor's degree in Communications from the University of Nevada, Las Vegas. Gentry began her career in broadcasting as an intern at Channel 8, KLAS-TV. She later became a reporter at Channel 8, working with Las Vegas TV news legends Bob Stoldal and the late Ned Day. Gentry left her reporting job in 1985 to focus on motherhood. She returned to TV news in 2001 to launch "Face to Face with Jon Ralston" and the weekly business programs In Business Las Vegas and Vegas Inc, which she co-anchored with Jeff Gillan. Dana has four adult children, two grandsons, three dogs, three cats and a cockatoo named Casper.

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