Thursday's sale of more than 2,000 acres in Henderson is expected to accommodate the burgeoning city's next several years of growth, but some of the region's largest developers are now saying they may not bid on the largest chunk of the land because the minimum price is too high.
Officers for American Nevada Corp. and their potential home-building partners will meet today to consider bidding at auction Thursday on the land south of Del Webb's Anthem.
The Bureau of Land Management is selling 2,723 acres, including the 1,940 acres appraised at a minimum of $250 million, another nearby parcel of 482 acres appraised at $66.5 million, and a Henderson parcel of 115 acres appraised at $17.2 million.
Phil Peckman, chief operating officer of the Greenspun Corp., American Nevada's parent company, said the company has been interested in the 1,940 acres in southwest Henderson, but the appraised price -- and minimum required bid -- may be too high.
"It looks like a very tough deal to make work," Peckman said. "We're going to have our final meeting and make our decision."
Potential partners of American Nevada would be home builders KB Home, Del Webb/Pulte Homes, Lewis Operating Corp., and Las Vegas developers Garry Goett of Olympia Group and Larry Canarelli, president of American West Homes, Peckman said.
American Nevada, which is owned by the Greenspun family, the publishers of the Las Vegas Sun, has partnered with Del Webb/Pulte before, notably for the development of 1,900 acres in North Las Vegas through a similar BLM auction two years ago. That deal for $47.2 million led to the creation of the master-planned community called Aliante.
But the five-fold increase in the appraisal for the Henderson land has some potential investors scratching their heads trying to figure out how to make enough of a profit on the deal. Tom DeVore, general counsel for Focus Property Group, said his company would attend the Thursday auction, but he isn't sure the company would bid.
"We'll definitely be there," DeVore said. "We've been working all year to prepare.
"We're pushing the edge of the envelope here and it can't go that much higher. We're still sharpening our pencils."
If Focus doesn't bid on the largest parcel, it also is interested in the 482- and 115-acre parcels, DeVore said.
Phil Guerrero, a BLM spokesman, said several potential developers have talked to the agency about the largest parcel and the 58 others that will go on the block Thursday.
If the 1,940 acres does not attract a minimum bid, it would likely be held back for at least one year, Guerrero said. Companies looking for a better value a year from now might be disappointed, he warned.
"It would require a new appraisal," he said. "Our appraisals are fresh for one year. One would imagine, based on our previous experience, the price would increase."
Guerrero noted that in the eight public auctions of BLM land conducted under the auspices of the 1998 Southern Nevada Public Lands Management Act, bid prices have gone from $90,271 per acre in November 1999 to $233,739 per acre in June 2003.
The land in the June 2003 auction had been appraised at $132,639 an acre but sold for $100,000 more than that per acre, Guerrero said.
"So to say the prices are too high is probably not correct," he said. "We believe these prices are well in line with what the market will produce. In fact we've been hearing that folks will be willing to pay substantially more than the appraised value."
Guerrero said 143 potential bidders have already registered for the auction, about thee-quarters of the 200 companies that have typically attended past auctions.
"To us that seems to bode well," he said. "We feel good about the auction.
"The market will decide. It's all supply and demand."
The city of Henderson is banking on the development.
Henderson Mayor Jim Gibson said his city decided three years ago to nominate the land for development, and it was originally slated to be auctioned off by the BLM 18 months ago.
"We held off because we became concerned about the ability of the growth to pay for itself," Gibson said.
Today the city believes that the need for space for residential development means a new master-planned development, or several such developments, makes sense, he said.
"This will be a good development, a good maybe series of developments, for the city of Henderson," Gibson said.
Any developer who successfully bids on the land must, under the rules of the 1998 land act, work closely with Henderson's planning departments on the development of the land. Gibson said the 1,940 acres would ultimately be home to 20,000 people.
The development would likely take several years to complete, he said.
"It's big. It will be absorbed over four years," he said.
The developers also would have to work carefully to ensure that the new houses do not outstrip the available resources, Gibson said. Particularly problematic would be the issue of water.
"We are assured by the (Southern Nevada) Water Authority that there is enough water to supply the area, but there is not an endless supply of water," he said. "Water. That's the toughest of questions."
Any development will have to be very careful in how it uses water, Gibson said.
"It's a very important aspect of the development," he said. "None of us can afford to outstrip the resource."
Auctions of BLM land are held twice yearly, and so far have sold 4,901 acres for $567 million. Most of the money goes to environmental and conservation projects in Southern Nevada.
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