Metro Police are investigating "the conduct of (Las Vegas) city employees" handling developer Billy Walters' request to have a deed restriction on his Royal Links Golf Course lifted to make way for housing.
The criminal investigation was announced at Wednesday's City Council meeting by Mayor Oscar Goodman, who tabled the agenda item on the course, which is next to the city's wastewater treatment plant.
"Over the last several weeks the city manager's office, in concert with the city attorney's office, has been continuing an investigation regarding information provided to the mayor and council by staff regarding the Royal Links Golf Course deed restriction," Goodman said during Wednesday's public meeting.
"The city manager's office, the city attorney's office, Metropolitan Police and the district attorney have been in discussions about this investigation. Yesterday, the city manager's office was notified that the Metropolitan Police Department intends to pursue that investigation further. Metro will be the point of contact on all questions relating to the investigation."
In 1999 the city sold Walters land adjacent to the wasterwater treatment plant with a deed restriction limiting development. The golf course was seen by the city as a buffer between the plant and nearby housing.
But with the golf industry in a lull, Walters wants to develop the land east of Nellis Boulevard along Vegas Valley. He needs the deed restriction removed and has proposed making up the difference between what he paid for it with the deed restriction and what he would have paid without the restriction, plus interest.
The city has put off a vote on the proposal in each of the last three meetings. The first time, it was because Goodman said some council members received briefings that included "inflammatory" comments made by city staff.
More recently, as the Sun first reported, city staff members have been investigating two very different versions of an engineering report commissioned to sort through some of the issues surrounding the proposal.
City Council members received an edited version that excluded sections addressing potential consequences of development next to the plant, safety issues and potential costs if development occurred on the golf course.
City officials have not said who ordered the editing or why it was edited, but council members have raised their concerns.
Undersheriff Doug Gillespie said that about two weeks ago Metro officials reviewed the findings of an internal investigation by the city and determined the department's detectives should go ahead with a criminal investigation.
"The issue we are looking at is the conduct of city employees," Gillespie said, noting it would be "inappropriate" at this time to comment on specific crimes or potential suspects.
Gillespie estimated that the investigation could take up to two weeks and that, if investigators determine a crime has been committed, something could be announced within about 30 days.
Asked if Walters was a person of interest, Gillespie said: "Not at this point in time."
Walters said he "knew nothing about the engineering reports" prior to them surfacing last month.
On July 8 City Manager Doug Selby sent an e-mail to city Public Works Director Dick Goecke and Environmental Manager David Mendenhall, the city's treatment plant manager, asking that they get an outside consultant to assess the effectiveness of past odor control measures, a record of past complaints and the likelihood of future complaints.
Selby was responding to a request by Councilwoman Lois Tarkanian, who asked for a "full report on the implications of allowing development" on the course.
Selby said he wanted the information for the July 20 council meeting for an item related to the deed restriction on the golf course land. Mendenhall relayed Selby's request to consultants at HDR Engineering of Folsom, Calif., which had the engineering firm CH2MHill write the report.
But the city unwittingly ended up with two versions.
The original version of the report included the subtitle, "effects of converting Royal Links Golf Course to residential development on odor complaints." The final draft is subtitled, "assessment of odor control improvements."
The draft estimates that the potential cost to the city of further alleviating the odor problem is up to $100 million, while the final report says the improvements "can be costly."
Left out of the final report were comments from the consultant regarding the importance of a berm around the plant for flood protection and a warning about the hazardous materials at the treatment plant.
How two versions developed from that report not only has been a concern of the city's investigation but also figures to play a role in the police probe.
Walters said the tabling of his proposal by the council and the criminal investigation by police "will not be a major setback" and that he supports the efforts to resolve the issue.
In a news release issued later Wednesday, Walters urged "speed and thoroughness" to resolve "all questions associated with engineering reports" on the water pollution control facility.
"We expect that any impropriety discovered will be punished appropriately," Walters said. "We will continue to work with the city to address the issues of flood control, hazardous materials, plant expansion and odor control associated with the lifting of the deed restriction on the Royal Links Golf Course."
Those were the issues Goodman said the city staff will continue to pursue.
Walters said replacing the golf course with homes will not only provide the city with revenue but also will provide the public with "moderately priced housing" and save the community water resources that currently are used to maintain the golf course.
Walters also must gain Clark County Commission approval for his proposal to build about 1,200 homes on the 160-acre course. The golf course and the city's wastewater treatment plant are outside the city limits.
Walters now is asking the city to lift that restriction in return for $7.2 million, which represents the difference between the $894,000 Walters paid the city six years ago and the 1999 value of the land if it had no development restriction, plus 6 percent interest.
City documents estimate the value of the land without a deed restriction at $48 million. Walters has said the land might be worth that much, but he also said it is unfair to evaluate his proposed deal without taking into account the roughly $50 million he says he has invested in the property and the value of the additional revenue from the sale of water to new homes.
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