Water, Water Everywhere, but Are We Out of Land?

February 8, 2002 - Land - specifically developable and available land in the Las Vegas Valley - has become an increasingly hot topic among the Valley's developers. Is there truly a scarcity, or is it more of an issue of the difficulties in obtaining land?

Can the fastest growing area in the country be forced to stop growing? Is there a population cap forced by the constraints of the Valley's boundaries? How does this issue impact the development community and consumers? How will it impact the Valley's future: where and how people live, what they will pay for housing, how they will commute, and how infrastructure and transportation needs will be met?

Looking at an aerial view of the Las Vegas Valley, you see land everywhere, but looking at it on a map is enough to make a developer feel claustrophobic.

Howard Hughes Corp.'s land abuts Red Rock, a congressionally-designated boundary on the designated boundary, halts further development north, along with the Las Vegas Paiute Reservation; in the east, Lake Mead, a congressionally-designated national park, stretches all the way from Laughlin to Overton; finally, in the south, the Black Mountains form a natural blockade, with yet another congressionally-designated area, the McCullough Mountains, just south of Del Webb's Anthem.

The federal government has boxed the Las Vegas Valley in - developers are trapped in a doughnut hole, and they're forbidden to eat their way out.

The existence of constraints and boundaries on the Valley's developable land, both physical and regulated, is unarguable, but making projections on the impact of such constraints and what the future may hold takes a lot of expert analysis and forecasting.

Therefore, in a two-part story (the second part will appear in the February 22,202, issue of TheInsighter newsletter), TheInsighter inquired with a number of experts, all of whom have kept their thumbs firmly on the pulse of an issue of increasing concern for the Valley's developers.

One of the most well-known consultants to the local development industry, John Restrepo, who performed the absorption study for the 1,900 acres in North Las Vegas for the BLM last year, notes there is no shortage of land in the literal sense of the word, such as the physical shortage of land on the San Francisco peninsula, but rather, it is a "man-made" artiface caused mainly by public (i.e. BLM) land disposal policies, landowners that are either asking too much for their land or are holding onto land in hopes of realizing greater appreciation, as well as infrastructure constraints (to name some of the major reasons).

"Development will run into water-related constraints before it is impacted by an absolute shortage of land," contends Restrepo.

So, how much land is left to accommodate current growth? Back at an Urban Land Institute Growth Panel in 1997, that question was at dispute among the Panelists.

One member had the population capping at 1.5 million based on growth and available land, while another said there was enough land for 4.5 million.

To attempt to answer this question, Restrepo Consulting Group with the help of Applied Analysis developed a general formula using generally accepted data.

When the 182,000 gross vacant acres (year 2000) in the Valley are taken into consideration, that figure must be reduced by about 50% to account for undevelopable lands (i.e. Wilderness Study Areas, flood detention basins, rights-of-way, etc.), bringing the developable land total to about 90,000 acres, according to Restrepot.

That figure represents net acres, accounting for land available for actual use (i.e. residential and commercial).

According to Jeremy Aguero, principal analyst for Applied Analysis, and Restrepo, the Clark County Assessor's database and Regional Transportation Commission (RTC) and UNLV statistics were utilized to develop a formula, taking into account several factors: 1) the population grew by about 750,000 people between 1990 and 2000; 2) for every 1,000 people, about 60 acres (net) is absorbed; 3) about 44,000 acres (net) were absorbed between 1990 and 2000 - approximately 4,400 net acres annually; and 4) the Las Vegas Valley has 90,000 net acres vacant, developable land left.

Therefore, the Las Vegas Valley has a 21-year supply of land available before all vacant lands have been completely absorbed, at which time the population is projected at about 2.2 million. (Although Restrepo points out that this is a "worst case scenario" assuming growth were at an 8% rate as it was between 1999 and 2000 as opposed to 3-4% growth rate that the Valley is likely to experience over the next decade).

Who Controls The Land?

With the federal government owning 86% of the land in the state - 3.2 million acres in Clark county alone - the Bureau of Land Management (BLM) wields a great deal of control over how the Valley's future is shaped. Restrepo prefers to focus on those holdings that developers care about: what is disposable and developable.

Of the 3.2 million acres, only 27,000 are slated for disposal in the Las Vegas Valley.

At the end of 2000, the Clark County Assessor's Office recorded 182,000 acres of vacant land left in the Vally, which represents 52% of the Valley's 350,000 total acres.

The Southern Nevada Public Land Management Act (SNPLMA) directs the BLM to dispose of the 27,000 acres from its disposal boundary.

Since SNPLMA was promulgated in 1998, the BLM has sold 148 parcels 9totaling 2,672 acres) at auction for $124.5 million.

Due to public outcry on the land exchange process amid concerns the federal government wasn't getting "fair market value" for the public lands it bartered, the SNPLMA was developed as a way to ensure prices were market driven by requiring appraised parcels to be sold at a public auction.

So far, the BLM believes that it's working just as intended.

According to Mike Dwyer, manager of the Southern Nevada BLM Office, the agency obtains an appraisal on land to determine its fair market value, and of the 148 parcels sold under SNPLMA to-date, 70 have been sold for the appraised value, and 78 have been sold for greater than the appraised value (23% more than the appraised value, on average).

Part II of "Water, Water Everywhere, but Are We Out of Land?" examines the effect of land availability in the housing market, land efficiency in Las Vegas, and the role developers and local governments play in the BLM disposal process.

« Go Back

Article Copyright ©: The Insighter