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Aug. 08, 2006
Copyright © Las Vegas Review-Journal
Mayor gets tough on flipping
New rule cuts approval time for downtown projects
By DAVID McGRATH SCHWARTZ
REVIEW-JOURNAL
Mayor Oscar Goodman is figuratively flipping off those who want to flip land after they get downtown condominium projects approved.
The Las Vegas City Council last week unanimously cut in half the time that entitlements are valid for a 22-story condominium project, with the mayor saying he wants the new restrictive timeline a condition on all downtown projects from now on.
Approvals for high-rise condos would be good for only one year, instead of the two years called for under Las Vegas code.
Goodman has repeatedly expressed frustration at those who buy land, get projects approved for it and then turn around and try to resell the land at a profit, a process known as flipping.
"I don't like the fact that they're taking advantage of us," the Las Vegas mayor said. "They're making representations to us that they're going to build a certain product, and they have no intention to do so."
Some in the development community questioned whether the new policy would turn paper plans into brick and mortar any quicker.
"Towers are tough to build right now with labor and construction costs, and I don't think the market can absorb all those units right now," said Paul Freed, a co-owner of the 702 Group, which has been granted entitlements for two downtown projects.
Freed said his company fully intended to build the two projects when it received approval late in 2005 and early this year. But rising costs scuttled those plans, and now the projects are on the market for sale or a joint venture.
Getting entitlements for a project -- which requires going through the staff level, planning commission and city council -- is no easy process. And some developers will buy only entitled land.
"Everybody plays a role, and land developers can play the middleman role," Freed said. "It's a buyer's market, and if a builder wants to move forward right now, he can find a site."
Goodman said at Wednesday's council meeting that those reselling land after getting projects approved are slowing the progress of high-rise construction downtown.
Just one downtown high-rise condo project has been completed so far, and construction has begun on only a handful of others.
Bea Goodwin, president of the Las Vegas Highrise and Condominium Association, said that while the pace of making downtown more vertical can seem frustratingly slow, these multimillion-dollar projects take time.
"You don't just flip a switch," she said. "We're changing the skyline in a hurry. But this is Vegas, where we want it bigger and faster than anybody else. ... Nobody expects every project announced to get built."
She said she understands Goodman's desire to limit the number of those flipping projects. But she said there needs to be a safety valve for serious builders to get extra time for their plans if they need it.
"A developer can be doing everything right and still run into challenges," she said. "Getting a contractor, labor. No matter what the city mandates, there's a process to go through."
The mayor said the council can grant extensions if developers can prove they're moving forward.
"I know some folks say you can't get it done within a year. Maybe. But you come back in a year, tell us what you've done. If we see you're acting in good faith, we'll give you another year," Goodman said at Wednesday's meeting. "If we find you're playing with us, we'll cut you dead."
The one-year deadline, he said, "gives them plenty of time to see the planning department, they have plenty of time to go to the building department, but maybe not enough time to flip it."
Paul Murad, author of "Manhattanizing Las Vegas," said flipping increases the price of land, and thereby increases the cost for people who buy the condo units.
"It ends up not just affecting developers, but consumers as well," he said.
At Murad's last count there were 55 approved projects downtown. He estimated that at least a third of the owners went through the process just to flip the land.
Planning and Development Director Margo Wheeler said the mayor has not indicated a desire to change the city's code, so the projects would face the one-year timeline on a case-by-case basis. Goodman was the only council member to speak about the new restriction.
Wheeler said Goodman has made it a point to ask downtown developers about financing and timelines during open City Council meetings.
"He has now found a mechanism by which he may effectuate his goal of having projects built, instead of languishing or sold for a profit without the intention of moving forward," she said.
The project last Wednesday that is the first to be subjected to the tighter timeline is in the downtown Arts District.
The unnamed project at 1300 Casino Center would be 22 stories, with 172 units, said architect Sheldon Colen.
He told Goodman and the council that the owner was "ready to start right away" and did not need to sell a certain number of units before construction started.
The project stirred up some controversy initially, as nearby residents worried that the artistic, grass-roots feel of the neighborhood could be lost. But Richard Geyer, president of the Las Vegas Arts District Neighborhood Association, spoke in favor of the project after working with the developer and Councilwoman Lois Tarkanian, who used to represent the area.
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