Bureaucracy is driving Las Vegas’ land crisis, real estate stakeholders say

Buying and developing land in the Las Vegas Valley is a bureaucratic mess involving three separate levels of government, inflated appraisal prices and too much red tape, according to industry stakeholders who want the process streamlined to help alleviate the issue.

Steven Haynes, a vice president with Colliers International who specializes in buying and selling land in the Las Vegas Valley, said the Southern Nevada District Office of the Bureau of Land Management needs to listen to the private sector’s concerns about the process.

“They do two things that are a challenge. One: I don’t ever remember them just releasing land. It always has to be nominated,” he said. “There’s a lot of work that goes into just getting the land nominated and the length of time for it to get on the BLM auction list. Then you have the appraisal where they come up with the value of it.”

Additionally, BLM, which controls 88 percent of Clark County alone, is making little land available for sale at auction, but after it does developers still face a slow entitlement process with the valley’s municipalities.

Mike Ford, one of the owners of Las Vegas-based Abbey, Stubbs &Ford, a public lands consulting firm, and a former BLM employee, said 21,883 acres of federal land have been offered up for sale through the Southern Nevada Land Management Act, which was passed in 1998. But since 2019, only 2,038 acres have been offered up for sale, he said.

The process comes at a time when Southern Nevada is growing. The lack of developable land feeds into the region’s housing crisis, leading to some Nevada politicians calling on the federal government to act. Gov. Joe Lombardo recently renewed his call to President Joe Biden to “cut bureaucratic barriers” and work on streamlining the process for releasing federal land to make way for more homes. Lombardo’s letter is the second time this year he’s written directly to the president.

“Housing developers throughout the state are poised to add to Nevada’s housing inventory, but we need a streamlined approach to the disposal of federal lands so they can get to work,” Lombardo wrote.

How it works

After a municipality, at the request of a company or individual, asks the BLM to put a piece of land up for auction, the land has to go through a months long appraisal process from the Appraisal and Valuation Services Office (AVSO) within the Department of the Interior, not the BLM, Haynes said.

Frank said the office is only concerned about getting “top-dollar for any land they sell.”

The Southern Nevada District Office of the BLM deferred to the AVSO regarding appraisals and declined an interview request with Theresa Coleman, the district manager for the office. In an email response to the Las Vegas Review-Journal, the AVSO said via a spokesperson they conduct real property valuations and appraisals for five separate bureaus including the BLM.

“Since AVSO is a separate organization, it relies on BLM realty staff and program managers to complete due diligence activities necessary to perform valuation work,” the spokesperson said. “These due diligence activities include but are not limited to statement of work requirements, survey, title review, environmental analysis, and other investigations into the property’s conditions.”

The AVSO further said in the statement that since 2019, they have completed appraisals on 68 cases with a mark value of close to $324 million, which are all completed within 180 days as established by Congress.

“This time frame starts from the receipt of a complete appraisal request, which includes due diligence activities performed by BLM, and ends with the submission of the reviewed appraisal report to BLM.”

Bureaucracy at each step

To be eligible to bid, attendees at a BLM auction must pay $10,000, Haynes said. The winning bidder has until later that day to produce 20 percent of the sale amount, and then have six months to close on the remainder. The initial $10,000 deposit goes towards a potential purchase and is refunded if the bidder doesn’t win the auction.

All these steps cost the private sector money and drive money to the government simply for giving up land to develop, Haynes and Ford said.

“They’ll go out and get the appraisals based on what has just sold, comps (comparable properties in similar area), but the comps they are getting the appraisals off of have now gone through 12 to 18 months of entitlement work,” Haynes said. “The timing between the BLM making you pay and the timing that Clark County takes to approve just entitlements or your site plan, there’s a huge delta (change in price) and that’s the main problem.”

Haynes said this has created an entire industry of middle men who buy auctioned land and then sell it to developers given they know the ins and outs of the process, which can further increase the price.

But this is not the end, as Haynes said there is another layer that comes into play after this: local government. He said depending on the jurisdiction (Clark County, the City of Las Vegas, the City of North Las Vegas or Henderson) means more red tape, bureaucracy and money spent before shovels have even hit the dirt in terms of obtaining zoning, permitting and site plan approval.

In response to an email request from the Review-Journal, Clark County officials said its comprehensive planning department is working to reduce wait times and streamline other planning.

Ford said until the government recognizes they need to get out of the way of the private sector to help solve Las Vegas’ land crisis, the “monopoly” of the BLM and the AVSO will continue.

“Frankly, as long as the BLM fails to expeditiously release and sell land, and the AVSO continue to add process and regulatory burden to federal land appraisals, the BLM sale process and land values will continue to escalate abnormally,” he said. “The net result being, ever higher costs for housing and economic development that results in additional burden.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.