Housing plan: Former councilman gets a sweetheart deal

Former Las Vegas City Councilman Michael McDonald was back at City Hall on Wednesday, seeking to lease for 75 years at $1 per year some acreage at 1501 N. Decatur Boulevard, near Vegas Drive, for the purpose of building 60 subsidized apartments for the elderly.

His plan calls for eventually placing 196 "affordable" apartments on the former Wonderworld site, though city staff point out he has shown no financing for any construction beyond the first 60.

Mr. McDonald also asked the council and its redevelopment agency for $3.9 million to subsidize those first 60 units.

Excluding land cost, the total bill for the project is estimated at $11.26 million, which McDonald plans to acquire in the form of "investor equity from state low income housing tax credits" at $7.1 million, added to the aforementioned city grant of $3.9 million. Plans also call for $221,681 as a "deferred developer profit/fee."

City staff opposed the proposal on several grounds:

First, Mr. McDonald does not have any experience developing affordable housing. Second, on Dec. 7 of last year, the city terminated "for non-performance" a development agreement with another of Mr. McDonald’s outfits, Alpha Omega Strategies. Third, the North Decatur property is zoned commercial, as are the surrounding parcels.

But finally, city staffers got out their calculators and figured that even excluding the land cost, the city’s grant contribution under this scheme would equate to a $97,975 subsidy per "affordable housing unit." That’s more than it would cost to simply go out and buy comparable, existing vacant units.

In fact, the city has invested $8.1 million acquiring the site, and $400,000 in environmental cleanup. "Applying this figure to the project would yield a per unit city subsidy cost of $301,045 per unit," city staffers figure.

Private homes near Decatur and Vegas Drive now average $72,000 on the open market. And in today’s depressed environment, those lucky seniors could walk into some spacious mansions in Summerlin or Green Valley for $301,000 apiece.

Finally, staffers warn there’s no assurance Mr. McDonald will ever build any more than his first 60 units.

Still, the City Council voted 5-1 to approve the deal.

This would be hilarious, if the taxpayers who worked to earn those tax dollars had gotten them by just lining up down at City Hall with their hands out.

"We don’t really have an idea of how much this project ought to cost," objected Councilman Bob Coffin, who cast Wednesday’s brave and lonely "nay" vote. Why? It never went out to competitive bids.

Even in a city known for insider dealings, this one smells like a landfill. Building a few dozen one-bedroom apartments along a commercial thoroughfare is not going to bring new prosperity to this part of town.

The problem with housing in Las Vegas today is not that’s unaffordable. Mr. McDonald can argue all he wants that the true subsidy is only $65,000 per unit or $56,000 or whatever. Fact is, it would be cheaper for the city to simply buy a private home for each of his 60 lucky seniors.