From Walt Walters' perspective, the city of Las Vegas could have gotten 80 quality affordable apartments added to its housing pool and kept its $5 million.
Instead, he said, the city overpaid by more than $800,000 for the Monterey Villas complex and, despite the goal to provide affordable housing, is now poised to charge more in rent than he would have.
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A lawsuit filed in District Court on Thursday claims that Monterey Villas LLC broke a contract to sell the complex to Walters for $4.175 million in order to sell it to the city for a higher price.
"The city was duped," said Walters, a California businessman who said he has bought and rehabilitated a number of Las Vegas apartment complexes. "Either that, or they're the most dishonest, immoral people in Nevada."
The City Council last week unanimously agreed to set aside $5 million to buy the complex, with plans to hire an outside company to fix up and manage it as affordable housing once escrow closed.
But the city's purchase was contingent on whether Walters' offer, which was set to close on Monday, would go through. The lawsuit, which does not name the city, seeks to overturn the city's purchase, and instead have the apartment complex sold to Walters.
Calls to the city were referred to City Attorney Brad Jerbic, who did not return calls Friday for comment.
Danish Shah, who identified himself as an official with Monterey Villas LLC, said he had not seen the lawsuit and wouldn't comment.
Steven Glass, who had been the attorney for Monterey Villas as of this week, according to the lawsuit, said he no longer represented the company.
Officials announced the purchase of the complex, on Tam Drive north of Sahara Avenue, on Wednesday as a new tactic in trying to bring affordable housing to the area.
Although city officials had not done an appraisal, they said comparable land sold in the area showed the city was getting a good deal, based on the value of the land alone.
The apartments would be rented to those making 80 percent of the median income, and city officials said they would be able to stabilize rents as property values rose.
The complex was shut down last year after a city, county and police inspections found many units unfit to live in.
City officials said the deal between Walters and the seller apparently had fallen through.
Walters and the lawsuit tell a different story.
He entered into an agreement with Monterey Villas LLC on March 10 to buy the apartment complex for $4.7 million.
About April 12, Walters came back and said the purchase price was too high after reviewing the cost of repairs to bring the apartment up to code, according to the lawsuit. The purchase price was lowered to $4,175,000, which was agreed upon.
The lawsuit claims that escrow was set to close on Monday. But the seller refused to provide the necessary documents to finalize the deal.
Before that, on May 15, the broker for the seller offered Walters $200,000 to walk away from the purchase, according to the lawsuit. He refused.
Then on Monday, Shashikant Jogani, identified in the lawsuit as a manager, owner and officer of Monterey Villas, offered Walters $500,000 and the ability to purchase another property if Walters terminated the contract. Walters again refused.
In the end, the seller demanded that additional information be provided by 5 p.m. Monday.
"The title company was unable to provide the requested information ... because it was over 480 pages," according to the lawsuit.
After 5 p.m. Monday, the seller's attorney notified the escrow company that Monterey Villas was canceling escrow and was keeping a $200,000 deposit Walters had set aside.
"The odd part about this is the city was aware we were in escrow," Walters said. "We communicated with every entity, code enforcement, police, county health, about remodeling of the property. We were prepared and ready to start that work immediately."
City officials said they expected to spend between $500,000 and $1 million to bring the apartments up to code and hoped to open the complex by next year.
Rents would be set so the city could break even on the apartments. Those prices were estimated at $550 to $700 a month for a one bedroom and $660 to $840 a month for a two bedroom.
Walters said those rents would be too high for that area.
"I own 50 to 60 units in that area, and people there can't afford that," he said. "A one bedroom should go for about $500. A two bedroom, about $600 a month."
Walters' attorney, Stephen Cummings, wouldn't discount the possibility that the city might be named as a defendant in the lawsuit.
"I hope to open a dialogue with the city before we get involved with litigation," Cummings said.
He said Walters "has a history of doing these types of projects, of building quality low-income housing, and maintaining quality properties. We were doing everything we thought was right."
Cummings said Las Vegas is supposed to have a business friendly approach. "Here my client is, saving the $5 million, and they steal the deal from him? It's an interesting approach. Not my idea of business friendly."
Cummings said he wants to see the city get its money back and Walters get the property.
The purchase agreement between Walters and Monterey Villas called for disputes to be brought into arbitration. The lawsuit says the complaint was filed in court so that a legal notice could be sent to city officials informing them that there was a dispute over the ownership of a property.
Cummings said the notice, called a Lis Pendens, only arrived in city officials' hands after the deal was finalized.
