This issue is contributing to Las Vegas Valley’s housing crisis, major homebuilder says

A Bureau of Land Management easement grant that homebuilders must obtain to run utilities through federally controlled land in the Las Vegas Valley can take up to three years for approval, and a sizable backlog of requests contributes to the housing crisis, according to a national homebuilder that operates in the region.

The government’s process is bogged down by red tape, a lack of communication and cost implications for homebuilding, said a top Las Vegas executive for one of the major homebuilders in the valley, who spoke on the condition of anonymity for fear of damaging the company’s working relationship with the BLM.

“There’s just very little communication of what the status is. We’ve had them take anywhere from 12 months to 36 months, and you really can’t get much feedback,” the homebuilding executive said in an interview with the Las Vegas Review-Journal. “If you try to call or check the status, they’ll just say, ‘Yeah, you’re in the queue.’ They may tell you a number where you are in the queue, but you don’t really have any idea how long that takes.”

Other national homebuilders operating in the valley didn’t respond to requests for comment on the topic.

Homebuilders must obtain a BLM right-of-way grant to run basic lines such as water and power and other utilities and services, most commonly underground between streets through land the government controls.

Contributes to shortage of homes

The homebuilder said all major homebuilding companies operating in the valley are in the same boat and have voiced frustration about the process, saying it impedes some projects. It contributes to a shortage of residential construction the valley sorely needs, the homebuilder said.

The Southern Nevada District Office of the BLM acknowledged a media request for answers regarding the subject but did not offer a response by deadline.

According to an internal document obtained by the Las Vegas Review-Journal, the BLM had approximately 553 right-of-way grants pending as of Aug. 16, with the majority having been filed more than a year prior.

The Las Vegas Valley has a housing crisis, with home prices at record highs. The BLM controls close to 90 percent of all the land in Clark County and has been slow to release it since the passage of the Southern Nevada Public Land Management Act in 1998, which specifically required the BLM to sell land to the private sector for development.

Many in the real estate industry also say auctions for land in the valley involve a slow and laborious process, and the value of the land is priced too high to make most projects work financially.

The homebuilder said they believe that if the BLM’s right-of-way process were properly streamlined, it should not take more than 60 days to process a grant. The homebuilder said they have either abandoned homebuilding projects in the valley, or avoided specific land that could be developed for homes because the BLM’s right-of-way delay would make the project financially unfeasible.

“Not only is there a cost of capital, but there is a level of risk that you are taking,” the homebuilder said. “If I start a project today, I probably won’t be able to start selling homes until 18 months from today, and then if you figure a typical project is 100 or so homes, it’s probably going to take me two years to sell all those homes, and we don’t collect money on those homes until we hand over the keys to the buyer.”

A recent report from the Regional Transportation Commission said there could be up to 82,000 acres of land available within Southern Nevada for infill development and affordable housing.

Streamlining the process

Most of the available parcels for development are located in emerging or less-developed areas, said Tina Frias, CEO for the Southern Nevada Home Builders Association, and require substantial upfront investments from the homebuilders for roads, utilities, water and sewer systems. She called the BLM’s right-of-way, or ROW, process “lengthy and complex” while presenting unique challenges.

“All of this must be completed before home construction can even begin, and the planning, funding and building of this infrastructure is largely borne by the homebuilding industry,” she said. “This challenge extends beyond projects located directly on former federal lands. Even when development occurs elsewhere, utility connections often require crossing adjacent BLM-managed property, making the easement process a frequent and recurring hurdle in land development.”

Frias said this all results in unnecessary delays, and a simple solution could help.

“Easements should be proactively reserved to streamline the process,” she said. “Pre-authorizing rights-of-way for roads and utilities, particularly in areas where development is foreseeable, would make a meaningful difference, as most of the required easements align with predictable future roadway corridors.”

Mike Ford, one of the owners of Las Vegas-based Abbey, Stubbs & Ford, a public lands consulting firm, and a former BLM employee, said he and the Southern Nevada Home Builders Association have been trying to work with the BLM to reduce processing times. He called the process a “chronic” problem that directly contributes to the valley’s housing crisis.

“Regrettably, there has not been any substantive progress in terms of reducing the backlog or significantly improving process times. Frankly, processing routine ROWs, especially in the designated Las Vegas Valley disposal area, should not take more than 180 days from receipt of an application,” he said. “Historically, the 180-day ROW processing time has been the goal of BLM nationally.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.