McDonald gets OK to buy land for less than appraisals

There's still a little controversy left in the old councilman.

Michael McDonald visited his old City Hall stomping grounds Wednesday and left with the council agreeing to sell him land for millions of dollars less than it's worth.

Alpha Omega Strategies, of which McDonald is president, plans to build 600 apartments for low-income senior citizens on the 13 acres at Decatur Boulevard and Vegas Drive.

Mayor Oscar Goodman acknowledged that flak might be coming the city's way.

"Only an idiot would say this transaction would not be looked at closely," he said.

Despite that, the mayor and the rest of the council voted to sell the land to the former Las Vegas councilman because of a desperate need for affordable housing for the elderly, they said.

The project also would improve the area, said Councilman Ricki Barlow, whose ward includes the area of the project.

Alpha Omega agreed to buy the land for $6.5 million.

The city acquired the acreage -- including some parcels that were purchased during the years McDonald held his office -- for $8.5 million.

Two recent appraisals for the city valued the land at $9.2 million and $9.6 million.

McDonald originally offered to buy the acreage in 2004 for $8 million. But McDonald said the mayor told him the city would get an appraisal, which came back at $6.5 million.

"We can pass a lot of those savings on to the seniors," McDonald said. He said it would be "very difficult" to make the project work if he had to pay the higher price.

McDonald left office in 2003 following a string of ethics controversies. He dismissed any connection between his public term and his current pursuits.

"That is a crazy stretch to say I knew back in '98 (when the city bought most of the land) I would get unelected in 2003," he said.

McDonald said he will get financing for the project through Wells Fargo and that he has other private backers.

The company already has put $325,000 into the project. The cost will be $62 million.

Scott Adams, director of the Office of Business Development, said the city is well-protected if the project falls through. He said staff has scrutinized the agreement with Alpha Omega more than any other since he has been here. Adams also provided a detailed breakdown showing future property taxes and other benefits that made the project beneficial to the public.

Councilman Steve Wolfson asked Adams whether anyone was interested in the site.

Adams said staff had not put out a public request to see whether anyone else was interested. But, he said, there has been minimal interest in developing the site.

Tenants in the housing project would be 55 and older. Rents would be set at a rate determined by the median income of Las Vegas. McDonald referred those questions to the city, which could not provide numbers late Wednesday.

This isn't the first time that a former councilman has gone back to his former place of employment promising affordable housing.

Frank Hawkins, former councilman and founder of the Community Development Programs Center of Nevada developed an affordable housing project in 2000 with help from the city and county officials, legislators, the Department of Housing and Urban Development and Las Vegas Housing Authority.

In January 2004, the City Council gave Hawkins $4 million in federal grants to build low- and middle-income housing. Community Development Programs Center of Nevada was to spend the money on two West Las Vegas housing projects.