Walters’ Bali Hai Golf Club pays McCarran airport no rent for 10 years

Developer Bill Walters contends that his Bali Hai Golf Club was unable to generate enough revenue to pay rent to McCarran International Airport over the past 10 years.

But now as his firm, The Walters Group, pursues plans to convert what he calls a money loser into a giant industrial park, yearly audit reports show the firm took in at least $6 million since 2000 that didn’t get counted as revenue.

As a result, the airport has never made a dime from the 18-hole course in which golfers pay $75 to $295 to play near Las Vegas Boulevard, south of Russell Road.

The lease agreement calls for McCarran to receive 40 percent of Bali Hai’s net profit as rent, which is to be put into the airport’s operations.

In this case, net profit is the revenue left after debt payments and operating costs are deducted.

The lease allows wide latitude in what can be declared as an expense. Walters’ sister company, Nevada Links, which operates Bali Hai, paid The Walters Group $6 million in “management fees” over a decade, according to yearly audits by the airport. Walters is a major partner in both entities.

The company wrote off the fees as operating costs.

Clark County officials and financial experts say Walters is doing nothing illegal or unethical. He is simply using the accounting methods allowed under the lease agreement.

“The airport negotiated a terrible lease,” County Commissioner Steve Sisolak said of the Walters deal. “This is not an isolated case.”

Dozens of leases on airport land base rent on net profit, and in nearly all instances the airport and county have received little or no money, Sisolak said, calling them “the worst leases in the world.”

Because Walters’ firm is private, he is not compelled to publicly disclose how he spends the management fees he receives — for instance, whether the money goes toward paying executives’ salaries.

And the airport’s yearly audits of the golf course don’t list labor costs in the reports.

Mike Luce, The Walters Group’s president, wouldn’t comment on the Bali Hai lease or explain how the management fees are spent, saying the firm’s attorney advised against it.

Randy Walker, the airport director, said the lease allows a portion of Walters’ revenue to be used as management fees. This is typical of revenue-based leases, Walker said, adding that a tenant can hire an outside company to manage the property or handle it in-house.

Walters managed the golf course internally and reimbursed his company.

Sisolak argued that this is why net-revenue leases are troublesome.

“They (tenants) get to write off too much of the income as costs,” he said.

Commercial project proposed

Bali Hai came under scrutiny in July when Walters sought to revise his 99-year lease so he could turn the golf course into a 2 million-square-foot commercial complex. He says a glut of local golf courses were built in the late ’90s, making it even more difficult to earn a profit in the bad economy.

He hopes to break ground in 2012 on the industrial park, which would house diverse vendors who would supply hotels and casinos with uniforms, beverages, soaps and other products. A 365,000-square-foot shopping center would be built on the edge of the 155-acre site facing Las Vegas Boulevard.

Walters has said the $49 million he borrowed to build the golf course created a stifling debt that eats up much of Bali Hai’s income.

A commercial complex could pull in $110 million during the first 10 years and generate $4 million a year in tax revenue for the county, he estimates. The county last year collected a mere $88,000 in property taxes for the land, because of 2005 legislation — which Walters lobbied for — that classified golf courses as open space.

Walters has drawn kudos and criticism for his style of doing business.

Fans call him a shrewd entrepreneur, while detractors accuse him of cutting deals with local governments that appear to benefit only his companies.

He sued Lisa Mayo-DeRiso, a business consultant, whom he claimed made disparaging remarks about him. Court records indicate the lawsuit is still pending.

COMPETITIVE BIDDING REJECTED

County Commissioner Chris Giunchigliani has expressed support for converting Bali Hai to an industrial complex, but she thinks such a sweeping change should require the lease to be re-bid. A 2005 law that she, when she was an assemblywoman, helped draft calls for a public auction when certain land agreements are revamped.

Walters should prove he has the best project by beating out competing bidders, she said.

But fellow commissioners disagreed. They voted to let Walters and airport officials revise the lease and bring back the new version to the commission for final approval.

Commissioners are still waiting for the new lease, which airport officials say is being delayed because the airport is in the midst of this year’s audit of the golf course.

Giunchigliani also pushed to have an outside firm do a feasibility study on Bali Hai. The study would have taken a more detailed look at Bali Hai’s finances to see whether a golf course should be profiting at that site.

But the other commissioners rejected that proposal as well.

Giunchigliani said she wants to ensure the public gets “the best bang for the buck,” something that hasn’t been done with net-revenue leases.

She agreed with Sisolak that Walters’ Bali Hai lease is one of many bad deals the county struck, and said her intention wasn’t to single out Walters, whom she considers a good businessman.

“We negotiated a lousy lease, a bunch of them,” Giunchigliani said. “We can’t fault the business folks. We’re not good at negotiating leases with the private sector if the taxpayer is reaping no benefit.”

airport didn’t benefit

McCarran buys and leases properties to foster business parks and other development that fit with airport operations. It also seeks to prevent projects, such as houses, schools and hospitals, from being built near the airport or noisy flight paths.

There are about 30 net-revenue leases on airport land. Airport executives brokered some of the agreements, and county officials handled others.

In the case of Bali Hai, the County Commission was involved in crafting the lease 10 years ago.

Walker said the leases are a trade-off. McCarran entered many of these deals to encourage companies to develop the infrastructure at the sites, so the airport wouldn’t have to do it, he said.

The leases are a way of “sharing risk,” because the airport and tenants are banking on the ventures making a profit, he said. He acknowledged that Bali Hai hasn’t panned out.

“The whole golf course lease has been a disappointment,” Walker said.

Still, he blamed the slumping industry more than the lease itself. Not all net-revenue contracts are money-losers, he said.

For instance, the airport had a lucrative net-revenue lease with Majestic Runway Partners, which built a warehouse complex on airport land, Walker said.

Records show the airport received about $4.6 million from Majestic before McCarran officials swapped the site for property around the Henderson airport six years ago.

McCarran also has gotten about $1.3 million in rent since 2007 for a business office at Spencer Street and Russell Road.

The airport makes little money on a couple dozen leases because the Bureau of Land Management owns the land and takes 85 percent of net revenue, Walker said. The state gets 5 percent, leaving the airport with 10 percent.

He contends leases requiring tenants to pay a fixed rent have their own risks. If the business files for bankruptcy, the airport could lose money.

When National Airlines filed for bankruptcy, the carrier defaulted on $7.5 million in leasing fees it owed McCarran, Walker said.

TWO COMMISSIONERS WANT RENT

But Sisolak argued that collecting rent is safer. Revenue-based leases are done with the hope of getting a bigger payoff later, he said.

For that reason, he will insist that Walters’ new lease for the industrial-park project require a monthly rent instead of a portion of the profits, he said. A business venture of this magnitude could take years to turn a profit, especially in this economy, he said.

“I want guaranteed money on that thing,” Sisolak said.

Giunchigliani echoed his sentiments.

“A percentage of nothing is nothing,” she said.

Walters originally asked that his firm and the airport do a 50/50 split of net profit on the industrial park. He later stated he would be open to paying flat rent on the complex to work with the county.

Walters has another net-revenue lease on airport land that has made the county no money: Durango Commons.

Commissioners will discuss on Jan. 18 whether to cancel the lease on the retail and office complex at Durango Drive and Warm Springs Road because Walters failed to finish the project’s second phase by June.

Sisolak said Walters is unable to fill the existing commercial space in this economy, making it untenable to build more space. The commission will decide whether to end the lease or extend the deadline, he said.

Anchored by a Glazier Food Marketplace, the shopping center and medical offices stirred contentious debate when Walters proposed them in 2002.

He originally leased the land to build a golf course. He later requested that 64 acres be rezoned so he could develop the plaza.

Hundreds of neighbors at the time opposed it, saying it would increase traffic and diminish their quality of life. Competing developers also argued that Walters would get an unfair edge by leasing cheaper government land.

Commissioners approved rezoning 40 acres. Walters scrapped plans for a golf course and built the complex, which he says is now struggling.

Revenue-based leases such as this one made sense when the economy was booming and a solid return seemed likely, Walker said.

“Obviously, the recession hit and all development in the valley went into the tank,” he said.

Contact reporter Scott Wyland at
swyland@reviewjournal.com or 702-455-4519.

ad-high_impact_4
News
Memorial service for former RJ lawyer Mark Hinueber
Mark Hinueber, the Review-Journal's former lawyer and defender of the First Amendment, died in Las Vegas on Aug. 23. Hinueber, who was 66, worked at the RJ and other newspapers for 42 years. On Saturday, his friends and family gathered for a memorial service.
Army veteran honored in Henderson event
Army Sgt. Adam Poppenhouse was honored by fellow veterans in an event hosted by a One Hero at a Time at the Henderson Events Center.
Michelle Obama and Keegan-Michael Key urge Nevadans to vote
Former first lady Michelle Obama and comedian Keegan-Michael Key urged Nevadans to vote at Chaparral High School in Las Vegas Sunday, Sep. 23, 2018. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Nevada Task Force One Cheers Golden Knights
Nevada Task Force One Cheers Golden Knights
1 dead, 1 wounded in North Las Vegas standoff
A woman was hospitalized with serious injuries on Thursday morning after being shot inside a North Las Vegas house. Police responded about 11 p.m. to a shooting at a home on the 5600 block of Tropic Breeze Street, near Ann Road and Bruce Street. The wounded woman, police believe, was shot by a man, who later barricaded himself inside the house. SWAT was called to assist, and when officers entered the house, they discovered the man dead from an apparent self-inflicted gunshot wound.
Las Vegas Teen Makes Clothing Resale His Side Hustle
Las Vegas resident Reanu Elises, 18, started buying and selling streetwear online when he was a high school junior. Like many other young adults, the world of online resale applications like Depop and Mercari have made selling clothing online for a profit easy. Now, Elises spends his free time at thrift shops looking for rare and vintage clothing he can list on his on his shop. Now in his freshman year at UNLV as a business marketing major, Elises hopes to open a shop of his own one day and start his own clothing brand. He estimates that he's made about $1000 from just thrifted finds in the past year, which he'll use to buy more thrift clothing and help pay for expenses in college. (Madelyn Reese/ Las Vegas Review-Journal) @MadelynGReese
Fruition Vineyards Encourages Young Entrepreneurs to "Buy, Flip, Dream"
Once a month, young adults gather at Fruition Vineyards on South Maryland Parkway near UNLV to dig through a stack of rare, vintage and designer clothing that's marked down well below it's resale value. Shop founder Valerie Julian began the vent, dubbed "Fruition Vineyards" in August after running her streetwear shop since 2005. The event gives young entrepreneurs the opportunity to "buy, flip, dream" according to Jean. Meaning that they're encouraged to buy the clothing for sale and find a way to resell it for a profit, then reinvest that into whatever dream they pursue: college, a hobby or their own resale business. Shoppers lined up starting an hour before noon on the last Saturday in April for the opportunity and spoke about what they hoped to do with their finds and profits. (Madelyn Reese/Las Vegas Review-Journal) @MadelynGReese
Local man goes under cover searching for answers to homelessness
Licensed mental health therapist Sheldon Jacobs spent 48 hours under cover posing as a homeless man in an attempt to gain perspective on the complex issue.
Social Work UNLV Lecturer's Calling
Ivet Aldaba-Valera was the first person in her family to graduate from both high school and college. The 33-year-old UNLV lecturer is now pursuing her Ph. D in public policy at the school and has used her degree in social work to engage with the young Latino and Latina community of Las Vegas. (Madelyn Reese/Las Vegas Review-Journal) @MadelynGReese
The world's longest racetrack could be coming to Pahrump
Spring Mountain Motor Resort and Country Club in Pahrump might be the first racetrack in the world longer than 16 miles long once the expansion is complete. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Gold Point townsperson talks about why he choose to live in a ghost town
Gold Point townsperson Walt Kremin talks about the ghost town in Nevada he calls home. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Search for missing 3-year-old boy at Sunset Park
Las Vegas police and Red Rock Search and Rescue team search for a missing child at Sunset Park in southeast Las Vegas on Sunday, Sept.2, 2018. (Chitose Suzuki/Las Vegas Review-Journal)
Nobel Peace Prize winner Malala Yousafzai speaks at Las Vegas tech conference
Nobel Peace Prize winner Malala Yousafzai, who was shot by the Taliban on her way home from school in Pakistan after advocating for girls' education, spoke at VMworld 2018 at Mandalay Bay. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
Father recalls the night his 14-year-old son died jumping into moving traffic
From the Clark County Detention Center, Ezequiel Anorve Serrano talks about the night his 14-year-old son, Silas Anorve, died jumping into moving traffic on U.S. 95. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Palace Station unveils new sports book
Palace Station talks about the new sports book Thursday, August 23, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
One of world's longest racetracks planned in Pahrump by 2020
The racetrack will be 16 miles long by the year 2020 according to Spring Mountain Motor Resort and Country Club owner John Morris. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Henderson police bodycam footage of officer-involved shooting
Henderson police released body-worn camera footage of an officer-involved shooting in a grocery store parking lot at 2667 Windmill Parkway on Aug. 12, 2018. (Henderson Police Department)
Robotics takes off at Las Vegas Academy
Las Vegas Academy’s robotics team made it all the way to the world competition last year, the first year the team competed. Zackary Perry describes how they programmed their robot to compete. The team is an example of what Tesla wants to have in every school in the state. (Meghin Delaney/Las Vegas Review-Journal)
Bicyclist suffers major head trauma in hit-and-run
A bicyclist was hospitalized with life-threatening injuries after a Thursday morning hit-and-run crash near the school formerly known as Agassi Prep. Police said the bicyclist was hit by a white SUV, which fled the scene. The injured man suffered multiple injuries including major head trauma. As of 9 a.m., Lake Mead remained closed between Martin Luther King and Revere Street while police investigate.
Las Vegas artist Dave Dave dies at 42
Dave Dave talks about his art and his life in 2016. (Michael Quine/Las Vegas Review-Journal)
Dave Dave, whose dad set him on fire in 1983, dies
Dave Dave, a respected Las Vegas artist who was badly scarred as a boy when his father tried to burn him to death in Southern California, died at Sunrise Hospital on July 15. He was 42. When he was 6, Dave's father tried to kill him by setting him on fire. He was given a sleeping pill and his bed at a Buena Park, California, motel was doused with kerosene. “I remembered being in a lot of pain,” Dave told the Review-Journal in 2016. “When stuff happens to you at that young of an age, you tend to block it out, but I remember the pain was excruciating.” Dave, who was born David Rothenberg, became close friends with Michael Jackson, who met him after the attack, which burned more than 90 percent of his body. “I wanted to meet him, and he wanted to meet me, and that just turned into a lifelong relationship that never ended,” Dave said. “It was amazing being friends with Michael Jackson. He was an amazing person.” Dave attended ArtCenter College of Design in Pasadena, California, and collaborated with various artists around Las Vegas, eventually selling his art to private collectors. Despite his challenges, he continued to live, thrive and create. Dave Dave
Homicide detectives investigate woman's death
Las Vegas police were called to Tahiti Village Resort early Wednesday after calls that someone had been shot. Police found a woman’s body between a parking garage and boiler room on the resort's property. A guest first reported hearing gunfire. There are no witnesses, but police will examine surveillance videos and look for clues. The woman was not identified, but a purse was found near the body. She did not appear to be a guest at the resort.
LVMPD Discusses Ross Dress for Less Shooting
LVMPD Assistant Sheriff Charles Hank discussed the 15th officer-involved shooting of the year at a press conference at Metro headquarters on Tuesday, Aug. 14. The active-shooter incident took place at the Ross Dress for Less store at the 4000 block Blue Diamond Road in the south Las Vegas Valley. (Madelyn Reese/ Las Vegas Review-Journal)
Metro Asst. Sheriff Brett Zimmerman on Aug. 8 officer-involved shooting
Metropolitan Police Department Assistant Sheriff Brett Zimmerman met with media Monday to discuss the details of the 14th officer-involved shooting of the year. (Madelyn Reese/ Las Vegas Review-Journal)
Clark County School Board president Deanna Wright on travel expenses
Clark County School Board President Deanna Wright says she followed proper expense protocol in trip to Florida last year.
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program where community and business leaders joined to welcome students back with an inspirational welcome. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Shooting leaves 1 dead in southeast valley
A man was found fatally shot in the doorway of a squatter apartment after an argument ended in gunfire on Sunday night. Officers responded about 10:30 p.m. to the Silver Pines apartments and discovered the man in a breezeway in one of the buildings. The wounded man died at the scene, despite the efforts of another person, who tried to administer medical aid. Witnesses saw a man and a woman flee the scene, but were unable to give police a clear description.
North Las Vegas unveils new school crosswalk
North Las Vegas councilman Isaac Barron talks about the new school crosswalk in front of CP Squires Elementary School Monday, August 6, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
LVMPD Briefing on OIS #13
Assistant Sheriff Tim Kelly held a press conference to discuss details of the 13th officer-involved-shoot for the department in 2018. Video shows the moments before the suspect was shot. The shooting, which has been edited out, occurred as the suspect lunged at an officer outside the apartment. (Madelyn Reese/Las Vegas Review-Journal)
TOP NEWS
News Headlines
ad-infeed_1
ads_infeed_2
Local Spotlight
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like