Developer seeks permission to alter Park Highlands in NLV

Work started by the Olympia Group continues on the smaller of two parcels of land at Park Highlands.

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A Dallas-based company overseeing the stalled housing development Park Highlands in North Las Vegas has approached the city about reducing density and eliminating other various requirements.

In December, master plan developer Hillwood Communities, a company of Ross Perot Jr., acquired the holding company led by the Southern Highlands developer the Olympia Group. The holding company emerged from bankruptcy in late 2009.

In 2005 during a federal land auction, Olympia and four building partners—D.R. Horton, American West, Standard Pacific and Astoria Homes—bid $639 million for 2,675 acres northeast of Elkhorn Road and Decatur Boulevard. The development had scheduled plans for 15,750 homes.

D.R. Horton, which bought 20 percent of the acreage in Park Highlands for $127.8 million with cash, sold its interest to Hillwood as part of a larger land package across the nation, said Hillwood Communities President Fred Balda. The sale included some other raw land in the Las Vegas Valley, he said.

Hillwood acquired the holding company about a year after it emerged from bankruptcy, Balda said. D.R. Horton wasn’t part of the holding company that used debt to pay for the land, he said.

The three builders and Olympia paid for 100 acres each and the holding company has about 1,300 acres remaining of which Hillwood has the right to take down from lenders, Balda said.

Park Highlands is divided into 2,000 acres and 600 acres. Hillwood owns 100 acres on the smaller parcel and 300 acres on the larger parcel.

Hillwood executives met recently with representatives from North Las Vegas about amending the development agreement negotiated by Olympia and the builders. Hillwood represents those parties in the discussions.

“We’d like to amend the development agreement to make it more usable,” Balda said. “We still want to deliver a quality master plan much like Aliante.”

Balda said everything is on the table from lowering density to dealing with requirements that are a burden to develop the property. Even with the discount the property was acquired, Balda said the existing terms don’t work.

Reducing the density would lessen the need for public facilities to be built and cut down on infrastructure expenses, Balda said. He suggested a needs assessment be done to determine that the developer only pay for the cost of the demand the development generates and nothing in excess of that.

“We just want what’s fair and equitable,” Balda said. “Right now, it doesn’t make sense. You can’t do it so you don’t do it.”

Without changes in the agreement, the cost to build homes in Park Highlands would be too high to be competitive in the marketplace, Balda said.

North Las Vegas Planning Director Frank Fiori said it’s encouraging that interest in developing the property continues and added city officials are willing to talk about amending the existing agreement.

“North Las Vegas and other cities are struggling with their budgets and getting developments going and rejuvenating their cities,” Fiori said. “For this project to have someone interested is encouraging.”

Balda said he hopes to obtain a new development agreement in the next four to five months to be ready when the housing market recovers.

He said a number of homes hasn’t been determined but reducing density doesn’t mean all lot sizes will necessarily be bigger. The existing development yields 5.8 homes per acre, city officials said.

The development will be a mix of larger and smaller homes, and that goes for lots as well, Balda said. Work started by the Olympia Group continues on the smaller parcel wrapping up a water, sewer and drainage system. That should be completed in the next two to three months, Balda said.

The smaller parcel of the development would be built first, but Balda said there’s no timeline. It’s possible there could be homes open sometime in 2013, he said.

Home Builders Research President Dennis Smith said Hillwood’s strategy to prepare the site for development is realistic despite the weak demand for new homes and a slumping economy.

Las Vegas has about 19,000 finished lots but a vast majority of those are controlled by other builders and developers, Smith said. The one group selling lots were banks, but most of those lots have already been acquired, he said.

“The average person might say we have all this inventory out there and ‘what are they doing?’,” Smith said. “There’s inventory but a lack of finished lots and if builders want to keep building even a few hundred homes a year, they still have to buy some finished lots.”

Smith said Hillwood’s decision to go with less density would benefit the master plan because buyers want larger lots for the same price or even less money if possible. Many want more space between their neighbors and in their back yards, he said.

Many homes built during the boom were on lots of 2,500 to 3,500 square feet but builders today are looking at building on lots of 5,000 to 7,000 square feet, Smith said.

Balda said he remains optimistic about the future of the Las Vegas housing market once it gets through its excess inventory. The demand for new homes should be about 20,000 units a year, but it’s been 5,000 a year because of foreclosures and lack of jobs, Balda said. That should change and master planned communities will fare the best in a valley that has limits on how much can be developed outside it, he said.

“Long term, Las Vegas is a great place to set up shop and deliver good quality housing, but not today,” Balda said. “Hopefully, in a few years, it will return, but it’s not going to happen overnight.”

Steve Bottfeld, executive vice president of Marketing Solutions said the interest from Hillwood is positive news for the valley’s housing market.

“It says there are some people convinced the future of Las Vegas is positive, and I think what they’re saying is the future is going to be higher-end homes and perhaps more importantly that this should be a confidence- booster for those in the residential home building arena and Realtors alike.”

Home Builders Research President Dennis Smith said Hillwood’s strategy to prepare the site for development is realistic despite the weak demand for new homes and a slumping economy in Southern Nevada.

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