Del Webb, American Nevada capitalize on diversion at BLM auction

American Nevada Corp. and Del Webb Corp. entered Wednesday's Bureau of Land Management auction at the Clark County Government Center with a high profile and a fat wallet. But it was through diversion that they made their winning bid of $47.2 million for a 1,905-acre parcel located in the northernmost reaches of North Las Vegas.

Frank Schreck, a local attorney known for representing the Binion family, made the winning bid for the development partnership under the name North Valley Enterprises. Afterward, he revealed his affiliation to the companies, and deferred comment to them.

Phillip Peckman, an executive with American Nevada's parent company Greenspun Corp., served as the partnership's decoy auction participant. He never lifted his card once the action began.

Del Webb executive Frank Pankratz said the partnership felt comfortable with its winning bid despite bidding over appraised value, and looked forward to extending its product into North Las Vegas, where American Nevada, Del Webb and Del Webb's new parent company, Pulte Homes, currently have no presence. Although some Del Webb representatives in attendance intimated there would be a Sun City development -- the company's trademark product -- built on the site, Pankratz said they would consider their options in their meetings with the city of North Las Vegas, which are under way.

"This is a very exciting opportunity for American Nevada and Del Webb to come together," Pankratz said, pointing out that the extensive public facilities earmarked for the land would render it similar to American Nevada's Green Valley development.

The city has indicated it wants a public golf course, among other recreational amenities on the land.

"There's more area set aside (for public facilities) in this acreage. There's maybe 1,200 acres buildable," he said.

The parcel represents the first installment of a contiguous 7,500 acres which eventually will be auctioned over the next several years. Developers have eyed that enormous tract -- nearly 12 square miles -- for close to a decade.

The winning bid was the second major company event for Del Webb in nine days. In the prior week, the company announced it would accept a merger bid by Pulte Homes Corp., the nation's largest home builder.

Seven bidders showed up to register. Only three made bids.

Following a slow start, a representative for the Olympia Group and the Canarelli family, which owns American West Homes, engaged in a bidding battle against Schreck. The auctioneer appealed directly, stalled occasionally and changed the increments to coax bids from the hesitant Olympia-Canarelli bidding team. Twice he even stopped the action to give them time to consider.

Unlike his rival, Schreck raised his yellow card unflinchingly. Afterward, he wouldn't disclose his limit, but if the speed of his bids were any indicator, he hadn't reached it. Before the auction, Del Webb executive Scott Higginson was overheard saying he expected the price to break $50 million.

The auction ended with a round of applause for the winning bidder and the runner-up, followed by the formality of American Nevada signing a check over to the BLM for $9.44 million -- 20 percent of the sales price. Other terms of the sale include: 1) The winning bidder must sign a development agreement with North Las Vegas within 30 days of the purchase date; 2) The balance of the sale price must be paid within 180 days; and 3) More than one-third of the acreage is designated for a variety of public uses, such as roads, parks and fire stations.

The purchase price was 18 percent over the parcel's appraised fair market value of $40 million. Previously auctioned BLM lands typically have fetched winning bids of 15 percent to 20 percent over appraised fair market value, making this unusually large parcel typical in that aspect, according to John Restrepo, a local real estate consultant who conducted a market study on the parcel last year.

"Once you get a little over the 20 percent mark, then it becomes difficult to justify the price," Restrepo said.

Michael Dwyer, BLM project manager for the Southern Nevada Public Land Management Act, which authorizes the auctions, said he was pleased to see a respected development partnership acquire the parcel. The acreage within North Las Vegas represents the northern boundary of federal land in the Las Vegas Valley that the BLM is authorized to sell. To the north lies a two-mile "buffer" between the city and the Desert National Wildlife Range, a federally protected area.

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