Spectators flock, bidders balk at big-ticket parcel

Moments before the auction officially ended, the news everyone in the Sam's Town Live! auditorium came to witness became apparent, and crowds began to file out.

A 1,940-acre parcel south of St. Rose Parkway in Henderson -- at $250 million, the pric- iest in the four-year history of Bureau of Land Management auctions in the Las Vegas Valley -- would draw no bid.

The event, which auctioneer Mike McKee called "the big party" and which had drawn a standing-room-only crowd, appeared a big success for the BLM leading up to the final item of the day. All but one oddly shaped parcel had drawn bidders and anticipation built as the two-hour auction progressed.

After several minutes of McKee cajoling the gallery for a bid, the anticipation deflated and the verdict was in: the price was just too high.

"I think I'd be telling a story if I said I wasn't disappointed," said Mark Morse, field manager for BLM's Las Vegas office. "A check was in and we had a buyer prepared. I thought we'd get a bid today."

The anticlimactic ending to the auction overshadowed what would be a significant transaction on most days. Pulte Homes purchased about 482 acres for $66.5 million, the minimum bid price. The piece, located in southernmost Henderson, is adjacent to the Anthem master-planned community developed by Pulte's subsidiary, Del Webb.

Another major parcel nearby measuring 115 acres sold to Kimball Hill Homes for $28.4 million, about $11 million above the starting bid.

Morse points out that the largest parcel proved the exception on the day: all but two parcels drew bids in an auction dominated by smaller buyers for an average of about $174,000 per acre -- lower than the previous auction, but higher than appraisal. Several buyers later defaulted, placing the end-of-day talley at $127.1 million on 51 parcels. The sheer cost, he suggested, may have been a factor.

"I'm relatively comfortable that our appraisals come in at a fair price. We had plenty of buyers for our smaller parcels. Not too many people can bring a check for $250 million."

In the days leading up the auction, potential bidders balked at the opening bid prices on the larger lots. The 1,940-acre piece appraised at roughly $129,000 per acre, close to the average per-acre price of parcels at the last auction, held in June.

In previous auctions, however, larger parcels have had lower per-acre prices. A comparably sized piece in North Las Vegas sold two years ago for $47.2 million -- one-fifth as much -- although the two parcels differ in several ways.

The most significant difference is that the latest piece was offered following two frenzied auctions, one in June and one last November, that saw competition for large parcels. At the June auction, land prices exceeded $233,000 per acre, about $100,000 higher than appraisal.

This time around, the 59 parcels, a combined 2,723 acres, were appraised at roughly the same average per-acre price, about $132,000.

Civic officials expressed relief after the giant parcel did not sell. Bristol Ellington, a Henderson city planner, said the no-sale outcome was no setback for the city.

"We have plenty to keep us busy for now. We're not disappointed at all," Ellington said.

His department's contact with developers indicated a bid was unlikely.

"The developers all do their due diligence and they came back to us saying they can't make it work. There's a lot of infrastructure costs involved that make the piece cost a lot more than the $250 million purchase price, not to mention all of the requirements (the city) places on the developer," he said. "We recognize that the land was priced too high. I hope the BLM puts that into consideration for next time."

Spectators from across the valley shared similar views. Mike Majewski of the North Las Vegas Economic Development office, which went through the same process for its Aliante master plan, pointed out that major parcels sold through the auctions require the buyers to enter development agreements in which the buyer -- presumed to be a residential developer -- commits to adding community infrastructure, such as parks, fire stations and school sites. The more a developer pays for land, the more they plead poverty when they negotiate with the city for an agreement.

"(The price) doesn't leave much room for any other expenses," Majewski said.

Representatives from the BLM held firm on their minimum bid prices, which by law are based on appraised fair market value.

Another parcel, measuring 30 acres in five unconnected chunks, also drew no bids.

The smaller, unsold pieces will become available via Internet auction, perhaps later this week, through the General Services Administration. BLM realty specialist Judy Fry said two bidders already indicated interest immediately after the auction.

The larger piece will not go online. Fry said the bureau would consider whether or not to offer it at the spring auction, which is expected to be a small auction with no major parcels. Otherwise, it may become available again next fall.

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