Feature Stories - March 2007

Yours,Mine, and Ours:

Public and Private Lands in Nevada

by Jennifer Rachel Baumer

No doubt about it – Nevada is bursting through its boundaries. For a state with so much land, we’re still running out of land to build on. Our state’s population is largely grouped in metropolitan areas, and land, even in our vast state, is at a premium.

In the Las Vegas Valley, commercial developers are feeling the land crunch for office, industrial and retail development – we’re running out of space. Most in demand is premium space close to the freeways and interchanges, where employees and customers can reach the businesses locating in proposed new developments. Space for large, master-planned communities that allow residents to live, work and play without long commutes is becoming increasingly scarce.

In Northern Nevada, as the population spreads to the borders of the Truckee Meadows, we also spread to the edges of land that isn’t considered sensitive or protected, and even residential land that’s already developed is apt to surround isolated areas considered environmentally sensitive and off-limits for development.

So when it comes to land, we’re surrounded by it, and running out of it at the same time. All of which makes Bureau of Land Management (BLM) public lands auctions important to private developers who want to keep building in Southern Nevada and, to a lesser extent, in Northern Nevada.

Public Land Management in Nevada

The BLM was established in 1946 when the General Land Office and the U.S. Grazing Service came together. Today BLM is responsible for managing 258 million acres above ground, and an additional 700 million acres of mineral rights underground. The total acreage managed by the BLM comprises 13 percent of the U.S.

In Nevada, the BLM administers some 67 percent of the land, which comes to roughly 48 million acres – though it’s not quite that straightforward. According to Juan Palma, Las Vegas field office manager for Bureau of Land Management, 86 percent of Nevada is federal lands. Sixty-seven percent is managed by BLM, 13 percent of the state is privately owned, and one percent is actually considered “the state.” This means that BLM, an agency of the U.S. Department of the Interior, controls a huge chunk of Nevada’s lands.

BLM is a uniquely western agency located primarily in 12 western states, including Alaska, as well as managing underground acreage where minerals are located throughout the country. In Nevada, BLM means public lands, which means the chance to use these lands for recreation. Nevada is America’s outdoor adventure place, after all, and BLM public lands offer visitors and residents the chance to hike, fish, hunt, boat, camp, cross-country ski and snowshoe and visit historical and archeological sites. There are field offices across the state and the Nevada BLM Website provides information on recreational activities from boating and fishing to gathering pine nuts, whether you need a permit for certain activities, and how and where to get one if you do.

BLM also has the unique authority to sell public lands into private holding through land auctions. A series of land acts has cleared the way to transfer public land to private buyers. One of the land acts that affects how BLM is able to manage Nevada lands is the Southern Nevada Public Land Management Act (SNPLMA), passed in 1998. SNPLMA allows BLM to sell public lands within a boundary around Las Vegas, with proceeds from the sales going into a special account to benefit education, Southern Nevada Water Authority, parks, trails and natural areas, capital improvement projects, conservation initiatives, multi-species conservation plans, acquisitions of environmentally sensitive land, and Lake Tahoe Restoration projects.

SNPLMA was introduced by Senator Ensign (at the time, Congressman Ensign) in 1996. Senator Richard Bryan sponsored the bill and Senator Harry Reid helped secure its passage. The bill was introduced because people were making public land exchanges in the Las Vegas Valley that benefited only the individuals involved and not the state. “Someone would identify federal land they wanted for development and go to the BLM and say, ‘I have land elsewhere to trade for it’,” said John Lopez, deputy chief of staff, Senator Ensign’s office. “Then they would trade lands with the BLM and turn around and sell to another private entity and make millions of dollars off it. It was a problem where taxpayers were being ripped off through the executive process because Las Vegas was just starting to boom.”

Imagine if it were possible to do that now, with land prices around Las Vegas skyrocketing. Senator Ensign introduced the bill that essentially drew a boundary around the Las Vegas Valley and everything inside deemed developable, which is land that doesn’t have wildlife preservation features and isn’t environmentally sensitive. He set up a separate fund for the money so it will never leave Nevada and won’t have to be appropriated back to the state by Congress. Five percent of the funds go into a permanent general education fund for the state of Nevada; another 10 percent goes into Southern Nevada Water Authority for infrastructure at Lake Mead; and the remaining 85 percent is for parks and trails in Clark County, for land acquisitions in Nevada and can be used for a number of things relating for central resource protection and capital improvements on federal land, like Red Rock or Lake Mead or the Spring Mountains.

At the time the bill passed into law, it was assumed land would go for $50,000 an acre. Instead, it sold for $600,000 an acre, so the auctions have brought more revenue into Nevada than originally envisioned. “To date, it has produced $3 billion in revenue, all of which is spent in the state of Nevada,” said Lopez.

Federal Land Transaction Facilitation Act

Another active law is the Nevada Federal Land Transaction Facilitation Act (FLTFA). That act provides for BLM selling lands at fair market value anywhere within the state of Nevada outside the Smith boundary and the Lincoln County Land Act area. It’s primarily a mechanism for funding, with proceeds remaining to be expended in the state. Funds from sales under FLTFA go into a U.S. Treasury account set up for BLM in Nevada and can be used for specific things within that account, to prepare for land sales and once sales are made, to patent those lands.

FLTFA can also be used to buy environmentally sensitive lands within federally designated areas or adjacent to holdings of such areas, such as U.S. Fish and Wildlife Service preserves or national parks.

Or, more simply, SNPLMA affects lands within the boundary around the Las Vegas Valley, and FLTFA affects BLM lands outside of it. FLTFA sales don’t seem to get as much attention as SNPLMA sales because land prices inside the Las Vegas boundary have skyrocketed and fair market value still brings a lot of money into the state.

Not all of the BLM sales have been in Southern Nevada. Under FLTFA eight parcels went up for sale in September 2006, mostly in Elko County, but one in Lander. In January 2007 lands were sold in Nye County, and land is coming available in Humboldt and Pershing counties as well. Land was sold in Douglas County in 2001, in 2004 about 425 acres were sold, and as a result of that sale the state received about $40 million.

Altogether under FLTFA Nevada has sold approximately $84 million worth of land in the state of Nevada since the year 2000, and that doesn’t include lands sold under SNPLMA – including the receipts from the Southern Nevada Public Land Management Act receipts total $2.932 billion, according to Palma.

“And the money all stays in Nevada,” said Palma. “To clarify, under SNPLMA, 5 percent goes to the state of Nevada general education fund. From our receipts, that has been $148 million given to the state of Nevada. Southern Nevada Water Authority is another recipient of receipts – they get 10 percent of all we bring in, which equates to $281 million.”

In fact, 85 percent of the funds remain in Nevada to be used for expenditures approved by the Secretary of the Interior for parks, trails and natural areas and local government projects. Parks, trails and natural areas benefit in Clark County under SNPLMA capital improvements projects, and the Lincoln County Land Act has been amended to allow capital improvements and conservation initiatives as well as parks, trails and natural areas to expand into Lincoln County. The act will be further amended by the White Pine bill to allow those expenditures to not only benefit Clark and Lincoln counties, but White Pine as well. Lake Tahoe is another recipient of nearly $300 million worth of federal funds from SNPLMA allocated to ensure there’s no need to lobby Congress every year to set aside funds used for hazardous fuels treatment, water clarity, air clarity and soil erosion control, all the things that contribute to the loss of that environment.

SNPLMA = NV

But if it still sounds like the Southern Nevada Public Land Management Act is taking its name a little too literally, still, Northern Nevada gets into the act. “In Northern Nevada [funds] go towards land acquisitions to preserve beautiful places like the Truckee River, McCarran Ranch, properties east of Reno and around Washoe County that now won’t be developed but held by the public for generations to come,” said Lopez. “There are lands in Washoe Valley and around Carson and throughout the state that are going to be preserved into the future because of this money.”

The difference between Northern Nevada and Southern Nevada with regard to the land acts is more obvious in the private sector. “The [land sales] are good news in Southern Nevada for private development because in the Las Vegas Valley new land is becoming more and more scarce,” said Lopez. “So the auctions help the development community by providing raw land because so there are so many new people moving into Nevada – the auctions help provide places to build homes and subdivisions by increasing the land supply in Las Vegas and Clark County.”

In Southern Nevada, BLM land auctions also mean the difference between having land for new industrial and retail developments and not having the land. In Northern Nevada, BLM land isn’t quite the same. Ken Stark, president, Stark & Associates, said the land acts don’t directly affect what he does as a commercial real estate broker in Northern Nevada, especially since Stark & Associates is primarily focused on the commercial office market.

“There’s a lot of BLM land in Northern Nevada, but around the Reno/Sparks area and Carson City there’s just not much said Lopez. “You don’t have BLM land inside the Truckee Meadows available for development so it’s not the same [as Southern Nevada.] There are some BLM lands outside the Reno area that local government is in the process of looking at to recommend for future sale, but that’s a local decision.”

Mark Krueger, principal, Lee & Associates, said he hasn’t seen much with BLM sales in Northern Nevada but maybe it’s time for that to change. “When you look at this market there’s a lot of BLM and U.S. Forestry holdings adjacent to development and sometimes in the middle of a development. It makes a lot of sense to start thinking about how to liquidate those properties and put them to better use, allow local jurisdictions to zone and develop them along with adjacent lands or similar lands, but the vehicle isn’t in place up here to do that.”

Running out of land is not the issue – it is the location of the land. “There is not much land left to buy for development in the Truckee Meadows,” said Par Tolles, managing director of CBRE/Trammell Crow Company. “The land that is left is very expensive, which is why developers are building mixed-use developments.” Developers are moving east to Storey and Lyon County for big-box office complexes. According to Tolles, the price of land currently being sold in parts of Northern Nevada, ranges from $8 to $12 per foot, whereas 6 years ago you could buy the same land for $2 to $3 per foot. “Depending on the type of developing you are interested in, there is enough land if you can afford the price,” said Tolles. “That’s why you will keep seeing more and more redevelopments because it is less expensive.”

Essentially, according to Krueger, a BLM map of Northern Nevada would show BLM lands sprinkled through the market, including areas that have already been developed where a hillside might be considered protected or public lands, or where a hillside drops down into an expansion area and becomes a BLM parcel, little isolated protected zones, surrounded by development that’s already there. “That’s places like Mt. Rose Highway corridor and Spanish Springs and North Valleys, just places throughout the market area,” Krueger said. Local government authorities and BLM need to work together to determine how to make changes with this kind of zoning.

Public to Private

Once the lands are sold, they’re private lands. The buyer can do anything any owner of private lands can do with property, provided fair market value is met, and many sales make far more than fair market value. Much of the land is sold to private developers, but buyers can also be state agencies looking to use the land for recreational purposes or some other governmental need, but typically, Palma said, it goes to the private sector in residential, commercial or industrial real estate.

So far, some 13,500 acres inside the SNPLMA boundary have been offered for sale and approximately 13,000 acres have sold. “Typically we’re working closely with local governments in the Las Vegas Valley including Clark County, in determining the interest in the land,” said Palma. “We don’t just put lands up for sale just to exercise that authority. We need some sense there may be interest in the lands. We never know specifically what they’ll become because it’s public land and anyone can bid, but there’s usually interest expressed by local government.”

About 12,000 acres remain within the SNPLMA boundary to be sold, and another land auction will be held March 7, 2007 – there’s information on the BLM’s website, nv.blm.gov/snplma/land_sales/next_sale.htm – ways to turn public lands private in Nevada.