State to pay $5.9 million more for Project Neon land

CARSON CITY - Gov. Brian Sandoval and Attorney General Catherine Cortez Masto complained for an hour Tuesday before agreeing to pay $10.6 million for 2.85 acres in downtown Las Vegas that had been appraised at $4.7 million last year as part of a massive Spaghetti Bowl road project.

They are two of the three members of the state Board of Examiners who voted to pay $5.9 million on top of the $4.7 million paid last year to Vegas Group LLC and Coral Capital LLC, owners of a 124,126-square-foot vacant property on Charleston Boulevard at the Interstate 15 northbound ramp. The companies did not accept the earlier payment, which was placed in control of the courts.

The Nevada Department of Transportation needs the land for part of its
$1.5 billion Project Neon, a series of flyovers and freeway improvements that will improve the flow of Interstate 15 traffic.

Secretary of State Ross Miller voted no, saying that a delay would allow more time to look at the appraisal and see whether the price is appropriate. He also was concerned because the lawyer for the two companies said another company, Century Links, has an easement on the property that has not been relinquished.

But until that easement is settled, the Transportation Department will not make the additional $5.9 million payment. When the payment is made, extensive litigation between the department and the property owners would end.

In a memorandum to the Board of Examiners, Transportation Department Director Rudy Malfabon said the property owners could receive a settlement of greater than $10.6 million if the matter were settled in court.

Both Sandoval and Masto were perplexed on how appraisals in 2011 put the value of the property at $4.7 million and then a year later another appraiser said it was worth $10 million.

"I am shocked," Masto said. "No Las Vegas property value goes up that much in value in with the economic downturn."

But Eric Storm, lawyer for the property owners, said that other property in the area has sold for $82 a square foot and that the compensation his clients seek is in line with recent values.

Unlike Miller, Sandoval said he wanted to agree to the settlement now because property values could increase even more and cost Nevada taxpayers additional money.

"It's bad news today, but good news to Clark County and Las Vegas," added Sandoval about the apparent rise in property values.

Malfabon said his department has secured 29 of the 52 pieces of private property it needs for Project Neon. His agency will seek reimbursement from the Federal Highway Administration for the money it pays for the 2.85 acres.