Senior housing development: State puts brakes on controversial city deal

Officials with the Nevada Housing Division say staff there have decided a former Las Vegas city councilman's outfit doesn't qualify for the millions of dollars in tax credits he needs to build 60 "affordable" (subsidized) housing units near Vegas Drive and Decatur Boulevard. They cite Michael McDonald's lack of development experience.

Las Vegas city staff also have similar worries, recommending against the deal this spring. But in April, members of the City Council - acting as their own redevelopment agency - approved about $3.9 million in federal tax subsidies for the project after Mr. McDonald brought in another former city councilman, Frank Hawkins, as a consultant.

Mr. McDonald - also the current chairman of the state Republican Party - hoped to collect a $1.3 million "development fee" for his efforts. The plan called for up to 140 additional units in a three-phase project, with the units rented to low-income residents age 55 and older.

But the addition of Mr. Hawkins obviously wasn't enough to placate state officials. Although the former Oakland Raider running back has successfully developed several similar projects in Las Vegas, Mr. Hawkins "is a consultant, not a developer. We can't use his experience," says Charles Horsey, housing division administrator.

Couldn't these objections have been foreseen, given the controversial nature of the deal and those involved? The City Council ignored the concerns of a number of critics when it moved the project forward by a 6-1 vote.

Both Mr. McDonald and Mr. Hawkins have had run-ins with the state Ethics Commission - and Mr. McDonald has a spotty track record concerning previous deals he's cut with the city. In addition, some observers believed the money for the project could have been better used elsewhere, especially when the housing collapse has dropped existing apartment rents and home prices to their lowest levels in many years.

Council members responded that the federal money is available only for such a housing project, and as a result, the revenue can't be applied to other programs.

Such "spend-it-or-lose-it" spectacles may have become common enough during boom times. Today, with businesses closing and thousands out of work, they're an embarrassment.

Both Mr. McDonald and Mr. Hawkins have every right to pursue entrepreneurial business arrangements, of course. But with their backgrounds and political connections, this one had trouble passing a basic smell test. Now the state has apparently agreed. Good.