Clark County real estate values jeopardized by waste shipments

By Jennifer Robison / Staff Writer

Interstate 15 passes close to homes near Sahara Ave. in this photo taken in January. Clark County real estate values are exprected to decline if nuclear waste is transported to Yucca Mountain through Las Vegas. Photo by Lori Cain.

Real estate and its related industries are a key component of Southern Nevada's economy -- and as such have a lot at stake in the Yucca Mountain debate.

Data from the Southern Nevada Home Builders Association show the construction industry is Clark County's second largest employer after the resort industry, providing jobs for about 10 percent of valley residents.

In addition, Las Vegas Valley home builders sell more than 20,000 new homes a year, and existing home sales surpass 30,000 units annually -- driving profits for sectors ranging from furniture and interior design to pool building and roofing companies.

Clark County requested an economic analysis of property values in the wake of Yucca Mountain from UNLV's Center for Business and Economic Research. The analysis, which is detailed in the county's Impact Assessment Report, showed property value losses ranging from $500 million with no accidents to $9 billion in the event of a shipment accident and subsequent radiation release.

Another study commissioned by Clark County and Nevada, and conducted by Arizona-based Urban Environmental Research LLC, shows which parts of Las Vegas' real estate market could be hurt should Yucca Mountain begin accepting high-level nuclear waste later this decade.

The study asked Clark County mortgage lenders and real estate appraisers to comment on the effects three possible scenarios might have on valley real estate values.

In the first scenario, high-level nuclear waste shipments proceed along portions of Interstate 215 and Interstate 15 without incident for 24 years.

Lenders and appraisers said that would result in a drop of 2 percent to 3.5 percent on residential property within one mile and a drop of half a percent to 1.5 percent on residential property within one to three miles of the transport route.

Commercial and industrial property values would fall anywhere from half a percent to 3.2 percent on business parks within one mile and half a percent to 1.3 percent within one to three miles of the transportation route.

The second scenario places an accident involving a single shipment truck at Lake Mead Drive and Interstate 15, or Sahara Avenue and Interstate 215, among other possible locations.

The accident would result in a cask of nuclear waste breaking free from its truck, with the cask staying intact and thus not releasing radiation. The incident would receive national media attention, the study said.

Under those circumstances, lenders and appraisers said residential property values would drop 6 percent to 8 percent within one mile and 1.6 percent to 4 percent within one to three miles of the shipment route.

Those surveyed also said commercial and industrial property values would fall 4 percent to 7 percent within one mile and 1 percent to 3 percent within one to three miles of the shipment route.

The third hypothetical, which the state's Transportation Department crafted, asks lenders and appraisers to consider the effects on property values should an accident at the above locations result in the dispersal of radioactive materials over a "wide area."

Should the third scenario occur, local lenders and appraisers said residential property values would plummet 29 percent to 34 percent within one mile and 20 percent to 24 percent within one to three miles of the transport route.

Commercial and industrial property values would drop 21 percent to 32 percent within one mile and 10 percent to 20 percent within one to three miles of the shipment route.

Despite the study's results, there's disagreement among local real estate analysts about the degree to which high-level nuclear waste would actually affect local real estate values.

Tim Sullivan, an analyst with the Meyers Group, a California-based real estate research and consulting firm with offices in Las Vegas, said the impact statement's statistics are "cause for concern when you're talking about real estate along the direct routes.

"Just be logical and think about whether you'd want to live anywhere near that," Sullivan said. "As human beings, we'd say, 'No, that doesn't sound like an attractive way to go.'"

But Sullivan said the valley on a macro-economic scale would likely not suffer serious or lingering effects.

"(Waste shipments) probably won't impact property values significantly in the big picture -- people will still move to Las Vegas, and it will still be a great retirement haven. I don't think it would really hurt the Las Vegas marketplace in total. But we should still be concerned about (real estate) on the direct path. I can't ignore it, and I think it's a legitimate concern."

Sullivan said county and city governments might have to consider remuneration for fallen property values for valley residents living near transport routes.

Another local home-building industry analyst said he foresees no negative effects on property values from nuclear waste shipments.

Traffic speeds along Interstate 15 near the spaghetti Bowl in Las Vegas. High-level nuclear waste shipments would likely lead to a drop in property values. Photo by R. Marsh Starks.

"I don't see how it's going to affect our housing, except to bring in more jobs," said Dennis Smith of Home Builders Research Inc., echoing arguments by some in the community that Yucca Mountain might evolve into a center for high-tech science research. "If Yucca Mountain brings high-paying jobs to the area, it will do nothing but benefit the market."

Steve Bottfeld, senior analyst with local research firm Marketing Solutions, said he "disagrees violently."

"How many high-tech jobs are we talking about?" Bottfeld asked. "Is it 800 or 8,000? Whatever it is, we're not talking about enough jobs to offset what we're going to lose. We're trading one kind of growth for another. The growth we're trading for stinks, and the growth we're losing is our life's blood. Whether (Yucca Mountain) would bring more high-tech jobs here in the future is immaterial."

Bottfeld said he remained "unalterably opposed to Yucca Mountain, both personally and professionally.

"Having a facility like that within 90 miles of what is the fastest growing economy in the country smacks not only of bad science but economic stupidity," he said.

However, Bottfeld said he wasn't certain about the extent to which home values would drop should high-level nuclear waste start streaming through Las Vegas -- or how long those values would remain suppressed.

He said since the waste is likely eight years from coming through town, it's difficult to predict the effects it might have.

"Nobody has a crystal ball that will see out that far. These are educated guesses, not opinions. But if Yucca becomes a reality, look for it to have a negative impact of 1 percent to 3 percent throughout the entire valley. If there's an incident, no question -- values drop at least 20 percent overnight, depending on where the accident occurs."

Bottfeld said though property values would fall quickly, they would return rapidly.

"But it would be six months of hell for the real estate industry," he said.

Bottfeld said the issue confronting local homeowners and builders would be psychological -- and that would be just as problematic as genuine, quantifiable radioactive contamination.

The county and state impact statement said a survey of Clark County residents found more than 80 percent of respondents said a nearby high-level waste shipment route would decrease their likelihood of purchasing a residential property in the area.

"If this real estate market remains hot -- and it will, depending on what the (Bureau of Land Management) does with its land -- we will have enormous price pressure. Going out seven or eight years, we'll have a situation in which California found itself, in which the least negative issue will pop a balloon," Bottfeld said.

Disagreement also exists among commercial real estate analysts about the degree to which the transport of high-level nuclear waste through the valley would affect property values.

Several local brokers and developers discussed Yucca Mountain during Market Watch 2002, a market-update event the local brokerage firm of CB Richard Ellis held earlier this month.

Greg Jones, vice president of commercial operations for American Nevada Corp., said during the seminar's office-market update that Yucca Mountain is a long-term issue valley real estate professionals should watch carefully.

"With anything negative to Southern Nevada, the concern we have is that the perception of Southern Nevada changes," Jones said.

But others who served on panels at Market Watch said they aren't so worried.

"In our office, some are concerned, and some are not," said Ralph Murphy, vice president and regional manager of Harsch Investment Properties, an industrial developer with about 5 million square feet of commercial space in the valley. "I think it will be safe, and in the long-term, it will be another interesting project here."

Aaron Paris, chief executive officer of Reno-based industrial developer DP Partners, said he believes the shipment of nuclear waste through Southern Nevada is inevitable.

Las Vegas should instead turn its attention to "making sure Yucca (Mountain) is not continuously played up in the news as 'near Las Vegas.' Ninety percent of the country has no idea where Yucca Mountain is," he said.

Bret Mackey, vice president of development for EJM Development Co., echoed Smith's thoughts about a potential increase in high-tech jobs for the region as a result of Yucca Mountain.

"The side benefit might be that it will bring a tech base to Las Vegas," Mackey said. "UNLV has been trying to put together a tech park, so this might provide the seed for that. We could see some real expertise on nuclear waste and how to handle it. We might see UNLV and science knowledge in the valley explode."

Rod Martin, vice president of Majestic Realty Co., a Los Angeles company with a 2 million-square-foot portfolio locally, said his company wouldn't abandon the Southern Nevada market should nuclear waste come through Las Vegas.

"If (the gaming industry) and home builders thought it would be devastating to their business, we'd hear more out of them," Martin said. "(Waste shipments) might enable us to improve our highway and rail systems, and that could benefit the industrial marketplace."

Earlier this spring, local real estate-related trade groups gave mixed reviews of plans for the storage of nuclear waste at Yucca Mountain.

The Southern Nevada Home Builders Association and the Greater Las Vegas Association of Realtors have said in separate statements that they oppose Yucca Mountain, though the executive director of the home builders group said that as a non-profit, the organization has limited funds to give to the fight against the site.

The Associated General Contractors has not taken a position on Yucca Mountain, and likely won't do so, its executive director, Steve Holloway, said.

Holloway said in earlier interview with the Las Vegas Sun that opinions about Yucca Mountain are so mixed among AGC members -- some of whom are performing construction work at the site -- that it would be difficult for the group to issue a unified statement.

The National Association of Industrial and Office Properties hasn't taken an official position on the site, either.

John Knott, managing director of the local offices of CB Richard Ellis, said he's not excessively worried about the prospect of nuclear waste shipments through town.

"It's a project that's going to require a great deal of safety, and I believe the leaders of our government will all take that responsibility very seriously," Knott said. "I expect (the waste) to be handled in an extremely safe manner."

Knott, like others, also cited the possibility that Yucca Mountain might yield high-paying, science-related jobs for Southern Nevada.

"I think it will be a big business," he said. "Both the development and implementation of Yucca Mountain will have numerous high-paying jobs associated with it that will bring more population to the valley.

"Also, the fundamentals of Las Vegas in the long term are strong, and I don't believe (Yucca Mountain) would cause any change in that. There will be 50 million more Americans over the next 30 years, and many of them will want to live in an area ranging from Texas to California. We're right in the center of that universe."

Knott also echoed others when he said local and state authorities should negotiate a series of benefits for Southern Nevada in exchange for accepting nuclear waste at Yucca Mountain.

Knott said those benefits should include an elimination of the federal income tax for Nevadans, an unlimited supply of clean water, ownership of all state land currently in federal hands, sustained levels of federal spending in the state and final oversight on all safety issues pertaining to Yucca Mountain.

For Bottfeld, that kind of talk offers little comfort.

"If Yucca becomes a reality, what happens to the (resort) financing that underlies our growth?" he said. "That's the critical issue facing Las Vegas right now. That's why we've got to go to court and defeat Yucca. They're attacking the growth of the engine that provides the fuel for the rest of our economic growth. If something happens to stop local job formation, that's the issue we have to look at.

"Look at what happened after 9/11. Our whole main industry reinvented itself in six months, and is now reinventing itself a second time. But it's going to be hard to reinvent ourselves in the face of nuclear waste."

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