Coyote Springs project stuck in sand trap

COYOTE SPRINGS -- At Southern Nevada's most isolated golf course, a red heeler mix named Mitch lounges in the pro shop like a pile of laundry with a pulse.

When the dog showed up a couple of years ago at the 18-hole course, 50 miles from Las Vegas and 25 miles from the nearest town, the staff quickly made him their mascot. They take him to the vet and make sure he eats something besides handouts from golfers.

Mitch has his own crate in a maintenance shed, and sometimes he rides along with the security guards who patrol the property after dark.

A dozen years have passed since plans were announced to turn this swath of desert straddling the line between Clark and Lincoln counties into Nevada's largest master-planned community.

So far, the only full-time resident of Coyote Springs is Mitch.

Time will tell whether anyone ever joins him.

GRAND VISION

The idea sprang from the mind of lobbyist-turned-developer Harvey Whittemore, a Nevada power broker whose influence in Carson City prompted some to call him the 64th legislator.

On 43,000 acres of empty desert, Whittemore dreamed of a master-planned community that would dwarf Summerlin.

Early plans included 50,000 homes and 10 golf courses, but the vision quickly grew. Soon Whittemore was talking about a full-service city, complete with enough schools, shopping centers, parks and other amenities to support more than 150,000 homes.

Some questioned the need for a whole new community -- built from scratch and as big as Henderson -- an hour's drive from the heart of Las Vegas.

But Whittemore had done it before.

In Northern Nevada, he created Wingfield Springs, another master-planned development with high-end golf courses and hundreds of homes outside of Reno and Sparks.

This time, though, the market abandoned him, and so did many of his influential friends.

Today the man whose power and panache once garnered him ready access to the voting floor in the state Legislature has been ousted from Coyote Springs by his own business partners.

Brothers Thomas and Albert Seeno, home builders from Northern California, bought into Whittemore's dream with a series of investments between 2004 and 2007, eventually taking control of two-thirds of his company, Wingfield Nevada Group Holding Co., which owns Coyote Springs.

Now the Seenos are suing Whittemore, whom they accuse of embezzling and misappropriating more than $40 million from the company, including money for private jet flights, personal home improvement projects and parties.

Whittemore responded with a lawsuit of his own in federal court in Reno. He is seeking $60 million from Thomas Seeno, Albert Seeno Jr., and Albert Seeno III, alleging they defrauded him through the holding company.

UNANSWERED QUESTIONS

A recent tour of Coyote Springs highlights the tangle of litigation that now binds the project.

There to escort two reporters and a photographer are three lawyers who can't -- or won't -- provide even basic information about the development.

When did the property change ownership?

How much has been spent on infrastructure so far?

What might Coyote Springs look like someday?

Each question draws the same general response: They cannot discuss matters subject to litigation.

Then there is Michael Ghiorso, the seventh member of the tour group. He won't -- or can't -- stop talking about how beautiful the golf course is, so that's where the conversation leads.

Coyote Springs Golf Club opened in 2008 as a five-day-a-week operation that charged top dollar and required golfers to hire a caddie.

The 7,471-yard track was designed by Jack Nicklaus, who came out in person to help plot the sloped fairways and undulating greens.

In the pro shop, there is a framed picture of Nicklaus in the desert, puzzling over a map with a group of men. Standing just to the right of the Golden Bear is Harvey Whittemore.

Since its debut, the course has won raves from serious golfers and accolades from golf publications, but that hasn't translated to more business, at least not yet.

In 2010, shortly after Ghiorso was hired on as director of operations, the course dropped its caddie requirement, expanded to seven days a week and adopted steep discounts for locals in hopes of attracting the Las Vegas pub links crowd.

Ghiorso said the course saw almost twice as many rounds played last year as it did the year before. As of late last month, they were on pace for about 26,000 rounds in 2012.

That translates to roughly 500 rounds a week or 71 rounds a day, though the course certainly didn't seem that busy as Ghiorso showed it off on a recent Tuesday morning.

The holes are largely framed by unspoiled desert and mountain vistas, though a few fairways do wrap around the stair-step pads of unbuilt custom homes.

The entrance off U.S. Highway 93 and state Route 168 is marked by palm trees and a wall bearing the development's name, but its main thoroughfare, Coyote Springs Parkway, runs out of pavement after a few hundred yards. The road is only open to construction traffic.

ENORMOUS STAKES

Since taking the reins from Whittemore, the Seenos have engaged Coyote Springs' home-building partner in a yearlong legal battle.

In March 2011, they filed a lawsuit accusing Pardee Homes of stalling and reneging on its agreement with Whittemore to prepare the 43,000 acres for construction.

A spokeswoman for Pardee declined to comment for this story, but an executive for the company told the Review-Journal in 2008 that the builder had spent millions of dollars to install basic infrastructure, including 21,000 feet of sewer lines and 11,000 feet of water lines.

In 2005, Pardee Homes announced it was poised to build at least 10,000 homes, with the first models to be ready by 2007. When nothing happened by May 2008, the builder said it was putting off constructing model homes until 2009.

To date, not a single house has been built.

Publicly, Pardee has blamed delays at Coyote Springs on the housing crash and economic recession.

According to the Seenos' lawsuit, Pardee's excuse to them was that there isn't enough water to move forward with the development, something the owners say is false.

A jury trial is scheduled to begin in January 2013. The stakes are enormous.

According to court documents, Pardee Homes had an option to buy $1.2 billion worth of property at Coyote Springs. County records show the company has spent about $140 million on land there so far.

Pardee's last purchase came in 2009.

The legal battle may only be a delaying tactic, as the two companies wait for the economy to recover and the market to return. Or Pardee's claim of insufficient water could be true.

Little can be ascertained by the public as District Court Judge Mark Denton has agreed to seal most documents in the case.

According to state records, the development holds permits for up to 4,600 acre-feet of groundwater in the Coyote Springs area and has applications pending for thousands of acre-feet more.

The state also has cleared the owners of Coyote Springs to pump groundwater from two other basins in Lincoln County, though they currently have no way to get the water to the development.

One acre-foot of water is enough to supply two average Las Vegas homes for one year. It's unclear how much water Pardee thinks is needed.

SMOOTH SAILING

For a while it looked like Whittemore couldn't lose.

The early history of Coyote Springs is dotted with lucky breaks and sweetheart deals that helped propel the project past financial hurdles and regulatory roadblocks.

Whittemore bought the land for $25 million in 1998, a decade after California-based defense contractor Aerojet obtained it in a controversial land swap sponsored by then-Republican Sen. Chic Hecht of Nevada.

A short time later, Whittemore sold an established well and about 7,500 acre-feet of his water rights at Coyote Springs to the Southern Nevada Water Authority for almost exactly what he paid for the land.

(For their part, water authority officials insist the water was a great deal, even though they had no way of getting to the Las Vegas Valley at the time they purchased it. Deputy General Manager John Entsminger called it "some of the best water in our portfolio.")

Whittemore's cozy relationships with federal and state politicos also helped Coyote Springs overcome environmental challenges and regulations at the local, state and federal levels.

In 2004, for instance, Sen. Harry Reid and other members of Nevada's congressional delegation successfully advocated for a lands bill that, among its provisions, moved a utility corridor from Whittemore's land to the national wildlife refuge across the highway.

A federal grand jury is now investigating whether Whittemore illegally funneled tens of thousands of dollars to congressional campaigns, including to that of his longtime friend the Senate majority leader.

Reid and other members of Nevada's delegation have since donated Whittemore's contributions and others in question to charity.

BIG NIGHTMARES

For a residential development without a single residence, Coyote Springs has a lot going on at the moment.

Trucks from construction and engineering firms crisscross the southern edge of the property on rough dirt roads lined with water pipes waiting to be buried.

Separate treatment plants for water and sewage have been built at opposite ends of the acreage in Clark County, ready to take on their first customers.

There are curbs, sidewalks and even landscaping in places, and some intersections are already marked with temporary street signs.

Off to the northeast, far from any activity, stand the only permanent buildings -- empty wooden shells that mark the beginnings of what was to be Coyote Springs' lake-side community center. Ghiorso talks about them like they aren't even part of the plans anymore.

Elsewhere men in hard hats put the finishing touches on an electrical substation that is expected to go on line in June and allow the golf course to power down its diesel generators for the first time in four years.

The lawyers won't talk about the monthly fuel bill for Coyote Springs, but in court documents the Seenos claim they are spending an extra $1.2 million annually to run the generators.

All Ghiorso will say about the bill is this: "It's so big I have nightmares about it."

MODEST AMBITIONS

In Lincoln County, dreams of a glittering new city in the desert have given way to more modest ambitions.

Officials in the rural county now hope to see a solar power plant or some other industrial development spring up on their side of the line.

To help that along, they agreed to rezone roughly a third of Coyote Springs' almost 29,000 acres in Lincoln County for industrial use.

But that doesn't mean county officials have given up on the residential side of the development.

"It might take 20 or 30 years, but I think it'll happen," said longtime Lincoln County Commissioner Tommy Rowe, whose family roots in the Caliente area stretch back to the 1890s. "People are still being born, and they're going to need houses to live in."

Ed Higbee is slightly less optimistic.

The Alamo resident drove a water truck at Coyote Springs during the early days of the development. Now he serves on the Lincoln County Commission.

Higbee said he would be surprised if Coyote Springs ever lives up to Whittemore's grandiose vision. But like Rowe, he thinks some sort of industrial or renewable energy development is still a possibility.

"I think the hopes and expectations are greatly whittled back," Higbee said.

As long as the owners of Coyote Springs keep paying their tax bills, the folks in Lincoln County -- all 5,300 of them -- can afford to be patient. Even in its undeveloped state, the development accounts for nearly 15 percent of all the property taxes paid in the rural county.

"It helps us out a lot," Rowe said.

Clark County Commissioner Tom Collins, whose district includes the southern third of Coyote Springs, also remains bullish on the project.

"When Vegas started, it was just a railroad stop. Now there's 2 million people here," he said. "You can never limit your dreams. People will come."

UNCERTAIN FUTURE

Ultimately, Coyote Springs' biggest fight won't come in a courtroom. For such a far-flung development to have a chance, most experts say it will take a dramatic recovery in the region's housing market and a return to steady growth.

Real estate consultant John Restrepo expects that to take a while.

"We all think in our guts that Southern Nevada is going to come back," he said, "but not the economy on steroids that we saw. I think it will be a more moderate growth pattern."

Others believe the boom was hollow and there will never be a real demand for a development like this. As environmentalist and outspoken Coyote Springs critic Rob Mrowka said: "It seems to be collapsing under its own weight and its own ridiculousness."

Kent Robison, attorney for Wingfield Nevada, acknowledged that the timeline for Coyote Springs is "an ongoing moving target," because its success is tied to the broader market. If you want to know when the development might get its first home and first full-time resident, Robison said, "Get the politicians to get rid of the recession, and I'll answer the question."

Here's Restrepo's best guess: "It's going to be many, many years in my opinion," he said. "It'll be at least 10 years."

So for now, Coyote Springs waits in the desert like an unfulfilled promise or an empty threat, depending on your perspective.

But it still has its cheerleaders. Even with Whittemore gone, there are prominent people who expect it to go.

Harry Reid is one of them.

"I think it will happen. It's just a matter of when," the Senate majority leader said on Thursday, after a clean energy event in Las Vegas. "It's a great project."

Review-Journal writer Laura Myers contributed to this report. Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350. Contact reporter Francis McCabe at fmccabe@reviewjournal.com or 702-380-1039.