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The NDOT Heist

Are State Highway Department
Officials Now Highwaymen?

by Judy Cresanta

nyone not a newcomer to the state traveling between Reno and Carson City these days can easily find him- or herself marveling at the convenience and ease of travel on the 20-mile stretch of road from Reno south to the Mt. Rose highway.

Only a few years ago, this stretch of road was often a nightmare--four lanes, traffic lights every quarter mile, commercial business with accompanying stop-and-go obstructions and lots of speed traps. Sensible people allowed an additional 30 minutes to get from downtown Reno to the Mt. Rose road.But now that this section of U.S. 395 is complete, the trip only takes, conservatively, 10 minutes--maybe five when relatively free of commuters.

Among the many marvels of this stretch of road is the breathtaking view--the Virginia mountain range riddled with gold mines to the east, and Mt. Rose and Slide Mountain rising to 10,300 feet to the west. Highway engineers did not only plan the safest route, they also left the majestic view intact by not constructing the usual 12-foot concrete walls--the kind that so often become public easels for local gang artistry.

Who could have predicted that such an impressive project would not only be completed ahead of schedule but also under budget? In case you're wondering, yes, Nevada's Department of Transportation (NDOT) oversaw construction. And, yes the feds had their hand in, too. But that's far from the whole story.

Construction of this road--officially, it's U580 between Reno and Carson City--had been contemplated for many years. When Southmark Corporation purchased the Double Diamond Ranch in 1985 the local political struggle over the I-580 alignment through the South Truckee Meadows was nearing conclusion. An alignment east of Virginia Street was selected to minimize negative impacts to residential uses west of Virginia Street. It was a route that also offered practical construction advantages. The only remaining questions had to do with finding and how long it would take.

Double Diamond to the Rescue

In 1988, Don R. Norman, and his son Roger W. Norman, purchased the commercial portion of the Double Diamond Ranch--a 452-acre tract of land south of Reno in the shadow of a sharp little hill the locals call Rattlesnake Mountain. The Double Diamond Ranch was, and remains, a mixed use-masterplanned community that provides homes and rapidly developing employment center.

The Normans, practical businessmen, were clear about the value of their land. But they also were new arrivals to the Truckee Meadows, aspiring to establish good community relations in their newly adopted home. So they approached NDOT and offered to donate to the state the 70 acres of land required by the proposed construction route. All the Normans asked in return was that, upon completion of the project, the State of Nevada give back any unused land.

By removing the most difficult obstacle to the highway's construction--attainment of right-of-way and negotiations and payment for compensation to private landowners--the Normans allowed the highway project to both start and finish substantially ahead of schedule.

But that was not the end of the Normans' generously. State officials let them know there where considerable pressures having to do with environmental impacts being placed on the project. To accommodate the state's predicament, the Normans agreed to donate whatever additional acreage that might be required over and above the original 70 acres. At the time, NDOT had money left over in its right-of-way acquisition account, but needed about $1 million, if the Normans would turn around and write a similar check to NDOT. Because the $1 million would be reflected as taxable income for the Normans, the state was essentially asking them to absorb a hefty tax burden. But to the state's delight, the Normans also agreed to this.

As with most huge government projects, redesign and slight   route shifts were to be expected. During this redesign period, NDOT's director informed the Normans that state wanted to relocate one of the highway's entire interchanges, and asked if the Normans would buy additional land along South Virginia Street to accommodate the change. Because the highway construction launch date was approaching, land values already had skyrocketed. The Normans ended up paying the unprecedented rate of $4.00 per square foot for the needed land--at a total cost over $1 million.

Shortly after that deal, NDOT notified the Normans that the department had changed its mind again regarding placement of the north interchange, saddling the father-son team with narrow strips of expensive but basically useless land. NDOT made no effort to compensate the Normans for this snafu. Instead department officials came knocking one more time, pleading that one more small piece of land was needed for the interchange. Though exasperated by now, the Normans went ahead and satisfied this request, too--to the tune of $426,418. Again, the only thing they asked was that any unused land be returned upon completion of that section of highway.

Eventually, under the right-of-way agreement, about 110 acres was donated to NDOT for the construction of Highway 395. That was 40 acres more than specified by the original design, and thus an immense saving to the State of Nevada. Acquisitions to the north and the south of the Double Diamond Ranch were acquired by NDOT at considerable cost. Reportedly the two-mile stretch of Highway 395 to the north cost the state approximately $18 million, while the similar section south of the Double Diamond cost about $8 million. In both instances the selling property owners were not only paid for their land but also received all the subsequent benefits of the nearby highway's location.

After the Bait, the Switch

Did the Normans have solid business reasons for their efforts to accommodate the state's need for land? Certainly--the business decisions they made were consistent with Southmark Corporation's strategic development plan. But the contrast between the Norman's actions and their neighboring property owners is significant for Nevada taxpayers. The highway would have cost at least $19 million more, a burden that the Norman's generously meant taxpayers did not have to bear. At the same time, no one can fault neighboring property owners for seeking the best compensation possible from the state. Many of these locals had invested in the ranchland decades before, looking forward to the day that Reno would expand to the south.

In early 1997 the section of U.S.  395 running through the Double Diamond Ranch was completed. It was not only a triumph of entrepreneurial generously, but also creativity on the part of the State of Nevada and the Normans. At the ribbon-cutting ceremony Don and Roger Norman were honored for their generous donations--not only of land but also aggregate materials used to build the highway   and even outright cash.

With the highway done, NDOT re-surveyed the lands to identify parcels remaining unused after the completion of Highway 395--and thus, under the agreement, due back to the Normans. The survey showed that between 5 and 10 percent of the land was unused and so NDOT, after securing the full support of its staff, began moving to return the property, relocating some fences to the agreed line of right-of-way. But as the time approached for reconveyance of the land, all cooperation from NDOT suddenly evaporated.

What had changed? The public record shows that, after the ribbon-cutting, a new administration had taken the helm at NDOT, appointed by then-Governor Bob Miller.NDOT Director Garth Dull retired and was replaced by Tom Stephens. jack Crawford departed the right-of-way office, which was then occupied by Heidi Mireles. Soon it was clear that the new team had a different view about their responsibility to honor the original agreement the department had made with Don and Roger Norman.

After repeated attempts to negotiate with the state, the Normans now expect they will be forced to sue. Their attorney, Mike Chapman, says that multiple communications from him and his clients with the state--talking with people from the governor's office on down to the head of NDOT's surplus property committee--for a long time have been without result. Both the new governor and lieutenant governor have asked NDOT to address the issue of returning the unused property, but as of this writing, the department has yet to provide a definitive answer even to those officials. Chapman, however, is confident the Normans will eventually prevail--if not upon the advice of NDOT's legal counsel, certainly before the courts.

Nevada Journal has obtained part of a letter written by Mireles stating the department's position. Blandly sidestepping the entire core issue of the department's earlier promise, the letter shows the bureaucratic opacity that straightforward business people find so aggravating:

The Department's Surplus Property Committee has recommended that the Department retain all of the right-of-way at this interchange. The Committee, which has consistently recommended that this property be retained, is of the opinion that the existing ownership in this area is not in excess of the requirements of the existing freeway facility... Since this project was constructed with the participation of the federal Highway Administration, their [sic] approval of any disposal of right-of-way would also be required. It is evident that they [the federal government] share the Surplus Property Committee's concerns and are not in favor of the disposal of this right-of-way.

Chapman says a later letter from the department suggests that current NDOT leadership may be backing away from its earlier stand. But this story   is instructive for Nevada taxpayers, since the irresponsibility of state bureaucrats ultimately imposes additional long-term costs on all of us.

State Government a Haphazard Mess

Clearly Nevada's Legislature needs to establish solid guidelines requiring responsible behavior by state officials in public/private endeavors. But this situation shows a deeper problem within the state. Nevada government, with its bureaucracies on auto-pilot, is often its own worst enemy--undermining the very interests of the people it is the mission of state government is to serve.

The second public policy concern here is the abuse by bureaucrats of Nevada state sovereignty. When convenient, many Nevada government officials assume the posture that the state is little more than an instrumentality of the federal government. It's ready-at-hand scam that allows them to use Big Brother as a hammer. In this case it means the Normans not only have to contend with the state, as they seek to have honored what was supposed to be a binding agreement, but also the leviathan of the federal government.

"He is truly wise who gains from another's mishap," observed Publius Syrus over two millennia ago. what the State of Nevada's department of transportation has done is ensure a future where informed Nevada landowners will not be eager to follow the Norman's generous example. NJ

Judy Cresanta (jc@npri.org) is president of Nevada Policy Research Institute.


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