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As Las Vegas Booms, Some Dealt a Losing Hand
By Brian MacQuarrie, The Boston Globe
Knight Ridder/Tribune Business News

Dec. 12, 2005 - LAS VEGAS -- Celine Dion is waxing romantic at Caesars Palace. Wayne Newton is warbling at the Flamingo. George Carlin is cracking jokes at the Stardust.

And outside the crowded shows, and up and down the fabled Strip, luxury condominium towers are sprouting like mushrooms.

At first glance, Las Vegas has never had it so good.

In fact, this desert valley of almost 2 million people is the fastest-growing in the country.

Las Vegas, in fact, leads the nation in job creation, and it has a white-hot housing market.

"It's going phenomenally well," said Mayor Oscar Goodman, a former lawyer for mobsters.

But as bright as the present appears, there are signs that Las Vegas is becoming polarized. Prices have pushed home purchases beyond the reach of many families. Crime is on the rise. And activists report problems in recruiting teachers, nurses, and police to serve a population growing by 6,000 a month.

As the city moves from municipal adolescence to adulthood, Las Vegas is only beginning to address its growing pains, said John Restrepo, an economic consultant here. "If we don't," Restrepo said, "we'll be facing significant challenges in the next few years."

Founded in 1905 as a sun-baked railroad depot, the city of Las Vegas has faced challenges and remakes galore.

From the Depression-era construction of the Hoover Dam to the mob's financing of its casino persona to its transformation as a family-friendly resort, Vegas has always been a survivor.

But now, the affordability of a city that relies on armies of low-wage workers to run its casinos, hotels, and restaurants is a glaring concern. Since 2000, the median price of a new home here, excluding condo conversions, has soared to $335,091 from $161,893, Restrepo said. Median household income in that time has increased to $47,741 from $41,657.

The Las Vegas metropolitan area, which ranks 153d in household income, is now put as the 33d most expensive housing market in the country.

In Greater Boston, by comparison, the median price of a single-family house is $430,900, according to the National Association of Realtors; the median household income is $63,521.

Despite all its visible opulence, the poverty rate in Clark County, which includes Las Vegas, increased to 12.7 percent in 2004, compared with 11.6 percent in 2003. Child poverty stood at almost 19 percent.

Nationwide, the child poverty rate was 17.8 percent in 2004, according to the National Poverty Center.

"There's plenty of jobs in Las Vegas, but the town is basically made up of minimum-wage workers. I just don't know who can afford these homes," said Mark Bradley, 47, a bartender and a native of West Roxbury, Mass., who has lived here for 13 years.

"When we first got out here, I was used to East Coast prices," said Bradley, who bought a 2,200-square-foot, four-bedroom house for $130,000 in 1994.

"I sold that in 2000 for only $170,000," Bradley recalled. "Now, all of a sudden, that same house is going for $350,000."

For Nicole Dye, a 31-year-old maid at the Bellagio Hotel and Casino, the work is steady, but the living is nearly paycheck to paycheck. Dye, who makes $12.50 an hour, is raising five children here after moving from Muskegon, Mich., two years ago when she was laid off from an $18-an-hour job at General Motors.

Now, rather than pay $675 a month for a three-bedroom rental in Muskegon, she puts down $1,200 to rent similar bed space. "That's high for me," Dye said, "but people tell me it's reasonable for Vegas."

But for tourists and retirees, the allure of the "new" Las Vegas has reached giddy heights. A total of 93 luxury condominium projects, with 194 towers and 51,000 housing units, have been proposed or are being built, said Brian Gordon of Applied Analysis, a real-estate and economic research firm in Las Vegas.

One of those projects, a high-rise condo hotel by Donald Trump, is three years from completion; all the units are sold.

A typical furnished studio there costs about $650,000, Gordon said.

Underneath the glitz and glamor, the concern that Las Vegas could fall victim to a housing bubble never seems far from the surface. It's a fear that real-estate agents and even unabashed city boosters acknowledge, including Mayor Goodman.

Goodman conceded that housing is a problem for longtime renters being forced from homes near the Strip, where developers are paying about $6 million to $10 million per acre. But, the mayor said, he's not ready to ask developers for set-asides to help construct affordable housing.

"Right now, I'm giving everybody the candy store," Goodman said of his dealings with builders. "You can't grow too fast. Growth is wonderful."

When asked where displaced Las Vegans will move, Goodman replied, "I don't have the answer to that one yet." Later, he added, "I don't want a tent city, that's for sure."

Georgia James, a real estate agent who has sold and resold property in one of the city's poorest neighborhoods, shook her head as she drove a bronze Cadillac past pimps, drug dealers, and the unemployed who loiter near condemned apartment buildings two to three blocks off the Strip.

"These people will have no place to go," said James, 65, who has worked an area called Naked City for 11 years. When other agents and developers were reluctant to invest in the area, James said, she saw its potential. Now, a motley collection of property is on the market for $8.5 million after being sold to Miami investors last year for $3.2 million.

"There's no setbacks, no height restrictions," James said. "They're just opening all the doors to everybody.

Goodman said he is working with federal officials, including the US Bureau of Land Management, to release undeveloped land for affordable housing.

In April, a broad-based discussion of regional leaders will be convened for those interested in Las Vegas housing -- developers, bankers, and urban planners, as well as police officers and teachers.

The stakes are enormous, said Ken Lange, the executive director of the Nevada State Education Association, which represents non-management school workers, who range from teachers to custodians to bus drivers.

Unless the shortage of affordable housing is addressed, Lange said, "I think we'll see the tremendous growth inevitably slow here as we are unable to put people in homes."

"Las Vegas, as a place to live," Lange said, "will not be as attractive, and so our potential for deep and fundamental economic development will evaporate."

Already, Lange said, school officials are finding that Las Vegas is a tougher sell for a starting teacher making $30,000 a year. Recruitment problems are exacerbated by an overcrowding problem, Lange said, in which a high-school English class typically has 40 students. Pat Nelson, a spokeswoman for Clark County schools, said the district is about 250 teachers short.

Meanwhile, the number of police officers has not kept pace with the area's growth. Between 1999 and 2003, the number of officers per 1,000 residents dropped by 24.1 percent, according to the latest figures compiled by the Clark County Monitoring Program, a quarterly analysis of social, economic, and environmental changes here.

At 1.7 officers per 1,000 residents, the Las Vegas area ranks 190th of 342 metropolitan regions as police grapple with double-digit increases recorded in 2004 for rape, aggravated assault, burglary, and auto theft.

Despite its growing pains, Restrepo said, the city appears insulated from a meltdown in the housing market. One reason, he said, is that the potential for private housing is limited in a region where the federal government owns vast tracts of land. Therefore, available housing should retain its value.

Another reason, according to Restrepo, is the influx of 8,000 workers per month -- offset by 2,000 who leave -- which creates a constant labor pool.

One transplant, Vicki Banusevich, a native of New Hampshire, came to Las Vegas as a waitress in 1997 and now is assistant general manager of Planet Hollywood on the Strip. To her, Las Vegas retains its appeal, despite its exponential growth.

"I really love Vegas. It's definitely multidimensional as far as cultures go," said Banusevich, who is 36. "And where else in this country has more restaurants per square foot? There's definitely a lot of money to be made in the service industry."

Still, Banusevich is uncertain whether she wants to raise her 18-month-old daughter here, where gambling and alcohol are available 24 hours a day, and where taxis display ads for strip clubs.

"I have to view it completely different now," Banusevich said.

For Restrepo, a Louisiana native who has lived in Las Vegas since 1988, city planners now have no choice but to confront potential problems head-on.

"It won't be business as usual anymore," Restrepo predicted. "But I'd rather be in Las Vegas as we address these issues than in a no-growth, Rust-Belt city like Dayton, Ohio."


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