Miles from the Strip, visions of an upscale village dim

Reporting from Henderson, Nev. — 

At the time, it probably sounded like a can’t-miss pitch:

Sunset-colored palaces. Three golf courses. Boutiques selling hand-painted silk gowns. A Ritz-Carlton. And a lake! A 2-mile-long desert lake, with marinas, an ice rink and a floating concert stage.

Few plans embodied the hubris of Nevada’s go-go years like Lake Las Vegas, the wannabe Tuscan village launched two decades ago 17 miles from the Las Vegas Strip. Over the years, Michael Jackson dodged paparazzi at the Ritz-Carlton. Elizabeth Taylor jetted in for her 75th birthday. Celine Dion bought a million-dollar home.

Conceived as a competitor to upscale getaway Palm Desert, Lake Las Vegas, on some days, is now more a lavish ghost town. The 3,600-acre development, like so many in Clark County, suffered one malady after another.

The lake, at one point, even sprang a leak.

“I wanted to see how bad it was,” said Vince Gassetto, a contractor strolling the hushed shopping district one recent afternoon.

What’s sometimes bemoaned as “Lake Lost Vegas” is a microcosm of the tattered Nevada economy -- victim of a flailing housing market, listless tourism and dwindling consumer spending. Like the beleaguered Strip, it relied too heavily on high-end clientele.

The development’s one gambling hall, Casino Monte Lago, will close Sunday -- a rare event in southern Nevada, where casinos almost always survive. A four-star hotel, the nearly 350-room Ritz-Carlton, will shut down in May, a first for the hotel chain.

Homeowners and some analysts portray these as the last setbacks for a place whose beauty and serenity, they say, will draw investors once the economy rebounds.

“This is not a community that’s drying up,” said Vicki Hafen-Scott, president of one of the homeowners associations. “It’s like living in an oasis -- it’s special.”

But others fear the closures signal the end of southern Nevada’s upscale aspirations.

When Lara Volkonskaya opened her Hermitage Art to Wear shop in 2008, she spent $25,000 on a single chandelier while retooling the store to resemble an art gallery. Her first customers all took home floaty -- and pricey -- silk clothing. But within months, business had evaporated. “My store is a high-end store,” Volkonskaya said. “Right now, I’m in the wrong place.”

Such a predicament was unfathomable to backers of Transcontinental Corp., which launched Lake Las Vegas. Located inside Henderson, it was touted as a destination address with, initially, its own ZIP Code: 89011 was no 90210, but some residents still pitched a fit when less-affluent neighborhoods were added.

It was assumed that Lake Las Vegas would provide second and third homes, or investment properties, for the well-to-do. The community helped redefine Henderson, whose beginnings as a home to industrial workers couldn’t have predicted the unquestionably stunning hideaway.

Visitors gawked at Skittles-colored condominiums, tiers of Spanish-tiled neighborhoods and a replica of the Florentine Ponte Vecchio bridge. The lake shimmered with 3.4 billion gallons of water.

“There was no luxury market, period, and Lake Las Vegas changed all that,” said Steve Bottfeld, a principal at local firm Marketing Solutions.

Then the recession set off a financially devastating domino effect.

Transcontinental Corp. defaulted on $540 million in loans and lost the property in foreclosure. Lake Las Vegas was scooped up by a turnaround management firm, Atalon Group, and entered bankruptcy in 2008.

“Put bluntly, the project was ill-equipped to deal with any slowdown in the real estate market,” Atalon president Frederick Chin said in court documents. The development, he said, lacked money for infrastructure and the golf courses (only one of which remains open).

The Loews Lake Las Vegas hotel fell into foreclosure. Then the Ritz-Carlton, which had earlier filed for bankruptcy, announced its shutdown and spooked potential investors in the struggling Casino Monte- Lago.

“It sent a bad message to new investors, who wondered what the heck was going to happen,” said John Tipton, an attorney for some casino owners. On a recent afternoon, fewer than 10 bettors fed quarters into machines in an otherwise empty room.

Anthony Curtis, publisher of the Las Vegas Advisor newsletter, had long considered the resort ill-fated. There weren’t enough residents to prop up the casino and shops, particularly when only about one-fifth of 9,000 planned homes were completed. And not enough tourists were willing to forgo the Strip. “I think their idea that people come to Vegas to get away from Vegas made no sense,” he said.

Meanwhile, inside the development’s gated communities, home after custom-made home was abandoned in the foreclosure crisis, dragging down everyone’s property values. Foreclosure sales have spiked, but the average closing price for foreclosed homes in December was $174,000. That same month, new home prices averaged $669,000.

In the meantime, the new owners hope to woo more full-time residents and businesses have retooled their pitches for a less-affluent crowd. The Loews hotel, in hopes of luring corporate groups, dropped the word “resort” from its marketing; that signaled extravagance.

Still, folks continue to move to the lakeside retreat, albeit at a slow pace. Since spring of 2008, fewer than 10 new home sales a month have closed there, according to local research firm Applied Analysis.

Two years ago, Sandee Hiegel rented a one-bedroom condo for $1,400 a month, which she considered a bargain. This year, she moved to a similar condo for $900 a month. “They’re pretty much giving away units now,” she said.

A hostess at the Black Pepper Grill in the MonteLago Village shopping district, Hiegel enjoys her short stroll to work and walking her two Maltese on the Ritz’s grounds. Would she buy something in Lake Las Vegas? She hesitated.

“It’s got to come back,” she said, a mantra oft-repeated in Nevada these days. “I mean, how much lower can it go?”

ashley.powers @latimes.com