Desert Connections

Times Staff Writers

Even now, as heavy equipment peels back the cactus and creosote bush to carve out roads and building sites, it's hard to believe that this 67-square-mile tract of empty desert will blossom into one of the biggest cities in the fastest-growing state in the country and the projected home to more than 200,000 people.

One of the most inhospitable places in the country, Coyote Springs Valley is so barren that, until recently, its best use was thought to be as a weapons test range.

Yet the valley -- an hour northeast of Las Vegas -- is on its way to becoming a real estate development of historic proportions, with as many as 159,000 homes, 16 golf courses and a full complement of stores and service facilities. At nearly 43,000 acres, Coyote Springs covers almost twice as much space as the next-largest development in a state famous for outsized building projects.

By comparison, Irvine Co., one of Southern California's largest developers, controls about 44,000 acres in Orange County.

Helping make Coyote Springs come alive was an alliance between a multimillionaire developer and one of the highest-ranking members of Congress: Nevada Democrat Harry Reid, the Senate minority leader and a member of the powerful Senate Appropriations Committee.

The relationship between developers such as Harvey Whittemore and politicians such as Reid is especially close in Nevada, home to a small fraternity of movers and shakers, powerful demands of rapid population growth and a huge amount of federally owned land.

Over the last four years, Reid has used his influence in Washington to help the developer, Nevada super-lobbyist Whittemore, clear obstacles from Coyote Springs' path.

At one point, Reid proposed opening the way for Whittemore to develop part of the site for free -- something for which the developer later agreed to pay the government $10 million.

As the project advanced, Reid received tens of thousands of dollars in campaign contributions from Whittemore. The contributions not only went to Reid's Senate campaigns, but also to his leadership fund, which he used to help bankroll the campaigns of Democratic colleagues.

Whittemore also helped advance the legal careers of two of Reid's four sons. One of the two, Leif Reid, who is Whittemore's personal lawyer, has represented the developer throughout the Coyote Springs project, including in negotiations with federal officials.

Whittemore, solidly built and well over 6 feet tall, is a partner in Nevada's biggest law firm and a veteran lobbyist for the state's gambling, liquor and tobacco industries.

His influence crosses party lines. Nevada's junior U.S. senator, Republican John Ensign, and GOP Rep. Jim Gibbons, whose district includes Coyote Springs, supported the project at key stages. But Reid's power in the Senate sets him apart and his relationship with Whittemore is deeply rooted.

"You have to understand how close the Whittemore and Reid families are," the developer said recently. "My relationship with Sen. Reid goes back decades." The senator concurs, calling Whittemore a longtime friend.

In a small state, Whittemore said, personal relationships are particularly important: "This is not New York. This is Nevada."

Reid, who declined to be interviewed for this article, cites economic grounds for his support of the project, as do his Nevada congressional colleagues.

"There is a reason every major Republican and Democratic officeholder in Nevada has fought for Coyote Springs -- it will create jobs and make the state an even better place to live and raise a family," said a Reid spokesman.

Nevada's congressional delegation has treated Whittemore no differently from any other developer, Reid's office said.

'Unique in the World'

For Whittemore, Coyote Springs is more than a financial investment. In words that soar beyond developers' customary hyperbole, he called it an opportunity "to create a beautiful place which is unique in the world -- not just Nevada or the United States, but the world."

More than a decade ago, Whittemore recognized the site's potential. It is 5 miles wide and stretches 13 miles along the east side of U.S. 93 between parallel mountain ranges.

Equally important, the site was in private hands -- rare in a state where the federal government owns 87% of the land. Nothing remotely as large and well-located might come on the market again.

There was just one catch: For all its possibilities, the land had serious obstacles to development that only the federal government could remove.

First, Congress had created a mile-wide power line corridor covering 10,500 acres and running the length of the property close to the highway. No power lines had been built, but development inside the corridor seemed to be precluded.

A second problem was that ancient stream beds and washes crisscrossed the site. Though dry most of the year, as part of the valley's ecosystem they could not be bulldozed or otherwise altered without federal permits.

In addition, while the private owner controlled all 42,842 acres, the federal government had retained title to almost a third of those acres to maintain a preserve for the desert tortoise, Nevada's state reptile, which is shielded by the Endangered Species Act.

The tortoise's habitat was concentrated in a wedge-shaped area in the middle of the site. Here too, development seemed to be prohibited.

"For eight years, almost on a daily basis I have been working on solving the problems of the site," Whittemore said recently.

Today, with the obstacles gone and construction under way, Whittemore's efforts seem to have paid off.

Land's Recent History

It was the exigencies of national security that put Coyote Springs in play. In 1988, Congress turned the land over to defense contractor Aerojet-General Corp. to test rockets. The southern third of the land is in Clark County, which includes Las Vegas, and the rest is in Lincoln County.

The rocket range was never created and the land remained essentially untouched until 1998, when Whittemore paid Aerojet-General at least $15 million for title to the privately owned portion of the site and for the rights under a rent-free government lease of the tortoise habitat.

Soon afterward, Whittemore reduced his financial exposure by selling the rights to 7,500 acre-feet of groundwater and a well to the Southern Nevada Water Authority for $25 million. But he retained other water rights at Coyote Springs and has agreements with Lincoln County and its private water company partner to buy more for the development.

Almost immediately, Whittemore began to push for the title to -- and unrestricted use of -- the tortoise habitat in the middle of the site. He argued that moving the tortoise preserve to the eastern edge of the site, where it would abut federal land, would help the desert tortoise and remove an impediment to his project.

In 1999, regional officials of the Interior Department refused, saying that only Congress could approve moving the preserve. Over the next five years, Whittemore bombarded the government with proposals.

Finally, in 2004, the Bureau of Land Management agreed to give him title to nearly 10,000 acres of tortoise land in the middle of his site in exchange for equal acreage along the fringes. They called the swap a "minor" boundary adjustment.

Appraisal Not Done

No federal appraisal was made to determine whether the land the government got was equal in value to the land it gave up, and some public land experts say the exchange may have been illegal.

"The law clearly wouldn't allow a 'boundary adjustment' of 10,000 acres," said Janine Blaeloch of the Western Lands Project, a group that advocates for public lands. "Congress drew the map of the leased lands. Congress would have to change it."

The bureau said it agreed to the land swap because the U.S. Fish and Wildlife Service said moving the preserve would be good for the tortoise.

Neither Sen. Reid nor Leif Reid played a role in getting the tortoise preserve relocated, Whittemore said.

In 2002, Sen. Reid went to work on removing the power line corridor.

First, he and others in Nevada's congressional delegation tucked an obscurely worded provision into a huge land bill to benefit a wide range of interests in Clark County. The provision shifted the power corridor off Whittemore's land and onto federal land along the west side of U.S. 93.

The land west of the highway had been earmarked for "wilderness study," but a separate section of the bill reclassified the land to allow power lines.

As drafted, the bill would have done Whittemore a large financial favor: It required him to pay nothing for getting the power corridor moved to the west side of the highway -- even though it increased the value of his 10,500 acres on the east side by clearing it for development.

The giveaway prompted questions from the Bureau of Land Management and the Senate Energy and Natural Resources Committee.

With the legislative clock running out, Reid and his Nevada colleagues backed off, removing from the bill the provision moving the power line corridor.

But another provision -- one that reclassified the status of the land on the west side so that it eventually could accommodate a power line corridor -- survived, and President Bush signed the bill in November 2002.

A year and a half later, Reid and the Nevada delegation tried again, inserting language moving the power corridor to the west side of the highway into a public land bill for Lincoln County.

This time, Whittemore had to compensate the government on the basis of "fair market value," but that was defined in such a way that would have required him to pay only about $160,000.

Drawing fresh criticism, Reid and the delegation changed the cost provision to say government appraisers should determine what Whittemore had to pay -- $10.4 million as it turned out. The bill became law in November 2004.

Just before that bill was passed, Whittemore announced a deal with Westwood-based Pardee Homes to become Coyote Springs' main residential developer. He also announced that Jack Nicklaus would design a set of golf courses to be known as the Bear Trail.

As the effort to clear a path for Coyote Springs moved forward, Whittemore showed his appreciation for the help Nevada politicians in Washington were giving him, especially Reid. Ensign and others got contributions, but significantly less than those given to Reid.

Political Funding

Since 2000, Whittemore, his wife and the Coyote Springs company have given Reid's senatorial campaign and political action committees at least $45,000. That included $35,000 for Reid's leadership PAC, the Searchlight Leadership Fund, which helped him advance as a Senate leader. Most of that money was contributed in 2002 shortly after Reid introduced the Clark County land bill.

In 2000, Whittemore gave an additional $20,000 to the Democratic Senatorial Campaign Committee, which Reid promoted as a party leader. Prior to 2000, the Whittemores had given Reid and his Senate campaign committee a total of $6,500, plus $5,000 for his leadership PAC.

Whittemore also helped Reid's sons, all of whom at various times have worked for the law firm in which he is a senior partner, Lionel, Sawyer and Collins. Rory Reid is a partner in the firm. When he ran successfully for the Clark County Board of Commissioners, Whittemore contributed $5,000.

He also gave Josh Reid $5,000 for an unsuccessful bid for a seat on the city council in Cottonwood Heights, Utah. Rory and Josh Reid have been active in Democratic politics.

Jon Summers, an aide to Sen. Reid, said, "Harvey Whittemore has a history of giving money to political candidates far and wide -- and to both political parties.

"However," he added, "as a registered Democrat, it is only logical that he would give a larger percentage to Democratic candidates and committees."

By the spring of 2005, only one step remained: securing a permit to deal with the stream beds and washes.

That process, handled by the Army Corps of Engineers, seemed routine, but in late July trouble struck.

Alexis Strauss, an official in the Environmental Protection Agency's regional office that oversees Nevada, notified the Corps of Engineers that her office had concerns.

"We respectfully object to the issuance of a permit for the proposed project because the authorization may result in substantial and unacceptable impacts to aquatic resources of national importance," Strauss wrote.

The phrase, "aquatic resources of national importance," was a designation that gave regional EPA officials maximum leverage to press for environmental concessions.

Rarely Invoked

Invoking such aquatic resources is rare -- done in only 1% or 2% of the permit applications that the regional office reviews every year, according to Tim Vendlinski, head of wetland regulation. "They weren't happy when they got that letter," he said of Whittemore and Coyote Springs.

Whittemore had not seen the EPA move coming and he called Nevada officials, his fellow-developers, Sens. Ensign and Reid, and Leif Reid.

Less than a week after the issue arose, Sen. Reid's then-top aide for energy and environment, Peter Umhofer, called the regional office. Whittemore said he had asked Umhofer to set up a meeting for him with federal officials. Umhofer also contacted the Corps of Engineers.

Officials at both agencies got the message that Reid was deeply interested in Coyote Springs, and Vendlinski made clear that Umhofer's intervention had upped the stakes.

"Any time a congressman calls, it kicks it up above my level. We treat correspondence from staff with as much weight as from congressmen," Vendlinski said.

At an Aug. 16, 2005, meeting, Whittemore, Leif Reid and their consultants tried to persuade the EPA to drop the aquatic resource designation. "They saw our letter as something that would bring their project to a halt," said John Kemmerer, the senior EPA official at the meeting. "They were interested in us rescinding it."

The EPA officials refused.

"It was a bitter pill for them," Vendlinski said. "The meeting did not end with a group hug."

Nonetheless, the developer and the federal agencies agreed to meet again in September.

Meantime, Sens. Reid and Ensign called EPA Administrator Stephen L. Johnson in Washington. The senators said Nevada developers were complaining about undue delays on permits.

Whittemore says he did not instigate the phone call by Reid and Ensign.

On Sept. 20, two days before Reid and Ensign were to confer with Johnson, three Reid staffers called the EPA regional officials to express Reid's concerns about permits, including developers' complaints that the EPA had become more demanding.

The next day, EPA regional officials sent briefing papers to Washington to help Johnson prepare for his talk with the senators. An e-mail from a senior EPA official made clear which way the wind was blowing.

"I've taken the liberty of shortening the talking points and making them sound more conciliatory," said John Reeder, who's in the EPA's congressional relations office. When talking with the senators, "the administrator needs to hear them out and not take an argumentative stance," he said. "Let me know if you have any heartburn over this."

When Johnson talked to the two senators, they reiterated developers' complaints about the EPA's regional office and expressed the developers' concern about their ability to get permits in the future.

"It was very unusual for two senators to go directly to the administrator," Strauss, the EPA regional official, said.

At some point in the process, Leif Reid called his father's office about the permit issue. Sen. Reid's office says the call had no effect on the senator's actions.

Office Lobbying Rule

In 2001, the senator's office established a rule that family members could lobby his office but could not get special treatment. In 2002, responding to questions by The Times, the rule was changed to prohibit any lobbying of Sen. Reid's office by his family.

"For the last four years, our office has had a policy that Reid family members are not to lobby the office on business matters, even if those matters benefit Nevada," Susan McCue, Reid's chief of staff, said last week.

"Leif is not a lobbyist, but he should not have called our office. I have reminded Leif of this policy to prevent future calls," she said in a statement. Leif Reid did not respond to questions.

The contacts by Leif Reid and others "were not an attempt to have Sen. Reid's office direct the outcome of the federal permitting process," Whittemore said.

As it happened, by the time Sens. Reid and Ensign had their conversation with the head of the EPA, Whittemore's permit problem was all but over.

On Sept. 16, Whittemore, Leif Reid and others had met with EPA and other federal officials at the site and the atmosphere became conciliatory.

Coyote Springs agreed to leave several washes untouched, reduced the number of acres of waterways to be filled in and pledged to make environmental improvements on 19 acres of other wash land.

And Whittemore promised not to disturb the Pahranagat Wash, which runs through the site. Since Pahranagat is subject to flash flooding, development there was impractical, but Whittemore made its protected status official.

"They took our concerns seriously," Vendlinski said.

For their part, the regional officials were not looking for a fight. Whittemore had demonstrated that he could bring Sens. Reid and Ensign into the game.

Privately, some regional EPA officials said they knew their superiors in Washington would not support a hard line on aquatic resources.

The regional officials not only withdrew their objections, but in April 2006 they also gave Whittemore's project an award for "environmentally sensitive improvements" in its plans. A smiling Leif Reid accepted the award.

"One year and $1 million in consulting fees later, we got our permit," Whittemore said ruefully in an interview in May.

"It is the right thing to do," he said, "and there is an economic incentive in making the project proceed."

As Coyote Springs grows onto the Lincoln County portion of the site, more permits will be needed. But Whittemore's dream is on its way to coming true.

Looking back, he expresses pride in the achievement, and in how far he went to meet environmental and other concerns.

"The final product is the most environmentally friendly development ever proposed in Nevada," Whittemore said. "I want people to understand that I am the platinum standard."

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Neubauer reported from Coyote Springs and Cooper from Washington.

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(BEGIN TEXT OF INFOBOX)

Cutting red tape

Nevada lobbyist Harvey Whittemore controls a 42,842-acre project called Coyote Springs, northeast of Las Vegas. These maps show original obstacles to development of the project and how they were dealt with.

(END TEXT OF INFOBOX)

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