Cheap Dirt Is Just The Beginning: One State's Lessons Learned In Developing Federal Land

A federal committee is being assembled to analyze the realities of opening some of the government’s 500 million-acre land portfolio to developers for housing — an effort billed as a way to combat the country’s housing crisis.

The idea is a divisive one and is months or years away from fruition. But while opening up federal land offers the chance to build thousands of sorely needed homes, developing these often wild lands, even if they’re given away for free, isn’t as simple as it sounds.

“Free land does not solve all of our problems,” said Bill Brewer, executive director of Nevada Rural Housing, which builds and finances affordable housing across the state. 

A joint effort between the Department of Housing and Urban Development and the Department of the Interior is driving the effort to develop federal lands. Roughly 7.3% of the DOI’s owned land, more than 36 million acres, sits within metro areas in dire need of housing, according to a Wall Street Journal analysis. 

The government is the single largest landowner in the U.S., with 27.4% of the country in its portfolio. While most of this land is currently useless from a housing standpoint, there are opportunities spread across the country. The feds own 10,000 acres in New York City alone, enough to re-create Central Park if the parcels were contiguous. 

Nevada has a head start on developing government-owned land after the state’s dire housing shortage pushed it to open formerly off-limits land for housing. But as Brewer and others learned, there’s more to the puzzle than just land. 

It is costly to bring infrastructure, roads and pipes to a remote site. Bringing utilities to a site 15 miles from the nearest road could cost up to $10M, according to Las Vegas-based Ovation Development Corp.

Residents of affordable housing communities are less likely to have dedicated vehicles and rely on public transit, which brings even steeper costs to developing property that sits further from jobs and social services. 

Ovation has 1,231 units on former Bureau of Land Management land either planned, under construction or finished since 2015. It is working with nonprofit partners on two projects set to bring 600 units of affordable housing to Henderson and Las Vegas. Heirloom at Pebble in Las Vegas, an infill development opening this year with 195 units, broke ground in March 2020.

The process can be onerous, often taking five to seven years for land evaluations, transfers, permitting and construction to take place, said the family firm’s co-owner Jess Molasky. And utilizing infill sites is crucial to making projects work.  

The under-construction project in Henderson, called Decatur Rome, leveraged the $100 per-acre price, but most of the savings were wiped out by $16M in off-site costs to bring in utilities as well as impact fees.

But with a significant amount of capital and a commitment to the region, Molasky said the firm can afford to wait and much-needed affordable housing is quickly leased up. Any time his company can get BLM land it helps reduce the cost, he said. Any savings on the land means more affordable units that create a “huge reinvestment in our community.”  

Western states in particular are brimming with opportunities. There are thousands of acres of federal real estate in Utah’s fast-growing Wasatch Front region. The American Enterprise Institute estimates developing across 512,000 acres in the West could yield 4 million new homes.

Nevada commercial developers have long sought more access to federal land for new housing, arguing that a lack of available land stymies their ability to build more affordable housing. 

In response to a dramatic jump in cost-burdened renters in the area, Clark County staff found roughly 500 acres of federal property in and around Las Vegas that would be suitable for such development. In 2022, the county worked with the BLM to purchase 20 acres, which it will hold in a land trust. 

The result is the Cactus Trails project, a forthcoming community of affordable homes in southwest Clark County that is a 20-minute drive from the Las Vegas Strip, an employment hub for service workers. The 210 single-family home development will feature new parks and walking trails meant to give families earning about $70K per year the same amenities as the master-planned community next door.

The county chose the site in what’s called the Mountain’s Edge area because it was adjacent to other developments and on an existing public transit line next to a master-planned community. In other words, road, sewer and power connections were easy.

“It’s tailor-made for getting it built for the public as quickly as possible,” Clark County Commissioner Justin Jones said. 

It was also dirt cheap. The assessed value was $1.4M per acre. The county picked it up for $100 per acre. It would have been impossible, according to Jones, to create this housing without that substantial discount. 

The program used for the development has helped build 405 new housing units since 2023. Using federal land opens up substantial opportunities, according to Nevada State Apartment Association Executive Director Robin Crawford.

“Will it solve the entire crisis? I don't know,” Crawford said. “There are plenty of spots where the land is developable, and it's in a close enough vicinity to transportation that it would be worth it.” 

The state plan to release federal land for $100 an acre, as it did for the Cactus Trails project, can help the housing crisis, Crawford said. But Nevada’s existing program only allows the land to be used for affordable housing, which can serve as an obstacle for developers seeking to make a project pencil. 

The requirement also makes it harder to build services on the land. Crawford suggested allowing more mixed-use projects with rules around setting aside a particular percentage of units as affordable, akin to inclusionary zoning. 

“It would have to be diversified a little bit,” she said. “Maybe a tiered pricing structure, or some kind of mixed-use or mixed-income allowance. Then I could see it just going wild.”

Critics of these federal land transfers argue many developers seek out the simple option. Great Basin Water Network Executive Director Kyle Roerink said the push to open federal land tends to ignore the potential for infill development in many Nevada metros. A recent study by the group Southern Nevada Strong found 82,000 acres of available infill development. 

“I can't say that it's a complete giveaway, right?” Roerink said of these federal land programs. “But I can say that they're taking the cheapest route. It’s the easiest route because they have a blank canvas in many respects.”

Developers will need to wait to figure out just how large a canvas they might be given. The HUD and DOI task force remains a work in progress without a public list of members.

According to The Wall Street Journal, the group will identify land that’s suitable for housing, with the DOI working on sales or lease transfers to public housing authorities, nonprofits, local governments or private developers. HUD will locate areas in need, and DOI will consider environmental impact and land-use restrictions.

Even with the speed at which most of the Trump administration has been moving, the process is likely to stretch on, creating a long road between people who need housing and the wide open spaces on which they could build. And since land is only the beginning, there are many more problems to solve.

“The problem with housing policy is that politicians want a magic housing button that they can press,” Hawaii Senator Brian Schatz told the WSJ. “And that’s not how this works.”