Henderson ousted business to displace the poor, spur development, says lawsuit • Nevada Current

A federal lawsuit filed against the City of Henderson in July alleges the city intentionally imposed enforcement actions designed to close a Motel 6 on the corner of Lake Mead Parkway and Water Street, so the property could be acquired “on the cheap, bulldoze the low-income housing units, and replace them with a planned shopping center.”  The action amounts to a private taking, the suit alleges. 

A source familiar with the city’s decision-making who asked not to be identified out of concern for retaliation says Henderson officials agreed to close down the Motel 6, a laundromat, and a sandwich shop in order to appease Strada Development Group, the planned developer of a 22-story tower and fulfill the city’s goal of establishing a gateway to Water Street. 

“No one wants to put a beautiful building across the street from that motel,” the source said. “It  was a condition of the development that they had to go.” 

The city and the developer deny the allegations. 

“There was no coupling between the two projects,” says Tom Wucherer, founder of Strada, which is seeking to purchase the two-acre parcel that is partially owned by the city’s redevelopment agency and envisioned as the gateway to Water Street.  

The motel owners, in their lawsuit, allege the city took action “by ‘faking’ the existence of serious housing code violations purportedly discovered on the plaintiffs’ properties in order to invoke emergency powers to evict tenants and revoke the motel’s business license and certificates of occupancy.” 

The lawsuit says the city informed the property owner that “current building permits that have been submitted and reviewed a few times will not meet the current Downtown Masterplan standards.” 

From February of 2023, six months after Strada Development Group submitted plans to the city for the Waterfalls, until May of this year when the city revoked the motel’s business license, code enforcement initiated eight actions at the Motel 6.  While the motel has been closed, the sandwich shop and laundromat, both tenants, are still operating. 

“They may have been doing things wrong. I don’t know. But code enforcement made it nearly impossible for the motel to come into compliance,” the source said. “They did all of this to be able to shove homeless people out of areas so the public wouldn’t be disturbed by them.” 

Private taking

California attorney Frank Weiser, who is representing the motel owners, says he’s argued cases with similar circumstances before the Ninth Circuit of Appeals and prevailed.  

In 1996 the Ninth Circuit found the City of San Bernardino engaged in a private taking when it boarded up low-income housing units and evicted tenants who were suspected of being gang members and drug dealers. The plaintiffs alleged the city conducted the sweeps to enable a commercial developer to acquire contiguous property.

Eminent domain laws allow governments to “take” property that is necessary for public purposes. Private takings, according to the Ninth Circuit, are a special type of constitutional violation.

Weiser says his clients in Henderson were never provided with proper notice that the Motel 6 would be closed or with a hearing.  

Arpit Patel, one of the owners of the motel property, says in late 2023 he asked the city if it was interested in buying the property. Henderson officials offered him $2 million to $2.5 million for the parcel, which he says he purchased in 2021 for $5 million. He says he’s invested another $1 million in upgrades. 

The city insists it made “no formal offer” to Patel. 

Patel says when he turned down the government’s offer, the city put him in touch with a developer who was interested only in the value of the land. 

Two developers are still eyeing the property, according to their attorney David Edelblute, who says his clients asked not to be identified. Edelblute also serves on the Henderson Redevelopment Commission, which oversees Water Street’s revitalization. 

The city’s acts “were taken pursuant to a policy, custom, or practice, to close the motel, and other properties nearby, in order to transfer such properties at a reduced and depressed value to a private company.”

The city says it did not depress the motel’s value by closing it.  

Water St. or bust

Henderson fancies itself a premier community, but downtown Henderson, the oldest part of the city and home to City Hall, bears little resemblance to the luxury master planned communities that surround it. 

Instead, much of it remains a throwback to the 1940s and the city’s creation as a home for  workers at Basic Magnesium, Inc. a national defense contractor during World War II. 

Bars and restaurants have popped up in recent years along Water St., downtown’s main drag, but some areas, as well as the surrounding neighborhoods, remain blighted.

The owners of the motel and the source who spoke to the Current suggest the events are part of a larger effort to gentrify Water Street, regardless of the impact on residents. 

In April, the Regional Transportation Commission, at the request of the city, moved two bus stops on Water St between Pacific Ave and West Atlantic at the request of business owners. The stops were adjacent to a senior apartment complex and a senior community center. 

“You basically did it because you want to discourage the homeless population from being settled on the downtown corridor,” resident LesPierre Streeter said during public comment at a city council meeting in May. “You took no consideration of how it affects seniors, how it affects the disabled to have to travel an extra half a mile to three quarters of a mile in order to take the bus.”

“On the way down here today, I noticed the sign. ‘Henderson. A wonderful place to live.’ Unless you’re handicapped or disabled or homeless,” resident Richard Dover told the council. 

“While the relocation of any stop always has a negative impact on riders, in this instance, the walking distances to alternative stops are not outside our typical service standards,” Angela Castro, deputy chief executive officer of the RTC said via email, noting one stop is .33 miles from the removed stop, while the other is .22 miles farther.  Castro says the bus stop locations meet American Disabilities Act requirements.

“The new location is more centrally located in the heart of downtown Henderson, with accessibility to City Hall and the Justice Facility,” Henderson spokeswoman Madeleine Skeins said via email. “This enhancement will ease traffic congestion and offer additional parking for local businesses and events at Water Street Plaza.”

Development delayed

Strada, the developer of the Waterfalls, which is projected to have 110 hotel rooms and 225 residences, meeting rooms, and offices, according to its website, has yet to purchase the two-acre parcel across from the Motel 6.

“We’re 50% through construction documents and putting together the capital stack on it,” says Wucherer of Strada. “We should be moving forward sometime in the fairly short future.”

Strada associate DTH 215 Venture LLC filed for bankruptcy protection in June on the Waterfalls’ sister project, the Watermark, a seven-story mixed-use Water Street project that was slated to open in 2022. 

The $50 million project has liabilities between $50 and $100 million, according to court documents. 

“I’m not going to lie,” Wucherer told the Current. “The Watermark project is consuming time on our side on a project that, frankly, should have been open by now, but we’re certainly moving forward with the Waterfalls and our quest to put more people on Water Street. We do agree with the city’s vision for what Water Street wants to be, and are glad to be part of it.”