Jul 062014

By Rosalind S. Helderman,

SEARCHLIGHT, Nev. — Harry Reid grew up in a shack in this dusty old gold-mining outpost in the middle of the desert.

As he rose to political power, he amassed personal wealth and began living part time in a condo in Washington. But he never stopped holding tightly to a gritty public persona grounded in his Searchlight roots — building a house here and keeping the town his official residence.

Along the way, a tiny town that thrived only briefly during a gold rush more than a century ago gained bragging rights as home to the most powerful man in the U.S. Senate.

But this month has brought a remarkable turn of events for Searchlight and its population of a few hundred: A new gold rush has reignited investor interest here. And Reid, whose land quite literally sat on a gold mine, has seized the opportunity to cash out of the town at the center of his political identity.

He announced last month that he had sold his house along with 110 acres of Joshua-tree-dotted, rocky land to Nevada Milling and Mining, a small South Dakota company that bought an abandoned mine next door in 2010 and has high hopes for a new era of gold production.

The $1.75 million deal was a handsome payout for Reid (D), who is paid a Senate salary of $193,400 per year. Nearly all of the land had been in Reid’s family for decades, much of it originally deeded to his father and some bought by Reid from family members. His brother will continue to live in Searchlight, where Reid will also retain some holdings.

Reid, 74, said he and his wife, Landra, wanted to be closer to their children and grandchildren, as well as his political base in Las Vegas, an hour’s drive across the desolate Mojave Desert.

Now Reid, who as Senate majority leader is presiding over the Democrats’ efforts this year to retain control of the Senate and looking ahead to his own potentially difficult reelection in 2016, will need to adjust the carefully tended life narrative he has presented to voters since he entered politics in the late 1960s. And Searchlight is pondering a new but possibly brighter future without its native son.

“We’re all very, very sad to see Harry go,” said Reggie Doing, 32, whose family owns the Searchlight Nugget Casino and Restaurant, which offers 10-cent coffee, $1 beer and is the town’s main gathering place. But he said the return of gold mining marked by the sale could renew the town. “Nothing is guaranteed and nothing is forever. Change can be a blessing.”

A video that Reid recorded to break the news of his land sale to constituents shows the senator lovingly describing Searchlight trinkets he keeps in his Washington office, including an old miner’s helmet with a carbide lamp. “Even after all these years, you can still smell the carbide,” he said, sniffing the item.

“Searchlight is my birthplace, it is my home, my favorite place in the world,” Reid said in a statement provided to The Washington Post. He called the sale a “a very difficult decision.”

The return of gold mining to Searchlight is part of a new rush throughout Nevada made possible by a spike in gold prices following the economic crash of the last decade, when gold was thought to be a safe investment in a volatile financial world. The price of gold soared to over $1,900 an ounce in 2011; it has now settled back to about $1,300 an ounce, still a historically high price.

New technologies have allowed gold-mining companies to leach tiny particles of gold from ore that would have been considered of far too low-grade to be worth mining in Searchlight’s heyday. Mining, along with gambling, is one of Nevada’s most profitable industries, with nearly all of the gold produced in the United States lifted from beneath the state’s rocky deserts.

Searchlight has seen past attempts to revive its once-lucrative mining, but has in recent years been plagued with more scam artists than gold strikers. Town historian Jane Overy recalled one man nicknamed “Santa Claus” by residents, who showed up around Christmas carrying a suitcase full of cash and declaring he would invest in a gold mine. He was gone in a few months.

But Nevada Milling and Mining has been a steady presence since it bought 88 acres next to Reid’s property in 2010. The company says it has invested at least $15 million in the site, which included a mill and an abandoned mine, and it plans to begin mining operations there this month. Newly installed machines will crush 200 tons of rock a day, said mine manager John Hayes, enough to rival the best of Searchlight’s boom years.

The company inherited oilskin-page records from the old mine site dating from 1904 that provide detailed descriptions of deposits that seemed useless in the old days but are now likely to be lucrative. A new bank safe, its tag not yet cut off, sits inside a concrete-walled room awaiting newly minted gold bars.

Reid’s property is valuable to the company for potential drilling years from now and for its strong well, which could be tapped soon to feed the water-intensive mining process, Hayes said.

By Reid’s telling, he did not anticipate the value that would ultimately be assigned to the land holdings he spent years amassing bit by bit.

“I can remember coming back after law school, and the one thing I wanted to do was start buying Searchlight property,” he said in a video clip released to The Post. “And I started that. I would get a little piece, I’d pay some of my uncles $50 a month. So I wound up collecting property. At the time, it wasn’t worth much. But as the years have gone on, it’s now worth more money.”

With land sales in Searchlight largely static for years, there are few recent deals with which to compare the mine’s purchase, said Fred Marik, a real estate agent trying to sell other land in Searchlight.

The sales price is about $700,000 more than the value assessed by Clark County, although according to the assessor, that value does not account for the water underground or possible mineral deposits.

The investors behind Nevada Milling and Mining issued a statement saying the purchase was negotiated with Reid “at arms-length.” It took into account the need to buffer nearby neighbors from the sound of dynamite blasts at the company’s new mine, as well as water and mineral rights. The value of Reid’s land was “based on numerous factors” that the company considers “proprietary and confidential,” the statement said.

The company’s investors include Roland Gentner, a South Dakota businessman who used to run a company that sold slot machines, and James Oegema, president of a South Dakota investment company with casino and car-dealership holdings, according to public records.

They declined to be interviewed, but George Garcia, a development consultant working on the project, said the company wanted to buy Reid’s land before the new mine starts pouring gold and causes a spike in prices throughout the area.

“The whole county is in a stir,” he said. “It’s like any gold rush. There’s always an element of people who think they can make money.”

“Something is worth what someone is willing to pay for it,” Hayes added.

Asked by the Las Vegas Review-Journal following the sale if he had gotten a “sweetheart deal,” Reid responded: “I hope I did. That’s what this great free enterprise system is all about.”

“They wanted my property,” he continued. “They wanted to develop what I had, so we made a deal.”

Adam Jentleson, a spokesman for Reid, pointed to the company’s 2010 purchase of the mine property next door as the most similar recent sale in the area. There, the company paid $1.5 million more for fewer acres.

“As with any sale of private property, there was a negotiation and this was the final price agreed on by both parties,” Jentleson said.

Reid, who lives in a Ritz-Carlton condo in Washington and who lists his net worth at between $2.8 million and $6.3 million, has profited from lucrative land deals in the past. Some of those deals have been controversial.

One deal drew scrutiny when he reaped a $1.1 million windfall on a 2004 sale of land he did not personally own. He had transferred the parcels to a holding company three years earlier, which gained him tax benefits, but had not publicly disclosed the change.

Members of Congress are free to make private real estate investments, although they must disclose the value of their land holdings, within wide ranges.

In 2005, Reid sponsored an earmark that helped build a bridge near property he owned in Arizona. The bridge could have raised the value of the land.

The Searchlight deal is more personal for Reid.

He called Judy Hill, a longtime friend and former Searchlight postal worker, to inform her of the sale before it went public, Hill said. On the phone, he described the decision to leave as one of the hardest in his life, Hill recalled.

Reid had made the place famous by frequently referring to its scrappy past in speeches on the campaign trail and on the Senate floor. He talks about how his mother did laundry for desert brothels while his father toiled underground during gold mining’s less lucrative days. Reid’s father’s grave in the town’s grassless cemetery is marked with the etching of a pickax to mark that time.

Callers to his office are greeted with voice mail announcing, “This is Harry Reid of Searchlight, Nevada.” And Reid wrote a detailed 189-page book, “Searchlight: The Camp That Didn’t Fail,” laying out the town’s up-and-down history of gold mining.

Reid’s sale is only one of a number of changes that will remake the town in coming years. The Nugget has been on the market since last year, with an asking price of almost $5 million for the casino and other surrounding land. Doing said he hoped Reid’s sale leads to an increase in property values in the whole area.

As for Reid’s two-bedroom, 3,000-square-foot house — a gift from his wife built in the 1990s — it may become the mine’s offices. Another option: Mine manager Hayes might move in with his family.

“They can do what they want with my house,” Reid said, “since they bought it.”

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