Dermody files suit to halt brothel construction in Northern Storey County

VIRGINIA CITY -- Another Tahoe Reno Industrial Center landowner has sued to stop a brothel in northern Storey County.

DP Partners, an industrial real estate development company that owns 157 acres in the center, is seeking a writ of mandate in Storey County's District Court on Friday.

The complaint charges that proper procedure was not followed in the licensure of a brothel in early January and the petition for writ seeks to halt construction of the brothel, according to Storey County Clerk Lorraine DuFresne.

Storey commissioners Greg "Bum" Hess, Bob Kershaw, Chuck Haynes and Storey County are named in the action. Hess said the county has done nothing illegal and called the lawsuit a stall tactic.

"Mike Dermody (of DP Partners) is trying to run the county and when he doesn't get his way, he will sue," he said.

Known as Wild Horse Canyon Ranch and Spa, the brothel will be located in Storey County's river district, not far from the center. Businesses contend the presence of the brothel could hurt property values. The brothel could end up costing the county a lot of high-end business and a substantial amount of money, they claim.

Kershaw said Storey officials have to follow the law and if they don't comply, they can be sued.

"It's not my job to determine if the brothel will hurt their business," he said. "I can't deny a license just because the people around it don't like brothels."

Lance Gilman, owner/developer of Tahoe-Reno Industrial Center, is also owner of the proposed brothel. He said grading for the brothel site has started and construction will begin in three weeks.

The suit comes on the heels of another filed Jan. 16 in U.S. District Court by Kal Kan Foods and Roybridge Investments against Storey County and its commissioners. The suit charges the brothel licensure process was "arbitrary and capricious" and asks the court to void the license for the brothel.

Gary Duhon, attorney for all companies involved in this suit, earlier explained some of the concerns. He could not be reached for comment Friday.

"We thought federal court was appropriate because this issue has dramatic impact on economic diversification in all of northern Nevada," he said earlier. "One of the concerns expressed by our clients was that the blue chip companies interested in the complex will be discouraged by the presence of the brothel. It creates an image in the mind of these companies, reflecting on the area as a whole. Northern Nevada was recently complimented concerning its business development in the Wall street Journal. This a black eye for the entire region."

Gilman challenged that philosophy, saying that if the brothel were bad for business, he would stop construction.

"This is a gaming state with a tax system and funds primarily come from tourist revenues. We attract companies to this state because they don't have to pay corporate or state income tax," he said. "We have a structure that allows us to subsidize them and now they want to cut back those revenues to the counties, the ones that furnish them that break."

He said the combined annual tax revenues from these businesses probably isn't $800,000 and the industries demand a lot of infrastructure, like fire services, an expensive commodity for Storey County. One brothel, on the other hand, can generate $500,000 in tax revenues without the infrastructure demands.

Alleging their property values will decrease because of their proximity to the brothel, DP Properties, Roybridge Investments and Kal Kan all filed for tax relief in Storey County Jan. 15. An appeal by Alcoa Inc. followed Jan. 25. All of the companies are located in Storey County's new industrial complex except Kal Kan, which is nearby.

"They have a right to protest property taxes," Kershaw said. "It may very well be underestimated as it is."

Gilman also noted there are five established brothels around the Fernley area in nearby Lyon County.

"For them to say that corporate America can't coexist within our revenue resources is total nonsense," Gilman said. "All those businesses are successful today and have brothels around them."