Eminent domain may be imminent to make way for Neonopolis

Denise Cardinal

Thursday, Feb. 19, 1998 | 10:11 a.m.

Two businesses that are leasing property downtown are holding out against the city's plan to purchase the property to make way for the $84 million Neonopolis @Fremont Street retail complex.

Once again, therefore, the city is talking of taking over the properties using its powers of eminent domain. Its use of these powers in the past during the development of the Fremont Street Experience landed the city in legal trouble and generated bad press locally and nationally.

The difference this time, however, is that the city has binding agreements with the owners of the property that would result in clean sales. The two businesses, Woolworth's and Rancho Market, are leasing space from the owners and are clinging to their lease agreements.

The city made an agreement with the Neonopolis developer to assemble the land for the project by late March and build a two-story, subterranean parking garage. The estimated cost to the city is $40 million.

All of the affected property owners agreed to sell their parcels. But Woolworth's and Rancho Market are still negotiating the buyout of their lease agreements.

With the deadline approaching, and as a safeguard against losing the redevelopment project, the city attorney's office filed papers that will lead to eminent domain proceedings if the negotiations are not soon completed.

"The City Council has an obligation to acquire the property and to negotiate the leasehold agreements," City Attorney Brad Jerbic said. "We have to meet deadlines and we're fulfilling our obligations under the agreement."

Jerbic said both tenants received letters last week notifying them of the deadline requirements and the chance of a lawsuit being filed if agreements are not soon reached.

Even though Woolworth's itself is no longer in its space, having gone out of business last fall, under its current agreement with the property owner it could could lease its space out.

Rancho Market's operator, Wendell Tobler, just hasn't agreed to what the city's buyout of his lease should be. He has about a year and a half remaining on his lease.

Previous attempts at eminent domain resulted in a public relations nightmare for the city. It recently spent millions settling lawsuits with the property owners of lots across Fremont Street from the Neonopolis. After using eminent domain to acquire the land to build the Fremont Street Experience parking garage, the courts ruled the city improperly used its power.

Neonopolis will house retail shops, restaurants and a 24-theater movie complex at the northwest corner of Fremont Street and Las Vegas Boulevard. It's being developed by World Entertainment Centers out of Atlanta and is scheduled for completion in late 2000.