Suit over convention center expansion headed to trial

Friday, Aug. 6, 1999 | 11:44 a.m.

District Judge James Mahan on Thursday denied a motion to dismiss a lawsuit brought by the Venetian hotel-casino against the Las Vegas Convention and Visitors Authority over its $150 million convention center expansion financing plan.

The Venetian suit, filed in July, disputes the LVCVA's ability to use tax-free revenue bonds without a public vote to build a 1.3 million-square-foot convention center addition.

Venetian owner Sheldon Adelson maintains the tax-free status of the convention center presents unfair competition to his privately owned Venetian and attached Sands Expo Center.

LVCVA officials say the suit will delay construction and could cost the city convention business.

Following nearly four hours of sometimes heated legal debate, Mahan ruled Thursday that arguments offered by the LVCVA did not convince him to dismiss the suit filed by the Venetian July 8 and later joined by Nevada Concerned Citizens and private citizen Richard Ziser.

Mahan set an Oct. 5 trial date, but attorneys for the LVCVA are convinced that Adelson got exactly what he wanted -- more delays on the construction of the convention center addition.

"We're very disappointed," said Douglass Mitchell of Dickerson, Dickerson, Consul & Pocker, who served as lead attorney for the LVCVA. "The Las Vegas Convention and Visitors Authority still feels it has fully complied with providing the arguments (to have the suit dismissed). There are no factual issues left to be resolved."

LVCVA legal counsel Luke Puschnig was bitter following Mahan's ruling.

"Do I think we'll be able to finish the addition in time for CES (the January 2001 Winter Consumer Electronics Show)?" Puschnig asked. "No way."

Attorneys Marc Gordon, of Berkley, Gordon, Levine, Goldstein & Garfinkel, and Nicholas Santoro of James, Driggs, Walch, Santoro, Kerney, Johnson & Thompson, filed "friend-of-the-court" briefs on behalf of the producers of CES and the Packaging Machinery Manufacturers Institute.

Gordon and Santoro said because of the potential delay in construction of the convention center addition, CES and PMMI are faced with either relocating their shows to another city or negotiating agreements with Adelson's Sands Expo Center at higher prices.

Gordon said it's likely CES would negotiate with Adelson and pay the higher prices to keep the show, which draws about 100,000 to Las Vegas every January. It's unknown yet what PMMI, which has a large equipment show in Las Vegas in the fall of odd-numbered years, will do.

Both CES and PMMI were counting on the two-story addition to be completed in time for their shows so they wouldn't have to sign long-term contracts with the Sands.

Pushnig said in mid-July that he hoped to have the lawsuit resolved within a month. Mahan's decision to start the trial in October adds another two months to the construction schedule. A 60-day turnaround for a trial is considered an accelerated pace.

Mitchell suggested to the judge that the LVCVA would be ready for trial in two weeks. The Venetian's lead attorney in the case, Stephen Peek, of Hale Lane Peek Dennison Howard & Anderson, said he wanted 90 days to prepare.

Peek, who at one point was admonished by the judge for interrupting the proceeding, was happy with the final outcome.

"We're very pleased with the court's decision," Peek said. "But it's going to take a superhuman effort (to be prepared in 60 days). There are substantial records the LVCVA is going to have to produce (for the trial)."

Peek and Mitchell argued two major points in the proceeding: whether the LVCVA acted within the law in approving the sale of $150 million in revenue bonds to finance construction of the addition and whether the LVCVA conformed to the state's open-meeting law prior to the approval.

The judge's ruling did not make a judgment on either of those points. Instead, it said the LVCVA did not convince him there was enough reason not to hear the merits of the case.

Thursday afternoon's hearing offered a preview of the arguments expected to be made at the trial.

The Venetian team argued that the bonds the LVCVA authorized are actually general obligation or special obligation bonds, since the expansion itself cannot generate revenue until it's complete.

The LVCVA board of directors, Peek said, did not give the public ample opportunity to address the expansion issue and left several questions unanswered about traffic, environmental impacts, parking and the revision of a master plan.

Mitchell countered that new state legislation clearly defines the type of bonds the LVCVA was selling and that the board followed the state law to the letter.

He said there was no violation of the open-meetings law and that the public was given every opportunity to discuss the expansion plan at a special meeting of the board.

Mitchell also said the Venetian's concern wasn't about the bonds or open meetings -- it was about delaying the bond sale process so that Adelson could negotiate leases with trade show organizers who wouldn't be able to get into the convention center expansion on time.

"It's about delay. It's about delay. It's about delay," Mitchell said at one point in his arguments.

Prior to arguments on the dismissal motion, Mahan ruled that Richard McCracken, an attorney for the Culinary Union, could intervene in the case because of the union's interest in jobs at the convention center.

McCracken ripped the Venetian for impairing the LVCVA's credit-worthiness to the benefit of Adelson and the Sands Expo Center.

"How far will Sheldon Adelson go to stop the Las Vegas Convention and Visitors Authority?" McCracken asked.

The Culinary Union and Adelson have been at odds for months, sparring over the issues of union representation at the new hotel-casino and sidewalk ownership outside the resort.

Mahan authorized McCracken to intervene, but warned him to keep his comments to the issues of the case.

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