Delays continue at the Venetian

Gary Thompson

Wednesday, June 2, 1999 | 11:04 a.m.

The cost of completing work on the $1.5 billion Venetian hotel-casino continues to run higher than expected, and its $300 million retail complex remains unopened.

In addition, persistent problems with the Venetian life-safety systems have prevented county building inspectors from releasing suites on the three top floors of the resort for occupancy.

That's the picture gleaned from legal documents and government officials willing to talk about the Venetian. Resort executives themselves have either declined to comment or could not be reached for comment. A principal with Blatteis Realty Co., the leasing agent for the retail area, declined comment.

A recent Securities & Exchange Commission filing by Las Vegas Sands Inc., the Sheldon Adelson-owned entity that controls the Venetian through several affiliates, disclosed that the guaranteed maximum price for construction of the main portion of the resort has climbed $18.9 million, to $643.3 million, since the last SEC filing 45 days earlier.

The GMP is the price Adelson has agreed to pay Lehrer, McGovern Bovis Inc. to "substantially complete" construction on the Venetian. The price has been raised several times since LMB won the Venetian contract with a $490 million bid.

In describing the Venetian as a $1.5 billion resort, Adelson and aides have said the cost of land and construction of the casino, suites and other infrastructure would total about $1.2 billion. The other $300 million, they said, would come from the money invested by retail shop and restaurant operators who lease space from the resort.

But so far, the money invested by upscale retailers has yet to yield any returns, and building inspectors said Tuesday it could be weeks or more before any of the outlets in the Grand Canal Shoppes area are opened.

The SEC filing also noted that sometime after March 31, LVSI received $21 million in "indirect contributions" by Adelson. The money was originally allocated for facilities scheduled to be built as part of Phase 2 -- the construction of another 3,036-suite hotel tower, the SEC filing said.

That project, called the Lido, hasn't been financed, though Venetian officials have said construction would begin this summer.

The quarterly SEC filing also disclosed that Adelson had asked the Bank of Nova Scotia to boost its revolving loan commitment by $20 million.

The SEC document also said LMB has submitted bills for $27 million in "scope changes" to the project and may assert additional claims in the future. The SEC filing gave no indication of the potential size of the additional claims.

As with an earlier filing, the latest SEC report noted that LMB had wanted to delay "substantial completion" of the Venetian until June 20, two months after the originally scheduled completion date. But Adelson rejected the request, saying it was nothing more than an attempt by LMB to assert "unfounded" claims for overtime and other costs.

Work has continued on the resort since then, but the SEC filing didn't say whether the Venetian or LMB is paying for it or provide an estimate of the total amount in dispute. An LMB spokesman referred all questions to Venetian officials, who declined to comment or couldn't be reached for comment.

As of March 31, the various Venetian affiliates listed in the SEC filing had combined current liabilities of $154.8 million, including $100.5 million owed for construction. Payments for construction through that date totaled $939.1 million, the filing said.

Adelson and other Venetian officials had often insisted the resort would open "on time and on budget" in mid-April, despite skepticism among visitors they guided around the resort in March. One resort spokesman said 10 restaurants, 35 shops and 95 percent of the rooms would be open by mid-April.

By late March, though, the Venetian had issued a cautiously worded statement saying it "expected" to open by April 14. When the property couldn't pass county inspections because of malfunctioning safety systems, the opening date was postponed until May 3.

Even when that date rolled around, it wasn't certain when portions of the resort could be opened to the public. Celebrities including Sophia Loren and hundreds of reporters brought in to cover the May 3 opening had to stay at neighboring resorts. The two functioning restaurants couldn't serve food to the guests at a charity event, no shops in the unfinished Grand Canal retail arcade were open and only four floors of suites were cleared for occupancy.

Portions of the Venetian finally opened early May 4, and Adelson and other officials pledged that the retail area and most of the suites would be open on or before May 14. But the SEC filing dated May 14 changed the planned opening date for the shops to May 24.

Yet as of today, the Grand Canal shopping mall, which is to house up to 70 retailers, is still apparently weeks away from opening, according to county building inspectors.

"They can't open the retail shops until we've approved the smoke-management system, and they're anywhere from one to two weeks away from that," Building Inspector Jesse Hymer said Monday.

"We've given them authorization to stock merchandise on the second-floor mall level," Hymer said. "But they still have quite a few shops that aren't even leased at this point."

Adelson has scheduled a "grand opening" of the Venetian for June 10-13, but it's still uncertain just what will be open then. Even if the smoke-management system passes muster, the buildout of the unfinished retail and restaurant areas could take months.

As of Tuesday, at least three restaurants and one coffee shop were open. The SEC filing said three more restaurants are scheduled to open by July 22.

Hymer said building inspectors have granted approval for customer use of the pool deck and some of the jacuzzis at the Venetian. But the county still hasn't approved temporary certificates of occupancy for the top three floors of the hotel tower due to problems with dampers in the smoke-extraction systems, he said.