Neonopolis seeking new direction until finances are straightened out

Erin Neff

Friday, Nov. 26, 1999 | 10:26 a.m.

Today marks what many consider the busiest shopping day and beginning of the bustling holiday movie season.

So it's little wonder that downtown's planned Neonopolis entertainment center had hoped to open the day after Thanksgiving next year.

But the bankruptcy of its anchor tenant, Mann Theatres, coupled with rumored leasing trouble have left the opening date a mystery and raised questions about whether the $99 million complex will be more boondoggle than boost to a sagging downtown economy.

Last week developers broke ties with Mann when a Delaware bankruptcy court terminated the company from the Neonopolis lease agreement. Rob Snowden, spokesman for World Entertainment Centers, the company developing Neonopolis, heralded the break as "freedom from being encumbered in lengthy bankruptcy proceedings."

Mayor Oscar Goodman was also elated at the news, but for a decidedly different reason.

"Now it gives my administration the opportunity to put in projects that we think are best for the city," Goodman said. "One movie theater is fine, but there are other projects more interesting and enticing."

Neonopolis plans had called for the third floor to be occupied largely by Mann Theatres' 11 movie screens. With Mann now out of the picture, Snowden said he is looking for another anchor theater tenant to take its place in the center under construction on Fremont Street between Fourth Street and Las Vegas Boulevard.

After the project was scaled back from its original 264,000 square feet, Mann was slated to fill 57,000 square feet of the redesigned 205,000-square-foot center.

"Our commitment right now is to get a movie theater committed to the project," Snowden, executive vice president of WEC, said.

Goodman disagrees with that philosophy and hopes Neonopolis instead takes a more residential-friendly approach by including a martial arts studio, a fitness center or other similar activity he said will keep people downtown after working hours. He even suggested the possibility of attracting a casino.

"We need to make downtown a place that's different," Goodman said. "We don't have to copy Coco Walk."

Coco Walk in Coconut Grove, Fla., is the successful retail entertainment model Snowden helped develop and the shopping center deemed the model for Neonopolis by World Entertainment Centers.

Goodman's criticism of Neonopolis began shortly after he took office in June and read newspaper reports of the developer's apparent difficulty leasing the massive center to prospective retail tenants and restaurants.

Although Goodman has been assured that leasing agreements are under negotiation, his latest comments appear reflective of his continued uneasiness with the project.

"There's so much more we can do there," Goodman said.

Snowden said he is confident a new theater tenant will be signed early next year, although he would not disclose with whom or how many theater operators Neonopolis is speaking.

"There's more than one," Snowden said. "Hopefully by next century we'll be able to announce that."

Snowden said he cannot comment on specific details of leasing negotiations that Retail Estates -- the company hired to lease Neonopolis -- is conducting because of stiff competition from retailers on the Strip looking to sign the same clients.

Mike Forche, president of the City Centre Development Corp., said he isn't concerned about the delay because the city's financial interests in this project are secure. The CCDC is the private-sector arm of the city's redevelopment agency.

In about two weeks a city-hired contractor will finish work on the two-story underground parking garage on top of which Neonopolis is supposed to be built. The garage is anticipated to cost about $14 million.

After construction is complete, a structural engineer must certify that the garage is suitable for construction of the center. Within 90 days of that certification, construction on the retail center must begin, according to the city Redevelopment Agency's contract with Prudential Insurance Co. of America -- the project's financial lender.

"At that point in time we cash the $9 million letter of credit we are holding," Forche said. "Then they have 90 days to start construction on the retail."

What if they don't?

"If they don't, we basically have $9 million of their money and we have to decide whether to go ahead," Forche said. Prudential representatives will meet with Goodman, Forche and WEC on Monday to express their concerns about the project.

Snowden said as soon as a theater tenant is signed, the project could be redesigned to that anchor's wishes and immediately built. The construction timeline on the retail portion is 12 months.

"I just think Prudential's going to continue on and work the deal as hard as they can," Forche said.

Mark Paris, president and CEO of the Fremont Street Experience -- a private, for-profit company made up of downtown casino owners -- said he remains confident in Neonopolis' future.

"The theater thing took a hiccup but none of the people I talk to are concerned," Paris said.

The Fremont Street Experience, a canopy-covered pedestrian mall with nightly laser light shows designed to keep tourists downtown, is viewed by many city taxpayers as a waste of their money.

The city spent $23 million of taxpayer money on a parking garage adjacent to the Experience, which draws crowds but hasn't proved the salve for the aging downtown casinos' financial wounds amid heightened competition from the Strip.

In January 1998 the City Council voted to provide $32 million toward the project for land acquisition and an underground parking garage for the Neonopolis project. Critics again cried foul, claiming city funds weren't needed for another downtown parking garage.

During the International Council of Shopping Centers annual convention in Las Vegas this past May, WEC found itself awash in a competitive sea of planned retail complexes.

TrizecHahn Development Corp. of San Diego unveiled details for Desert Passage, a 462,000-square-foot collection of specialty shops, exotic boutiques and restaurants at the new Aladdin hotel-casino.

The Rouse Co. of Columbia, Md., is expanding its Fashion Show Mall on the Strip to more than 1.8 million square feet. Rouse also said Lord & Taylor, Robinsons-May and Dillard's would be anchor stores in the Trails Village Center, the name selected for its new Summerlin mall, which will open in spring 2001.

Forest City Development Co. of Cleveland announced a 90,000-square-foot addition to the Showcase Mall adjacent to the MGM Grand.

The recent openings of The Venetian, Paris, Mandalay Bay, Bellagio and the Resort at Summerlin also cut into WEC's pool of prospective tenants.

Still, Paris said he's talked with retailers ready to commit to Neonopolis.

"There are some real exciting things coming," Paris said without disclosing any tenants.

Retail Estate refers all questions about its leasing efforts to Snowden.

One local businessman who is considering leasing space in Neonopolis said he was stunned by the proposed rent costs and has not yet decided whether to ink a deal.

"They're charging rates comparable to The Forum Shops (at Caesars Palace)," said the business owner who asked not to be named. "This is downtown, not Caesars Palace."

Snowden would not comment on specific leasing strategies, including rental rates, but did say all prospective tenants are being promised that a movie theater will anchor the center.

"We're telling them that on opening day, whenever that day will be, a theater will be in there," Snowden said.

City Councilman Gary Reese, in whose ward Neonopolis is planned, said he believes Neonopolis will succeed despite the loss of Mann and an uncertain future theater tenant.

"Today I'm more confident than ever in Neonopolis," Reese said. "You can never really control other businesses and bankruptcies."

Mann's parent company, WestStar Cinemas, filed for bankruptcy protection from creditors in September.

"Prospective tenants understand the reason," Snowden said. "It hasn't affected the leasing one iota."

Robert Gorlow, WEC president, referred all questions to Snowden. However during May's International Council of Shopping Centers convention, he said Neonopolis was more beholden to tourist numbers than to Mann.

"Nine million people will already be visiting the Fremont Street Experience," Gorlow said at the time. "That attraction is our top anchor."

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