LVCVA weighs move after court victory

Tuesday, Oct. 12, 1999 | 10:57 a.m.

The Las Vegas Convention and Visitors Authority is attempting to find out whether it can proceed with a bond issue to finance an expansion project following a favorable ruling Monday in a suit filed by the Venetian hotel-casino.

LVCVA board members met for a previously scheduled meeting today and did not extensively discuss the proposed issuance of $150 million in revenue bonds to build the 1.3 million-square-foot South Hall expansion.

The LVCVA staff and board members are waiting for word from their bond counsel on whether the expansion or the bond issue have to be approved anew or whether they can proceed in the wake of District Court Judge James Mahan's denial of a complaint from the Venetian.

The Venetian, which argued unsuccessfully that LVCVA was proposing special general obligation bonds requiring a public vote and not revenue bonds, said Monday it would appeal the judge's ruling.

But possibly a bigger issue is whether bond underwriters would agree to proceed with the bond sale in the face of an appeal of Mahan's ruling.

Bond underwriters Morgan Stanley Dean Witter, New York, delayed issuance of bonds when the Venetian filed suit in July. They also expressed concern about legislation introduced by Majority Whip Tom DeLay, R-Texas, that would tighten restrictions on tax-exempt bonds issued by state and local governments.

A spokesman for Rep. Jim Gibbons, R-Nev., said DeLay's bill is "dead in the water."

The Venetian, meanwhile, plans to move ahead on its appeal to the Nevada Supreme Court.

David Friedman, assistant to Sheldon Adelson, chairman of the board of Venetian owner Las Vegas Sands Inc., which brought the suit, said in a statement there were still many unanswered questions raised in court that haven't been answered to the company's satisfaction. Las Vegas Sands operates the Sands Expo Center, which is attached to the Venetian and competes with the convention center.

"Because of the LVCVA's financial mismanagement, our tax dollars are in danger of being needlessly wasted," Friedman said in the statement issued within minutes of the issuance of Mahan's decision. "In recent months, the foundation on which the LVCVA hoped to finance the expansion has disappeared. Many of the shows they had hoped to fill their new space with re-signed with the Sands Expo Center and did not leave Las Vegas."

Friedman explained that the Sands Expo Center has signed the Western Shoe Associates, the Jewelers' Circular-Keystone Show, three shows affiliated with the Automotive Parts & Accessories Association and the Men's Apparel Guild in California to five-year contracts.

"This case and the issues that surround it are too important to the people of Clark County," Friedman said. "We must appeal Judge Mahan's decision or the real consequences will be suffered by the taxpayers of Clark County."

The LVCVA issued a two-sentence statement and a spokesman said the LVCVA board of directors would meet to determine what it would do next to get the two-story South Hall expansion on track.

"We are pleased with Judge Mahan's decision in this case," said Rob Powers, a spokesman for the LVCVA. "His decision will allow us to move forward with the expansion of the Las Vegas Convention Center, a project which is in the best interests of the entire community."

Friedman said the Venetian is leaving its options open over whether the company would seek a court order blocking the sale of bonds pending the appeal.

Mahan's nine-page decision not only addressed the Venetian's complaint about the financing of the expansion with revenue bonds, but also allegations that the LVCVA violated the state's open-meeting law in approving the convention center expansion.

Mahan said there was "substantial evidence in the record to support the LVCVA's decision to issue revenue bonds on June 22, 1999."

The decision said the LVCVA was on the verge of approving general obligation bonds to finance the project when the Nevada Legislature passed Assembly Bill 554 and it was signed into law by Gov. Kenny Guinn. The new law authorized county fair and recreation boards, which the LVCVA qualified as, to issue revenue bonds that could be secured by room tax receipts -- a new financing option.

"It appears that the Venetian's quarrel is with the Legislature, which authorized the issuance of revenue bonds in AB 554, and not with the LVCVA, which merely availed itself of the amendment ..." Mahan's decision said.

Mahan also said evidence in testimony and court briefs indicated to him that the LVCVA did not violate the open-meeting law. The Venetian had argued that the LVCVA staff had attempted to build a consensus for the expansion plan by conducting a series of briefings for board members.

The Venetian's decision to appeal the case came as no surprise to Mahan, who said he and his staff worked over the weekend to research cases cited by both sides in their arguments. Court presentations by both sides were completed in one day

Mahan said from the bench that he expected the losing side to appeal, a fact not lost by the Venetian, which included some of the judge's remarks in its press release.

"As the judge had himself noted several times during these proceedings, this is a difficult case involving close questions of law which will ultimately need to be resolved by the state Supreme Court," Friedman said in the release. "Therefore, the next logical step is to take Judge Mahan's ruling through the appeal process.

"While the LVCVA initially misrepresented that this lawsuit would be dismissed prior to trial, Judge Mahan ruled this case to have merit and expressed how difficult his decision in this case would be while ruling against the LVCVA's motion to dismiss and motion for summary judgment."

Friedman said the Venetian expects to prevail in the appeal, adding that the company isn't opposed to the expansion as long as it is well planned.

"It is truly sad that we will have to go to such great lengths to force a tax-subsidized government entity like the LVCVA to act in a responsible manner," Friedman said in the conclusion of the release. "We are pleased though that since our involvement in the Las Vegas Convention Center expansion process began, the Venetian has saved the community millions of dollars. We forced the LVCVA to reconsider a prepaid rent financing scheme that would have cost the community millions of dollars.

"In addition, we have brought the LVCVA under a much-needed level of scrutiny. This, perhaps, will force the LVCVA to recognize that they must spend our tax resources wisely and efficiently."