New Frontier to be imploded this summer

Monday, Jan. 3, 2000 | 12:04 p.m.

Real estate developer Phil Ruffin said today he plans to implode his New Frontier hotel-casino on the Las Vegas Strip and replace it with a $700 million San Francisco-themed resort.

Two years after spending $165 million to acquire the aging, 1,000-room hotel-casino, Ruffin has decided to raze the structure and replace it with a sparkling new property called "City by the Bay."

The new resort, scheduled to open in fall 2002, will include replicas of such noted San Francisco landmarks as Lombard Street, Coit Tower, Alcatraz Island, Fisherman's Wharf and several restaurants.

The 2,512 rooms will include 400 suites, and the 120,000-square-foot casino will offer 100 table games and 2,500 slot machines. A water-filled "San Francisco Bay" fronting the Strip will feature sea lions, boats and a wave-making machine.

Ruffin said the New Frontier is one of the few hotel-casinos on the Strip that has water rights to build such a facility.

"We have to do this to compete," Ruffin said. "The Strip won't be the same 10 years from now as it is today. Half of it will have to change to continue to draw new visitors."

Ruffin said he expects the new resort and other projects under consideration just north of Spring Mountain Road will increase the energy and entertainment levels needed to draw more visitors to that portion of the Strip.

South African billionaire Sol Kerzner's Sun International Hotels Ltd. has yet to announce plans for developing the Desert Inn site across the Strip from the New Frontier once Sun acquires it later this year. And Boyd Gaming Corp. is considering options for a major make-over of the Stardust hotel-casino just north of Ruffin's property.

Ruffin will use about 25.5 of the 41 acres he owns at the New Frontier site to build the new resort, leaving the remaining acreage for further development.

He said he'd rejected an offer from a European firm that wanted to buy the property. "We'd have made a very nice profit," he said, "but that would have taken us out of Las Vegas. I decided for my family that this would be a nice long-term project."

Ruffin said he plans to implode the existing structure in June or July and lay off most of the property's 900 employees. But they'll have first shot to be among the 3,000 workers needed to staff the new resort, he said.

His purchase of the Frontier hotel-casino in January 1998 ended a bitter six-year strike against former owner Margaret Elardi by the Culinary union.

Ruffin said the new facility will cost between $650 million and $700 million and is expected to generate annual cash flow of $125 million to $150 million, more than enough to cover anticipated debt service of $70 million a year.

Financing will include an equity contribution from Ruffin, plus bank and publicly traded debt. Ruffin said he expects to have "firm commitments" for the funding in 30 to 45 days.

Ruffin is sole owner of a diverse real estate, lodging, manufacturing, energy and retail conglomerate based in Whicita. He owns 13 hotels with 5,000 rooms, including the Crystal Palace resort in Nassau.