Proposed land deal could delay new Station casino

David Strow

Wednesday, July 5, 2000 | 10:51 a.m.

A land deal being engineered in North Las Vegas could result in a delay in the development of a controversial North Las Vegas hotel-casino by Station Casinos Inc.

Station has previously announced plans to develop a $100 million to $150 million hotel-casino in North Las Vegas, its second in that city. As it now stands, the property would be developed on a 34-acre site just south of Craig Road on Martin Luther King Boulevard.

Though this land is zoned for gaming, construction must be finished by the end of 2002, or Station will lose the right to build a hotel-casino on it.

This deadline would not be the case in the land deal under discussion. A group of unidentified investors, represented by Las Vegas attorney Stan Parry, is attempting to acquire the 173-acre Craig Ranch Golf Course on Craig Road, just west of Martin Luther King. In connection with this purchase, the group wants the city of North Las Vegas to zone 30 to 40 acres of the course for gaming use -- and transfer this land to Station for its planned development.

City officials have expressed willingness to go along, but only if gaming entitlements are surrendered on Station's current land parcel.

"Frankly, this is something the city brought to us, and we are evaluating it," said Glenn Christenson, Station's chief financial officer. "It would involve extending the time period indefinitely as to when we could develop the property."

But Christenson emphasized no decisions have been made.

"The most important thing is to have the best location for a (hotel-casino) in that part of North Las Vegas in the future," Christenson said. "We have to be convinced that is the best site available. We're working with the city to evaluate that situation.

"It's a big decision to move from one location to another," Christenson said. "We think the site we have (already) is an excellent site."

Gaming analysts, however, believe moving to Craig Road -- and delaying the project's development -- would be the more logical move, particularly since Station will be acquiring the nearby Santa Fe hotel-casino.

"If that land swap happens, it would be a win-win situation for all parties," said Robin Farley, analyst with PaineWebber. "It would allow Station to develop a property based on what they see in the market rather than the zoning expiring. It would make happier this group of local opponents to the project who prefer (the Craig Road) site.

"It doesn't mean they won't build, but this gives them time to evaluate what they'll have in that part of the market. When a company is deciding whether to build or not, you prefer to have the decision driven by reasons other than zoning issues."

Another key to waiting is preventing the new property from cannibalizing business at Santa Fe and Texas Station, said Lehman Bros. analyst Stuart Linde.

"Those are pretty close locations," Linde said. "They could let the population of that quadrant grow to the level where additional capacity is warranted. If they didn't own Santa Fe, they could steal (business) from Santa Fe."

Moreover, Linde noted, Station doesn't need to rush. The number of sites that can be used for neighborhood casinos is limited by law, preventing a new operator from preempting Station's plans to build in the North Las Vegas neighborhood.

"There's a limited number of land slots, a limited amount of new development," Linde said. "If you know you can monitor effectiveness the developments going up, why wouldn't you do that?"

But both analysts said Santa Fe, in and of itself, won't present a cannibalization concern to Texas Station.

"The total amount of capacity (in North Las Vegas and northwest Las Vegas) is not increasing," Farley said. "If anything, you can take costs out, and that's going to be a positive for Station.

"It doesn't bring new capacity into the market that wasn't there before. It makes that capacity more rational."