Neonopolis project at critical stage

Erin Neff

Monday, July 24, 2000 | 11:28 a.m.

A planned entertainment complex in downtown Las Vegas besieged with setbacks may finally be nearing the announcement that will make or break the $99 million project.

Sources tell the Sun that Neonopolis developers are negotiating with Resort Theaters of America to anchor the project that is more than 18 months behind schedule.

The possible breakthrough is sorely needed as developers face tight city deadlines to construct their end of the private-public partnership project -- a three-level entertainment center with shops, restaurants and movies.

Construction was either required to start last Tuesday or by Aug. 16.

The reason for the nebulous starting date stems from the many different groups working on the project. World Entertainment Centers is the developer, Prudential Insurance Co. of America is the financier and JSS Advisers is leasing the center. And that's just the private sector side.

The city has already completed a subterranean, two-level parking garage at a cost of $32 million on the block-long expanse at Fremont Street between Fourth Street and Las Vegas Boulevard.

The mayor's office and the private City Centre Development Corp. have played roles in the Neonopolis negotiations in addition to the city's redevelopment staff.

"I heard a rumor that we were going to hear a special announcement this week," Mayor Oscar Goodman said last Thursday. "But being as there's just one day left, and I haven't heard anything, I don't think it's likely."

Joyce Storm, the project's leasing agent, did not return calls.

Others familiar with Neonopolis say a letter of intent from Resort Theaters is imminent -- if not already in place.

"As you know we have to remain silent on all pending negotiations," said Robert Gorlow, president of World Entertainment Centers. "But things look very promising, and we remain very optimistic that we'll be able to announce several leases in the near future."

Resort Theaters, based in Los Angeles, is a cinema chain incorporated in 1998 and headed by Brad Krevoy and Ron Leslie, the former president of AMC. The company is backed by New York investment group Crown Capital, Richland Gordon & Co. and by Swedish media conglomerate Svensk Filmindustry.

The chain acquired all of the Metropolitan Theater Corp.'s Palm Springs, Calif.-area cinemas, just finished a five-plex in Aspen, Colo., and plans a 10-screen theater in Park City, Utah -- home to the Sundance Film Festival.

In some Resort Theaters cinemas, state-of-the-art technology couples with reclining leather seats, a restaurant serving gourmet entrees and a supervised children's play area.

Mark Paris, chief executive officer of the Fremont Street Experience, said he could not comment on the potential theater tenant. He did say, however, that he has seen new plans for the theater portion of Neonopolis, increasing the number of screens from 11 to 14 and adding 20,000 square feet of retail space outside the theater.

Neonopolis, originally supposed to open Thanksgiving weekend of this year, has been without an anchor tenant since September. That's when Mann Theatres dropped plans to develop 11 screens because of the bankruptcy of its parent company, WestStar Cinemas.

With construction not even started, it's unlikely the project will open now before 2002.

Even before the project lost its anchor, leasing the other restaurant and retail space was a hard sell, in part due to Strip-comparable rental rates. And with so many new retail centers on the Strip, Neonopolis has a tough time competing with the likes of The Aladdin's Desert Passage, Caesars Palace's Forum Shops and others.

Neonopolis is modeled after CocoWalk in metropolitan Miami. CocoWalk, which opened in 1990, was the first urban entertainment center, coupling open-air activities with themed restaurants and retail.

CocoWalk recently sold at a $10 million loss, calling into question the validity of such urban entertainment centers, according to an article in the trade magazine Shopping Centers Today.

Goodman downplayed the article as it relates to Neonopolis, saying downtown Las Vegas has the right mix of tourists, workers and residents in proximity to freeways to make the project a success.