Neonopolis developers pay off parking garage

Erin Neff

Wednesday, May 17, 2000 | 11:18 a.m.

The city of Las Vegas cashed a $9.6 million letter of credit Tuesday from Neonopolis developers after weeks of haggling over the money.

The city heralded the move as "a significant milestone" even though the money was technically supposed to be paid March 22 when an engineer certified that an underground parking garage built by the city was completed.

"I think it's great," said City Manager Virginia Valentine. "I think if they had any doubt in their minds, they wouldn't have wired us the money today."

The money flowed easily into the city's coffers in part because of specific demands outlined by Mayor Oscar Goodman on Friday.

In a May 12 letter to Neonopolis representatives, Goodman demanded Prudential pay $9,580,000 to the city Redevelopment Agency by 5 p.m. May 16.

Three hours before the deadline, Prudential's leasing agent Joyce Storm, faxed a letter agreeing to free up the money. She also said that developers would not need a 90-day time extension.

"Thank God," Goodman said late Tuesday afternoon, wiping his hand across his brow as if ridding his forehead of sweat. "It's great that we got the money."

For weeks Prudential and city representatives bickered over whether the parking garage was completed and about how much was owed the city.

Under terms of the development agreement between the city and Prudential's development subsidiary, World Entertainment Centers, the city was responsible for building the underground parking garage.

Once the garage was finished, Prudential was supposed to pay the city the money for the garage -- originally $9 million. World Entertainment then had 90 days to begin construction of the three-story entertainment center on top of the parking garage.

But last week Prudential sent a letter to the city asking officials to hold off on cashing the letter of credit and to issue developers a 90-day extension on construction.

When the City Centre Development Corp. received the letter, board members of that private sector redevelopment committee worried that Prudential was just trying to stall the project.

Neonopolis was originally supposed to open on Thanksgiving Day, 1999 where Fremont Street meets Las Vegas Boulevard. However, anchor tenant Mann Theaters pulled out of the project last year when its parent company filed for bankruptcy protection.

Developers have had no success finding a replacement theater tenant to anchor the project, leaving the $99 million center without any of the businesses supposed to draw tourists and residents alike back downtown.

Eastman Kodak Co. of Rochester, N.Y. is reportedly interested in working with a theater company to test some of its state-of-the-art digital film technology. But Kodak can't do anything until a theater tenant is signed.

Valentine said she thinks Tuesday's move by Prudential shows that the company is making progress finding a replacement tenant.

"Until there's an anchor tenant, the rest of them don't sign," Valentine said.

During last Friday's teleconference, Goodman offered Prudential a 90-day extension with several caveats. One such term required World Entertainment to pay the city $450,000 to cover the interest on the bonds the city issued to finance its share of the project -- about $32 million.

In her letter Tuesday, Storm said Prudential would not be seeking the 90-day extension.

As a result, construction on the entertainment center is now supposed to begin July 18.

Prudential is still disputing about $580,000 in added costs to the parking garage. Although Prudential paid that amount on top of the original $9 million letter of credit, the company does not believe it is responsible for change orders that added to the cost.

When Prudential originally asked the city not to cash the letter of credit, City Centre Development Corp. board members feared the request signaled the troubled project was headed to court.

Now city officials say that even if Prudential does back out of the project, the city has its money, valuable land and a two-story underground parking lot.

Erin Neff

covers Las Vegas government for the Sun. She can be reached at (702) 259-4062 or 229-6436, or by e-mail at erin@lasvegassun.com.