Las Vegas Sun

March 28, 2024

County OKs razing of DI: Wynn expected to unveil plans for new resort in October keynote address

Nearly one year after shutting down the Desert Inn, Steve Wynn has received county approval to begin the process of demolishing the 50-year-old resort to make way for his latest creation.

But Las Vegas still has some time to wait until that vision becomes reality. Sources are saying Wynn isn't likely to open the new resort until 2005 at the earliest, assuming construction begins next summer.

The Clark County Building Department issued demolition permits to Wynn Resorts in late June, Ron Lynn, acting director, said. The permits allow Wynn to begin nonexplosive demolition of the DI's low-rise buildings, including the DI's casino, Lynn said.

Lynn said Wynn Resorts has indicated its intention to implode the Augusta tower, the older and southernmost of the DI's two high-rise buildings, in October.

Wynn was traveling and could not be reached for comment this morning.

Wynn is scheduled to deliver a keynote address at the World Gaming Congress and Expo in Las Vegas in mid-October. It is widely expected he will unveil his plans for the new resort at that time.

Wynn has not yet applied for a permit to implode the 308-room Augusta tower, but wouldn't have to do so until late August if he was aiming for an October demolition date, Lynn said. However, the demolition permit issued will allow Wynn to prepare the tower for implosion by removing interior walls and other materials, such as glass and contaminants.

Wynn Resorts also has been authorized by the county to demolish the 196-room Wimbledon Tower, located behind the casino; the 32,000-square-foot casino; the DI's spa and the resort's clubhouse.

However, gawkers shouldn't look for a repeat of Wynn's theatric implosion of the Dunes hotel-casino in 1993.

"My understanding is that they're not going to do it as a function, that this was going to be basically a construction process versus an entertainment process," Lynn said.

Currently the buildings on the north end of the complex, built during the resort's 1997 renovation and expansion, are not on the demolition list. That includes the 117-room St. Andrews Tower, the 83-suite Palm Tower, the 11-suite Villa del Lago complex and a high-rise parking garage.

There's still no official word on what the new resort will look like, beyond what Wynn has already said. As of Thursday, the Clark County Planning Commission hadn't received any official plans from Wynn Resorts.

In February Wynn indicated the resort will feature a 52-story, 585-foot tower, with 2,300 all-suite rooms. Wynn also has indicated his plans to build a huge lake at the resort, complete with a water stadium.

"We're using every trick in the book to make it the most delicious experience in Las Vegas history," Wynn said at the time. "It would only take a few minutes (to design) if we copied the Mirage or the Bellagio, but we don't want to copy the Mirage or the Bellagio. We want it to be better."

Since then, Wynn has been silent on his plans.

Wynn is now apparently developing the resort in the style of architect Frank Lloyd Wright, several sources familiar with the plans said.

One source described the as "a lot of water and waterfalls ... a desert natural style, muted colors."

"But with that guy, it could've changed 10 times since then," the source said.

Another source indicated "it sounds like an enhanced Bellagio." The new resort would keep the Desert Inn Golf Course, would include convention facilities and could include residential development down the road.

"He recognizes Monday through Thursday is now important in Las Vegas, and he needs space to capture those meetings," the source said. "Conventions have been the driver of room prices.

"He only knows one (style), and that's the high-end. He's as high-end as it comes. It's over the top."

The target price for the resort appears to be somewhere between $1.2 billion and $1.3 billion. If Wynn began construction next summer, that would put him on target to open the resort in late 2005 or early 2006, sources indicated.

"Look how long it took to plan the Borgata (in Atlantic City)," one source said. "Then you understand if Steve Wynn spends a little more time on preplanning, it increases his odds of coming in on time and on budget. That's important for him, but it's also important for the banks and bondholders."

The Borgata was first announced by Boyd Gaming Corp. and Mirage Resorts Inc. in mid-1998, but construction didn't actually begin until September 2000. The $1 billion resort is set for completion in summer 2003.

Wynn has already brought in Tokyo-based Aruze Corp., Japan's largest maker of pachinko machines, as an equity partner. Aruze plans to invest $260 million in the project for a 50 percent stake; Wynn paid $270 million for the DI in May 2000.

That's apparently all the equity Wynn is looking for, Wall Street sources say. Wynn is in talks with major banks to supply $700 million to $800 million in debt financing for the project. A bond offering may follow, but Wynn isn't actively putting such a deal together.

"Almost every investment bank is interested in speaking to him," one source said. "Everybody who's done the work has concurred it's a great piece of real estate. It's now a question of how he wants to structure (the financing), and whether it's salable into the marketplace."

The one snag could be the Nevada Gaming Control Board. In November, Aruze was charged with tax evasion by the Tokyo Regional Tax Bureau and hit with a penalty of 1.7 billion yen ($14.9 million). Aruze is appealing the decision.

Dennis Neilander, chairman of the control board, said regulators are monitoring Aruze's appeal and are staying in touch with Japanese authorities. However, he said the board hasn't done any independent investigation of Aruze as no license application has been filed by the company.

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