Neonopolis still looking to sign its first tenant

Diana Sahagun

Tuesday, May 1, 2001 | 10:52 a.m.

Neonopolis, which was once the cornerstone for the city of Las Vegas' plans for a revitalized downtown, has settled another delay, but the project is still waiting for its first tenant.

While the massive entertainment project is more than a year behind schedule and crawling toward completion, a leasing agent said Monday that efforts are still under way to find businesses to occupy the space.

Chardell Steves, a leasing agent for Neonopolis, said Prudential Insurance Co., which is financing the project, has not received a letter of intent from prospective tenants. When a firm letter of intent is signed, Steves said, she will announce which companies will occupy the space.

Mayor Oscar Goodman, who says he is often kept out of the loop on the project, said he has been told companies are lining up "three deep" vying to become the first tenant.

Meanwhile, the project's two-story underground parking garage was completed a year ago, but the city has just made a proposal to settle payment of its additional construction costs.

Granite Construction, which built the now city-owned underground parking garage, alleges the city owes it more than $1.6 million in unexpected construction claims.

A resolution appears close, however, and both the city and the contractor, Granite Construction, have agreed on a settlement that would allow both parties to sign off on the project.

The 30,000-square-foot Neonopolis, scheduled to open late last year, is still without an anchor tenant; Mann Theatres dropped plans to build an 11-screen theater complex when its parent company, WestStar Cinemas, filed for bankruptcy protection.

Construction began on the massive complex earlier this year, although no announcement has been made regarding an anchor tenant or other retail occupants.

Deputy City Manager Steven Houchens said city officials are eager to settle the dispute with Granite and continue with the project.

Rather than arbitration, a costly and lengthy process, the city is offering Granite Construction $405,164 to settle the dispute.

Granite Construction has agreed to the city's offer, according to the settlement proposal. The Las Vegas City Council will vote on the agreement Wednesday.

Rod Cooper, manager of Nevada operations for Granite Construction, signed the agreement April 11. Cooper did not return calls for comment.

The yearlong quarrel about who should pay the extra construction costs on the more than $9 million parking garage is just one aspect of the already delayed project.

Neonopolis now is expected to open in 2002.

Prudential officials complained about the additional construction fees when the garage was completed in March 2000.

The city was responsible for hiring a contractor to build the underground parking garage, according to the development agreement between the city and Prudential. When the garage was finished, Prudential was to pay the city for the garage and accept construction of the retail component above it.

Prudential asked for an extension to pay $9 million to the city's redevelopment agency for the garage. Prudential argued that it should not have to cover extra construction costs and alleged the garage was not completed.

The city refused to budge on the deadline, and ultimately Prudential paid the original $9 million contract and $580,000 in additional costs for construction.

When the garage was transferred to the city in August, 11 construction claims by the contractor -- with a damage amount of $1.62 million -- remained unresolved.

Houchens said the city investigated the 11 claims -- many of which were the same complaints brought up by Prudential. The city disagreed with some of the claims, but agreed with others.

Houchens said because of a few unforeseen circumstances during construction, additional charges were accrued by the contractor.

For example, during construction the contractor found an underground fuel tank. Workers had to dig it out and subsequently test the soil. Contractors also accrued additional costs for drainage, because of the presence of ground water.

"A huge project like this is not an easy one," he said. "You're digging down 20 feet into the ground, and there's always going to be certain claims and counterclaims by both parties. Sometimes there are valid changes and sometimes there aren't."