Lot sales suspended at luxury Las Vegas golf-course development

Grace Leong

Thursday, Nov. 1, 2001 | 10:47 a.m.

The bankrupt Aladdin resort on the Las Vegas Strip is not the only property troubling its developer, Jack Sommer.

Sommer is the principal of luxury residential development Mountain Spa in far Northwest Las Vegas. It faces difficulties because of a failed hotel deal and because the Sept. 11 terrorist attacks aggravated an already slowing housing market.

Mountain Spa officials this week said they've temporarily stopped sales of model homes and home lots as they rethink their development strategy.

Megan Jones, Mountain Spa's spokeswoman, said that although foot traffic was strong when the model homes first opened for public viewing in April, "not many people were willing to buy pricey homes and pricey lots because of the poor economy."

"But when we re-open the sales office, we expect good response due to fact that the Northwest Las Vegas area is a fast-growing one, and we're optimistic that the housing industry and economy will recover in short time," she said. "Mountain Spa isn't in the business of building homes. It sells lots. The model homes were built just to show what could be done on the lots."

The model homes will sell for between $500,000 and $1.4 million, while the estate lots sell for between $150,000 and $1 million.

Jones said the 637-acre Mountain Spa, located near Floyd Lamb State Park, was initially modelled after La Quinta Resort & Club, a five-star golf residential community in California.

But those luxury resort plans are now temporarily on hold after luxury hotel chain Ritz-Carlton called off plans last year to develop a five-star non-gaming hotel at Mountain Spa, Jones said.

"That delayed the project because when a resort backs out, you have to redraw the lots because land has been set aside for the resort property. You have to decide whether to keep that land for resort purposes or redraw it for homes," she said.

Dawn Cicca, Mountain Spa's attorney, said Mountain Spa is legally entitled to sell lots for up to 1,873 homes or enter into a joint venture with a master developer to build the homes. Mountain Spa also has a zoning entitlement to build a casino if it decides that's economically viable, she said.

The project also includes a 27-hole PGA golf course called Silverstone Golf Club that is solely owned by Championsgate, Fla.-based golf course developer Meadowbrook Golf Group Inc. Silverstone, which opened in June, leases the land from Sommer, but he isn't involved in the club's management or operations.

Silverstone has a temporary clubhouse and is in the process of building a permanent 22,000-25,000 square foot mediterranean style clubhouse -- yet to be named -- that is expected to open in January. It includes a banquet room, restaurant, bar and grill and lounge area.

Jones said Mountain Spa is now considering whether it should continue to try to find another resort partner for the property or contract with developers to build smaller homes.

She said the change in Mountain Spa's development strategy is a business decision that has "nothing to do with either the Aladdin's problems" or several pending lawsuits filed in recent weeks by Mountain Spa contractor Johnson Communities of Nevada Inc. and two subcontractors to force the developer to honor agreements to pay for work done on the six model homes.

Barney Ales, Johnson's attorney, said Mountain Spa may have problems paying its subcontractors because its relationship with financial institutions may have been affected by the bankrupt Aladdin's problems.

But Jones disputed Johnson's allegations. "Mountain Spa stands behind its rightful obligations to its contractors and subcontractors. These are minor contractor disputes and will be resolved," she said.

Johnson, which is suing to recover $759,934 for construction work, said it is growing concerned over whether it will get paid after two Las Vegas subcontractors also sued Mountain Spa recently to recover payments.

Subcontractors Kennington Plastering Nevada and Quality Wood Products Ltd. sued Mountain Spa and Jack Sommer, alleging they failed to honor settlement agreements to pay $84,801 and $42,927 respectively.

Kennington is also suing Johnson for payments, but Johnson alleges it's not required to pay because of workmanship problems.

Also, Construction Lending Corp. of America, which said it provided $2.759 million in development financing for construction of roads and the model homes, sued Mountain Spa on Oct. 16.

That suit alleges Mountain Spa failed to cure liens placed on the property and failed to request for extensions to repay the loans.

Mountain Spa, however, disputed Construction Lending's claims, blaming the lien actions on Johnson's failure to pay the subcontractors.