Experts debate Le Reve delay

David Strow

Tuesday, April 9, 2002 | 11:11 a.m.

Steve Wynn's proposed resort on the Las Vegas Strip became embroiled in a political debate Monday, when President Bush claimed Wynn couldn't get financing for the $1.65 billion Le Reve because Wynn lacked terrorism insurance.

Wynn wasn't talking -- but gaming industry sources doubted the claim.

"There's no way Wynn would get derailed by this," an industry executive said. "I don't think that's plausible. It sounds to me like politics at work, for reasons beyond Las Vegas."

"That's B.S.," another source said. "It's highly improbable."

Bush did not refer specifically to Wynn in his comments in Washington Monday. But it was clear that the project he was referring to could only be Le Reve, as no other resort of that magnitude has been proposed for the Strip.

"A $2 billion resort in Nevada ... (that) could provide 16,000 jobs is on hold because they can't get insurance for terrorism," Bush said. "You know, you've got the chance to employ 16,000 people, but because something hasn't happened in the United States Congress, it's not going forward. And that's not right."

A White House backgrounder also did not identify Wynn, referring instead to a "prominent developer." But a Monday story in the Washington Post, citing senior Bush administration officials, named Wynn.

Wynn could not be reached for comment. Wynn was a supporter of Bush in the 2000 elections, and is personal friends with Bush's father, former President George Bush.

A source familiar with the situation said Wynn was "moving forward very fast" on project financing.

"He's hired a good guy, Ron Kramer (a former Wall Street banker), and I think he's moving very deliberately forward," the source said. "My guess is it'll come together pretty quickly."

The debate in which Wynn has become entangled revolves around providing federal assistance in producing terrorism coverage for American companies. The attacks of Sept. 11 wreaked an estimated blow of more than $50 billion on the American insurance industry -- and as a result, terrorism coverage has become scarce.

Roughly 70 percent of pre-existing policies covering damages from terrorism attacks expired on Jan. 1, and premiums on those terrorism policies that do exist have skyrocketed.

The House last year passed legislation creating a federal backup plan, in which the government would help insurance companies continue to offer terrorism insurance by agreeing to pick up, for at least one year, 90 percent of losses in attacks that caused more than $10 billion in damage, with a ceiling of $100 billion.

Senate Democrats have proposed that insurers pay the first $10 billion in losses in the first year and the first $15 billion in the second year, with the government covering anything above that. Action on the Senate bill has stalled over Republican attempts to attach limits on lawsuits related to terrorism attacks.

"They were making progress in the fall, but adding tort reform to a bill that's supposed to deal solely with terrorism insurance -- that's what has caused the impasse," said Andy Davis, spokesman for the Democratic majority of the Senate Commerce Committee.

Bush, meanwhile, was turning up the heat on Democrats to act, claiming the lack of insurance was putting the brakes on construction projects around the country.

Hyatt Corp., for example, can't start construction on a 1.5 million-square-foot office building in downtown Chicago because it lacked insurance, Bush claimed. And J. Willard Marriott Jr., the chairman and chief executive of Marriott International Inc., claimed many of the hotel company's $6 billion in new projects could not proceed without terrorism insurance.

For Strip properties, "terrorism insurance is almost impossible to get," one Strip executive said.

"But to make it a reason not to build something is absurd," the executive added. "Maybe Bush is trying to make a point about how important (the bill is). But I can tell you, in our company, it's an issue that's never come up."

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