Goodman issues warning to Neonopolis operators

Tuesday, Feb. 24, 2004 | 10:42 a.m.

Las Vegas Mayor Oscar Goodman has sent a letter to the operators of the struggling Neonopolis entertainment mall notifying the facility it is in "contractual default" with its partner, the city.

Goodman in the letter cites the operators' failure to deliver an audited statement of net operating income for Neonopolis' first year, its discrimination against potential tenants and failure to develop an urban entertainment center at the Fremont Street complex.

The letter, dated Monday, warns World Entertainment Centers LLC and Prudential Real Estate Investors, the mall's owners, they have 30 days to address the issues.

The discrimination allegation stems from the failure to sign a lease last month with Donald Troxel, an Ohio club owner who planned to open a cabaret nightclub in Neonopolis modeled after his club in Ohio that caters to gays.

Troxel said he spent more than $200,000 on contracts and a liquor license application before Neonopolis managers told him they were not going to sign his lease. He said they told him that at least part of their concern was the gay clientele.

Goodman expressed outrage in Monday's letter: "If true, the city will have a legal obligation to oppose such practices with all means and methods available to us."

Goodman signed the letter as chairman of the Las Vegas Redevelopment Agency and ordered copies be sent to City Manager Doug Selby and City Attorney Brad Jerbic, among others.

According to a city spokeswoman, no vote was taken by the full City Council acting as the Las Vegas Redevelopment Agency, authorizing Goodman to send the demand, nor was one apparently needed.

But without such authorization, questions arise as to whether the letter, filled with legal language, carries any legal weight.

"The legality is that the mayor is just one vote on the City Council, but the political reality is that he is the perceived front person for the city and, as such, he will get the attention of the operators of Neonopolis more so than the city manager," said Bill Thompson, a professor of public administration at the University of Nevada, Las Vegas.

"When it comes time to take action, I'm sure things will be done properly. As for now, the mayor has likely been advised by the city attorney that it is all right for him to send the letter."

The letter does not say that if the mall operators do not comply they would face the council. Rather, it indicates immediate action was pending.

"You have 30 calendar days to cure or initiate substantial efforts to cure each of the event of default notifications. (Should you) fail to comply ... the city will submit a claim for immediate payment of outstanding deferred purchase price (principal and interest)," it reads.

City officials have estimated that amount to be about $10 million.

Officials at Prudential Real Estate say they have not yet received the letter but are trying to make heads or tails out of what they have heard about it.

"When we first learned of it yesterday, we thought some action had been taken in court, but we couldn't find anything filed," said Theresa Miller, spokeswoman for Prudential in Parsippany, N.J. "Generally when we deal with these issues, it is with planning boards or city councils.

"The question is whether this is a letter from the mayor giving his opinion, saying he will take the matter before the full council, or is it an official complaint against us from the council? If this is about default, it seems that it should have come from the City Council or city manager."

The city invested about $32 million in taxpayer funds into the project -- including $15 million for an underground parking garage.

City officials last month said they will have to dip into the general fund to the tune of about $400,000 to pay for the shortcomings of the garage revenues so they can remain on pace to pay off the debt service on the general obligation revenue bonds that were issued to build the 600-space facility.

Attempts to reach Goodman, Selby and Jerbic for comment today were not successful.

The 227,000-square-foot Neonopolis mall is anchored by a 14-screen movie theater and features two restaurants and several smaller food and drink outlets, some retail shops and Jillians family entertainment center.