Understudy waiting in wings for arena developer to falter

Saturday, Aug. 4, 2007 | 7:42 a.m.

If REI Neon/Warburg Pincus Joint Venture cannot deliver on its plan to develop an arena in downtown Las Vegas, at least one group is ready to step in and take over the project.

Paradigm Sports & Resorts LLC, the group that by all accounts was the second choice of the committee that reviewed the proposals, is prepared to build a $4 billion arena project on land straddling Las Vegas Boulevard, including City Hall.

"The biggest difference between our proposal and theirs is that we know ours will actually be built," Paradigm's Ken Miller said.

There are other differences as well, such as cost, the amount of development beyond the arena, location and the city's contribution.

Unlike the REI project, Paradigm's project is contingent on Las Vegas offering the City Hall property and parcels to the east of Las Vegas Boulevard. The project would include only one casino and no residential units.

Clark County Commissioner Lawrence Weekly, a member of the selection committee, called Paradigm's proposal "sharp," adding: "It was a very difficult decision."

Las Vegas Mayor Oscar Goodman, who headed the selection committee, advised the other developers that submitted proposals to be prepared in the event REI Neon falters.

"Keep your pencils sharp," he said at the council meeting announcing REI Neon/Warburg Pincus as the preferred developer.

What is clear, to the decision-makers and companies alike, is that only one arena will be built in the city. That means if the $9.5 billion REI project moves forward, Paradigm will be left on the sidelines. (Goodman recently said the project's price tag had risen to $10.5 billion, but company officials say it remains $9.5 billion.)

An interview with Miller about his project provided the first look anyone besides city officials and the selection committee has had at the proposals, although some details of REI's plan were revealed when the company went before the council seeking zoning approval.

In keeping the proposal secret, the city has cited a state law prohibiting the release of its specifics until a deal is signed with a preferred developer.

Miller also is reluctant to release too much information about his plan for fear of alienating his partners and harming his chances if REI cannot deliver.

Although Paradigm does not need preferred developer status to proceed with its project, it would need approval from the City Council on key issues, such as acquisition of the land.

"We thought we had it," Miller said. "We could have proposed a larger project, too, but we know we can deliver this."

The group may still get the chance.

The clock started ticking for REI Neon on Wednesday, when the City Council approved a memorandum of understanding for its project. The group has 60 days to work out an agreement with the city and put up a nonrefundable $1 million deposit.

If a deal is not reached by the deadline, the city has several options, including extending the memorandum of understanding or allowing it to expire and considering other proposals.

A version of this story appears in the current issue of In Business Las Vegas, a sister publication.