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Monday, Oct. 12, 2009 | 2 a.m.
Sun Archives
- Fontainebleau judge wants quick sale of bankrupt project (10-2-2009)
- In reversal, Fontainebleau lenders suggest liquidation (9-25-2009)
- Fontainebleau: Bank no longer ‘seeking to destroy’ project (9-17-2009)
- Potential buyer in negotiations for stalled Fontainebleau project (9-15-2009)
- Fontainebleau contractors seek lien claims in state court (9-14-2009)
- Fontainebleau suit against lenders moved from bankruptcy court (8-5-2009)
- Another lawsuit alleges unpaid work at Fontainebleau (7-14-2009)
- Fontainebleau builder says it’s protected from paying severance (7-14-2009)
- Fontainebleau fires back, outlines bank dispute (7-8-2009)
- Fontainebleau developers: Design change could help costs (7-6-2009)
- Court filings shed light on Fontainebleau financing (7-2-2009)
- Practice of building before designs are done hits wall at Fontainebleau (6-28-2009)
- Flood of new hotel rooms dims Vegas outlook for '10 (6-23-2009)
- More subcontractors accuse Fontainebleau of failing to pay for work (6-23-2009)
- Fontainebleau subcontractors want bankruptcy case moved (6-22-09)
- State gaming regulators shied away from policing borrowing (6-21-2009)
- Fontainebleau subcontractors say contractor conflicted (6-19-09)
Of all the buildings under construction nationwide left unfinished because of the recession, the Fontainebleau Las Vegas resort, which analysts say may be nation’s largest and most expensive stalled construction job, might be the poster child for badly timed development.
Fontainebleau is a giant among other unfinished projects in town. Those include Boyd Gaming’s shelved Echelon resort on the Strip and Wyndham’s 19-story Desert Blue time-share building across from the Rio. Unlike Fontainebleau, where workers had finished the exterior and were installing room furnishings in lower floors when work halted this summer, both of these buildings were little more than steel and concrete skeletons when construction halted in August 2008 and February, respectively.
But for all of its new or recent hotel and condominium inventory, Las Vegas isn’t nearly as bad off as South Florida. Nearly all Miami-area condo towers were completed before the economy worsened, but the high-rise boom and bust has left several vacant or near-vacant buildings in its wake.
A few buildings were never built past their foundations, and three Miami-area high-rises — two condo towers with more than 300 units and the second and third towers of a 1,644-unit complex — will be among the last to open in the recession, with lingering questions about how they will be filled.
“If these developers had been one year behind schedule there’d be many more empty buildings,” Miami broker Samir Patel said.
Elsewhere nationwide, many buildings had the relative advantage of never getting off the ground, not being as far along or already being finished when the bottom fell out of the market.
The only other major casino resort awaiting financing to finish construction — Revel, in Atlantic City — is not in as dire straits as Fontainebleau. Work is continuing on the $2 billion project, though interior work was halted to focus on finishing off the resort’s exterior. Revel, privately financed by Morgan Stanley, won’t be opening next year as planned, though owners hope it will open in 2011 with two towers of 1,900 rooms each. The future of Fontainebleau Las Vegas is more uncertain after lenders refused to lend more than $600 million in prearranged financing, throwing the building into bankruptcy. Developers estimate the 63-story Fontainebleau may cost another $1.5 billion to complete on top of the roughly $2 billion already put into the resort.
Several stalled projects elsewhere are remodeling jobs involving existing structures.
Those include the Connell Building in Scranton, Pa., an office building that’s being transformed into a residential building with office and retail space, and the original Filene’s Basement in downtown Boston, which has been closed since 2007 after plans to build a high-rise there stalled.
Others are smaller-scale, mixed-use developments where some buildings were completed and others weren’t. A bank recently agreed to forgive millions in debt on Virginia housing development Belmont Bay and will foreclose on the project, including partially completed condo units.
Though Las Vegas may not lead in unfinished buildings, it tops the nation in major commercial projects that never got past the financing stage before the recession came along. But that’s nothing new: Las Vegas has long attracted speculators with big dreams, little experience and enough millions to secure some land on deposit and develop plans, only for them to evaporate for lack of financing.
During the past real estate boom, multi-billion-dollar resort concepts that were eventually shelved came from bona fide developers with real money. They include Elad, owner of New York’s historic Plaza hotel, which spent $1.2 billion acquiring the site of the imploded New Frontier for a Plaza-themed resort, and James Packer, who has lost millions betting on future growth in Vegas, including a stake in Fontainebleau and the proposed Crown Las Vegas resort.
Fontainebleau secured a $4 billion financing package in June 2007, months after bad mortgages had begun imploding the balance sheets of Wall Street investment banks but well before the mortgage crisis helped take down the economy. In retrospect, the giant buildings for which Las Vegas is known take several years to build — time enough for the economy to turn.
Timing, so the saying goes, is everything.
I remember this little concrete building in the middle of the desert down there in Laughlin, just nearby that bankrupt golf course. It's been like that for so many years now without being imploded. Looks like a place bombed down in WW II, but it's in Nevada! There should be a law that says buildings that aren't finished within time are to be imploded for landscape reasons.
If the Echelon Place can't continue to be finished within the next 5 years , they should at least put a giant fence around with Palm trees or so, just to make it look nicer. And the Fountainbleau should be finished by law, just from the outside. And please remove all these iron steel bars with commercial stuff on it. What's the point on that?
The sooner we forget about the mortgage crisis, the better. Time for BoydGaming to take over on that project and finish "The New Stardust".
The place outside Laughlin was suppose to be timeshares. It went belly up over 10 years ago.
There are limits on everything and a first year business school student could have told developers that there is a surplus of hotel and casino space in Las Vegas. It's all about money. When the developer isn't putting in his money but other people's money, the data be damned. Build Build Build.
It was about time the Banks wised up to the 'developers' ripping them off. Bad architecture and lousy overpriced union labor coupled with the 'owner' all with their hands in the cookie jar -
Let this be a lesson - there is no substitute for integrity.
The bums got what they deserve.
once again: BoydGaming is the perfect candidate to take over on that semi-complete construct. An ideal combo to that also very questionable project right across the street. Water consuming entertainment projects such as golf courses or big pools are no longer a wise option, but how about a wild west entertainmen mini phantasy world with roller coasters and such? 20 dollars admission per day, unlimited rides, a food court, and THE KIDS ARE HAPPY while daddy and mom gamble away their money at "The New Stardust". That entertainment park could even be a joint venture with Circus Circus. I don't think they would have anything to complain about. A perfect match for both.
It's more than bad timing for Fontainebleau. Gross Mis-management by people managing this project is one of key reasons why the costs spiralled out of control which, in turn, resulted in banks denying the pre-scheduled loan. Rightly so, banks aren't in any good shape to lend to a badly timed, ill conceived and poorly managed property. Consider this, some key Execs running this property before it went bankrupt were also leading another high profile project on the strip before it hit the ground. If you have such incapable execs at the top opening a $3B property in a poor economy, What else can you expect? Whatever it is, I hope this property opens up and creates the thousands of jobs that this city badly needs!
it's not as much bad timing as it was bad design. what an ugly, ugly building right next to the 2 ugliest places on the strip, circus circus and riviera.
the economy is NOT turning around. just "google" the word "layoffs" and you'll see there are still hundreds of americans losing their jobs every day.
until that turns around, vegas is going to keep the downward spiral going.
Blame it on timing?
Let's consider:
1. Cost
2. Location
3. Design
The trifecta of common sense mistakes - and none are fixable.
A government board to limit and oversee growth would have prevented this. The private sector failed, we need more government. The government projects get finished.
The Federal, state and local government should fund the completion of major projects with special bond issues and new stimulus funds. A speculation tax should be levied on all developments and projects and performance bonds should be required. If the project is not finished on time, it is torn down or surrendered to the government.
One of the biggest problems with all of the newer places in LV, Especially on the strip, They may look different on the outside, but once inside, they're all the same. Even the unique properties (Luxor, Mirage, TI, etc.) have been watered down in remodeling to be clones. At least places like Riviera, Circus Circus, Trop, etc. have some uniqueness for their lack of any investment in remodeling over the past decades has left them "retro" although tired looking. It seemed to start with the Bellagio, Venetian, Palazo, etc. All boring look alikes with high prices no longer sustainable. Steve Wynn is regularly lambasted in these blogs, but the guy does finish what he starts, and offers a product to justify the high price. Remember when Luxor was "THE place to stay"? Now you can get a room there for $50. When these new places come on line, there will be a bump in the employment numbers, but they will quickly give way to reduced numbers at competing properties, followed by a leveling off at the new places.
At least it's affordable for guys like me to try some of the nicer properties at more affordable prices.
They deserve everything they're getting now, and when CityCenter files for bankruptcy you can thank losing the change girls, the cocktail girls and everyone else they tossed for more profits
It will all go to the basics. Old style Vegas, means: maybe dirty carpets, but who cares, but what we want is friendly staff, good odds, and old memories coming up. Circus-Circus has been my first favorite casino, about 20 years ago. It opened when I was born, so that's a special casino for me, always. Hopefully it will be there for many years. Old style Vegas, Circus-Circus is a part of that.
"If the project is not finished on time, it is torn down or surrendered to the government."
Uh, sure. That would fix the growth problem because there would be no further growth.
Bad timing? perhaps, I like to think of it as bad karma. Think about when you are on a pretty good run in the casino, you begin to think that it will last, and you start betting with more frequency and larger amounts. This is otherwise translated as greed. The minute you get into this conduct, you start losing...Nuff said
Nuclear waste pit in Yucca looking pretty sweet now. Think of the hazmat jobs and all the visting truckers.
wizard, there is a tax already. It is the increase in credit card rates even though the banks are borrowing from the Fed at near-zero rates and paying interest to depositors at near-zero rates.
The last thing Las Vegas needed was CityCenter.
With all this complete disaster nobody is held accountable and going to jail. Now they want to finish the project? What for? How about paying the contractors?
Lenny_V: I mean it's better for the environmental view point to at least finish a building than leaving it halfway there. In our country, and I don't think Switzelrand is considered as a communist country, dude, they make sure that a country keeps its beautry and that companies respect the citizen and the culture. Maybe you live in a building right in front of a big sand hill, I don't know. where I live, it's all green and can see the cows on the meadows, just 5 minutes walking. Which one would you like to see ? A concrete cemetary building never being completed, or a grean meadows with happy cows on it?
I don't know about you, but perhaps you like places such as the Echelon cemetary or that concrete construction in the Mohave desert just out of Laughlin. Maybe it's your understanding of beauty. I also have serious doubt that the Circus Circus tourists appreciate the dust being blown over to the pool because Echelon decided to quit working on the construction and simply putting everything on halt. Do you like the idea that it could stay like this for the next 20 years? Would you consider this as representative or rather embarassing?
There should be rules for that, or not?
Boris... get a clue. There should not be a law to enforce the stupidity and greed of these large corporations.There should be a law these companies to dismantle their unfinished projects.
Running out of money prior to completion of construction is nothing new to Las Vegas Resorts. The Billy Wilkerson Flamingo project went to Bugsy Seigel/Meyer Lansky for completion, Wilbur Clarke's Desert Inn was signed over to Moe Dalitz , Tony Cornero's Stardust to Moe Dalitz, Riviera to Chicago Mob and Marion Hicks's Thunderbird to Meyer Lansky, all suffered this humiliation which is how the then cash rich Mob stepped in and got their start in Vegas...
The last 3 years in this town are a symbol of bad timing(and out of control greed-but go figure, it's Vegas).
Ok, but creating a huge fence around the Echelon Place to hide that World War III scenery from all the tourists toddling along on Las Vegas Boulevard would be something, or not?
And once it's clear that finishhing the Fountainbleau might take years, what's they point of leaving construction machines visible. At least some semi-finishing work would be nice for the entire picture on the Strip.
I am sure Circus-Circus is suffering , as well as the Riviera, because of this deserted scenery. Tourists may walk down till Encore and Wynn and then turn around and go back. The few that make plan to go to Sahara, will require a napkin to protect their breathing system from all the dust that's in the air, unnessearily.
Plus, it's a shame for the entire Strip. Boyd knows that construction will probably never continue. Maybe in 15 years from now. So what's the point of leaving it like it is? Are they dreaming of some billionaire buying them out for a huge amount? I would at least put on a big fence or plant palm trees all around, or perhaps think of the idea of using the site for a cool amusement park for the next 10 years. I am sure this would be not sooo expensive and still bring in some money.
One point everybody seems to miss:
Fontainebleau, in it's unfinished state, is not an accurate representation of the intended design. For example, while the tower is not all that pleasing at this point in the project's construction phase, that may have changed had everything been completed. For example, isn't the skin of the tower designed with computer-controlled illumination? If so, that would have been a dramatic feature. Those who have done any research on the original Miami Beach property would know it's generally considered architect Morris Lapidus' most important design, and features the at-one-time famous glass-like "Staircase to Nowhere" in the lobby, which was to be replicated in the Las Vegas property.
http://en.wikipedia.org/wiki/Fontaineble...
Glenn got caught in bad timing on this one, but Schaeffer is a smart guy who, after "practicing" with Excalibur and Luxor, built a great project at Mandalay Bay. Not only is the interior extremely well done imo, but the project was conceived with several really good features including the House of Blues and The Four Seasons. Then Schaeffer went on to develop the Mandalay Bay Convention Center and The Hotel onto the property, both excellent projects. The biggest blunder was not building Mandalay Bay Events Center to an equivalent seating capacity to The MGM Grand Garden, but then everybody makes mistakes.
Glenn's and Jeff's idea was to create a global brand in Fontainebleau. I am sure Schaeffer's design was to take the company public as he did for William Bennett and Circus Circus back in the early '80's.
What I was never quite sure of is the name, for a casino brand anyways. Anybody who knows any French knows that blue is "bleu", not "bleau". Bleau rhymes with eau (water) pronounced "O". So apparently the English colloquial pronunciation is "fountainblue", which is, well, silly. Maybe it would have been OK, the name, after everything was finished.
I do think the property itself could well have been a stunner had it been completed to specs.
While we are waiting for F to be completed,
http://www.examiner.com/examiner/x-18969...
9ballguy - I wouldn't go as far as to say "last thing LV needed" - Think of all the jobs? If the company wants to shell out the $$ for it, let them - There are plenty of people out there looking for work!
Well said cribster64.
Bad timing had much to do with the problems, but lets not forget that the courts ruled in the banks favor due to ultimately bad construction management. The project was grossly over-budget.
PS, I love the idea of a new "Stardust"!
CityCenter will take much needed business from other Hotels causing those businesses to layoff workers.
9ballguy - Almost everyone does the shuffle as I call it when the new casinos open... Its what LV needs to do to stay "fresh" and the shuffle is also beneficial to those who are looking for advancement - i.e. - the front desk manager at Wynn now becomes the Director of Front Office at CityCenter...
I don't live in Las Vegas and perhaps you are correct VegasGM85. I sincerely hope that you are.