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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

An easy solution to Echelon eyesore

23 July 2012

Here's a better idea than Boyd Gaming Corporation's plan to spend $4 million on palm trees, landscaping and facades to hide a shuttered $4.8 billion development on the Strip that has sat unfinished since 2008 and is one of the boulevard's biggest eyesores.

Just tear it down.

The fact is Boyd's original concept for the CityCenter-like Echelon project - five hotels of various sizes, a large casino, 750,000 square feet of convention space, 30 restaurants, 300,000 square feet of retail and entertainment amenities, all covering 87 acres - is not going to happen.

Not in this lifetime.

Boyd Gaming might someday build a 2,000-to-3,000-room hotel-casino on the Echelon site once the economy stabilizes and the Las Vegas market warrants that type of investment.

Until then, Boyd plans to keep the unfinished steel- and-concrete structures in place, hoping to incorporate the Echelon remnants into whatever comes.

In regulatory filings, Boyd said it would like to build out Echelon in phases, but the company won't revisit the plans for at least three years. That language is meant to appease the investment community.

Clark County commissioners last week gave Boyd a six-year extension to complete the North Strip development, which means we're unlikely to see anything open until 2018.

That's 10 years since construction was halted and 11 years since groundbreaking, which took place less than four months after the historic Stardust was imploded to clear the site.

Structural engineers say Southern Nevada's arid climate extends the life to steel and concrete skeletons. The unfinished Emerald River hotel-casino project in Laughlin has been sitting under the elements for more than 20 years and could still have some use.

But that's Laughlin, not the Strip.

Boyd Gaming did the smart thing in August 2008 when it halted Echelon after one year of construction and close to $1.5 billion in development. If the company hadn't taken that gutsy move, several analysts speculated, Boyd Gaming could have been driven into bankruptcy.

Instead, Boyd Gaming rode out a tough economy that sent the gaming industry reeling. The company's regional properties in the south and Midwest survived. Boyd operates the top-producing casino in the tough Atlantic City market, while its Coast Casinos and Sam's Town continue to draw customers. Boyd's downtown casinos stayed resilient, backed by their loyal Hawaiian clientele.

Meanwhile, Station Casinos and Herbst Gaming went into Chapter 11 bankruptcy, and MGM Resorts International, Caesars Entertainment Corp. and Las Vegas Sands Corp. undertook various debt refinancing and corporate restructuring measures.

Boyd Gaming kept its cash available. In May, the company received plaudits for its $1.45 billion acquisition of Peninsula Gaming, which will strengthen and expand its regional casino business when the deal closes later this year.

Echelon is the only blemish.

Hiding unfinished steel structures behind decorative landscaping and strategically placed coverings doesn't resolve the Echelon eyesore. Steve Wynn put landscaping across the Strip to hide the empty New Frontier site when Wynn Resorts Ltd. opened Encore in December 2008, but without maintenance the foliage died.

According to its annual report filed with the Securities and Exchange Commission, Boyd expects to spend between $15.5 million and $17 million annually to maintain the Echelon site, which covers items such as security and property taxes. Boyd already cleared out construction equipment, including cranes and a concrete batch plant.

It might cost less just to clear everything from the site. A Boyd Gaming spokesman said the company has never considered the idea of demolishing Echelon, nor has it explored what it would cost to remove the structures.

Landscaping and hiding the unfinished buildings will satisfy Clark County Commissioner Chris Giunchigliani, who represents the north Strip area. Her ire is with the unfinished Fontainebleau, which was halted in 2009 when 70 percent complete. Investor Carl Icahn purchased the project out of bankruptcy and has done nothing with the mothballed property.

"I've love to have the Fontainebleau torn down. It's falling apart," Giunchigliani said. "At least Boyd will try to make [Echelon] look like a finished building. I would just like to see some vibrancy on the north end of the Strip."

Of course, Strip land is also not as valuable as it once was. Grubb & Ellis Executive Vice President John Knott estimated the value of Strip acreage has declined 90 percent since the real estate peak five years ago. What was once $30 million an acre is now $3 million an acre.

Granted, there are other eyesores on the Strip besides Echelon and Fontainebleau.

Las Vegas Sands Corp. wrapped its unfinished condominium tower with construction material. The building wasn't demolished because it sits atop a Walgreens and is adjacent to the high-end Barneys New York.

MGM Resorts was given permission last week to implode the unfinished and structurally unsound Harmon. The building is the centerpiece of a nasty construction defect fight with Perini Building Corp.

Echelon doesn't have any of those restraints. Hiding it behind landscaping won't change its status.

A better idea would be to just tear it down.
An easy solution to Echelon eyesore is republished from Online.CasinoCity.com.