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Best of Benjamin Spillman

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Benjamin Spillman
 

Investor urged to help with mob museum

18 February 2008

LAS VEGAS, Nevada -- The Hollywood-based owners of the Lady Luck casino could take an even bigger stake in downtown Las Vegas.

Leaders of CIM Group, the development company that last year bought into the shuttered Lady Luck, are in talks with the city of Las Vegas to put money toward a proposed mob museum on Stewart Avenue at Third Street.

City officials want CIM to put money up front to help create the $39 million museum in a historic post office and are considering ways to repay the company later, possibly through future tax rebates.

The idea is to coordinate the opening of the mob museum with the revival of Lady Luck, although it may take until 2009 or later.

"We're trying to figure out how to get all those projects in sync," said Betsy Fretwell, deputy city manager in charge of converting the post office into a museum. "What we are trying to do is put together an entire package that works financially."

John Given, an official with CIM Group, did not respond to a request to comment about the project.

Fretwell said the two sides haven't yet worked out an agreement, but one possible arrangement would have the developer get back a portion of the taxes a new or improved project generates, a structure known as tax increment financing, or TIF.

Typically, the city will rebate 41 percent to 50 percent of the new tax money on a project eligible for a TIF deal, she said.

"It is an incentive to help make the development affordable in an area where development is difficult," she said.

It could be "several months" before they strike an agreement, she said.

The city has identified public money to cover about $15 million of the proposed $39 million needed to complete the project, which is already under way. There has yet to be any private money dedicated to the project, Fretwell said.

Potential rebates for investing in the mob museum aren't the only incentives for reviving the Lady Luck. CIM Group also has an exclusive negotiating agreement with the city for about five acres of land next to the proposed museum that is now a public park.

If CIM makes good on its promise to reopen the hotel-casino, it gets an opportunity to buy the park from the city before it goes on the open market.

That means there's no chance competing buyers could bid up the price of the land, as happened with the nearby Gold Spike casino that sold for $15 million in July and then $21 million earlier this month to a new buyer.

Paul Murad, president of Metroplex Group, a Las Vegas commercial real estate development and brokerage firm, said it makes sense the city would want CIM to put some money up front to speed work on the museum.

"The city is giving them a special consideration for the land," Murad said. "It is only the responsible thing that they give something back to the city."