MGM Mirage says it is paying CityCenter subcontractors

4 June 2010

By Howard Stutz

LAS VEGAS, Nevada -- MGM Mirage said in a court filing it has begun the process of paying subcontractors caught in the middle of its legal skirmish with CityCenter general contractor Perini Building Co.

The casino operator, which owns CityCenter in a 50-50 joint venture with Dubai World, said it is actively working through the closeout process with 25 of the 220 first-tier subcontractors who worked on the development. MGM Mirage said there are "hundreds" of lower-tier subcontractors who are also owed for their work on CityCenter.

The subcontractors billed Perini, "and subsequently MGM Mirage" more than $5 billion for the work done on CityCenter. MGM Mirage said it needs a detailed accounting reconciliation from Perini, on a subcontractor-by-subcontractor basis, to determine how much is actually owed to the subcontractors.

"At the same time, CityCenter must evaluate backup for time and material work and must determine the validity of any claims for extra work," attorneys wrote.

MGM Mirage said it has not received that information.

The filing was made late Wednesday in preparation for a hearing this morning in Clark County District Court on its lawsuit with Perini, which has filed liens for $490 million against CityCenter for work owed on the $8.5 billion Strip project.

Perini, which filed the lawsuit against MGM Mirage, said about $390 million of the disputed amount belongs to subcontractors, many of whom are small, minority-owned businesses.

In its court filing, MGM Mirage said it reached a tentative payment agreement with one subcontractor and has meetings with several others. MGM Mirage scheduled a mass-meeting next Tuesday morning at Aria with all subcontractors owed money for work on CityCenter in order to facilitate a payment process.

The casino operator said it took over the closeout process from Perini after the general contractor filed its lawsuit.

MGM Mirage said has more than 65 employees, including accountants, engineers, and project managers, working full time to evaluate and process subcontractor claims for payment.

"CityCenter is doing its best to complete this process in a timely and orderly fashion," attorneys wrote in the filing. "However, CityCenter needs certain information from Perini in order to further expedite the process."

MGM Mirage said it has sought payment logs, check registers and other documents from Perini to determine the work performed by the subcontractors and what the general contractor has already paid.

Attorneys for the casino operator said Perini changed its "final payment application" several times after it was submitted May 4, which added $21.5 million to the overall total.

MGM Mirage attorneys said they had notified Perini's lawyers of the need for additional information, but it had not been delivered.

MGM Mirage said other problems with the documentation submitted by Perini include; billings from individual subcontractors that differ from the amount sought by Perini; lack of backup documentation, billing applications that contain mathematical errors; and payments sought that are based on "projections."

Perini officials have said the company's goal is to see the subcontractors paid.

Last month, Perini executives and subcontractor representatives, and MGM Mirage officials, met separately with Gov. Jim Gibbons, who sought to mediate the dispute.

Meanwhile, Perini has embarked on a media, public relations and Internet campaign in order to put pressure on MGM Mirage.