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Arnold M. Knightly

Constant need to renovate challenges gaming industry

11 October 2007

and Joan Whitely

LAS VEGAS, Nevada -- Local gaming companies are always building something new these days. They're almost always upgrading or renovating something old too.

Room renovations are a regular part of a company's business cycle, much like "changing the oil on a car," said Gordon Absher, MGM Mirage's vice president of public affairs.

The renovations are becoming more important as gaming companies upgrade older rooms to compete for spend-happy guests by offering the latest high-definition TVs or more luxurious hotels rooms with more amenities.

Room remodeling projects at the Rio and Harrah's Las Vegas spurred investigations by Clark County and Harrah's Entertainment because it appears some of the remodeling work was not properly inspected or did not have permits.

Two floors in the Rio's Ipanema tower and 510 rooms and 27 suites at Harrah's Las Vegas have been closed off because of the problems.

Randall Sayre, a member of the state Gaming Control Board, said he hopes the permitting problems are limited to Harrah's Entertainment properties.

He does not feel the need to look at other gaming companies at this time, but he said that could change if the final investigations by the gaming company and the county end up showing problems could exist elsewhere.

"Clearly this is a profound issue with regards to public perception," Sayre said. "I don't think it is right, at this point, to push a great deal of expense through the entire industry to go look for a maybe."

Other local gaming companies have not talked much about Harrah's problems, but some executives explained some details about how they decide what renovation projects need permits and inspections and which ones don't.

"The rule of thumb for me is if you're moving plumbing or moving electrical or a life-safety device, get a permit," said Joe Haley, Station Casinos' vice president of project administration. "Involve the county, talk to them and say, 'Hey, this is what we're going to do. What do you think?'"

Station Casinos, with 4,060 rooms at 10 properties in Clark County, tries to renovate its room inventory on seven-year cycles and is finishing upgrades on 530 rooms at Palace Station.

Haley said the process goes beyond obtaining contractor bids and proceeding. The process must provide oversight and get the required input from the different government agencies, he said.

"We go into our projects with our eyes wide open and understand what some of these things entail," Haley said.

Maintaining a dialogue between employees overseeing the projects and county inspectors about what is going on with the projects is important, he said.

"I don't think it's that difficult," Haley said. "It's more a matter of having knowledge of when you need to involve (inspectors) and be proactive with it."

Some of the problems at the Rio and Harrah's involved work thought to require inspections that might not have received them.

Before the closing of two floors at the Rio, an architect who works for a local construction consulting firm and was recruited by the newspaper, observed multiple problems in the rooms he examined at the Rio.

Some electrical wall outlets appeared to have been added during the remodeling work without proper inspection, said Brian Grill of Benchmark Consulting. If the outlets were not inspected for polarity, a ground fault could be present in the wiring. Grill works as an architect only in California and Arizona, where he is licensed.

Changing out one bathtub for another could fall within the scope of ordinary hotel maintenance, which would not trigger the need for a permit. "It really depends on how much demolition has to occur," Grill said.

Another factor comes into play if a tub's head butts up against a wall shared by a next-door guest room. Walls between guest units need, by building code, to maintain a prescribed rating for fire resistance. If workers cut into such a wall to handle pipes for a tub replacement, inspectors should verify afterward that the wall's fire rating is restored, Grill said.

The whistle-blower who prompted the Review-Journal's intensive look at the Rio remodeling also has alleged that the rewiring of television and Internet cables did not comply with code.

Grill could not view the cables in question -- which now are hidden behind crown molding or carpeting -- but he echoed certain concerns expressed by Fred Frazzetta, an electrician who worked on the project and filed a complaint about the Rio remodeling with the county's building division.

Frazzetta said that in certain phases of the Rio remodeling project, workers ran cable for a computer from a telephone jack on one wall to another wall. When they could not pull the low-voltage through a conduit in the concrete floor to that spot, they instead ran it unprotected under carpeting along the wall.

"The cable has to be protected for its entire length. That's the code," Grill said. If cable insulation is damaged, it could arc, which is a fire hazard. "That goes with any wiring, low voltage or high voltage," Grill said.

A county investigation of the Rio led to closure of two floors that bypassed county safety procedures. One county official said the Rio failed to adequately protect holes between floors so smoke will not spread during a fire.

Clark County Development Services in February had cleared the Rio of alleged remodeling without permits or inspection after a superficial one-day review.

But the county department reopened the investigation in late September after the Review-Journal researched allegations by a whistle-blower who had filed a complaint with Development Services on deficiencies in the Rio remodeling in August 2006.

Absher did not speak about the MGM Mirage's permitting and inspection process but said that the Excalibur and Mandalay Bay, both of which were acquired by the company in April 2005 in the $7.9 billion buyout of Mandalay Resort Group, are in different stages of the room renovation process.

Absher said the company, which has 40,000 hotel rooms in 10 Strip properties, takes two or three floors of a hotel offline at a time during renovations, which last nine to 12 months.