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Benjamin Spillman

Dispute leaves Neonopolis on broil

2 June 2009

LAS VEGAS, Nevada –- In addition to a magnifying glass and telephone, John Del Prado keeps a roll of paper towels at the front desk in his jewelry store.

He uses them to mop up puddles of sweat from the desktop.

Del Prado is one of the few remaining tenants in Neonopolis, a troubled downtown mall that recently added the loss of air conditioning to its list of problems.

"Well, it's hot," says the animated, straight-talking Del Prado. "When I opened the store in the morning, it was 103 degrees in here."

But Del Prado isn't lashing out at Rohit Joshi, the embattled developer at Neonopolis whose dispute with the air conditioning provider created the sweltering conditions.

Like other businesspeople sticking it out at the mall, Del Prado just wants the problem solved so Joshi can get back to filling empty storefronts.

"I'm really standing on the side of Joshi," says Del Prado, adding, "My business has suffered."

Joshi is locked in a battle with Ameresco, a Massachusetts-based company that owns a plant that uses chilled water to cool several buildings, including Neonopolis.

The company says it shut off service to the mall after it fell $300,000 behind in payments. Joshi says he would be happy to pay for air conditioning he's used, but is unwilling to pay a portion of the bill he refers to as "capacity charges."

Ameresco didn't return a call for comment. But in an earlier interview, Ameresco spokeswoman Jeanette Coleman Hall said, "He hasn't paid us for months."

The air conditioning issue has emerged as the latest sideshow in the ongoing drama that is Neonopolis, a mall that can't seem to gain momentum despite its location at Fremont Street and Las Vegas Boulevard.

The sweltering conditions led to an exodus of artists from studios built just months ago as an attempt to drive foot traffic to the second floor of the three-story property.

And heat from the scrutiny prompted Joshi to raise his voice during a recent interview during which he said the media spotlight is contributing to the woes of Neonopolis.

Joshi says previous mall owners signed a bad deal with Ameresco and he just wants a new agreement so he can build an economically sustainable venue for tenants.

"I'm not going to have all these bad deals. I've got to clean my house, that's my right and my prerogative," he says. "You have to let me be the judge of how to reduce my costs."

But the scrutiny isn't going away.

Neonopolis' high vacancy rate discourages foot traffic between the Fremont Street Experience canopy and Fremont East, another city-supported tourism district. The mall also benefits from a city subsidy in the form of a discount on parking in the city-owned garage beneath it.

In October, the City Council approved a five-year agreement to continue selling parking to Neonopolis management at a discounted rate so it can be passed along to customers to encourage patronage at businesses.

The lack of tenants has frustrated Las Vegas Mayor Oscar Goodman, who recently told reporters at his weekly press briefing the situation is trying his patience.

It's also upsetting to current, former and prospective tenants.

"He plays a lot of stupid games," said one businessperson familiar with the property. "We have money to invest, but (Joshi's company) won't let us do anything."

Nearby businesses also want the mall to succeed. With so few tenants, the mall is viewed as not much more than an obstacle for tourists who might venture to viable businesses adjacent to bustling Fremont Street.

"It is just three big walls closed up, blocking everything," said Stephen Siegel, who owns the Gold Spike hotel-casino at Ogden Avenue and Las Vegas Boulevard.

Neonopolis blocks the view of Fremont Street from the Gold Spike, in which Siegel has invested more than $20 million to purchase and revive the property.

"It is a big ugly box in the middle of an unbelievable location," he said.

Joshi says he has commitments from tenants to fill space in the mall as soon as it is ready for prime time.

There are plans at Neonopolis to revive "Star Trek: The Experience," an attraction that drew hundreds of thousands of tourists to the Las Vegas Hilton before it closed there last year.

Joshi and others say they hope to have Star Trek up and running by May 2010.

The local Telemundo affiliate for Las Vegas also recently moved to Neonopolis and is operating on the top floor, albeit with its own air conditioning system.

And Joshi is providing temporary air conditioning to remaining tenants.

"With Joshi, I'm satisfied," said Joe Palermo, executive director of the Southern Nevada Museum of Fine Arts. "He's done everything he promised me, personally."

Part of the reason there isn't a tenant revolt could be because Joshi has reduced rates dramatically and those unwilling to put up with the mall's problems have left or been driven out.

A big blow came recently when Galaxy Theaters vacated the top floor, citing the lack of air conditioning and a parking dispute as reasons for its departure.

A former tenant from the now-shuttered art studios next to Palermo's museum also said the realities of the mall didn't live up to the promises that led him there.

"It has been waste of time and money," said H. Stephen Jackson, an architect and artist who was packing for a new studio near Third Street and Colorado Avenue. "At this point, I'm just glad to get out of here."

Joshi didn't say when he will deliver a long-term fix for the air conditioning problem. It could come in the form of an agreement with Ameresco or a new, independent system for the building.

In the meantime, he says he's committed to the Neonopolis project, even if it is costing him $240,000 per month to keep it open.

"All I can tell you is we will solve this problem one way or another," he says. "Shortly, I hope."