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Best of Benjamin Spillman

Gaming Guru

Benjamin Spillman
 

Moulin Rouge buyouts stalled

8 September 2008

LAS VEGAS, Nevada -- Six months after the Las Vegas City Council approved plans for a gambling resort on the site of the historic Moulin Rouge casino, the area remains blighted and property owners accuse developers of reneging on promises to purchase their homes.

The developers insist they are pressing forward with the project and say eventually they will make good on promises to buy out the remaining occupied units of the near-empty Treeline condominiums.

In the meantime, the condo complex at 901 W. McWilliams Ave. has lost value as a place to live for remaining tenants and owners due to neglect, vandalism, crime and nuisances from drug users and vagrants who break into abandoned units at Treeline and neighboring properties.

And with the credit markets showing no interest in making commercial property loans at rates Moulin Rouge developers can live with, it could be a while before condo owners get compensation and the surrounding neighborhood gets something to replace the dangerous, blighted property.

The owners of the project -- Moulin Rouge Development Corp. of Las Vegas and Republic Urban Properties of San Jose, Calif. -- have acquired all but nine of the 60 units in the Treeline complex.

They've also bought up the former Desert Breeze apartments and have designs on more property between J and H streets and Bonanza Road and McWilliams Avenue.

Clark County property records show Moulin Rouge Development Corp., which is headed by Las Vegans Chauncey Moore and Dale Scott, has spent nearly $15 million acquiring property.

Moore and Scott did not respond to an interview request through a representative.

Republic Urban joined the project in February and has since become a lienholder on the land, according to Michael Van Every, the company's senior vice president of development.

But some folks who have dealt firsthand with the two companies are skeptical there's any money left.

They say Moulin Rouge and Republic Urban have backed off pledges to buy remaining condo units and aren't making good on promises to pay the owners money and extend sales agreements.

"I hope they can do it, I just don't see how," said Amy Groves, former manager of the Treeline homeowners association.

Groves, who is also a real estate broker, said after Moulin Rouge acquired most of the Treeline units from Bart Maybie, Moore and Scott raised hopes among remaining owners by promising them large sums for their modest homes.

When the purchase money didn't materialize, the two men offered to pay owners thousands of dollars per month to keep the sales agreements alive.

The purchase money never came and the extension payments dried up.

Once Republic Urban joined the project the promises stopped, Groves said.

"They are well within their rights to pay their earnest money and walk away," Groves said. "That is exactly what they did."

The problem is, until Moulin Rouge developers can complete the purchases, remaining owners in Treeline are forced to watch their property deteriorate in appeal and value.

During a recent visit, the entry gate from McWilliams Avenue was bent and propped open.

Inside the complex there was an overflowing community trash bin. The security guard on duty wore no uniform and the only evidence of law enforcement was two Las Vegas police officers who happened to ride through on motorcycles.

The units are adjacent to two lots with completely abandoned buildings. The abandoned buildings have broken windows and provide haven for squatters, thieves and illegal-drug users.

"Anybody who would wander in here would say it has lost its value," said Socorro Keenan, who owns one of the Treeline units but doesn't live there. She rents it to a tenant.

Keenan bought the unit in 2004 for $45,000. She says it is worth more despite the condition of the community because of the City Council approval that allows gambling and other business on what had been residential property.

She also says the Moulin Rouge developers stand to benefit the longer the complex stands mostly empty.

"I'm getting less (rent) because of the valuation of this area," she said. "This is the worst condition it has ever been in."

Van Every says it is "absolutely false" that the developers want to hold out to force sellers to take a lower price.

"If we had financing those deals would close," he said. "We paid them a lot of money in nonrefundable extensions."

Eventually, the developers intend to build a project that will cost hundreds of millions of dollars. Van Every says in a transaction of that size, "$300,000 for a unit there isn't going to make or break a deal."

The real problem is securing financing for the big loans at favorable rates, Van Every said.

The only loans now offered to the developers are at interest rates so steep they would undermine the viability of the project.

"This is a market that is very severe," he said. "We are seeing market factors that are not pretty."

Van Every also said tearing down the abandoned structures isn't as easy as it would seem. The buildings contain asbestos and possibly other material that would require special precautions to remove, he said.

That would cost money the group doesn't have.

"It is just not as easy as bringing a bulldozer down there and knocking it down," Van Every said. "We don't have a lot of resources now; we are doing the best we can."