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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Questions remain over stopped-in-progress Nevada projects

7 February 2011

LAS VEGAS, Nevada -- In Laughlin, a few miles up Casino Drive from the cluster of the town's resorts, sits the hulking shell of what was to have been the Emerald River, an $800 million hotel, casino, golf and resort complex.

Fourteen floors of one hotel tower and seven floors of a second were completed before the money ran out, the project went bankrupt and construction stopped.

That was more than 20 years ago.

The concrete and steel towers still remain near the edge of the Colorado River, rising above overgrown weeds and desert foliage.

Some people wonder whether this could be the future of several land parcels along the Strip.

Construction of Echelon, a $4.8 billion development by Boyd Gaming Corp. at a site on which the Stardust once stood, closed down in August 2008, leaving unfinished steel and concrete structures. The company is not planning to restart the project for at least three to five years.

Across Las Vegas Boulevard sits the dormant Fontainebleau. The $3 billion resort was 70 percent complete when lenders pulled the plug on it in April 2009. Billionaire corporate raider Carl Icahn bought the development out of bankruptcy for $150 million in February 2010, sold off much of the hotel's furnishings, and has not announced any plans for the building.

Las Vegas Sands Corp. stopped construction on its $600 million St. Regis condominium tower in November 2008 when financial problems besieged the company. The tower, which is 19 stories, has not been worked on since. Two unused construction cranes are secured to the roof.

Other projects were halted in midconstruction in 2009 because of economic reasons. The Shops at Summerlin Centre next to Red Rock Resort shut down when developer General Growth Properties filed for bankruptcy. A Wyndham Vacation Ownership development across from the Rio stopped when funding disappeared.

The steel and concrete skeletons may still have some life.

Clark County Development Services officials and structural engineers said Southern Nevada's dry desert climate allows incomplete structures to retain their usefulness once a project is restarted.

You may not want to read this, but like Emerald River, unfinished developments could last for 20 years.

"This is actually the ideal environment for these buildings to be sustained," Clark County Development Services Director Ron Lynn said. "We don't have a freeze-thaw cycle that could be devastating to structures. It's not like being near the ocean with high humidity and salt air. We have a very low-corrosive environment."

Wright Structural Engineers Chief Executive Officer Brent Wright agreed that dry desert air keeps exposed steel and concrete structurally sound. The bigger challenge involves the county's building codes, which often change every few years.

"That's more of an issue than materials deteriorating," Wright said. "If codes change, by the time a project is restarted, some retrofitting might have to take place. The changes could be significant or minor."

When the projects were halted, Clark County officials ran through a checklist of shutdown functions. Lynn said decommissioning is different for every site.

The Shops at Summerlin, which is predominantly steel, needs to be secured by fencing. The Fontainebleau is more complicated. The hotel tower was close to operational, so fire alarms and smoke suppression systems need to be maintained and regularly checked. Elevators also have to be kept operational.

Clark County building inspectors don't check Summerlin Centre as often as they visit Fontainebleau.

"Because of its state of completion, we look at the Fontainebleau more closely," Lynn said.

Boyd Gaming continues to spend an undisclosed amount of money each quarter to maintain the Echelon site. The company provides 24-hour security and surveillance for the fenced-off 87-acre location and operates 150,000 square feet of warehouse space to store unused building materials and construction equipment.

"Our goal is preserve the site and the structure in order to maintain and protect its value," company spokesman David Strow said.

Boyd also operates a system for preventing water buildup.

"Water is the enemy that would have the biggest impact on an unfinished building," said Ken Zarembski, managing director of Walter P. Moore Engineers + Consultants. "Structurally, steel doesn't change. As long as it doesn't rust, it could last a long time."

None of the stalled projects are anywhere near restarting.

The Howard Hughes Corp. took back the Summerlin Centre site from General Growth and is evaluating options.

"We will continue to monitor and evaluate all market variables and conditions, and coordinate with our retail partners to determine when the development will move forward," Howard Hughes Corp. Senior Vice President Tom Warden said.

Las Vegas Sands spokesman Ron Reese there is a continuing evaluation of the St. Regis tower. The company owns the cranes and is expected to remove them from the tower by the end of March. Reese said the building will be wrapped in construction material by May or June.

"There are a series of conversations taking place on what can be done there, but nothing is finalized," Reese said.

Investors don't seem to mind the inactivity. With 150,000 hotel rooms in a recovering market, Union Gaming Group Principal Bill Lerner said the last thing Wall Street wants to see is more lodging capacity.

Echelon, for example, was to have included multiple hotels totaling 5,000 rooms, a shopping mall and a 140,000-square-foot casino. Lerner doesn't think the project will be revived in that model.

"People understand what has happened to the market," Lerner said. "Investors are hopeful that when projects are restarted, the timing will be right."

Lynn said any restarted projects would undergo a "recommissioning process," ensuring the buildings are structurally sound and meet Clark County code. Even though construction work has stopped, structures are continually inspected.

Every month, inspectors from the Clark County Development Services check out the integrity of the Emerald River buildings and ensure that there is adequate fencing so the site is secured.

For all he knows, Lynn could be sending inspectors for another 20 years. News hasn't surfaced about Emerald River since 2005.

Jim Shaw, who represents Riverside Development, the current owner of the site, said the unfinished towers are "structurally sound." Plans to develop the project are on indefinite hold, Shaw said. But whatever is eventually built may involve the structures.

Could the Emerald River towers still be used after more than 20 years?

"That might be pressing it," Zarembski said.
Questions remain over stopped-in-progress Nevada projects is republished from CasinoVendors.com.