London developer rescinds Moulin Rouge development offer

The excitement over what seemed to possibly be a final redevelopment attempt of the Moulin Rouge site is gone even faster than it came.

A London-based developer who had offered to redevelop the site appears to have withdrawn from the project.

An email from an official of Psi-Key Entertainment Corp. sent late Friday to the receiver of the Moulin Rouge property states that “despite significant efforts,” the company did not receive any letters of support from the state of Nevada or the city of Las Vegas.

“Regretfully, based on this turn of events and lack of civic support for this project, we have no alternative but to withdraw from the transaction and rescind the Purchase Agreement referenced,” the email states.

The email was sent six hours after Psi-Key failed to deposit $1 million in escrow.

Assemblyman Harvey Munford, who is also the chairman of the board of the Ward 5 Chamber of Commerce, which encouraged Psi-Key leadership to submit an offer on the property, said the abrupt change of heart by Psi-Key is “the most shocking experience” he’s had has a legislator.

“(Working with a seemingly promising developer) made me almost ready to jump up and down,” Munford said. “They made it appear as if they were ready to rock and roll, and then all of a sudden they came up short.”

Psi-Key leadership did not respond to an interview request. However, in a previous interview Oct. 14, Psi-Key Entertainment CEO Paul Taliaferro said that apart from something coming out of “Area 51” and warning of a “doomsday device,” he and his team were prepared to pursue a $1.9 billion project to develop a hotel resort, convention center and neighborhood revitalization project on West Bonanza Road in downtown Las Vegas that extended to Cashman Center.

While the email from Psi-Key cites a lack of civic support, city of Las Vegas spokesman David Riggleman said municipal officials are disappointed that the project seems to have stalled.

“We’d love to see that (area) developed into something as grand as they were talking about,” Riggleman said. But the city does not financially support hotel-casino projects.

“The city can assist private-sector projects through the fast-track process to get plans reviewed quickly and through other redevelopment incentive programs,” Riggleman said.

Jennifer Cooper, a spokeswoman for the governor’s office of economic development, said in a statement, “We were introduced to representatives of Psi-Key by phone for the first time last Thursday afternoon. It is disappointing to learn that they are no longer interested in the project.”

In a letter from the city to Taliaferro dated Oct. 18, the city stated, “Once you have closed escrow on the purchase of the Moulin Rouge property, I would suggest that we meet so our team could learn more about your project, including project phasing, real estate development team, and project financing. I thank you for your interest in investing in downtown Las Vegas.”

Dale Scott, former president of the Moulin Rouge Development Corp., which attempted to redevelop the Moulin Rouge in 2004, said he felt that he had the “full support of the city and the community” when he was working on the site.

But given the site’s 60-year failed development history, Scott said, a developer looking to work on the Moulin Rouge must be prepared to prove its financial ability to do so.

Psi-Key would have taken ownership of the Moulin Rouge property upon court approval Nov. 18. Riggleman and Scott said it is possible that Psi-Key was looking to secure letters of support before they took ownership of the property as leverage to gain investors.

A judge will decide Nov. 18 whether to approve the sale to the next-best offer. That will be either Las Vegas Moulin Rouge, LLC, which has an offer in of $10 million but has yet to fund earnest money, or another developer who may emerge on the scene before then. Las Vegas Moulin Rouge, LLC is headed by Scott Johnson, a former member of Moulin Rouge Holdings LLC, which failed to close on a sale of the property for $8 million in June because of company infighting over a higher offer by AMA Realty.

Contact Nicole Raz at nraz@reviewjournal.com or 702-380-4512. Follow @JournalistNikki on Twitter.