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March 6, 1997
Dear Commissioner:
ITT was welcomed to Clark County and the City of Las Vegas in 1993 with tremendous warmth and enthusiasm. Our welcome in Carson City was equally assuring. So much so that we elected to incorporate in the State of Nevada at the time of the spin-off of ITT into three companies with ITT Corporation, the hotel and gaming company, becoming a legal resident of your state.
Last fall I received a telephone call from Steve Wynn, a longtime friend, asking that I overrule Peter Boynton and grant Mirage Resorts Inc. the right to use air space behind the Caesars Palace for a monorail system from Bellagio to the shopping area at the Mirage. Mr. Wynn and his people had already been told that we could only grant such a right if a stop, at Caesars' expense, was provided on the Caesars property. Mr. Wynn argued that, since the monorail technology he had contracted for provided only for a two-way system with no stops in between, he could not accommodate this request. However, he also stated firmly that he would not provide a stop at Caesars even if this technology could accomplish that.
I then suggested to him that there might be a common stop between Caesars and Mirage so that passengers from Bellagio could go to either casino as they chose. He was equally opposed to such an idea and could not have been more emphatic about that to me.
During the entire course of the call, he did not tell me that he had already submitted an application for the monorail utilizing our air space to the Planning Commission for approval the following week. Because the land and air space above are very valuable assets of Caesars Palace, and in my responsibility to my shareholders, I dutifully went out to Las Vegas on Oct. 23 to explain the situation to each of the Commissioners that I could talk to, namely, Chairperson Yvonne Atkinson Gates, Vice Chair Lorraine Hunt, and Commissioners Erin Kenny and Myrna Williams.
The day I was there I did meet with Commissioner Paul Christensen, who since has been replaced by Commissioner Lance Malone. In the meetings with each of the Commissioners, at which I was accompanied by Peter Boynton, Bob Faiss and Marc Rubinstein, I made it clear that Mr. Wynn had not told me about the action for approval of the monorail in our telephone conversation and that, furthermore, he had told me that if ITT did not cooperate, Mirage Resorts would not cooperate with respect to future Caesars Palace construction plans and that ultimately he would seek condemnation of Caesars Palace air space by the Clark County Commission. About a week later, Peter Boynton and Bob Faiss met with Commissioner Woodbury and related the exact same information.
I remember very clearly Chairperson Atkinson Gates stating that the board would never condemn property or air rights in order to serve another private interest. That was certainly no surprise.
But the events that have occurred since then have emerged as a real surprise. On Tuesday, Feb. 26, our General Counsel, Mr. Richard Ward, called to tell me that Marc Rubinstein had received suggestions from certain of the County Commissioners that I should try, once again, to resolve this issue with Steve Wynn before a hearing on the Caesars Palace south tower proposal to be held by the Commission on Monday, March 3. I reached Mr. Wynn that same day in Lake Tahoe and, once again, repeated my proposal for a monorail stop at Caesars, or a common stop between Caesars and the Mirage. Mr. Wynn was obviously angered by the nature of my call in which I indicated that this seemed to have some bearing on whether or not our south tower would be approved and was explosive in his rejection of either of my proposals.
On Monday, March 3, at a management meeting here, Peter Boynton suggested that I be sure to call the Commissioners and let them know of Mr. Wynn's reaction to my call, as they had originally instigated my making the calls in accordance with messages received from Mr. Rubinstein. I put in telephone calls to all of the Commissioners, and the only one to return my call was Commissioner Woodbury, with whom I had not met during my visit last October 23.
Commissioner Woodbury understood Mr. Wynn's position and certainly ITT's. I made it very clear that the south tower was a completely independent project and should not be used as a basis for coercing ITT to approve releasing the air space to the County so that they could allow Mr. Wynn to build his monorail without a stop at Caesars. Commissioner Woodbury politely listened and said, "Thank you. I understand your position." At 7:30 in the evening, I received a return telephone call from Commissioner Malone after my offices were closed.
The hearing, of course, took place and, to my dismay, our pre-development agreement for the south tower was approved only if we deeded air space unconditionally over to the County so that Mr. Wynn could build his monorail. We have always indicated to the Commission that we would grant air rights for a public conveyance system, which included a stop at Caesars, but not for the purpose obviously intended. I am not sure that the Commission completely understands my responsibility to protect valuable assets of the shareholders of ITT, and Caesars Palace is a very valuable asset.
On Tuesday, March 4, at a Board of Directors meeting of ITT in New York, I advised our Board of what was taking place and the pressures that were being applied by the Board of Commissioners. It is appropriate to say that they were incredulous. They were also advised that, if the Commission decided against us, we would most likely have to go back to the Planning Commission for a second use permit before we could expect to pursue this issue again. Our architectural work has been completed at considerable expense, and we are now facing at least a month or two delay, even if the Commission approves the second tower at its next hearing on this subject. As I understand and reported to our Board, there were no objections to the tower other than the demand by the County for the air rights behind Caesars Palace.
On Wednesday, March 5, at the suggestion of our Board, I once again attempted to call Commissioners Atkinson Gates, Hunt, Williams and Woodbury. As of 4pm on Thursday, March 6, none of these calls have been returned. So, although I have attempted to do what the Commissioners requested, I now feel I do not even have the representation, since you will not communicate with me. I can't help but think back to our corporation's original welcome to Nevada and Clark County in 1993 and several similar welcomes in the subsequent years.
Because of the circumstances, I am forced to put in writing what I could not communicate orally, which would have been preferred from our corporation's point of view. Our corporation will simply not be treated in this fashion. Mr. Wynn's monorail has nothing to do with our south tower. I can only advise that if we do not receive approval for the south tower project without the constraint of having to provide Mr. Wynn the right to our air space, then I will regretfully be forced to cancel the construction of the south tower, and if the County wishes to proceed with the frontage road, it will have to condemn that property at substantial cost to the taxpayers.
It is my understanding from Marc Rubinstein that after the seven to nothing approval of our project only if we provided our air space, he advised the seven Commissioners that we would not sign the document the Commission offered us. I understand also that you repeated, as a board, your remonstrance to me and to Steve Wynn that we settle this issue. I simply tell you, we can't, and to hold the south tower hostage to Mr. Wynn's naked display of raw power is to my corporation unconscionable. The Board of Commissioners has now given Mr. Wynn veto power over our Caesars Palace south tower construction together with three public works projects (frontage road, Harmon Avenue extension and the "X-Tunnel.") Unless decency and fairness come to play here, the Clark County welcome will be a hollow event.
This is not my kind of ball game. Mr. Wynn has told me that I do not understand how Las Vegas operates. I hope he is wrong, but I am truly shaken by your decision and hope you will amend it on the next go around to simply approve our south tower project, or I assure you it will be dead with the loss of annual room taxes of approximately $2.6 Million and annual property taxes of approximately $1.0 Million. To be very clear about it, the air rights' issue should never have come into play here, and I think we all know it. I am only happy we got approval for a larger north tower project before Mr. Wynn's monorail could get involved in that major construction as well.
Finally, I would remind you that when I visited with five of you last October, I made it very clear that we wanted to be very good citizens in Las Vegas and Clark County, that we would dedicate land for the frontage road and air space for a public conveyance system, and that we would cooperate in every way for systems to be built on the other side of the strip affecting a future Planet Hollywood and the Desert Inn. We have tried to cooperate with your staff in every way. We had planned, at the time I met with you, to spend $2 Billion on new construction at Caesars, the Desert Inn and Planet Hollywood. We have tried to be responsive to government, but I think we also have the right to expect elected government officials to be responsive to us and treat all its corporate citizens equally.
While I am perplexed at my inability to communicate orally with you, I will attempt to set up a meeting with as many of you as I can see on my next trip to Las Vegas. I particularly would like to meet Commissioners Woodbury and Malone, since I could not meet them on my previous visit, and also to reestablish relationships with the other five Commissioners. I know you understand my situation, and I want to work this out amicably even on a delayed basis.
Sincerely,
RAND V. ARASKOG
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