What would be the first private project for the city of Las Vegas' ballyhooed 61 acres will go before the City Council on Wednesday, with the developer asking to enter exclusive negotiations to build a 40-story or taller office tower.
The agreement calls for the city to sell 5.38 acres of its Union Park land at $1.74 million an acre to Heritage-Nevada VIII, a limited liability company.
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Mayor Oscar Goodman, who has made development of the vacant former rail yard a focus of his administration, said the project would be a boon to downtown, the city and the region.
"It will have as significant an impact, if not more so, than World Market Center," he said of the massive furniture wholesaler built on neighboring land. "It'll be a new industry that will bring people worldwide."
Both Goodman and the chief executive with the company behind the project refused to say what the use would be.
The agreement calls for 500,000 square feet of commercial space and 100,000 square feet of retail space. Residential space is not part of the plan, dubbed Project Splendor.
Goodman said he has heard that the project will be taller than 40 stories.
The city has been at this stage before with developers interested in Union Park, only to have deals fall through. Most recently, would-be master developer The Related Cos. and the city broke off talks after more than a year because the New York-based development company wouldn't commit to erect residential high-rises within the mayor's time frame.
The only two projects currently slated for the site are backed by nonprofit organizations. A model of the Lou Ruvo Alzheimer's Institute, designed by Frank Gehry, was unveiled this year. Organizers are raising money and designing the Fred W. and Mary B. Smith Center for the Performing Arts.
Goodman said the difference this time is that Heritage-Nevada "is paying for the land. They're not asking for any particular benefits, any significant monetary benefit from the city."
The mayor acknowledged that the price Heritage-Nevada would pay -- $1.74 million an acre, or $40 a square foot -- is well below the $4 million or $5 million an acre some downtown land is being sold for.
"When you look at the tax benefits, the diversification of the economy, the critical mass assembled, it's not just a dollar up-front benefit," Goodman said. "It's four times what the city paid for it. This is not a giveaway."
Robert Zarnegin, chief executive and president of Heritage-Nevada and Probity International Co., a Beverly Hills development company that has the same principals as Heritage-Nevada, declined to discuss the project until it receives council approval.
Zarnegin said the company has been around for 30 years and has built office buildings, high-rise condominiums and hotels, mostly in California. The company has developed hotels such as the Peninsula Beverly Hills and The Wilshire in Los Angeles.
The exclusive negotiating agreement calls for a 12-month negotiating period between Heritage-Nevada VIII and Newland Communities, a San Diego company hired by the city last year to coordinate development of Union Park.
The developer will be required to submit $200,000 as an earnest money deposit and can extend negotiations by six months by submitting a site development review and another $200,000 deposit. There is also the possibility of a tax rebate for the project. And the city will have to assume clean-up costs for any contaminated land, up to $12 a square foot.
When Goodman was asked how the public could form an opinion of the deal without knowing details, he was dismissive.
"Who cares? I hope it takes place," he said. "If you asked the public about the furniture mart, they probably would've laughed.
"I say this respectfully to the public, but until they see the economic impact of these projects, and the impact they will have architecturally and to diversify our economy -- once they see it, they'll know it's a great project."
