Henderson arena deal failed because Sacramento Kings went elsewhere, developer says

Failure to lure the NBA's Sacramento Kings to Henderson - not fraud - killed an ambitious arena-stadium project that couldn't land a pro sports team as an anchor tenant, embattled developer Chris Milam said in court papers filed Monday.

In his first public response to allegations that he intended to defraud the city of Henderson through a bait-and-switch land scheme, Milam also revealed that his development team included attorney Key Reid - son of U.S. Senate Majority Leader Harry Reid, D-Nev., and the brother of Henderson City Attorney Josh Reid.

Key Reid was brought into the sports complex deal to recruit a Major League Soccer expansion team and was paid $5,000 a month, according to legal papers filed by Milam's lawyers, the Las Vegas law firm of Santoro Whitmire.

City Attorney Reid, who was not in that job when Milam hired his brother, said through the Henderson's public relations office that, "My understanding is that Key was hired for his relationship with Major League Soccer."

Milam's response also said Reid had an equity interest in Milam's group that was later rescinded. The amount of equity and the circumstances of the recision were not specified.

Key Reid was hired by Milam in May 2011. His older brother, Josh, became city attorney the following December. It is unclear in the court filings whether Key Reid's work on the proposed development overlapped with his brother's tenure with the city.

Key Reid declined comment.

Milam's court papers portray the Texas developer and his team of lawyers and consultants as having worked hard to recruit the Kings while also talking to NBA, NHL and Major League Soccer officials to lure a professional team to the proposed multi-venue sports complex proposed for 480 acres in Henderson. Helped substantially by Henderson's endorsement, Milam tendered the sole bid in a Bureau of Land Management sale, paying $10.5 million for the raw desert.

While once supportive of Milam, the city sued after learning that the developer was shopping the land for residential and commercial uses before last November, when he told the city that the sports complex it desired was not financially viable.

CHASING A FRANCHISE

In court papers, Milam's attorneys describe his development company's pursuit of partnering with cable companies to create a regional sports network that would broadcast games of a future Henderson-based NBA team; the hiring of Morgan Stanley to advise on relocating a pro team to Henderson; and even touring the Barclays Arena site as it was being built for the Brooklyn Nets.

Milam's lawyers said the developer's team "conducted extensive discussions with representatives of numerous NBA franchises," but the court papers name only the Kings.

On May 21, 2012, Henderson Mayor Andy Hafen and acting City Attorney Christine Guerci-Nyhus met representatives of the Maloof family, which owned the Kings, and the largest nonfamily partner, Bobby Hernreich, in New York City.

No deal was made. The Kings recently were sold to a Seattle investment group.

Key Reid, 38, was most associated with efforts to land a professional soccer team. He had played soccer for the University of Virginia from 1993 through 1996 under Bruce Arena, the legendary soccer coach who later led the U.S. national team and is now coach of the Los Angeles Galaxy.

Working for Milam, Reid and Hafen traveled to New York, where they met potential financiers and senior MLS, NBA and NHL officials, the court papers said.

Reid managed the Washington office of prominent Nevada law firm Lionel, Sawyer & Collins from March of 2002 through December of 2003. He left to join Greenspun Corp., a Las Vegas real estate development firm, after the Los Angeles Times published an investigation of relatives of congressional members who lobby Congress.

One article spotlighted Sen. Reid and his sons, who all worked for Lionel Sawyer & Collins. The senator then decided Key Reid and his son-in-law, lobbyist Steven Barringer, should not be allowed to visit his office on behalf of clients.

FINANCING EVAPORATES

Milam said the sports complex idea fell apart because CSST, a Chinese company he was counting on to finance project, in May 2012 refused to fund the deal without an arena anchor team, court papers said, though a memorandum of understanding signed by CSST on Feb. 8, 2012, hadn't included that stipulation.

"Given CSST's change of the terms upon which they would finance the Project, and the slow pace of discussions on the Kings, the Milam Defendants ultimately came to the realization in or about July/August of 2012 that it would not be possible to achieve a financial closing by the date required, " the court papers said.

The city of Henderson remembers the deal falling apart in a different way.

"Two weeks before Milam attempted to terminate the deal with the City, (Milam public relations specialist) Lee Haney and (Milam lawyers) John Marchiano and Chris Stephens told City Council members in briefings with city staff that Milam had made significant progress with the Kings and other sports franchises. At no time did they inform the City that financing fell through because of their failure to lure the Kings," Henderson spokesman Bud Cranor wrote in an email.

"Milam never informed the City that the Chinese financing had fallen through," Cranor wrote.

Unable to land the Kings, Milam's team approached Josh Reid and City Manager Jacob Snow to discuss modifying the scope of the project to integrate residential, commercial and business uses, comparing it with the Irvine Spectrum project in California, the legal papers said.

Milam said the city officials agreed to a change in the project's scope on condition the developer could attract a joint venture partner.

Promotional materials that included residential elements for the site were prepared for that effort, not as an end-run around the city, Milam maintains in court papers.

The city disagrees.

"Neither Milam, nor his representatives, ever suggested changing the use of the project to residential in any meeting with the city manager or city attorney,'' Cranor wrote. "Milam's claims that they stated that the City would agree to allow them have large scale residential development on the arena site is false. The City has always been firm in stating that residential development would not be appropriate for the arena site."

NO ONE IS HAPPY

"This case is about a failed business deal. Neither side is happy with the outcome," Milam's legal papers said.

But city officials allege that Milam intended all along to use Henderson's backing in buying the BLM land at a sweetheart rate, then blow off the development agreement that limited its use for a stadium complex.

Milam unsuccessfully attempted to build sports venues near the Strip before he pitched the idea to Henderson officials in mid-2011.

Also named in the city's lawsuit are Marchiano, a widely known Henderson lawyer who handles many land use cases in the city; Stephens, a lawyer with the firm of Brownstein Hyatt Farber Schrek; Michael Ford, a land consultant and form BLM official; and Haney, a public relations specialist. In court filings, each of the defendants denies conspiring to defraud Henderson.

"This story of grand conspiracy between Milam, the portrayed 'evil developer from Texas,' and four sophisticated professionals ... is pure fiction. The story is a last-ditch effort by (Henderson) to save face in light of its failed expectations," Milam's court papers said.

Attorneys for the city are expected to be in Clark County District Court today seeking a preliminary injunction to prohibit Milam from using the land for anything but a stadium-arena complex.

Review-Journal writer Brian Haynes contributed to this report. Contact reporter Alan Snel at asnel@reviewjournal.com or 702-387-5273.