A swanky hotel by celebrity chef Charlie Palmer won't be landing in downtown Las Vegas anytime soon because it's unlikely customers will pay room rates needed to make the project pencil out.
Developer Rick Kaufman delivered the bad news Wednesday -- a splash of cold economic reality for backers of Symphony Park, a section of downtown city leaders consider Las Vegas' hottest development zone.
During a presentation to the City Council, Kaufman and Palmer said there is a possibility they could afford to develop the project in phases but didn't offer a timeline.
Although city officials dangled the possibility of additional development incentives if they speed things up, the developers exercised their option to postpone the construction deadline for another year.
"Banks are not lending today for the construction of new luxury hotels in Las Vegas," Kaufman said. "It is still cheaper to buy a hotel in Las Vegas than to build one."
The plan had been to build an approximately 400-room hotel in Symphony Park that would complement the Smith Center for the Performing Arts, which is scheduled to officially open next week, and other projects in the former rail yard.
But the unraveling economy sent room rates in Las Vegas plummeting in recent years.
"The whole project today is absolutely not viable today," Kaufman said. "But what might be viable is a phased project."
Last year, the average daily rate in Las Vegas was $105, up from a low of $92.93 in 2009 but a long way from the $132 customers were willing to pay in 2007 around the time the Palmer hotel was conceived.
Kaufman said an alternative could be to build a 50- to 100-room hotel with the potential to add a larger structure later.
"The hope is by building a lighter-weight building that still looks and feels great, that cost-per-room is low enough that today's relatively lower room rate can help us pay the mortgage," Kaufman said.
Although Kaufman repeatedly said his company is committed to the project, some council members were irritated.
Ward 6 Councilman Steve Ross said the delay threatens to undermine good economic vibes coming from an area that has seen the construction of the Smith Center, the Cleveland Clinic Lou Ruvo Center for Brain Health and the World Market Center in recent years.
"We have momentum right now, and I don't want to see that slow down," Ross said.
Ward 3 Councilman Bob Coffin expressed doubt that the Palmer would ever break ground and suggested the delay was just to kill time before pulling the plug entirely.
"I worry that maybe you don't want to go there because it is just not feasible at all and you just won't say that," he said.
Mayor Carolyn Goodman dangled the possibility of development incentives to keep the project on track, telling Palmer and Kaufman there are "ways we can help you move forward."
Afterward, Economic and Urban Development Director Bill Arent said there have been preliminary discussions about New Market Tax Credits. The federal credits were first used in Nevada during development of the National Museum of Organized Crime and Law Enforcement, aka the Mob Museum, in downtown Las Vegas.
"If you can lower their cost of financing, we might be at a point to make that project go," Arent said.
Contact Benjamin Spillman at firstname.lastname@example.org or 702-229-6435.