Henderson, developer endure a bitter breakup


From the start, it looked like an “Odd Couple” romance — a developer with a checkered past out to win the heart of a wholesome bedroom community lost in the shadow of Sin City.

Here was mall developer Christopher Milam, up from Austin, Texas, and fresh from trying to build a major sports arena at two sites near the Strip. He was a smooth-talking, earnest suitor who spoke convincingly about the Las Vegas Valley’s ability to win an NBA team, selling himself as just the man to build the team’s glittery home court.

After two air balls in Las Vegas, Milam was ready to settle down in the suburbs. And Henderson, once a small town but coming into its own as Nevada’s second city, was hungry for attention as well as economic development.

Milam pitched a dazzling plan: Not only would the 480-acre site be home to an NBA arena, but it also would have a stadium for a Major League Soccer club.

And a baseball park.

And a football stadium for NFL games.

And all this was possible without public money.

How could any city resist such a pass?

“If it sounds too good to be true, then it probably is not true,” was all former Denver Mayor Wellington Webb could say after he was briefed about Henderson’s decision to back Milam’s play.

Webb was mayor of the Mile High City from 1991 to 2003, a time when a Major League Baseball park, an arena for NBA and NHL teams and a new NFL stadium were built.

Rick Baker, chairman of the Metro Denver baseball and football stadium boards, said Henderson city officials were gullible to think that Milam could deliver the four-venue complex he proposed.

Baker said only a few sports titans, such as Phil Anschutz and Stan Kroenke, owners of the NFL’s St. Louis Rams, NBA’s Denver Nuggets and NHL’s Colorado Avalanche, could do such a feat.

“It sounds pretty bizarre,” Baker said.

Neither Milam nor city officials wanted to talk about the land deal, which is now under federal investigation. What’s known about their failed relationship comes from public records, observations of other developers and assessments of those familiar with the nation’s sports facility industry.

FALLING OUT OF LOVE

Like many relationships that start out feeling too good to be true, the marriage between the confident Texan and the city looking for arena love ended in a bitter breakup, recriminations and lawyers’ bills.

After romancing the city for more than a year, Milam on Nov. 28, 2012, delivered a Dear John letter. The deal was off, he wrote, because his stadium/arena deal was not financially viable.

And, by the way, he planned to keep the ring: That same day he paid the balance of $10.5 million to the Bureau of Land Management for the site he and the city had selected for the arena complex.

Henderson officials say they knew Milam was a two-timer. A sales brochure dated Oct. 8, 2012, was already circulating, offering the 480 acres for a mixed-use development “which could likely be re-entitled for high-density, single-family residential units.”

Moreover, Milam’s brochure said the land he was buying from the government at $22,000 per acre is comparable to that in neighboring Inspirada, where the asking price is $500,000 per acre.

Milam even gave the bare desert a street address, adding a little dig at the second city: 14000 Las Vegas Blvd. South in Las Vegas.

Last month, Henderson took Milam to court. The city scorned doesn’t want custody of the land, and it isn’t asking the BLM to block the sale, but it is asking a Clark County District Court judge to prohibit Milam from using it for anything except a stadium or arena, as outlined in a 2012 development agreement.

A March 18 hearing is scheduled.

After more than a week of charges and countercharges in court filings and in the media, one question remains:

Why didn’t the city see it coming?

Henderson “saw this as a way to get out of Las Vegas’s shadow,” Webb said.

Henderson should have been more skeptical, considering Milam’s high-profile failures to land stadiums and arenas just off the Strip and downtown, in Symphony Park, said Clark County Commissioner Steve Sisolak, whose district includes half of Henderson.

“In Henderson, he’s telling a story that everyone wanted to buy into. He’s saying stuff that every politician and resident dreams about,” Sisolak said. “They believed something that was a fairy tale. It’s not like the signs were not there. ... He’s a masterful salesman.”

Deep down, Henderson knew it was taking a chance on a bad boy who had left a trail of broken promises in his wake. The city’s own lawyers made reference to the developer’s flaws in perfect hindsight when they filed their legal complaint on Jan. 28.

“Milam is a man with a troubled past, and is no stranger to fraud,” they wrote.

In another high-profile dispute in county courts, Milam was accused of lying about the source of money he brought into a failed 2005 condo project with former Hard Rock Hotel owner Peter Morton. The dispute led to a $1.1 million fraud judgment against Milam.

In designating the land for use only as a sports complex and nominating — or endorsing — Milam’s bid to the BLM, Henderson gave Milam an inside track. No one else bid against him.

Henderson may have seen the affair as having little risk. Milam was to pay all the big bills, though the city would be putting its reputation on the line as well as covering some costs associated with the zoning and land use process.

If Milam couldn’t deliver a sports complex, he wouldn’t buy the land and the relationship would simply be a passing fling, the city reasoned.

“It would be, ‘no harm, no foul,’\u2009” said developer John Ritter, who built the Mountain’s Edge and Providence master-planned communities, and whose company has supervised Inspirada in Henderson.

“The basic concept was if Milam pulls off the arena, he buys the land. But if he can’t, he won’t,’’ Ritter said. “Milam couldn’t do the arena deal, but he wants (to buy the land) and have his cake and eat it, too, and that was not the intent of the deal. That’s why it’s a scam.”

Henderson now accuses Milam and four associates of outright fraud — promising the sports complex Henderson desires while all along planning to flip the property for commercial and residential use.

But in court papers, Milam’s lawyers say he never intended to jilt Henderson.

“This case is about a failed business deal,” they wrote.

That means it’s no one’s fault — “It’s not you, Henderson, it’s me ... and my financial backers.’’

HEAD OVER HEeLS

It may not be as entertaining as an episode of “The Bachelor,’’ but competition to boost civic pride and financial stability by landing a major sports venue is intense in Southern Nevada. There are at least four current proposals, all hoping to make it to the altar first. They include projects in downtown Las Vegas, at the University of Nevada, Las Vegas and attached to major resorts on the Strip.

Perhaps it’s no surprise that Henderson, a suburb aching to blossom as a major league city in its own right, might fall prey to a salesman with a smooth pickup line promising exotic financing, access to powerful league officials and a date with owners of an NBA team — the Sacramento Kings — looking to relocate.

Rohit Joshi, the animated veteran developer of the Neonopolis on Fremont Street and no stranger to pitching deals to local governments, described the dynamic this way:

“Every city has a dream of grandeur to have an arena,’’ Joshi said. “They feel it brings prestige to a city. His job is to get people excited about a deal. Developers want to conquer mountains and conquer the world. ... They (Henderson officials) got swayed by a developer.”

Milam’s seduction took Mayor Andy Hafen and acting City Attorney Christine Guerci-Nyhus to New York for an assignation with representatives of the Kings in the swanky boardroom of Goldman Sachs, a leader in stadium under­writing.

Milam arranged private meetings with the president of the international group of CSST, his financial backer, for Hafen and each City Council member separately.

He swept city officials away for a tour of the Brooklyn Nets arena construction site.

And he showed them that he had what it takes, adding Piper Jaffray as a power­house bond underwriting group, and making big plans to create a regional sports network to broadcast NBA games from his arena.

He professed his ardor and devotion at an April 17 Henderson City Council meeting, telling all who would listen that, “We have large teams now working on architecture and engineering, finance, legal, sponsorship, marketing, event sales, and a whole lot of other stuff.”

But at the end of the day, Milam wasn’t able to woo everyone. Sisolak said he had heard it all before, when Milam wanted to build in the county, and it didn’t sound any sweeter in Henderson.

“There was no substance to what he was presenting in terms of making it work,” Sisolak said.

LESSONS TO LEARN

Henderson isn’t the first town to fall for a player.

Joshi said the city should have signed a developer’s version of a prenuptial agreement, requiring Milam to have a tenant before it agreed to walk down the aisle.

“You always get the tenant first,’’ Joshi said. “They should have asked him, ‘Where is your team?’\u2009”

Cities across the country hear all types of grandiose proposals. Former Tampa City Councilwoman Linda Saul-Sena saw her share over two decades in office.

“If someone came to Tampa with that plan, I would have been incredulous. Unless they were King Midas, I would want to see their business plan,” Saul-Sena said.

“Did Henderson do any due diligence? When the first conversations started, I would want to see proof of his ability to build this thing.”

Proof? Milam offered council members this at the April 17 meeting:

“CSST, our lender, approved the project at their investment committee a week ago Monday,’’ reads a transcript of that meeting included in the city’s lawsuit. “So it’s fully approved. ... They’re providing the majority of the money in a construction loan as a senior lender.”

At that meeting, Milam told council members that CSST, a Chinese company that has declined comment on the Henderson deal, would put more than $650 million in the arena even without an NBA team as a tenant.

“So, in a very real sense, the project is financed now,” Milam told the council.

Well, apparently it wasn’t.

In court papers filed last week, Milam said the lender changed its position more than a month after his reassurances to the council, and did indeed want an anchor tenant. With the Kings showing little interest in Henderson, Milam decided to ask for a divorce last July or August.

The city says Milam didn’t bother to inform it that the deal was no longer viable until late November.

That hurts.

Rick Smith, board chairman of the Henderson Chamber of Commerce, acknowledges Milam’s plan was “grandiose,” though he notes the world-class Staples Center arena in Los Angeles was also once considered grandiose.

And Smith acknowledges there were indications the proposal “could be problematic,” though he notes the city gave Milam deadlines and is trying to hold him accountable.

Smith said his city shouldn’t give up. It can still find happiness, if it can attract a good partner.

“If the right people are involved,” Smith said, “the plan can happen.”

Contact reporter Alan Snel at asnel@reviewjournal.com or 702-387-5273.

 

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