The city of Henderson and Chris Milam have reached a tentative settlement in the city’s lawsuit alleging the embattled Texas developer masterminded a bait-and-switch deal to flip 480 acres of federal property for single-family homes instead of building the sports complex he promised, the Review-Journal has learned.
Negotiations over the weekend concluded with Milam’s lenders “taking over” to reach the tentative deal, said a source familiar with the settlement.
Texas-based lenders Rockafellow Investments LLC and II C.B. LLC had loaned Milam $16 million to cover the $10.5 million cost of buying the land from the Bureau of Land Management, plus related expenses.
Details of the settlement were still being finalized Monday, but the deal would include one of three options:
■ Pay Henderson $250,000 by Friday to cover lawsuit costs and continue the transfer of the BLM land.
Technically, Milam would ask the BLM for a 45-day extension from the current March 28 closing date. When that deal closes, he would have to pay the city another $4.25 million. After gaining title, Milam then would sell the property to a buyer who would have to comply with the city’s arena zoning.
“The lenders would then receive any money above that, up to the amount of their $16 million loan to Milam,” the source said. “The lenders drive the bus. Milam is just a passenger. Milam will only hold title in name only.”
■ Kill the BLM deal. The agency would keep the land and a $2 million nonrefundable deposit. Milam’s creditors would walk away with just less than $8.5 million refunded from the $10.5 million held in escrow.
■ A combination of the two other options, with Milam paying the city $250,000, the BLM keeping the land and the creditors walk away with $8.5.
“His chance of coming out of this with any profits from this transaction is very remote. That property would have to sell for more than $21 million for there to be any surplus. That doesn’t seem possible at this point,” a source close to the negotiations said Monday.
Lawyers for both sides were expected to present the settlement today to District Court Judge Susan Scann, the source said.
Neither Milam nor his lawyers could be reached for comment Monday. City spokesman Bud Cranor acknowledged the settlement discussions but said nothing is official.
In its lawsuit filed in late January, the city never tried to block the BLM land transfer. Instead, it asked a judge to limit use of the land to arena purposes and to prevent Milam from profiting from the sale of the land for use as anything but a sports facility.
After failing to secure a site near the Strip, Milam approached Henderson in 2011 about building a four-venue professional sports complex, which included an arena for NBA or NHL games, professional soccer games and baseball.
The city supported Milam by nominating the BLM land for purchase and gave the developer the inside track by requesting that Milam be allowed to match the highest bid. Milam was the sole bidder, however, and simply matched the BLM’s appraised value.
In court papers Milam said he lost his expected financing for the project in mid-2012 when his China-based lender required an anchor sports team tenant as a loan condition. The lender had not previously made that requirement, Milam said in court papers.
Milam pulled the plug on the arena deal on Nov. 28 by hand-delivering a letter to the city saying the sports complex was not feasible, though he still planned to buy the land.
After developers complained to the city that Milam was distributing materials in November promoting the land for residential use, Henderson sued Milam and accused him of working with his consultants to flip the land for home construction after he promised the arena-and-stadium complex.
The city’s lawsuit against Milam included several other defendants accused of working as his “confederates” in a scheme to promise an arena but flip the land for homes.
The city’s lawyers alleged that a land use consultant, Mike Ford, used his friendship and business alliance with former Bureau of Land Management Director Bob Abbey to help Milam get the land. The city’s pleadings alleged that another consultant, former City Attorney John Marchiano, apologized to the city for Milam misleading Henderson officials.
The city’s lawyers allege that Ford’s firm and Marchiano individually would each get a $500,000 “success fee” if the BLM land deal were consummated.
Abbey, who denies he helped Milam acquire the land, wrote in an email Monday that he and his partners at Abbey, Stubbs and Ford LLC are keeping their options open.
“We fully believe we have been harmed by the slanderous allegations raised against us by City of Henderson officials and we do not believe that justice has been served through the proposed settlement between Milam and the City,” Abbey wrote.
The federal Office of the Inspector General is investigating the land deal after the Department of the Interior requested the probe a month ago. It’s unclear what effect the settlement would have on the federal investigation.
Abbey wrote that he expects the federal investigation will confirm that he played no role in this BLM land deal.
“The fact that Henderson officials raise allegations do not mean they are true. We will continue to push for the Department of Interior’s Office of the Inspector General to complete their review and publicly release their findings,” Abbey wrote.
“I am confident their report will validate that I had no involvement in this sale during my time as the BLM director and that I have not benefited in any way from this transaction. I am also confident their report will find that applicable laws, regulations and agency policies were fully adhered with,” he wrote.
“At the end of the day, I am hopeful the good citizens of Henderson will realize they have fucking idiots working for them and that they will show up at the polls to elect officials who are worthy of representing that community’s interests,’’ Abbey wrote. “I do not believe this to be the case today.”