Harmon Hotel gains reprieve from demolition

The unfinished and unwanted Harmon Hotel at CityCenter on Friday received at least a one week reprieve from demolition.

Clark County District Judge Elizabeth Gonzalez gave FM Global, the insurance company that holds the construction policy on the Harmon, until Dec. 13 to outline whether it needs more time investigate the building’s flaws. CityCenter, half-owned and operated by MGM Resorts International, has filed a $393 million claim on the Harmon as a total loss.

At a hearing, CityCenter attorneys argued for renewed demolition authority, but no one from the insurance company appeared to explain its position. In September, however, FM Global raised concerns in letters to CityCenter attorneys that demolition might destroy evidence and invalidate the policy, leading Gonzalez to rescind the demolition permission she had granted on Aug. 23.

If FM Global does not repond in the next week, Gonzalez said she would rule in a way that would “probably be back in the same place that I was before.” But should the insurance company press for more time, “Maybe I will make a different determination,” Gonzalez said.

The latest twist in the two-year-old tug-of-war over the Harmon’s fate started on Aug. 27, when CityCenter filed its formal proof of claim. Although CityCenter attorneys downplayed this as a formality, FM Global senior general adjuster Chris Roza wrote a letter that this vastly expanded the potential claim. With CityCenter gearing up to start floor-by-floor demolition in mid-October, rather than stage an implosion that has become a Las Vegas specialty for getting rid of obsolete Strip properties, Roza said the insurance company would not have enough time to finish its work.

While preliminary paper work began in October, the schedule called for work on the site to start Dec. 2.

CityCenter attorney Mark Ferrario, however, said FM Global’s people and consultants have spent as much, or perhaps more, time examining the Harmon’s construction than anyone else. Further, the demolition timeline calls for preliminary cleanup work and removing the exterior glass skin first, allowing FM Global to work in the Harmon simultaneously, with the removal of the top floor not expected to being until April.

“There’s plenty of time for them to do whatever they want to do, within reason,” Ferrario said. “It’s a red herring issue.”

But George Ogilvie III, representing former general contractor Tutor Perini Building Co., raised concerns that it would hurt his client if FM Global refused to pay. Any insurance proceeds would be applied as a credit that reduces any liability Perini would face if a jury, with a trial now scheduled to begin in April, ultimately found that Perini must reimburse CityCenter for shoddy construction.

As has happened previously, the Harmon’s safety figured into the mix. CityCenter’s engineers have concluded that critical parts of the Harmon were so badly built that they would crumble during a serious earthquake, causing the entire 26-story tower to collapse.

In April, Steve Schiller, an engineer on Perini’s side, sent the county building director a letter saying that the process of gathering evidence last spring had weakened the building, even though he previously concluded that it would survive an earthquake. He also recommended a couple of quick fixes to shore up certain structural trouble spots.

“Who will be held responsible if, God forbid, a code level earthquake should occur and the Harmon collapses onto Las Vegas Blvd., the Cosmopolitan and/or the Crystals mall,” wrote City Center attorney Alexander Robertson IV in court papers. If that happened, he laid out a scenario of “plummeting stock prices,” numerous lawsuit and government investigations ensuing.

However, Ogilvie countered that CityCenter raises the safety issue only to advance its legal agenda. In two-and-a-half years since CityCenter raised the possibility of disaster, it “has done nothing to abate code deficiencies in any way,” he said.

CityCenter attorneys said they had not yet decided whether they would take out the demolition permit, now the the county has approved its floor-by-floor plan, and begin preliminary work in the coming week.

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or at 702-387-5290.

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