City-owned land that developers want to buy in conjunction with a revival of the downtown Lady Luck casino could fetch twice as much money as originally thought — although critics of the plan say the city could get even more.
The land value grew because early negotiations between the city of Las Vegas and developers CIM Group of Hollywood, Calif., didn’t consider gambling as a possible use for property along Stewart Avenue between Fourth Street and Casino Center Boulevard.
But once assessors returned reports that suggested unrestricted gambling as a potential use, the value of the deal shot up from $75 to $140 per square foot, or from $15 million to $28 million for the entire 200,000 square feet in question.
The potential increase in value was just one of the changes the Las Vegas City Council approved Wednesday after a progress report on the effort to reopen the shuttered Lady Luck.
“That block has potential for unrestricted gaming,” said Scott Adams, director of the city’s office of business development. “That is one of the things we’ve been excited about.”
The land appraised for as high as $99 per square foot without gambling and $180 if the developers were able to clear the hurdles needed for a new casino.
Chris Bohner, research director for Culinary Local 226 in Las Vegas, criticized the deal as a handout for developers.
“This sets a very dangerous precedent for the city,” Bohner said during an animated speech before the council. “Every other casino developer in this town … they are going to ask for this deal, too.”
Council member Steven Ross also questioned the deal.
“I don’t want this to appear like a sweetheart deal,” said Ross, who ultimately voted to support the agreement. “Anything we do downtown can’t have that appearance.”
CIM will get the land only if it meets conditions of a development agreement with the city and it will only pay the higher price if it uses the land for gambling, Adams said.
He also said the city met requirements of a state law that calls for local governments to identify the economic value to taxpayers for a sale of land below appraised value.
Adams said the deal would return more than $100 million to taxpayers in exchange for about $12 million in land write-offs.
“The write-down is on paper; this is real,” Adams said of the potential proceeds.
Las Vegas Mayor Oscar Goodman lashed out after Bohner spoke. Goodman raised his voice, banged the dais with his hand and criticized the union for trying to scuttle what he said was the best available proposal to reopen an empty, blighted property.
“For the past several years I have seen a rotting corpse,” Goodman said of the property’s condition. “The Lady Luck structure has been a blight.”
He continued: “This is no giveaway. This is not a candy store. We are getting offers for land when nobody is buying land.”
The council heard the update and voted unanimously to approve the new plan, which calls for CIM to invest at least $100 million in the project and start construction by Dec. 31, 2009.
Other provisions in the agreement include:
•An option for CIM to purchase a city-owned parking garage at Third Street and Ogden Avenue for about $6.8 million. The appraised value was $11.4 million to $17.8 million.
•An agreement by CIM to spend at least $100 million on Lady Luck renovations, $500,000 refurbishing the parking garage and $300,000 annually from revenue generated by billboards the developers will install on the Lady Luck’s facade.
•A completion date of Dec. 31, 2011.
CIM already owns the Lady Luck and says it is committed to reopening it. Adams said the land deals for surrounding property will encourage the company to complete a higher quality hotel and bring business to an area that is now blighted.
Activity would be a welcome change at the Lady Luck. The casino-hotel closed in February 2006, putting about 700 people out of work and leaving a huge empty shell in the Las Vegas skyline.
At the time, Andrew Donner of the Henry Brent Co., said it would reopen in about a year. But Donner had trouble financing a proposal and eventually brought in CIM Group, which in July entered an exclusive negotiating agreement with the city on a small park and some property around the former post office building across Stewart from the Lady Luck.
The developers want the land to provide more elbow room for a Lady Luck revival. The city wants assurances CIM will create something that complements downtown and also generates revenue to help pay for transforming the old post office into a mob museum.
Just fitting all the goals into a plan took a year. With the vote Wednesday, the City Council says it wants construction under way within 18 months.
“In today’s environment that is, I think, pretty aggressive,” Adams said.
Contact reporter Benjamin Spillman at firstname.lastname@example.org or 702-477-3861.