MGM pays more subcontractors in CityCenter case

CityCenter developer MGM Resorts International has settled overdue payments with 77 of the 233 subcontractors left holding the bag when the casino operator and general contractor Perini Building Co. began trading charges publicly and through court documents over who was to blame for problems with the $8.5 billion Strip project.

In a filing with the Clark County District Court on Friday afternoon, MGM Resorts, which owns the massive Strip complex in a 50-50 joint venture with Dubai World, said it had paid $19.1 million to 23 subcontractors who worked on the various CityCenter projects. About 44 have reached agreement with MGM Resorts on a final payment figure, but additional information is needed before a check can be issued. MGM Resorts said 10 subcontractors were found to have been paid in full.

The company said it was close to reaching agreement with “many” others.

During MGM Resort’s second-quarter conference call on Aug. 3, CityCenter Chief Executive Officer Bobby Baldwin said all of the subcontractor accounts would be closed out by the end of the year.

The company said the closeouts with the 77 subcontractors who reached deals with MGM Resorts received a total of $799.2 million for the duration of the CityCenter project, almost 99 percent of what the companies billed. Some of the contractors are receiving a lesser percentage on the final payment because their work for the entire project is being reconciled.

Much of the negotiations surrounded final payment for work that was completed.

“We thought it was done timely so we’re happy the process is complete,” said Jimmy Lee, collections supervisor for Cell-Crete Corp. of Monrovia, Calif., which supplied concrete for several of the CityCenter projects.

According to the document filed Friday, Cell-Crete was paid more than $3.9 million for its work at CityCenter.

Peter Potwin, chief financial officer of Portland, Ore.-based Benson Industries, a glass company that worked on the 1,495-room Vdara hotel and condominium project, said there was little disagreement once he sat down with MGM Resorts officials.

The company, which was paid more than $40.9 million for its work at CityCenter, was seeking final payment.

“It was really just some contract retention payments and the settle-up of some change orders,” Potwin said. “We’re happy with the outcome.”

In its court filing, MGM Resorts said many of the agreements had been reached with smaller subcontractors who had been trying to get paid by larger companies.

MGM Resorts took over the closeout process with subcontractors who had not been paid for their work in June after Perini filed mechanics liens against the development in a dispute over roughly $485 million of CityCenter’s $6.285 billion construction budget.

Perini also sued MGM Resorts in Clark County District Court for nonpayment.

CityCenter officials met with subcontractor representatives on June 9 in a mass meeting at Aria to explain how the closeout process would work. By the end of June, only a handful of subcontractors had been paid.

In a report filed with the District Court on July 22, MGM Resorts said it had settled with five subcontractors for $7.7 million and listed 11 other names without dollar amounts.

During the Aug. 3 conference call, Baldwin said 33 subcontractors had been paid and the company was in the final stages of negotiations with 43 additional companies.

Perini forced MGM Resorts’ hand with a public campaign, saying MGM Resorts was denying payment to small subcontractors. Perini and subcontractor representatives met with Gov. Jim Gibbons in May, who sought to mediate the dispute.

Much of the argument between Perini and CityCenter surrounds the unfinished Harmon Hotel at the front of the CityCenter site. Construction defect issues caused the tower to be scaled back and redesigned from 47 floors to 26 floors after subcontractors installed defective reinforcement bars.

Perini officials said only a few subcontractors performed the defective work on the Harmon and were held out of the closeout process.

In previous statements, Perini executives said their hope was for subcontractors to be paid while the builder litigated other issues with MGM Resorts.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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