Perini tries to enlist aid of governor’s office in CityCenter payment

Perini Building Co. on Tuesday took steps to enlist the help of the governor’s office to investigate why MGM Mirage is not paying more than $500 million the builder claims it and its subcontractors are owed.

In a nine-page letter sent to Gov. Jim Gibbons, the building company asks for an investigation to avoid the harm facing the builder and more than 600 subcontractors and vendors if the outstanding bill is not paid.

"We believe it is critical to the survival of many of the minority owned and small-businesses, as well as all of our employees and all of Las Vegas to know the truth," the letter said.

Gibbons had not received the letter as of Tuesday afternoon, according to one of his representatives. MGM Mirage said late Tuesday it was still reviewing the letter and had no comment.

Perini filed a $500 million master lien against the project March 29. Subcontractors have continued to file individual liens through Tuesday.

Perini expresses concern in the letter to the governor about what the builder believes is the gaming company’s deteriorating financial position.

The letter was signed by four Perini officials, including Chief Executive Officer and President Craig Shaw.

The letter details issues raised in a lawsuit filed seven weeks ago in Clark County District Court.

Perini said that MGM Mirage has paid only $5.79 billion of the $6.29 billion construction contract. More than $800 million of the work was done by minority and women business enterprises. Of the nearly $500 million owed, Perini said $400 million is due the subcontractors, $40 million of which is for small minority and women owned businesses.

The money is owed for MGM Mirage-directed changes and related delays and costs, the letter says.

Perini said the original construction contract grew from $3.5 billion due to MGM Mirage’s many design changes and modifications, making changes well after agreed upon dates. Some changes were delivered to Perini 132 to 520 days late, the company says.

The current amount owed Perini and the subcontractors is a significant increase from the $46 million that MGM Mirage told Perini it was going to hold due to "nonconforming" work. Perini has valued that claim at $4 million, the letter said.

MGM Mirage also presented a claim of $60 million to $80 million for the Harmon Tower before claiming the tower is at loss of $412 million.

Perini said MGM Mirage’s recent financial struggles cited in the Review-Journal and the Las Vegas Business Press are a possible reason for not paying. Those struggles include that MGM Mirage recently said it will be reporting a $255 million loss in the first quarter, CityCenter condominium prices were cut by 30 percent, net revenue decreased by 13 percent last year and the company is delaying completion of the Veer and Harmon towers.

The letter said that although the market has "changed drastically" since the project was conceived, it does not "negate the fact that CityCenter was delivered on time" and the money is owed.

"It now appears that they do not have sufficient funds to meet their obligations," the letter said.

MGM Mirage received an extension to mid-May to file a response to the lawsuit.

While the letter was directed to Gibbons, copies were also sent to both of Nevada’s U.S. senators, U.S. Reps. Dina Titus, Dean Heller and Shelly Berkley, State Attorney General Catherine Cortez Masto, the seven Clark County commissioners and Las Vegas Mayor Oscar Goodman and the City Council.

The letter was also sent to a representative from CityCenter co-owner Dubai World and all the members of MGM Mirage’s board of directors.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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