Player in new Las Vegas City Hall pursues legal quest to be paid

At the City Hall dedication ceremony in March 2012, builders and local politicians took turns basking in the glow of a new creation.

But missing from the VIP podium was Russell L. “Rusty” Nype, who played a key and perhaps pivotal role in bringing the project to life. By that time, he was already enmeshed in what is now a six-year court battle to get paid for his work in bringing Cleveland-based Forest City Enterprises Inc. to Las Vegas — not only to develop a new home for city govern­ment but to take a sizable stake in downtown redevelopment.

On Wednesday, Nype’s appeal of a defeat in a lower court made it to the Nevada Supreme Court, as his attorney argued he had done his job of finding investors to help the previous owners of five downtown blocks and deserved unspecified payment. Clark County District Judge Ronald Israel had ruled in December 2011 that the deal had morphed into a straight property sale, giving Nype, a consultant in West Palm Beach, Fla., nothing because he does not hold a Nevada real estate license.

“(Nype) looked at this as a development, not a mere sale,” attorney Daniel Polsenberg said. “He was involved with investors, not purchasers,” and never took steps such as listing the property.

But attorney Beau Sterling, representing Las Vegas Land Partners, which worked with Nype, argued that how the relationship started didn’t matter.

“This was a real estate trans­action,” he said. “If it ends as a real estate transaction, then it’s a real estate transaction and he needs to be licensed as a salesman or broker.”

By Sterling’s calculation, Nype expects about $3.3 million based on a 4 percent commission for $82.4 million that Forest City paid in mid-2007 for a 60 percent share of the five blocks, bounded by Garces Avenue, Lewis Avenue, Main Street and Casino Center Boulevard.

On one block, Forest City constructed the new City Hall for a fee and 6.4 acres on the northern tip of Symphony Park. Another block was turned over to the Regional Transportation Commission on a long-term lease for its Bonneville Transit Terminal.

Forest City spokesman Jeff Linton said the company has no timetable for moving ahead with the 47-story, 1,000-room casino hotel proposed for Symphony Park. Neither will construction start in the near future on the three blocks south of City Hall, where 1 million square feet of offices and 300,000 square feet of retail are planned.

New York developers Barnet Liberman and David Mitchell, the owners of Las Vegas Land Partners, had acquired the parcels in 2005, but needed outside financing to move ahead with the mixed-use project. A new City Hall was not envisioned at that time.

Both sides agree that Liberman and Mitchell enlisted Nype and another firm, First Wall Street, to find a partner in early 2006.

Not long afterward, Nype brought Forest City to the table, but the company passed on the deal. In court papers, Nype said his market studies and persistent courting of Forest City helped change the company’s view.

Polsenberg acknowledged that Forest City opted for a land purchase instead of an investment to reduce taxes due on the sale of unrelated assets.

Later, however, Polsenberg said Forest City put in about $50 million more, taking a 90 percent stake and restructuring the deal to resemble the originally conceived partnership.

Attorney Sterling said Nype should seek payment from First Wall Street, although it dropped out of the deal before it was finished. Litigation in New York concerning the firm was settled for undisclosed terms.

But cutting Nype out of any payment set a larger bad example, Polsenberg said.

“If widely applied, (Israel’s) decision might well discourage people like Nype, with the connections necessary to facilitate development, from involving themselves in Nevada,” Polsenberg said.

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