Henderson arena plan moves forward on financing

A Chinese company and its banking partners have agreed to finance a $650 million arena at the proposed Las Vegas National Sports Center planned for the west side of Henderson, according to project spokeswoman Lee Haney.

But the $1.5 billion development is far from a slam dunk.

"This is definitely a major step in this process, but we still have a ways to go," Haney said.

China Security & Surveillance Technology is considered one of China's top manufacturers and distributors of security technology, but it has expanded its global reach in recent years. The company listed assets of $1.4 billion in a regulatory filing.

But the company also is named in a class-action lawsuit that was filed in July, alleging CEO Guoshen Tu and other company executives violated the Securities and Exchange Act of 1934.

According to allegations in the federal lawsuit filed in Delaware, Tu and the other defendants violated their fiduciary duty to shareholders when they sought to buy back shares at undervalued prices as the company moved to delist as a publicly traded corporation.

Sports complex developer Chris Milam, CEO of International Development Management, has experienced his own legal troubles. He lost a lawsuit filed in 2006 alleging fraud and breach of fiduciary duty in a failed $1.2 billion high-rise condominium project planned for Las Vegas Boulevard.

A $1.1 million judgment was entered against him. Milam appealed, and the Nevada Supreme Court agreed to hear the case.

In a report published in November, Haney said the high court's willingness to hear the appeal was a good sign.

"They must feel there was some information that either wasn't considered or wasn't in the initial case," she said.

China Security & Surveillance Technology would finance the 750,000-square-foot, 17,500-seat arena to NBAstandards, Haney said. The capacity is 2,500 seats fewer than Milam proposed when he made his pitch to the city.

Haney said Milam continues to pursue equity partners that would co-own professional teams.

"He's talking to several people, but it's all confidential," Haney said.

The arena could house a professional basketball team, but it appears doubtful the league would be the NBA.

"We have no plans to expand," said Tim Frank, an NBA vice president in charge of communications. Frank said the league is familiar with Milam but did not elaborate.

Haney said she was not at liberty to discuss what the relationship would be between China Security & Surveillance Technology and Milam.

"We're very excited about it," she said of the fast-moving deal. "We started talking the week between Christmas and New Year's, and now the memorandum of understanding is signed. Now we still have to go to contract."

Haney said the arena is on track for a late summer groundbreaking, but first Milam must acquire the land it would sit on. The federal Bureau of Land Management controls the 485-acre site near the M Resort east of Interstate 15.

In a letter sent to the BLM last year, the city supported the sale through the Southern Nevada Public Lands Act. Haney said that process continues.

"We hope to take possession by late summer," she said.

Even if the financing is in place by then, at least one city official thinks the timeline could be too ambitious.

"Late summer might be a little aggressive," said Dennis Porter, who oversees the project for the city.

He said a fall groundbreaking is possible, but the city still needs information from Milam's consultants.

"We have to do our due diligence, and that takes time," Porter said. "The land acquisition process takes time, and we're still waiting for the information we need."

He said one of the key pieces of information the city requires is a fiscal analysis. A firm has been hired to study whether the Las Vegas Valley could support the project. The study will focus on issues from ticket prices to concessions.

Porter said the city remains optimistic. "We see it as a positive, but we don't know that much about the (Chinese) company that's offered up the memorandum of understanding."

Another element that needs to be completed is the creation of a Tax Increment Area that would encompass the entire site.

Once that is done, the city and Milam will seek access to a special fund the Legislature created in 2005 to help spur economic development.

Sales Tax Anticipated Revenue bonds have been used on fewer than a handful of projects in the state with mixed results. A key requirement is that tourist dollars must represent at least 51 percent of the revenue generated. Up to 75 percent of sales tax generated by the site would go to the developer to pay off bondholders.

Haney said the Chinese company also would play a role in the arena's construction.

The city of Henderson stands behind the project in supporting Milam's efforts to build the arena, two stadiums -- one for soccer and one for football -- and a baseball park, but the city has made it clear local tax dollars would not be used.

At his Feb. 9 State of the City address, Mayor Andy Hafen said the city has "been very clear on our direction that no current revenues will be diverted, or new ones levied, to put taxpayers at risk for these projects."

Contact reporter Doug McMurdo at dmcmurdo@reviewjournal.com or 702-224-5512.