City hall suffers setback

Las Vegas’ plans for a new city hall have become more expensive and possibly unaffordable, Mayor Oscar Goodman said Thursday, marking the second time in two days that one of his signature projects for revitalizing downtown has hit a snag.

"I’ve asked the city manager to have a manager’s review concerning the feasibility of city hall," Goodman said at his weekly news conference. "Everything’s changed. It’s a new world."

He blamed skittish financial markets, saying the city originally planned on an interest rate of around 5 percent. As of Wednesday, it appeared the best the city could do was 7.5 percent.

"That’s a difference of millions of dollars," he said.

On Wednesday, the Mob Museum project became embroiled in a dispute between two contractors bidding on one of the final phases of the project. The matter could head to litigation, tying up the museum’s opening for years.

"I’m hoping we’ll be able to resolve that," Goodman said.

"I’m not around much longer," he said, referring to the fact that this will be his last term as mayor because of term limits.

"I’ve been the driving force, I guess. I hope it’s complete while I can still enjoy it in public office," continued Goodman, who is considering a bid for governor as an independent in 2010.

Recently, the city gained final approval to seek up to $267 million to finance the construction of a new city hall immediately west of the Regional Justice Center.

The next step would be to seek bond financing for what is known as a "lease-purchase" agreement in which investors put up the construction money and are paid back through annual appropriations by the city.

Such financing is considered a riskier method than general obligation bonds because it’s not tied to a specific funding source.

The project has been controversial, and the Culinary union mounted a challenge to it, with the city’s entire redevelopment plan for downtown areas.

The city overcame that challenge, which included two proposed ballot measures and two trips to the Nevada Supreme Court.

But now Las Vegas has run into the reality of financial markets, said Chris Bohner, research director for Culinary Local 226.

"I think the financial markets have a better understanding of risk than the City Council," he said. "The financial markets have said, ‘We don’t think your project’s feasible.’"

He said that going over the $267 million limit would require the city to start the approval process all over again, something that could subject city leaders to more criticism.

"In my view, they didn’t want to go back and go, ‘Oh, not $267 million, now it’s $330 million,’" Bohner said, using a hypothetical number. "And this is not because of any labor or construction cost. This is financing cost."

The assessment of the city hall project is expected at the July 1 City Council meeting.

The Mob Museum dispute is also expected to be on that agenda because the bids at issue expire July 5.

Both projects are tightly linked with Goodman’s push to redevelop downtown Las Vegas into something that has more to offer than the Fremont Street Experience, wedding chapels and government services.

The city has touted several completed projects, including the World Market Center, the Chelsea Outlet Mall, the renovation of the Fifth Street School and the soon-to-be complete Lou Ruvo Brain Institute, plus new bars and nightclubs at the corner of Fremont Street and Las Vegas Boulevard.

The new city hall has been described as a catalyst that could jump-start the next wave of development.

The new building at the corner of Main and Lewis streets would serve as an "anchor tenant" for three other office buildings proposed for adjoining blocks, all of which are owned by the developer, Forest City.

And upon completion of the new city hall, Forest City would trade the city hall parcel for a plot in Symphony Park upon which it would be required to build a new hotel-casino.

The Mob Museum — aka the Las Vegas Museum of Organized Crime and Law Enforcement — is part of the planned redevelopment of the Lady Luck casino and adjoining land, a project that is also stalled.

Bohner said the city would not give up on a new city hall.

"I don’t think it’s dead," he said. "I think they’re going to come back when the markets settle down."

When asked about the prospects for downtown revitalization given this week’s developments, Goodman said, "We have to make sure we’re doing the right thing. … I’m going to be a good mayor."

Contact reporter Alan Choate at or 702-229-6435.

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