Contractors lay off workers at Fontainebleau while waiting on money

Contractors on the $3.1 billion Fontainebleau Las Vegas project have been reducing their work force this week because the developer has been denied access to part of the $130 million in financing that was going to be used to fund construction, a spokesman for the resort said today.

Spokesman Dave Satterfield said the funding, which the developer said was available late last week, is controlled by a separate group of lenders than the Bank of America-led group that pulled $800 million in financing last week after telling the developer that it was in default on some of its loans.

After the $800 million loan was rescinded, the second group of lenders pulled back enough of the $130 million loan to affect construction.

“We expected them to release the money this month, but they declined to do so in light of the revolver bank not providing the $800 million,” Satterfield said, emphasizing that construction on the project is continuing although at a slower pace than before.

The contractors are slowing down out of concern of not being paid on schedule tomorrow, but they were not surprised by the news, Satterfield said.

“(The contractors) were aware this was a real possibility.” Satterfield said. “They were kept well apprised of these recent developments. They told (general contractor) Turnberry West they would have to reduce their workforce if they didn’t get funding on April 30.”

The contractors’ payment scheduled for Friday would have brought the contractors’ payments current through March.

The work force on the 24-acre construction site has slowly been reduced this week with contractors laying off workers or offering furloughs while the developer continues to negotiate financing, according to some workers on the site.

The workers are being encouraged to call Senate Majority Leader Harry Reid’s office, as well as close any accounts with Bank of America and boycott the financial institution, according to a worker who was let go this morning.

Bank of America is the administrating agent on the $800 million loan.

Fontainebleau’s officials have maintained they are not in default. The developer has filed a $3 billion lawsuit April 22 against Bank of America and 10 lenders.

Both parties confirmed Tuesday that they are still negotiating.

The worker let go this morning, who has worked on the site since late last year, does not want his named used because he was told he could return as early as next week.

“They’re cutting everybody,” he said of his contractor. “The only ones left are helpers and apprentices to help clean up and return the rentals.”

It is not known how many of the 3,300 workers that were on the project last week are being retained.

Calls to unions during the past few days have not been returned. Calls to contractors have not been returned, or met with “no comment.”

A spokesman for the Southern Nevada Building and Construction Trades Council, an affiliate of 17 labor unions, denied any knowledge of the cuts as late as Wednesday night, stating he has been in Carson City.

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