Neonopolis debt payment needed to avert trustee sale

Owners of the struggling Neonopolis mall in downtown Las Vegas need to pay off a six-figure debt to Clark County by April or face losing the property in a trustee sale.

Clark County records show a holding company, FAEC Wirrulla LLC, owes approximately $156,000 in taxes, penalties and interest that must be paid by April to avert an auction sale of the troubled, three-story edifice at Fremont Street and Las Vegas Boulevard.

Assistant Clark County Treasurer Rebecca Coates said April is a significant date because that's when the county goes to auction with properties encumbered by delinquent tax bills.

"If a property is still outstanding, we can actually put it on that trustee sale, at which case it is an auction," Coates said.

Neonopolis developer Rohit Joshi characterized the delinquent bill as a misunderstanding and said the owners are already making payments to avert a sale.

"The bottom line is we have a payment plan," Joshi said.

Coates said properties don't go to a trustee sale until at least four years after an owner misses tax payments. She said the back taxes due on Neonopolis had been as high as $547,387 until a lump sum payment of about $344,000 brought that total down.

The county currently reports Neon­opolis owing about $242,000, Coates said, with $156,000 in delinquent status.

According to Clark County property records, Wirrulla in 2006 paid $25 million for the mall at 450 Fremont Street, which is on two parcels and includes the building. The parking garage beneath the mall belongs to the city of Las Vegas, which it allows Neonopolis to use at a discount.

In addition to the purchase price, Joshi said the company has spent another $15 million on the property, including operating losses at the mall, known for empty storefronts and failing businesses.

He said the amount of money investors have sunk into the mall is reason enough to catch up on the taxes before a trustee sale, especially considering he believes it is currently only worth a little more than $4 million.

"That's not going to happen," Joshi said of a potential trustee sale. "We have $40 million in; I'm not going to let that happen for a couple hundred thousand."

Joshi blamed the back taxes on a dispute with the county over valuation of the property. For the first few years after Wirrulla bought Neonopolis, he said, the taxes were calculated as if the property included the parking garage underneath.

Joshi said he challenged the valuation before the board of equalization and won. But he said that in subsequent years the tax bill reverted back to the higher level because he didn't realize he had to re­apply annually for the reduced valuation.

He said the cost of continuing the dispute would be greater than paying the back taxes at this point.

"We just decided to add that onto the taxes, and we made a payment plan," Joshi said.

News of the delinquent taxes comes as Joshi is seeking to refill the mall with tenants to replace the latest round of departures.

Earlier this summer, Denny's entered into a 20-year, $12.5 million lease for more than 5,300 square feet on the first floor facing the Fremont Street Experience.

Heart Attack Grill, a burger restaurant, is renovating another first-loor space that has been home to a series of failed restaurant, bar and club ventures.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-229-6435.