|By Howard Stutz, Las Vegas
Review-JournalMcClatchy-Tribune Regional News
Jan. 19, 2010--San Francisco real estate developer Luke Brugnara, who was denied a gaming license by Nevada casino regulators in 2001, said Monday he would pay up to $200 million for the bankrupt Fontainebleau project.
Brugnara, who owns land on the Strip and throughout Las Vegas, said he submitted a $170 million bid with the U.S. Bankruptcy Court in Miami for the shuttered Fontainebleau. Brugnara said he is backed financially by a New York City hedge fund.
A bankruptcy court auction is scheduled Thursday for the Fontainebleau, which was 70 percent completed before construction stopped in April after lenders cut off $800 million in financing. The project once had a budget of almost $3 billion.
Billionaire corporate raider Carl Icahn offered $156.6 million for the Fontainebleau in November to become the stalking horse bidder. It is unclear if other bidders had entered the picture.
Brugnara e-mailed the Review-Journal late Friday to say he had submitted an "all cash" offer of $170 million with proof of funding to the bankruptcy court examiner. On Monday, he provided the Review-Journal with documentation of the offer.
Brugnara said Monday he was willing to increase his bid to $200 million for the Fontainebleau and its 27-acre site at the north end of the Strip. He said he wouldn't complete the 3,889-room hotel tower right away, but would finish the Fontainebleau's retail element and open the shopping area.
"The land and the site alone are worth more than $200 million," Brugnara said. "The rent from the retail component would be used to finish the tower. Money is so tight right now."
If he is successful at the auction, Brugnara said it would take him between 30 and 60 days to close the Fontainebleau transaction.
"I've closed over $1 billion in transactions, and I've closed 100 percent of my deals," Brugnara said.
He said the ability to close the transaction should be the bankruptcy court's primary concern because "creditors have already taken a haircut and should be paid something for their investment."
Brugnara also disputed analysts' comments that it would take at least $1.5 billion to complete the 63-story building, saying it would cost far less to finish the tower.
The unfinished Fontainebleau interests Brugnara because he has held a fascination with the northern end of the Strip since the late 1990s when he was in his early 30s.
In March 2001 Brugnara was denied a gaming license on unanimous votes by both the three-person Gaming Control Board and five-member Nevada Gaming Commission for the Silver City Casino, which he purchased in 1999 for $30 million.
The casino has since been closed and converted into a shopping center across from the Echelon site near Convention Center Drive. Brugnara had proposed to build a high-rise condominium tower on the site but those plans have since been dropped.
Gaming regulators in 1999 were openly hostile to Brugnara's license application, citing several matters including a failure to file federal tax forms and a $1 million fine by San Francisco authorities. The control board hearing alone took more than six hours to complete.
Brugnara said he answered all the regulators' concerns, but then-Gaming Commission Chairman Brian Sandoval told the applicant he didn't meet the licensing requirements.
Brugnara said Monday the 2001 licensing matter was "water under the bridge" and he thought he would be successful this time around if he acquires the Fontainebleau.
In April 2008, a federal grand jury in San Francisco indicted Brugnara for filing false tax returns by failing to report more than $45 million in capital gains from the sales of real property.
Brugnara said Monday that matter was being settled. A spokesman for the U.S. attorney's office in San Francisco could not be reached for comment Monday because of the federal holiday.
Fontainebleau Las Vegas LLC and affiliates Fontainebleau Las Vegas Holdings LLC and Fontainebleau Las Vegas Capital Corp. sought court protection from creditors June 9, listing assets and debt of more than $1 billion each.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871.
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