|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
Aug. 15, 2011--MGM Resorts International today said it's recommending to Clark County that the quarter-billion-dollar Harmon Hotel at CityCenter on the Las Vegas Strip be demolished because of construction defects.
MGM Resorts said it is seeking Clark County Building Department approval to raze the empty, unused building. With that approval, MGM would then seek court approval for demolition.
An initial proposed timetable calls for the demolition to be accomplished in six months, followed by five more months of debris cleanup and site restoration.
At least $279 million had been invested in the building before construction was halted in early 2010 -- with all $279 million already written off by CityCenter. CityCenter is half owned by MGM Resorts International.
By court order, the building cannot be demolished while CityCenter and the building's general contractor, Perini Building Co., slug it out in court over defects in the 26-floor structure and unpaid CityCenter construction costs.
The demolition recommendation is sure to be opposed by Perini, which insists the structure is safe and that it can be repaired.
MGM Resorts and Perini are mired in litigation over the Harmon, with the latest twist being concerns that the Harmon could collapse in an earthquake. Because of those concerns, the county had required CityCenter to come up with a plan for the Harmon.
In a letter to Ron Lynn, a top Clark County Building official, William Ham, senior vice president of CityCenter facility improvements, said: "CityCenter has decided that to abate the potential for structural collapse in case of a code level earthquake ... CityCenter will demolish the Harmon Building."
Perini on Monday called MGM Resorts' statement about plans to implode the Harmon "self-serving and intellectually dishonest" and reiterated charges that design errors contributed to the building's problems.
"Perini agrees that the fastest way to end the dispute over responsibility to repair MGM's design errors would be to blow up the building and destroy the evidence. However, that would be far from the end of the dispute. MGM is seeking to implode the building to hide the fact that the Harmon is not a threat to public safety and to avoid having the repairs made that Perini and its third-party structural engineers have offered to do," the builder said in a statement. "The real reason for MGM's eagerness to implode the building is clear. MGM is looking out for its own economic interests and trying to shift responsibility for its business decisions and its own engineer's design errors onto Perini and its subcontractors. There is no question that MGM had buyer's remorse in moving forward with the gigantic CityCenter project during the dramatic downturn in the real estate market in Las Vegas."
Perini also disputed studies suggesting the Harmon could be felled by an earthquake, saying in its statement: "MGM's contention that the Harmon is unsafe is absolutely untrue. The Harmon does not present any current life safety issues even for a 'code-level' seismic event."
In what turned out to be a day marked by dueling press releases, MGM Resorts fired back late Monday with this statement: "Perini's accusation of an evidence-destroying conspiracy demonstrates a ridiculous irony considering their consistent refusal to perform any testing of their own on Harmon and aggressively opposing testing by others. By seeking to avoid the depth of the problems at Harmon, Perini shows it has no concern for public safety or the truth, only for itself. At this point, Perini is simply a defendant trying to blow smoke and limit its financial liability."
Gordon Absher, an MGM Resorts spokesman, said the company had consulted with experts who reported that repairs may not be possible and that it would take 18 months to conduct tests and come up with an approved, permitted design to fix the Harmon -- if repairs are even possible.
Such repairs then would take another two to three years to complete, Absher said.
"Based on their expert advice, CityCenter is recommending that the structure be demolished by implosion. We have been assured by demolition experts that a properly executed implosion will not pose health or safety problems for residents, visitors and adjacent businesses,'' Absher said in a statement.
Perini has charged that MGM Resorts is using the defects as a pretext to get rid of a building for which it has little use because of the economic downturn -- while publicity about potential earthquake dangers would likely forever taint the building and make its rooms difficult to market.
Unless their lawsuit is settled, MGM Resorts is likely to argue in court that if the Harmon had opened in solid shape and on time, it would have added substantially to the overall CityCenter experience and its profitability as it was envisioned at one point as a luxury, hip property.
Because of the construction defects involving concrete and reinforcing rebar at the 400-room, nongaming boutique hotel, it was limited to 26 of the 49 originally-planned floors.
Before the construction defects were discovered, the Harmon was intended to have some 200 condominiums atop the 400 hotel rooms.
In its latest quarterly filing with the Securities and Exchange Commission, Perini's parent company, Tutor Perini Corp. of Sylmar, Calif., in the Los Angeles area, said that as of June 30 it and its subcontractors were owed some $222 million for work at CityCenter including the Harmon. This is down from the $490 million Perini initially claimed was owed in a March 2010 lawsuit, as the amount at issue has been reduced by MGM Resorts paying some subcontractors directly.
MGM Resorts, in its own filings, has asserted its claims for defective construction at the Harmon and said its damages at least offset Perini's claim over the unpaid bills.
The lawsuit has been stalled in Clark County District Court for months as the parties wait for a ruling from the Nevada Supreme Court on whether certain attorneys can participate in the case.
The Harmon sits on a strategic piece of land on the Strip south of The Cosmopolitan and across the street from Planet Hollywood.
MGM Resorts International has not yet announced plans for the parcel should the building come down.
Sun reporter Joe Schoenmann contributed to this report.
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Copyright (c) 2011, Las Vegas Sun
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