Hotel Online 
News for the Hospitality Executive


Sparring Between MGM Resorts International and Perini Building Co.,
Contractor for CityCenter's Harmon Hotel, Heats Up

By Liz Benston, Las Vegas SunMcClatchy-Tribune Regional News

July 12, 2011--Three years after engineers discovered structural problems at CityCenter's Harmon hotel, the parties involved in building the resort appear no closer to figuring out what to do with an empty, 26-story building that experts say can't feasibly be torn down or, in a poor economy with more hotel rooms than Las Vegas can fill, fixed and open for business.

As those questions remain unanswered, owner MGM Resorts International and CityCenter's general contractor, Perini Building Co., are locked in a legal battle over more than $200 million in disputed contractor claims for work done on CityCenter. That dispute has become a high-profile shouting match, with both companies releasing letters to the media discussing the relative severity of the construction problems at Harmon.

MGM says the problem at the Harmon boils down to poor workmanship and an uninhabitable building, not subcontractor claims. Most of CityCenter's more than 200 subcontractors were paid after a lengthy negotiation process last year. CityCenter's counterclaim against Perini contends that construction defects at the Harmon, as well as other work at CityCenter that wasn't built according to plan, offsets some of what Perini is owed for CityCenter.

Monday, an engineering firm hired by MGM to review the troubled Harmon tower disclosed that the construction problems involving missing or misplaced reinforcing steel were so severe that the building likely couldn't withstand an earthquake. The county in 2009 had ordered MGM to review the building to ensure its safety.

MGM has forwarded the assessment by engineering firm Weidlinger Associates Inc. to the county and is awaiting word from the county on what to do next, MGM Resorts spokesman Gordon Absher said. The county had not released its response by Tuesday afternoon but is expected to do so soon.

Tuesday, Perini fired back at MGM with a news release stating that MGM's contention that the Harmon is unsafe is "absolutely untrue."

"(T)he Harmon does not present any current life safety issues even for a 'code-level' seismic event," Perini stated. "The truth is, however, that MGM does not want the Harmon to be repaired because the Harmon is worth more dead than alive to MGM."

MGM has rebuffed Perini's efforts to repair the Harmon for more than two years, Perini said.

"MGM never intended to complete the Harmon after the economic downturn; MGM cannot fill the Aria and Vdara hotel rooms or sell the Veer and Mandarin Oriental condo units that it has now. Repairing and opening the Harmon would only create a glut of unused hotel rooms for MGM."

In a follow-up press release Tuesday, MGM Resorts said Perini is attempting to deflect attention from the company's errors.

"When given the opportunity to fix the Harmon, Perini failed to do so in a timely or proper manner. Perini's representation of the facts is as poor as its construction at the Harmon."

In a report issued in January, an independent engineering firm hired by the county to study the Harmon determined that the Harmon is structurally sound "as designed." The firm, Walter P. Moore and Associates, didn't opine on the condition of the building as built, however, MGM said. The Walter P. Moore report states that the full extent of the building's problems had "not been documented or provided to us at the current time" and that the assessment was based on "design documents, non-compliance reports and limited visual observations."

The county ordered MGM to halt construction on Harmon in 2008 after months of extensive and expensive repair work. Structural steel known as rebar was installed improperly and contractors had been fixing the problem under MGM's direction. MGM eventually decided to top off the building at a little more than half its original height of 49 stories. The company maintains that it discovered more extensive problems that required work on the Harmon to be shut down.

The oval-shaped hotel was intended to be a dramatic gateway to MGM's $8.5 billion CityCenter. Instead, it has become a white elephant for MGM at the center of a major tourist corridor. Construction and engineering experts say they have no easy answers on the building's future given the hazard involved in demolishing a building that's part of an occupied resort complex and the unsatisfactory alternative of spending millions of dollars to repair the building.

Given the potential liability involved, it's unlikely that any construction expert will step forward with a definitive, unambiguous assessment of a major project like the Harmon, said Jack Juan, a construction attorney with Marquis & Aurbach in Las Vegas.

"You can't guarantee that a building is going to be free of problems," he said. "If it's safe, (owners) don't want to be told they were wrong. If it's not safe, they don't want to be held accountable."

Neil Opfer, an associate professor in construction management at UNLV, said the Harmon is a big problem without a ready solution.

Demolishing the building would be "extremely unrealistic" given its proximity to nearby buildings, he said. Implosions of major casinos in Las Vegas have been performed on large, vacant sites with plenty of room to accommodate the resulting rubble.

Repair work could be cost-prohibitive for MGM, however, he added.

The best route may be an unsatisfying one -- to wait out the economic downturn.

Had the boom continued, MGM may have continued the repair work on the Harmon and stuck Perini with the bill, Opfer said. Instead, the county may end up giving MGM time to figure out its next move.

The county has the authority to order the building to be torn down if it believes the structure is unsafe. A more likely scenario, construction experts say, involves allowing MGM to pursue a more detailed assessment of the building.

That could take 12 to 14 months, according to Weidlinger Associates' letter to CityCenter officials.

In the letter, Weidlinger said the construction problems "are so pervasive and varied in character that it is not possible to quickly implement a temporary or permanent repair to remediate the defects or even determine whether such repairs can be performed."

The engineering firm declined further comment.


To see more of the Las Vegas Sun go to

Copyright (c) 2011, Las Vegas Sun

Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit NYSE:MGM,NYSE:TPC,

Receive Your Hospitality Industry Headlines via Email for Free! Subscribe Here

To Learn More About Your News Being Published on Hotel-Online Inquire Here

To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch

Home | Welcome | Hospitality News
| Industry Resources

Please contact Hotel.Online with your comments and suggestions.