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Harmon Hotel Tower in Las Vegas Seems Doomed to Demolition

The Likely Result of Recent Court Hearings as Sparring Between
MGM Resorts and Perini Building Co. Continues

By Steve Green, Las Vegas SunMcClatchy-Tribune Regional News

March 18, 2012--It's almost certain that the Harmon hotel tower in Las Vegas -- which a top CityCenter executive calls a "monument of construction defects" -- will be demolished sooner or later in spectacular and unusual fashion.

Las Vegas is well known for imploding its aging hotels and casinos -- the Stardust and the New Frontier were among the most recent to come down.

What's unusual for the Harmon is that it's a brand-new, almost-completed structure. No one can recall such a large building -- 26 stories -- having to come down locally without opening.

But during a four-day hearing last week in a lawsuit over whether the building could be demolished, nothing emerged to indicate it will be saved. Instead, with its prime location on the Las Vegas Strip and hefty construction cost -- $279 million, which was long ago written off by CityCenter -- the Harmon is poised to be remembered as the one key component of the $8.5 billion CityCenter resort complex that never opened because of defective work there.

That defective work, blamed on both design and construction flaws, has rendered the Harmon a public safety hazard, according to Clark County's building department.

Dueling engineers for CityCenter and its general contractor, Perini Building Co., disagree on whether, because of the defects, the Harmon would collapse in an earthquake or a fire that could weaken its structural steel.

Court testimony in a Harmon lawsuit last week showed the engineers for both sides agree that the Harmon has plenty of problems. Where they disagree is if it's worth spending time and money to design and execute extensive repairs to make the building code-compliant.

CityCenter, Perini and its subcontractors have been fighting over the defective work and blaming each other in a massive lawsuit since 2010. Besides the issues over defective work, the contractors claim to be owed $192 million for their work -- a sum CityCenter disputes, given the condition of the Harmon. Another dimension to the lawsuit -- how CityCenter's finances have been harmed by the unusable condition of the Harmon -- is likely to be developed in coming months.

CityCenter is now asking Clark County District Court Judge Elizabeth Gonzalez for permission to implode the Harmon prior to a February 2013 trial on the defects and CityCenter's refusal to pay the contractors.

Gonzalez's permission is needed because the structure is a key piece of evidence in the lawsuit. CityCenter and its manager and half owner, MGM Resorts International, say enough evidence has been collected about the defective work for the trial to proceed without the building standing.

Perini and subcontractors deny a

CityCenter engineer's assertion that the Harmon would fall in an earthquake and insist the building should remain intact through the trial. That way, they say, more evidence can be examined as needed, and the jury won't be influenced by the fact that the tower was imploded.

The issue in the legal fight about CityCenter's implosion plan is less about whether the Harmon will be demolished than when the building will be removed.

Clark County has ordered the public safety hazard posed by the Harmon abated, and it gave CityCenter the choice of doing that with either repairs or demolition. CityCenter chose the demolition route.

Since work was halted on the Harmon in early 2010, MGM Resorts officials have made it clear the Harmon could never be used for the only purpose it was designed for: a hip, upscale hotel. And they're not interested in arguments by Perini that it can be repaired. Who would want to stay in the Harmon after the worldwide publicity about its defects, even if it is repaired, they ask.

"As we have said since last August, our experts are convinced that the fastest, surest and safest way to protect public safety from this unusable monument of construction defects is to tear it down," said Gordon Absher, vice president of public affairs for MGM Resorts International.

"Because of the magnitude of construction defects, the public safety issues and the reputational damage already suffered at the Harmon, CityCenter plans to address by demolition the public safety issues presented as soon as it is legally able to do so," Absher said Friday.

None of this, of course, is a secret to Perini. The company earlier tried but failed to convince Gonzalez it had a right to repair the Harmon under Nevada law.

Testimony by one of Perini's hired engineers last week -- coupled with the company's knowledge that CityCenter is set on demolishing the building -- suggested the company is aiming mainly at limiting damages against it in next year's trial. The engineer contended that the Harmon was improperly designed and could be repaired.

Once the decision is made to proceed with the implosion, the process would likely take a year or so and cost about $30 million. Crews would first spend four to five months preparing the site and then, after the implosion, another five or six months hauling away debris and cleaning it up.

Before the building is imploded, plans call for its glass skin and the ground-level podium structure adjacent to the tower to be disassembled and removed. That would leave a huge pile of concrete and steel to be hauled away after explosive charges take down the building in a controlled fashion.

CityCenter hasn't disclosed what plans may be in the works, if any, for the Harmon site after the planned implosion.

"CityCenter is currently more focused on addressing the public safety issues presented by the defective structure than over future plans for a very valuable piece of real estate," Absher said.

As reported by the Sun in January 2009, problems at the Harmon were detected by county inspectors in the summer of 2008. Among the building code violations reported by inspectors were missing or improperly installed reinforcing steel and missing critical connections between structural elements.

Because of the flaws, what had been planned as the 47-story Harmon Hotel & Spa was dramatically reconfigured in what was seen as a major embarrassment to CityCenter. Plans were scrapped for 200 condominiums to be built atop the Harmon's 400 hotel rooms, and CityCenter at the time decided to cap construction at 26 floors. Two years later, work was again halted -- likely permanently -- when even more defects were found in the structure.

The construction problems came at a time when CityCenter and MGM Resorts International faced significant financial hurdles. The recession made it difficult for MGM Resorts and its partner in CityCenter to finalize financing for the project, and the partners squared off in court over CityCenter's financial issues.

MGM Resorts and CityCenter eventually resolved the financial problems.

But the Harmon remains at issue -- not only in the building defect lawsuit but lawsuits filed by shareholders over MGM Resorts' stock price sinking from more than $15 in early January 2009 to $1.89 on March 5, 2009.

The shareholders contend MGM Resorts officials had failed to disclose the company's deteriorating financial position in 2008 and early 2009. What's more, they claim, company officials didn't promptly report "that serious problems were plaguing the construction of CityCenter."

Among the information company officials kept secret, the shareholders claim, were notices of violation from building inspectors at the Harmon between July 2008 and September 2008.

"According to former MGM employees, defendants actually knew of these issues as early as June 2008. But, in an effort to maintain the company's artificially inflated stock price, defendants failed to disclose any of these facts," one suit says.

Attorneys for the shareholders say they've been told by "Confidential Witness 8 or CW8" -- a Harmon project engineer for Perini -- that design problems with the podium portion of the Harmon surfaced even earlier, by November 2007.

"The full scope of the tower's problems then became apparent in June 2008, when, according to CW8, structural engineers from Halcrow Yolles (one of CityCenter's engineering firms) identified significant issues with the columns, which are used to hold up the floors," one of the shareholder lawsuits says.

"CW8 also stated that Halcrow Yolles discovered that the 'link beams' on certain floors of the tower were wrong and that the problems could cause the walls of the building to collapse," the suit says.

MGM Resorts denies assertions it failed to disclose required information to shareholders and has been fighting the shareholder suits.


(c)2012 the Las Vegas Sun (Las Vegas, Nev.)

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