Following requests from the Perini Building division of Tutor Perini Corp. and outcry from hundreds of subcontractors owed up to $400 million for work on a massive mixed-use Las Vegas Strip development venture, the state governor confirmed he's trying to get warring parties to settle differences out of court.
Nevada Gov. Jim Gibbons pledged to meet with Perini next week in what appears to be an unofficial intervention between the contractor and MGM-Mirage over the $492 million mechanic's lien filed in relation to the massive CityCenter project on the Las Vegas Strip. Gibbons said he hopes the sides can come to terms on the expensive dispute outside of court so that several hundred subcontractors who worked under Perini, which served as the general contractor on the $8.5 billion venture, can get paid quicker. Many companies have been peppering lawmakers, including Gibbons and even Senate Majority Leader Harry Reid (D-NV), who is running for reelection in November, with requests for help because. Between delays in payment and a local economic downturn that outpaced most cities in the nation, many subcontractors face financial peril should a lengthy court battle develop between Perini and MGM.
But even Gibbons admitted he is unclear how much authority the state can impose regarding CityCenter, which includes hotels, a resort-style casino, high-end retail and luxury condominium housing.
Perini, named Nevada's top contractor in recent years by publications Southwest Contractor and In Business Las Vegas, alleges MGM Mirage abruptly stopped paying for work already completed, specifically at the Harmon Hotel portion of the mixed-use CityCenter. The suit also contains Perini's allegations that MGM Mirage made thousands of change orders on the project's design well after an agreed-upon deadline. For its part, MGM Mirage has publicly threatened its own suit against Perini, which served as general contractor, amid allegations of numerous design and construction defects. Representatives from both sides have declined numerous requests for comment issued by NACM. MGM Mirage has yet to file the aforementioned suit or a legal response to Perini's original suit, which must occur in the coming days.
In a written communication between Perini and subcontractors obtained by NACM, the contractor says it was notified by MGM Mirage on March 17th that "no further payments were going to be made" to the general contractor and all subcontractors associated with the CityCenter project. Perini disputes claims of unacceptable work and noted that it could make no payments to the many subcontractors that worked on CityCenter "until these issues are resolved and Perini is paid\ by MGM."
The legal spat is the latest in a series of trouble signs for the epic venture, the most expensive private development in U.S. history at its inception. Though the opening of its CityCenter's casino (Aria Resort & Casino) and various retail offerings was hailed as a victory for the previously struggling MGM Mirage, the project had to deal with a national economic meltdown shortly after construction began, a housing and commercial real estate downturn that forced a surge in Las Vegas vacancy rates and a freefall in values, a controversy surrounding the perceived high number of worker deaths in the construction of the development and the downsizing of the Harmon Hotel to 26 stories from original plans to build nearly 50 stories.
Although the amount of the mechanic's lien represents less than 10% of the total project, it still stands as one of the most expensive filings in U.S. history.
Brian Shappell, NACM staff writer