Fontainebleau Files for Bankruptcy

On June 9, the $3.1-billion Fontainebleau Las Vegas, which is about 70% complete, filed for Chapter 11 bankruptcy protection. Construction of the 63-story hotel-casino-retail complex is now halted.

Scheduled to open in October, the project is being built by Fontainebleau Resorts LLC, an investment group led by Miami-based developer Jeffery Soffer, owner of the Morris Lapidus Fontainebleau hotel in Miami Beach.

The bankruptcy filing follows the departure of Glenn Schaeffer, Fontainebleau Resorts’ co-founder and top executive, in late May. His position as CEO, president and member of its board of managers remains vacant.

On April 23, Fontainebleau Resorts filed a $3-billion lawsuit in Clark County District Court against the project’s 11 lenders for refusing to provide $800 million of prearranged financing. The complaint called it “nothing more than the banks’ baseless attempt to walk away from the project and abandon their obligations.” It is a crucial chunk of funding needed for the project’s completion, industry sources say.

“When banks, especially ones that have received taxpayer dollars, make a commitment to finance a worthy project with thousands of existing jobs on the line, they have an obligation to keep that promise,” says Majority Leader Harry Reid (D-Nev.).

Lenders include Bank of America, which agreed to provide $100 million, and JP Morgan Chase, which was to provide $90 million. The banks have received a combined $77.5 billion of federal bailout aid. The Union Labor Life Insurance Co. Investment Co., a unit of union-owned ULLICO Inc., Washington, D.C., also committed $30 million toward Fontainebleau’s construction through its “J for Jobs” program, which creates jobs for union workers. ULLICO and Fontainebleau reportedly had been in talks about additional financing to bridge the gap, says a project official who requested anonymity. ULLICO Chief Investment Officer Herbert Kolben declined comment.

On April 20, lenders terminated Fontainebleau’s project financing based on “one or more events of defaults,” but failed to specify the nature of the defaults, says a company spokesman.

“They were already operating with a skeleton crew and continuing to lay people off. Now, the contractor liens are starting to accumulate, and they owe more than $250 million to subcontractors,” says another project official, who requested anonymity. “If you want them to finish the job, you have to figure out a way to pay them off.”

Turnberry West Construction Inc., Las Vegas, is the project’s general contractor. Colsanti Specialty Services Inc., Macomb, Mich., and Ceco Concrete Construction LLC, Tempe, are the project’s main concrete contractors.

Fontainebleau’s economic importance to the region has intensified following the recent delay and cancellation of other Strip mega-projects, including the $4.8-billion Echelon resort development, Caesars Palace’s $1-billion Octavius Tower and the $600-million St. Regis condominium tower.

Fontainebleau is taking steps to secure the construction site until new funding can be obtained. “They are just trying to waterproof it, and make sure all the doors are in. It will not be a long-term protection. They just want to protect the asset, but for a much shorter period of time than Echelon,” says Marc Furman, senior administrative assistant with the Southwest Council of Carpenters in Las Vegas. “There is a lot of stuff already in the building, and you need to protect it so it does not get damaged. It is so far done that I believe it will eventually get completed.”

By Tony Illia

Horse Drive Interchange At U.S. 95 Begins

Work began on the $44-million Horse Drive Interchange at U.S. Highway 95 improvement project which is scheduled to take 18 months to complete.

The project in the far northwest part of Las Vegas includes construction of an overpass and full interchange, frontage roads, ramps, retaining walls and a bridge, along with extensive utility work, flood control improvements, traffic signals and lighting.

The Horse Drive/U.S. Hwy. 95 interchange project is slated for completion in late 2010. Funding is provided by the Regional Transportation Commission of Southern Nevada, the Clark County Regional Flood Control District and the city of Las Vegas.

Capriati Construction is the project contractor.

Veer Towers Top Off

Veer Towers at CityCenter, Las Vegas, Nev. (Photo courtesy MGM MIRAGE)

CityCenter topped off Veer Towers, the inclining high-rise condominiums, in preparation of the urban resort’s opening later this year.

Designed by Helmut Jahn, the two glass towers rise 37 stories at a five-degree incline. The MGM MIRAGE-developed LEED project will feature extensive natural light and water-saving fixtures throughout. Its glass façades and fins will provide shade from the sun, diverting heat and enhancing circulation of cool air to promote energy-efficient climate control.

A rooftop amenities floor features an infinity-edge pool, hot tub and sun deck. Within, Veer will feature media and game rooms, fitness center with panoramic views and men’s and women’s separate changing rooms, steam rooms and saunas. Veer’s west tower also will boast a business center and boardroom.

Crews with general contractor Perini Building Co. have used 55,000 cu yds of concrete and 326,000 sq ft of curtain wall.

Affordable Concepts Awarded New Office Building

Affordable Concepts Inc. was awarded the construction of a new Class A office building by Craig P. Kenny & Associates, Attorneys at Law. The four-story, 25,000-sq-ft building was designed by Jawa Studios. Located at 8th Street and Clark Avenue, the project sits on .5 acres and is scheduled to be completed by February. The facility will house the law offices on the first three floors and will include a basketball court on the fourth floor.

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