Friday, March 7, 1997 | 11:59 a.m.
The City Council, looking to gain a piece of property that one day may be home to a justice complex, city jail or even a new City Hall, is expected to vote Monday to shell out $5.3 million for a small slot house.
The payment to obtain the Rainbow Vegas hotel-casino, 401 S. Casino Center Boulevard, across from the Clark County Detention Center, will be done through a loan the city will make to itself acting as the Downtown Redevelopment Agency.
The redevelopment agency will then lease the land back to the current owners, Rainbow Vegas Hotel General Partnership, and receive a monthly rent of $33,235 -- the amount the agency in turn will repay the city for five years.
Naturally, there will be no interest paid on the loan because the deal is little more than a Paul-repaying-Peter situation.
By structuring the deal this way, the city secures ownership of what it feels is a major piece of land in the city's future and allows the government to stay out of the hotel-gaming business while it decides just what to do with the property.
"This is key to our downtown development plan," said city spokeswoman Nadia Wiggins. "The land has the potential for several public uses, including the proposed justice center, a new jail or a new City Hall. The current City Hall (at 400 E. Stewart Ave.) is 25 years old."
She noted that city government has long outgrown the 11-story, D-shaped structure. Several city departments have been forced to relocate to sites around the downtown area while others have expanded to fill City Hall.
As to whether the city plans to get into gaming -- which it in effect helps regulate -- once the lease agreement ends, Wiggins said that option never has been considered. Rainbow Vegas features slot machines and video poker but no gaming tables.
Nevertheless, the city's purchase of a casino, from which it will collect rent, does dredge up memories of one failed city government/gaming marriage and of one major tourism attraction whose ultimate success won't be known for several years.
The city came under heavy criticism for its investment in the Main Street Station redevelopment project, which went belly-up and remained closed until the Boyd Group took it over and reopened it as a satellite hotel for its other properties. More recently, it became a full-fledged Boyd hotel-casino.
The city also was criticized for being too close to the casino industry again in its construction of the multimillion-dollar Fremont Street Experience. As a result, the phrase "giving taxpayer money to your rich gaming buddies," has come up more than once by angry citizens at council meetings.
But city officials believe the Rainbow Vegas deal's scope goes far beyond gaming to more diversified interests.
City Manager Larry Barton, in a memo to the City Council, said the purchase of the Rainbow Vegas "will provide the agency with a strategically located parcel of land which will provide a valuable resource for future development."
"The development will enhance the opportunities to strengthen the office corridor," Barton said. "This will be a benefit to the immediate neighborhood."
The city entered into the deal to purchase the property last Oct. 25. The lease the council will consider Monday is for one year with an option to renew for four months, beginning with the close of escrow, slated for March 24.
The terms of the lease include the tenant paying all utilities and taxes as well as providing maintenance for the property.
If the tenant makes key improvements that strengthen the overall marketability of the property, three months worth of rent payments will be forgiven, the lease says.
Also, the tenant cannot sublet the hotel-casino without the city's approval.
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