Wednesday, Oct. 25, 2000 | 11:19 a.m.
Two food establishments at the newly opened Desert Passage mall at the Aladdin hotel-casino on the Las Vegas Strip are fighting eviction notices, disputing they're behind on rent and saying business at the mall has been below their expectations.
Representatives of Anasazi LLC, owners of the Anasazi at Santa Fe Restaurant, and Caviar Royal LLC, owners of the Beluga Bar at the Caspian Sea, filed responses in Clark County District Court to the notices they received earlier this month.
Beluga Bar received its three-day notice to pay or vacate its space, signed by James Harris, vice president and general manager of the mall, Oct. 10. The Anasazi received a five-day notice Oct. 11. Both eateries' responses say they object to paying back rent because the mall hasn't been completed and traffic has been below expectations.
A mall spokesman said the notifications were not eviction notices, but an attorney representing the Beluga Bar said the one his client received was indeed an eviction order.
"It's not a negative relationship thing," said Paul Beirnes, director of marketing for Desert Passage, the 500,000-square-foot mall owned by TrizecHahn Development Corp., Toronto. "It's bill payers talking to bill payers. ... It's not eviction notices by any means."
Beirnes characterized the dispute as routine communications between landlord and tenant in a new construction project.
But the court responses from the two establishments are anything but cordial.
In an affidavit for "hearing on summary eviction" filed in Clark County District Court last week, Anasazi manager Harry Ohta said mall managers delivered "a banged-up old VW Beetle" when it was promised "a Cadillac" location. He said mall officials shoved him into "a dark corner at the dead end of a gloomy and lifeless spoke of the mall."
The Anasazi and the Beluga Bar, a caviar sampling establishment, are both located in the Desert Passage's harbor area, where a special effects-filled thunderstorm drops rain into a waterway at a faux wharf several times a day.
Ohta said the Anasazi is not in arrears and has spent $3 million to get the restaurant open, including $1 million in "extra charges" to make sure it was ready for Desert Passage's grand opening Aug. 17. Ohta says the mall should be responsible for the extra charges, now being sought by contractors who did the work.
He said mall managers pressured him to get the restaurant open in time for the opening, telling him other establishments were further ahead.
Meanwhile, Ohta said the mall hasn't delivered on several promises, resulting in the dispute over rent due. He said the Harmon Avenue entrance to the mall, the main valet parking drop-off point, isn't finished. That entrance is important to the restaurants, Ohta said, because mall officials said there would be an event at the Aladdin Theatre of the Performing Arts "virtually every night of the week" that would generate considerable walk-in traffic for the restaurants.
Orange and white barricades cordon off a section of the valet area and other restaurant managers say it's often blocked with construction equipment. They said they've been told the entrance would be completed within three weeks.
Ohta also complained that several businesses that mall managers said would be ready have yet to open.
"(The) landlord's mall grand opening was totally premature, to the serious detriment of (Anasazi)," Ohta said in his statement to the court. "At the mall grand opening, no other restaurant was complete and much of the mall had not yet even opened for business and was still boarded up. (The) landlord's mall grand opening, covered by national and local media, was a fiasco."
Desert Passage received generally favorable reviews the night of its grand opening. It was the Aladdin that got a public black eye because it opened 16 hours later than originally planned because county inspectors were still checking safety systems that hadn't been tested.
The manager of the Beluga Bar had similar complaints about mall management in a response to a three-day notice to pay rent.
In an affidavit filed with the court, Beluga Bar manager Barry Katcher said he believes his company doesn't owe mall managers $135,000 sought in back rent.
The total includes about $35,600 in monthly rent, utility and marketing charges for two months and another $63,700 in construction charges that have accumulated for three months.
Katcher said his company spent $100,000 in "fast track" construction costs to get the establishment open in time for the grand opening and was told by mall managers that it would be reimbursed.
Katcher also said traffic has been disappointing.
"At the time of entering into the lease with Caviar Royal, it was represented by the landlord that certain traffic flow projections would be met," the affidavit says. "To date, traffic flow has been far below the minimum traffic flow represented to Caviar Royal."
Earlier this month, Beirnes said traffic at the mall not only has met projections, but it has exceeded expectations.
An expert who follows Strip retail says it's common for there to be construction-related disputes in the wake of an opening.
George Connor, senior vice president of retail and resort properties for Colliers International in Las Vegas, said restaurants are much more difficult to open than standard retail outlets and that mall traffic is generally driven by anchor restaurants.
His own assessment of Desert Passage's traffic is that it's good for a mall that has been open two months.
"I've heard they're doing about $800 per square foot in sales (annually)," Connor said. "By comparison, (the Canal Shoppes at) the Venetian did about $600 a square foot when it opened and it's now up to about $900. And, there are about 50 percent more restaurants open at Desert Passage than were open at the Venetian this early."
Restaurants are more difficult to open, Connor said, because there are detailed fire suppression systems that have to be installed and checked, ventilation is critical and there are numerous heavy electrical and natural gas lines that have to be installed.
"And restaurants are typically very powerful traffic generators," Connor said. "Anytime you add restaurants, the greater critical mass is better for all the retailers."
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