Majestic Realty Co.
Published Wednesday, March 27, 2013 | 5:56 p.m.
Updated Wednesday, March 27, 2013 | 9:45 p.m.
UNLV is severing its ties with private developer Majestic Realty, ending a nearly three-year exclusive partnership on a proposal to build a 60,000-seat "mega-events center" on campus.
UNLV will conclude its exclusive negotiating agreement with Majestic on May 27. The university announced its decision in a news release late Wednesday afternoon.
The exclusive negotiating agreement, which was approved last summer, was set to expire Sept. 30, said Don Snyder, the UNLV Now project leader.
There were concerns from the Strip resort industry about Majestic's role in the project, especially over how much the company — backed by Los Angeles billionaire Ed Roski — stood to gain from its exclusive partnership with the university, Snyder said.
"That was one of the biggest challenges we had," Snyder said, explaining UNLV's decision to part ways with Majestic. "The true partnership has to be between the university and the resort industry. Having a private, for-profit developer standing between us wasn't going to facilitate getting the project done."
Majestic, which first proposed the stadium concept in 2010, poured millions of dollars into research and development for the UNLV Now stadium project. Roski had pledged about $360 million to $400 million — about 40 percent of the total stadium cost — in addition to assuming the risk to build the project.
As late as this month, UNLV and Majestic were working "lock-step" to introduce a legislative bill that would create a special tax district on campus to pay for the stadium, said Majestic point man Craig Cavileer.
That's why UNLV's sudden decision to sever ties came as a shock to Cavileer, who is also the president of the Silverton Hotel and Casino, an off-Strip resort.
"We are very, very disappointed," Cavileer said. "We are also surprised and perplexed by their decision to terminate the (agreement). We were the purported and proposed development partner. We were working closely together.
"We thought we made for a terrific partner," he continued. "We had a perfect arrangement."
Snyder thanked Majestic's early support and commended the company for raising the profile of the project in the public's eye.
"They spent a lot of time and money to move this project, and they developed a great level of emotional equity," Snyder said. "I understand (Cavileer) is disappointed and I feel badly about that, but this decision was necessary. We would feel worse if we couldn't finish this project."
UNLV terminated its agreement with Majestic early amid mounting pressure from the resort industry over the cost and scope of the $800 million to $900 million stadium proposal.
In early February, MGM Resorts International announced it "cannot support the current UNLV Now concept," arguing the project’s price tag was too prohibitive. MGM, which had earlier pledged $20 million for UNLV Now, later announced plans for a 20,000-seat arena on the Strip.
About the same time, the Nevada Resort Association and the Las Vegas Convention and Visitors Authority tempered their endorsement of the stadium, focusing their efforts on other projects such as renovating the Las Vegas Convention Center.
By dropping its private developer partner, Snyder said the university hoped to garner support from the wider resort community. The stadium will remain a public-private partnership, but the private partner will be the resort industry in general, Snyder said.
"We have determined that stakeholders need to have a voice here," Snyder said. "This is a better opportunity for their voices to be heard.
Currently, Snyder is talking with the six largest resorts in town as well as the Nevada Resort Association on earning financial backing for the stadium project.
The scope of the project will likely change as a result of Wednesday's decision to drop Majestic. UNLV Now developers may look at hiring another architect to come up with renderings for the revised stadium project, Snyder said.
"We need a clean sheet of paper to have a straightforward, honest dialogue," he said. "It's realistic to expect that's something that we need to do."
UNLV gave 60 days notice of its decision to sever ties with Majestic, as required under the "termination by convenience" portion of their exclusive agreement.
UNLV is not liable for any development costs incurred by Majestic, but is now required for the next two years not to enter into any agreements with other developers to build the stadium project unless it first offers it to Majestic under favorable and acceptable terms.
This timeframe may not affect UNLV that much, as it will likely take until the next Legislative session in 2015 for a special tax district to be approved on campus. This will likely delay the stadium project's groundbreaking by at least two years.
Earlier this month, Assembly Speaker Marilyn Kirkpatrick introduced legislation that would create a tax increment financing district that would divert property tax revenue back into the stadium project.
"It's more important to get it right than to get it done fast," Snyder said. "The 18-month (delay) I count to be an investment to get the project right."
While disappointed by the turn of events, Cavileer said he was still hopeful for UNLV Now stadium proposal.
"It's a fantastic project," he said. "We would love to see it get done."