County to MGM: Prepare plan to fix Harmon problems, abate damage if tower falls

Tuesday, July 12, 2011 | 4:25 p.m.

That demand is the latest development in an increasingly vitriolic war of words between MGM Resorts and Perini over a report that indicates structural problems with the troubled Harmon tower.

I have posted the county letter at right, along with an April missive and the structural report. Below are the nasty statements from the parties issued today.

Perini:

The article that appeared in the Las Vegas Review-Journal is a complete distortion of the report prepared by Clark

County’s expert. In November 2010, the Clark County Building Department commissioned a report from a third-party

structural expert, Walter P. Moore & Associates, Inc. After extensive review, Walter P. Moore prepared a comprehensive

36-page report in January 2011 that found the “Harmon Tower structure is structurally stable under design loads

from a maximum considered earthquake (MCE) event.” The Review-Journal article conveniently omits the fact that

the “vulnerabilities” identified in the Moore Report are design defects that are the responsibility of MGM. Specifically,

the Moore Report expressly finds the following vulnerabilities resulting from design defects and requires MGM to

address those defects: Vulnerability 1 - Connection Between Tower and Podium; Vulnerability 2 - Diaphragm Steel;

Vulnerability 3 - Podium Drag Line Components; and Vulnerability 4 - Elevator Lobby Beams.

MGM did not like Clark County’s expert’s report, which placed blame on MGM for improper design and required MGM

to address those design deficiencies, so MGM went to Los Angeles shopping to buy another opinion, which Weidlinger

has now apparently provided. Perini finds it indicative of MGM's motivation to mislead the public that the Harmon is

unsafe in that MGM provided a copy of its consultant's report to the media on the same day it received the report and

without providing a copy to its general contractor. MGM’s contention that the Harmon is unsafe is absolutely untrue.

Further, contrary to the implication of the Review-Journal article, the Harmon does not present any current life safety

issues even for a “code-level” seismic event. Perini's own third-party structural engineering experts agree with the Moore

Report’s finding that the Harmon is stable. Perini’s structural engineering experts have determined that the Harmon was

defectively designed, but is currently stable and all design and construction defects can be repaired. Perini’s structural

engineers are willing to design the repair and take over as the structural engineer of record so the Harmon can be

completed. This would include designing a repair of all of MGM’s design errors and omissions. MGM’s contention that

12-14 months is needed to design a repair is also preposterous. Perini’s structural engineering expert has already come up

with a tentative repair plan.

The truth is, however, that MGM does not want the Harmon to be repaired because the Harmon is worth more dead than

alive to MGM. Otherwise, MGM would allow Perini to repair it. MGM never intended to complete the Harmon after the

economic downturn; MGM cannot fill the Aria and Vdara hotel rooms or sell the Veer and Mandarin Oriental condo units

that it has now. Repairing and opening the Harmon would only create a greater glut of unused hotel rooms for MGM.

Perini has requested the opportunity to repair the Harmon for more than two years, but MGM has steadfastly denied

Perini's requests. MGM even opposed Perini's request to the court to have the opportunity to repair the Harmon.

Significantly, MGM’s expert does not say the Harmon is unrepairable.

MGM continues to owe more than $200M to Perini and the CityCenter subcontractors – most of which has nothing to do

with the Harmon - and is simply using the allegations of construction defects at the Harmon as a ruse to not pay Perini and

the subcontractors the amounts they are due. If market conditions were better and MGM found that demand existed for

the Harmon hotel rooms, MGM would not be claiming that the Harmon is unstable.

Perini will issue a more comprehensive response after Perini has had the opportunity to review MGM’s report.

MGM:

Perini is understandably attempting to deflect attention from what it already has admitted: As general contractor, it failed to properly construct the Harmon. No amount of misdirection can change that fact.

Perini cites from the Walter P. Moore report, but fails to quote it accurately. The report does say “Harmon Tower is structurally stable under design loads from a maximum considered earthquake event’’ but Perini chooses not to include the preamble statement “Our analytical findings suggest that the as-designed Harmon Tower structure is structurally stable…“

Moore said the building is stable AS DESIGNED*; it never gave any opinion about the AS-BUILT** condition of the building, which is the evaluation outlined in the Weidlinger letter submitted to Clark County on Monday.

The Weidlinger study examined the as-built condition of the building, and finds it grossly lacking. When given the opportunity to fix the Harmon, Perini failed to do so in a timely or proper manner.

Perini’s representation of the facts is as poor as its construction at the Harmon.

*Quote from Walter P. Moore Report, page 1, paragraph 1: “Hence we based this study only on information that was obtained from the available design documents, non-compliance reports and limited visual observations.”

**Quote from Weidlinger letter, page 1, paragraph 1: “We have analyzed the Harmon tower and podium in its current as-built condition. Our analysis included a review of the various destructive and non-destructive testing performed to date, the Walter P. Moore report, the permitted plans, and related construction documents. We have also calculated the permitted and current code-specified loads on the building.