LVCVA, Venetian argue over convention center delays

The delay the Las Vegas Convention and Visitor Authority is experiencing in the construction of a convention center expansion will cost more than $3 million in interest alone, the agency said Tuesday.

The LVCVA, embroiled in a legal controversy with the Venetian hotel-casino, wants to build a $150 million expansion with tax-exempt revenue bonds.

The Venetian, a competitor for convention business, contends the bonds the LVCVA wants to sell are a form of general obligation bonds, not revenue bonds, and require a public vote for approval.

A suit filed by the Venetian in District Court in July argues that the 1.3 million-square-foot addition can't be built without a public vote.

The LVCVA filed a motion to have the suit dismissed, but last week, District Court Judge James Mahan ruled the Venetian's suit has merit and set a trial for Oct. 5. Although trial procedures will be at an accelerated pace, the LVCVA believes it is losing time and money as a result of the delay.

Venetian representatives say the agency is disingenuous in its concern about losing money.

LVCVA President Manny Cortez told board members at the LVCVA meeting that the cost of the addition will go up with every day of delay in construction.

Cortez said the cost of financing the bonds alone could go up $3 million to $4 million on the project because of the higher interest rate that they would carry. Interest rates have risen since the LVCVA's original sale date.

Meanwhile, other factors could boost the cost even more.

Rossi Ralenkotter, vice president of marketing for the LVCVA, said five trade show producers already are investigating operating their shows at other locations because they aren't sure the convention center addition will be completed in time.

Ralenkotter wouldn't say which shows are considering a move because final decisions haven't been made and the LVCVA is still trying to come up with a solution.

Two show producers already have lined up in support of the LVCVA, filing "friend of the court" briefs in the LVCVA's motion to dismiss the suit.

After the motion failed, a representative of the producers of the Winter Consumer Electronics Show said the show doesn't expect to leave Las Vegas, but would negotiate with the Sands Expo Center -- which is owned by the company that owns the Venetian -- for convention space.

Representatives of a show produced by the Packaging Machinery Manufacturers Institute, the other suit intervenor, haven't announced plans for their show.

Tom Smith, vice president of facilities for the LVCVA, also told board members Tuesday that every day of delay in the startup of construction of the expansion will be costly because the project would be on an aggressive building schedule.

LVCVA board Chairman Michael McDonald said the agency should do everything it can to explain to the public how the Venetian's roadblock is costing the public money.

"Everybody in the gaming industry and in the whole city are affected," McDonald said. "It's important that we work to get the message out that this is affecting everybody."

But the Venetian has no intention of backing away from its initial opinion on the bond sales and believes the LVCVA isn't as concerned about additional costs as it purports to be.

Andy Abboud, director of government relations for the Venetian, said no one raised concerns about cost issues when the price tag moved from $79 million for the convention center addition in April to $150 million in July when the LVCVA attempted to sell the bonds.

Abboud said the Venetian was consistently rebuffed in its efforts to get more information about the price totals as well as details about traffic flow and parking questions.

Abboud said Mahan's ruling shows that the Venetian's questions about construction financing have merit.

"The threat about shows leaving is just rhetoric," Abboud said.

He added that the LVCVA has not succeeded in generating any new trade show business and that the expansion project does not have as much public support as the agency thinks.

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