Thursday, Aug. 19, 1999 | 11:02 a.m.
Local building trades contractors owed millions for work on the Venetian met Wednesday with Rep. Shelley Berkley, D-Nev., the only public figure to show any interest in the spreading fiscal turmoil one participant described as "unprecedented in U.S. construction history."
Company executives told Berkley failure to get paid for work and materials supplied to build the $1.5 billion hotel-casino owned by Sheldon Adelson will bankrupt several local construction firms.
They also said the construction industry isn't the only one being stiffed. Security firms, linen supply companies and other businesses also have been unable to collect on bills for services and materials supplied to the Venetian, they alleged.
Berkley vowed to explore introduction of federal legislation "to prevent this type of thing from ever happening again," and said she'd contact Nevada political figures to enlist their aid in resolving the threat to the state's building industry.
The first-term congresswoman acknowledged she was taking a political risk in stepping into the situation. Adelson, a billionaire who has bankrolled a bevy of handpicked political candidates, fired Berkley as his vice president of government relations before the Venetian opened and backed her Republican opponent when she ran for Congress.
"I've had problems with the Venetian for quite a while," she told executives from more than a dozen Las Vegas-based companies Wednesday night. "But when I was asked to meet with you, I asked myself a question: If this involved anyone but the Venetian, would I try to help? And the answer was yes."
The contractors say they desperately need help from someone. They built the resort, in many cases advancing the money for labor and materials out of their own pockets, and haven't been reimbursed yet.
More than $250 million of mechanics liens have been filed against the Venetian and related companies, and a lawyer for some trade contractors said he'll file another $5 million of such claims today.
Venetian officials contend they don't owe any money, asserting that the resort's "guaranteed-maximum-price" contract with Lehrer McGovern Bovis Inc. absolves them of any responsibility to pay the subcontractors.
The Venetian also contends that when Bovis, general contractor for the massive construction project, hired subcontractors, it failed to obtain mechanics-lien waivers as Adelson had requested.
The waivers were designed to bar subcontractors from filing liens, which have priority over other creditors' claims such as bank debt and mortgage notes. Courts in New York and California have ruled such waivers illegal.
But Bovis argues that it complied with the GMP contract and that cost overruns were a result of Adelson-approved changes in the scope of the project.
Bovis, named by Building Design & Construction magazine the top construction management firm in the United States, has filed $145 million of liens against the Venetian, as well as a lawsuit alleging fraud.
Local trade contractors don't really care whether Bovis or the Venetian is at fault. They just want to get paid for the work they've done and the materials and services they've provided. And they want to get paid now, not after the seemingly inevitable legal battles between Bovis and the Venetian drag through the courts.
But John Prendeville, a former Bovis official now suing the company for wrongful termination, said litigation will consume years because the extent of the claims "is unprecedented in U.S. construction history."
"Both sides will try to buy time and meanwhile there's no money coming," he said.
"Both of them are pointing fingers at each other, and we're caught in the middle," said Jeff Whittle of Recreation Development Corp., which is owed $4.6 million.
"It's inappropriate and unjust for them to have that building open for three or four years while we don't get paid. That hotel was opened with our money."
Richard Peel, an attorney representing more than a dozen local subcontractors who've filed $20 million of liens, said he'll file another $5 million of claims today. He said subcontractors have "financed this project by paying for laborers and materials."
"Bovis was, in essence, a contractor who brokered out the work to the subs," Peel said. "These people paid out of pocket as much as $100 million to get this building built. We need good legislation to prevent this from happening."
"None of us wants to see the Venetian go belly up," Berkley said. "But you aren't responsible for financing of the Venetian hotel."
RDC's Whittle urged Berkley to "bring this problem to every elected official in this area."
"Put some political heat on Adelson," he said. "He ought to pay us and fight it out with Bovis later."
Several executives urged that pressure be put on county officials to withhold permanent certificates of occupancy for the hotel-casino, which is currently operating with temporary approvals.
Others urged that the State Gaming Control Board yank the Venetian's gaming license for failing to pay. Berkley noted that gaming licensees "are required to act in an ethical manner."
"What's the magic number of how many people you can screw before it becomes unethical?" asked one subcontractor.
"If somebody had enough power to say this place gets closed until we get paid, we'd get paid."
So far, though, pleas for help to gaming regulators, the governor and Clark County commissioners have proven fruitless, several contractors said, despite the situation's spreading effect on the construction industry.
"There's a lot of little subs who are selling their equipment because they're going out of business," said one.
"This has impacted other jobs we're working on," said an executive of Safway Scaffold, which is owed $250,000. "Now other people know we're in a bind and aren't paying either, hoping we'll go under and won't be around to collect."
Not all major general contractors are taking advantage of the smaller companies' plight, however. Whittle lauded a recent offer by Perini Building Co. to help some subcontractors.
"Two weeks ago, I got a call from Perini, which has always been on the up and up," Whittle said. "They offered to pay us front money on another project to help keep us alive."
Some at the meeting haven't filed mechanics liens because they aren't trade contractors. Two executives from Special Operations Associates, which provided security services to Bovis during construction of the Venetian, said they are owed $820,000.
"We gave them payroll sheets and they paid us at first," said John Theel, SOA president. "But then they started skipping ... and we haven't received anything all year."
"The ramifications of this are extraordinary," Berkley said. "I'm really offended that this has happened to this community and to all of you. There are families and businesses in this community in danger of going under."
Berkley said she'd begin contacting Gov. Kenny Guinn and Clark County Commission members today to explore methods of resolving the issue, and instruct her staff to research possible federal remedies.
archive
