Neonopolis bid awarded amid threat of lawsuits

Amid threats of lawsuits and a fast-ticking clock on a key downtown redevelopment project, the Las Vegas City Council on Thursday rejected the top advice of its attorney and awarded a controversial construction bid to the second-lowest bidder.

Granite Construction Co. was awarded the $11,499,499 contract to build the two-story underground parking garage at the planned Neonopolis entertainment center during Thursday's reconvened session of the city's Redevelopment Agency.

Council members Arnie Adamsen, Larry Brown and Michael McDonald -- acting as the agency -- unanimously approved the bid award. Mayor Jan Laverty Jones and Councilman Gary Reese did not attend.

The dispute began when four companies responded to the city's request for bids for the estimated $14.3 million garage. Although M.J. Dean Construction's bid came in at $450,000 lower than Granite's, Dean did not submit certification of its waterproofing subcontractor as required by the bid documents.

When Granite protested, City Manager Virginia Valentine sent Dean Construction a letter saying that a staff review of the protest determined Granite should get the award.

Dean responded by disputing the type of general engineering contract held by Granite. The city's bid documents only requested the "appropriate license" and did not specify between types A and B. Dean has a B license and Granite has an A license.

As a result of the second dispute, the city's bid documents required the state Contractors Board to hear the matter. Thus, the bid award had to wait until after an emergency Contractors Board meeting.

One of the seven members of the Contractors Board missed Tuesday's meeting, however, and the remaining six were deadlocked over whether a type A or Type B engineering license is best for the project.

The Contractors Board recommended the state attorney general weigh in -- a process that would take about 30 days.

Meanwhile, City Attorney Brad Jerbic received a letter from the attorney representing Neonopolis developer World Entertainment Centers.

The success of the $99 million theater, restaurant and retail center at Fremont Street and Las Vegas Boulevard depends upon a November 2000 opening, the letter from attorney Stephen Rice said.

If Neonopolis doesn't open in time, anchor-project Mann Theatres will not be obligated to pay its base rent of $100,000 a month until May 2001, leading to losses of $550,000.

The city needs Neonopolis to open on time, Jerbic said, because of the debt service it is paying on $32 million in bonds floated for Neonopolis.

"We are recommending council reject all bids in this matter and send it back out," Jerbic said.

But Adamsen raised concerns about whether the four original bidders would then be on a level playing field.

City engineer Dennis Anderson said any new bid documents would clearly specify that either an A, a B, or an AB license would be suitable to build the project.

Roger Wirth, an attorney representing M.J. Dean, said he thought only a B license was correct for the job. Wirth also said waterproofing certification and like documents are usually not required at the time the bids are opened.

In fact, of the four companies, only Granite turned in that certification on time.

Jerbic disagreed with Wirth about the lack of importance given the waterproofing certificate in the bid documents. The certification is listed under the items needed for submittal, not on the main page.

"It was felt that this was so important because we're digging a 30-foot deep hole where we know there's groundwater at 10 feet," Jerbic said.

Wirth told the agency Dean would consider a lawsuit if Granite was awarded the contract, or if it was put back out to bid.

Stanley Parry, an attorney representing Granite, argued an A license was suitable to do the project. He submitted a letter from the Associated General Contractors Las Vegas chapter and proof of similar projects conducted with A licenses.

"Nobody's challenging that Granite Construction can't do this job," Parry said.

Granite even offered to indemnify the city for the potential delay that could result from litigation.

"You have a responsive and responsible low A bid right now," said Granite's Edward Riggs. "To go through this whole thing again is very unfair."

Jerbic told the agency he wanted them to rebid the project, but also said if they did award the contract it should be to Granite.

"I hope this isn't the way it's going to start off," McDonald said, referring to Dean's threat of lawsuit over the project many believe will shoulder downtown's rebirth.

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