Tuesday, Feb. 25, 2003 | 11:04 a.m.
CARSON CITY -- Casino developer Steve Wynn's company wants state regulators removed from overseeing the water service it provides to 10 homeowners on the Desert Inn Golf Course.
Wynn's representative said the company wants to be freed of state regulation to avoid further delays building the $2.4 billion Le Reve.
But the homeowners, who have been locked in a contentious legal battle with Wynn since refusing to sell their homes to him, questioned his motives before the Assembly Commerce and Labor Committee on Monday
"I do think this is a smokescreen being put up for ulterior motives," Stephanie Swain, a resident of the country club who is part of the lawsuits, told the committee. "What we have experienced to date is broken promises. We now live on the street of broken dreams."
Assembly Bill 139, requested officially by the state Public Utilities Commission, includes a provision exempting water companies in Clark County that serve 15 or fewer clients from PUC regulation. That part of the bill applies only to the Desert Inn Improvement Co., which Wynn owns.
Originally 53 homes around the golf course had water provided to them by the Desert Inn under a 1952 water contract that provided the home sites. The 10 homeowners who refused to sell their properties to Wynn in 2000 to make way for his new hotel-casino are still served by the water company under that contract. The PUC has oversight of that.
Several of those water users pleaded with lawmakers to retain the utility commission regulation because, they said, it is one of the few checks on Wynn's power to interrupt water service to their homes.
But Fred Schmidt, a former PUC Commissioner and current lobbyist for Wynn Resorts and the Desert Inn Improvement Co., said PUC oversight could stall the opening of Le Reve.
When Wynn sought financing for the project, he had to submit "thousands of pages of paperwork to the PUC at the cost of thousands of dollars," Schmidt complained to assembly members. "There were New York attorneys and it was very burdensome."
If the bill is not passed and Wynn seeks any change to his financing, he would be subject to PUC approval that "is going to be costly and impact the timeline for the property," Schmidt said.
Wynn's relationship with the hold-out homeowners is already the subject of litigation, and the procedural move requested Monday before the Assembly Commerce and Labor Committee left some of them questioning his motives.
Sharon Greenbaum, one of Swain's neighbors, said she believed the PUC needed to continue regulating the utility for "safety reasons."
"We have real problems with water interruption as it is now, and changing the status of the utility won't leave us any redress," Greenbaum said.
She also encouraged the committee to wait until after the litigation is heard in October.
"Let a court and a jury decide who gets what," she said, testifying via teleconference with two other homeowners from the Grant Sawyer Building in Las Vegas.
Committee Chairman David Goldwater, D-Las Vegas, represents the Desert Inn area and notified the residents about the hearing.
He asked Schmidt whether the residents would continue to receive service if the PUC does not regulate the water utility.
Goldwater said he has talked to one resident who was told the source of service interruption was a result of an aging 50-year-old pipe that burst. When utility representatives did not show him the source, he worried that the service interruption had other sources, Goldwater said.
"They were sort of getting into the realm of harassment," Goldwater said.
Assembly Majority Leader Barbara Buckley, D-Las Vegas, asked Schmidt whether there is a compromise that would free Wynn from the burdensome paperwork requirements at the same time it would ensure service for the homeowners.
Assemblyman Ron Knecht, R-Carson City, asked whether Wynn could create a subsidiary company to handle the water but not be subject to the Securities and Exchange Commission and other financing filings.
Schmidt said that since the golf course, which Wynn plans to re-open, uses water through the utility, the residents and golf course cannot be separated without lengthy hearings that could delay Le Reve's planned April 2005 opening.
"I don't think there's anything we could do that wouldn't generate further animosity," Schmidt said.
Schmidt said he would discuss the options with his client and get back to the committee at a later date. The bill, which will be discussed in a future work session, also amends some of the timelines the PUC uses in considering application by power users to leave Nevada Power or Sierra Power.
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