Las Vegas Sun

September 19, 2019

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Downtown project still in bad shape

It's been a long time since news of the performance or future of Neonopolis has been anything you would want to put up in bright lights.

Earlier this year a change in ownership spawned hopes at Las Vegas City Hall that the 250,000-square-foot, $100 million downtown retail center, which for the past 4 1/2 years has been an economic drain on the city and a recipe for disaster for retailers, might finally be turning a corner.

Now, however, some city officials fear that the complex is once again in a tight financial corner.

When Prudential Real Estate Investments sold the center for $25 million to FAEC Holdings Wirrulla, Mayor Oscar Goodman praised the company's frontman, Rohit Joshi, for his various development ideas. Adding to the optimism was the fact that the Poker Dome, a custom-built poker arena, has provided national exposure to the facility through tournaments televised on Fox Sports Net.

Despite those developments, however, a Dec. 6 City Council meeting on a routine extension of the city's parking validation agreement with Neonopolis raised concerns that the project still is in deep trouble.

At the meeting, Goodman left no doubt that his initial optimism had become frustration with Joshi's many plans for the facility, which the mayor described as being more like dreams.

"With all due respect, Mr. Joshi, your plans are not really plans," Goodman said.

Pressed by Goodman, Joshi acknowledged that two of the complex's three remaining anchor tenants - Galaxy Theatres and Jillian's Restaurant - were losing money. Neither tenant has been able to pay rent, Joshi said, conceding that he could not guarantee that either business would remain open.

Joshi said his "initial quick plan" to put Neonopolis on more solid financial footing was to rent five spaces on the first floor to retailers within 90 days and have those businesses open by the end of 2007.

But he offered no plan to fill the remaining 25 or so retail spaces at the three-story facility, saying simply: "The second floor has been a little tough leasing."

That, city officials said, hardly looks like a quick plan.

And that's what Neonopolis has needed almost from Day 1.

When Neonopolis opened in May 2002, it already was the target of criticism over the $32.6 million that the city spent to build an underground parking garage and to buy the land at Las Vegas Boulevard and Fremont Street. Since then, the project has been struggling to draw and keep tenants and patrons.

Joshi said he hopes to get a gaming license for the project, adding that he has been working with both local and international gaming operators to achieve that goal. Local experts, however, argue that a casino at the site would be a hard sell, saying the area may not even be large enough to accommodate one.

City officials also have been disquieted by questions over some of Joshi's other financial dealings.

At last week's meeting, Jonn Keamy identified himself as an assignee of interest on three legal judgments totaling more than $750,000 against Joshi, including a fraud judgment in a case involving former major league baseball player Darren Daulton.

Keamy told the council that Joshi's company, Joshi and Associates, no longer exists. It has been defunct in California for more than two years and has no Las Vegas business license, Keamy said.

Joshi, who was standing next to Keamy in the council chambers, did not dispute the claims.

Goodman directed City Attorney Brad Jerbic to look into the allegations.

"Find out where we stand with him because we've got a lot of money of the city that's resting on him at this time," Goodman said. "He's in the driver's seat as far as the future of that property, but because we're his partner we have to know who we're a partner of."

The question of who the city is a partner of goes beyond Joshi, however.

The company that owns Neonopolis was identified at the time of the property's sale as FAEC Holdings Wirrulla, but the owner on the property's business license is Wirrulla USA Inc. And the company listed on the parking validation program is Wirrulla Hayward LLC.

Joshi said the owners of the various Wirrulla companies are a group of investors from several countries who operate out of Delaware.

Goodman said at the council meeting that he had never heard of any of the Wirrulla companies before that day.

The common link in all of the companies seems to be Dharmesh Bhanabhai, who is listed as a vice president on the Las Vegas business license for Neonopolis.

Bhanabhai, contacted at his office in California, said he is an executive in the Wirrulla companies and an owner of Neonopolis. He also acknowledged that Joshi is the developer in charge of the project, but refused to answer additional questions.

The city owns the land and the garage under Neonopolis, while the partnership represented by Joshi owns the above-ground Neonopolis structure, according to Scott Adams, director of the city's business development office.

Potential income sources for the city include income from the garage and a financial arrangement under which the city would receive funds if the facility reaches a certain profit level. Adams said the current deal might never generate income, but that it allows the city to maintain a level of control in the project's redevelopment.

To date, though, the city's receipts have fallen far short of its expenses. The city still owes about $24 million on the garage and is getting virtually no money from the deal.

It is unclear how much leverage the city had in the sale negotiations between Prudential Real Estate Investments and the current owner. In any event, Goodman said, it's too late to worry about that now.

The city has no plan to buy the complex or take it by eminent domain, and chances are exceedingly slim that another buyer will come forward.

"He's the only game in town," Goodman said of Joshi.

City leaders say the effect that the languishing project could have on downtown redevelopment plans is as important as the success of the facility itself.

A successful Neonopolis, they say, could provide many of the infrastructure elements necessary for downtown revitalization.

Its prime location at Fremont Street and Las Vegas Boulevard, Goodman says, is the most important address in the city.

City officials hope that it does not become one of the emptiest as well.