CityCenter, lead contractor dispute $492 million claim

By Steve Green

Published Friday, March 12, 2010 | 3:34 p.m.

Updated Friday, March 12, 2010 | 4:16 p.m.

MGM Mirage today disclosed that disputes have emerged involving hundreds of millions of dollars between its CityCenter joint venture and the $8.5 billion project's primary general contractor.

Perini Building Co. on Thursday delivered a notice of its intent to file mechanics’ liens totaling about $492 million against CityCenter. Those liens represent the builder's claims for payment against the resort complex on the Las Vegas Strip.

MGM Mirage said it would dispute the claimed amount and also signaled it has counterclaims over construction defects at the Harmon Hotel part of the project, where construction has been suspended. When work resumes, it's scheduled to be completed at 28 floors, rather than the planned 49 floors.

"CityCenter believes that its actual obligation to the general contractor is substantially less than the amount claimed and that it is also entitled to significant offsets against the claimed amount. CityCenter intends to pursue all of its rights and remedies against the general contractor, including arbitration,'' MGM Mirage said in a regulatory filing.

"While CityCenter’s investigation into the general contractor’s potential liability regarding the Harmon Hotel is continuing, and there can be no assurance at this point as to the ultimate outcome of any action CityCenter may undertake, CityCenter believes that the amount of its claim against the general contractor may exceed the amount of CityCenter’s estimated remaining liability to the general contractor,'' MGM Mirage said in its filing.

MGM Mirage said CityCenter has obtained a six-month amendment to a credit facility that allows for additional construction liens in excess of the threatened amount.

Resolution of the lien issues and CityCenter's claims against Perini for the Harmon are part of the settlement process typical in large construction projects such as CityCenter.

In the case of CityCenter, some subcontractors have complained in recent weeks of not being paid in a timely manner.

Alan Feldman, MGM Mirage senior vice president of public affairs, confirmed today that there have been payment problems for subcontractors.

He said MGM Mirage hopes issues with the general contractor can be resolved so the subcontractors can be paid. MGM Mirage has long touted the economic benefits of CityCenter, including benefits for small and minority-owned contractors.

"That's why we want to get this done in six months," Feldman said.

A spokeswoman for Perini could not immediately be reached for comment. Perini is part of Los Angeles-area company Tutor Perini Corp., one of the world's largest construction companies.