CityCenter contractor critical of MGM Mirage in letter to Gibbons

By Steve Green

Published Wednesday, May 5, 2010 | 10:11 a.m.

Updated Wednesday, May 5, 2010 | 3:25 p.m.

The dispute over construction defects and nonpayment of contractors at CityCenter escalated this week when general contractor Perini Building Co. launched a public relations campaign targeting CityCenter developer MGM Mirage.

Perini on Tuesday released a letter sent to Gov. Jim Gibbons on Monday, copies of which were sent to scores of other public officials and MGM Mirage board members, attacking MGM Mirage over the issue, suggesting financial problems at MGM Mirage are behind the non-payment and asking Gibbons to "open an investigation to determine the real reason as to why MGM Mirage is not paying their bill."

Perini claims it and its subcontractors are owed about $500 million for their work on the $8.5 billion resort complex on Las Vegas Boulevard, and that minority and small business contractors are enduring much of the pain.

But MGM Mirage has said it's Perini's responsibility to pay subcontractors and the gaming giant has asserted offsets equaling or exceeding what Perini claims is owed. MGM Mirage's offsets relate to construction defects at the Harmon Hotel and other problems.

In its letter to the governor, Perini revealed that MGM Mirage is claiming the Harmon, where work has been suspended, is a "total loss" and that the loss totals $412 million. Perini also revealed that MGM Mirage asserted offsets of $46 million for non-conforming work in late 2009; and then on March 17 alleged additional offsets totaling $215 million.

Perini is disputing these offsets, saying the $215 million number was presented with no back-up documentation.

Besides the public relations campaign, Perini sued MGM Mirage in March in Clark County District Court. Previous similar legal battles involving the Venetian casino resort and its contractors dragged on for years before reaching trial and finally judgments and settlements in 2003.

MGM Mirage responded to Perini’s letter on Wednesday with a statement disputing Perini’s charges.

“While we disagree with all of the claims made in Perini’s letter to the governor, unlike Perini we are not going to litigate this case in the media,” said Alan Feldman, senior vice president of MGM Mirage. “The matter is before a judge, and the courtroom is the appropriate venue in which this dispute should be heard.”