City paves way for new downtown Las Vegas nightclub

By Dave Toplikar

Wednesday, May 19, 2010 | 12:59 p.m.

The Las Vegas City Council today unanimously approved leasing a city-owned, three-story former retail store to a pair of developers who hope to turn it into a nightclub that will help light up downtown's Fremont East District.

The building, at the southeast corner of Fremont Street and Sixth Street, is envisioned to have a nightclub within about a year to a year and a half, and will also be used for retail space and condominiums, according to the developers.

Terry Caudill, who owns the Four Queens and Binion's casinos, and Carlos "Big Daddy" Adley and his wife, Ava Berman Adley, who own the Velvet Margarita in Hollywood, have formed a limited liability corporation to lease the property, called 601 Fremont LLC.

"We're going to bring in some of the top retail, restaurant and amenities, literally in the country to this spot," Adley said outside the council room after the vote.

"There will be a restaurant, nightclub and an ultralounge on the first floor," Adley said. "The second floor will be retail. And the third floor will be condos. . . We want to open as soon as possible."

Caudill said as part of the lease with the city the developers have to come back to the city in 90 days to explain what they will need to do to fix up the vacant 48,740-square foot building.

"As they brought out in the meeting, it's significant," Caudill said. "It's an older building. It's got to be brought up to current codes, standards and to current uses, for the uses that we want to do."

As 601 Fremont LLC, the developers are leasing the $4.66 million building and its adjacent parking lot for $233,000 a year, starting at the seventh year. The lease term is for 30 years, with one 15-year extension and provides the tenants with a purchase option once all of the initial development requirements have been met. After six years, the rent will go up 1 percent each year.

"We think we have a great partner for a great project," Bill Arent, director of the city's office of business development, told the council.

Within 90 days, the developers will need to present an overall plan for the project, which will include conceptual drawings, a floor plan for the first floor and a preliminary budget and time schedule.

Arent said the city began looking for a developer for the project in 2008 and that Caudill and the Adleys were the second-ranked group to respond. The first-ranked respondent had dropped out, Arent said.

"The reason that we have a long-term lease is that we have a developer and an operator that is willing to make a significant up-front capital investment and they need to be able to recoup that capital investment over the long term," Arent said.

He said no rent will be charged for the first six years of the project.

"There is an abatement of rent during the first six years. That's mainly intended to give the developer and the tenant a chance to put in that significant capital investment," Arent said.

601 Freemont LLC will pay a security deposit of $116,500 at the time their concept is approved in 90 days, he said. An additional $116,500 will be required 90 days later, he said.

"As a city, this is really a no-risk agreement," Arent said. After the first 90 days, 601 Fremont must show it has proof of construction financing, then within nine months, provide proof that they can finish the improvement, he said.

Caudill told the council that the Adleys were the creative side of the venture and "they're going to bring the Hollywood vibe to downtown Las Vegas."

"I'm very dedicated to downtown. We see this as an opportunity to take what has been an empty, closed building that's been closed for several years and do something with it and get a good vibe going there," Caudill said.

Mayor Oscar Goodman said that Carlos "Big Daddy" Adley is "going to be a lightning rod for our downtown."

"We're making an old classic a new king," Adley told the council. He said he and his wife have had success in renovating properties in Chicago and Los Angeles.

"We're ready to go now. We were ready to go a year ago," he said. "We want to get this thing done."