Two Way Hard Three | Las Vegas Casino & Design Blog

April 3, 2007

Milam's Las Vegas Tower on Life Support?

Posted by Hunter

Thanks to 'Redneck' for sending this info in. The 1,888 foot 'Las Vegas Tower' project, proposed for construction on the former 'Wet N' Wild' site near the Sahara may be dead. The developer, Christopher Milam, missed a $40 million payment to the landowner, Archon Corp., this past weekend.

For a developer working on a $4.8 billion project to miss a $40 million payment isn't a good sign for the project. For the property owner not to boot them and find someone else isn't a good sign for the demand for that land (at least at the prices they want). The $40 million payment has had it's due date extended to May 31, 2007 - this is the third time the date has been moved and each time LVTI pays about $250,000 for the option so they actually are putting some cash in but things still look shaky at best.

Anyone have any more info on this? I know the debate has raged on the particulars of the building but that's moot if no cash is devoted to continue development.

The section from the 8-K filed with the SEC appears after the jump...

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SEC Filing Excerpt:

"Item 1.01 Entry into a Material Definitive Agreement.

On March 27, 2007, Sahara Las Vegas Corp., a Nevada corporation and subsidiary of Archon Corporation (the “Company”), and LVTI LLC, a Delaware limited liability company (“LVTI”), entered into a third amendment (the “Third Amendment”) to the Option Agreement dated June 24, 2006 (the “Agreement”) between the Company and LVTI, as amended on September 16, 2006 (the “First Amendment”), and as further amended on December 15, 2006 (the “Second Amendment”). The Company previously disclosed the terms of the Agreement in a Current Report on Form 8-K dated June 29, 2006, the terms of the First Amendment in a Current Report on Form 8-K dated September 19, 2006 and the terms of the Second Amendment in a Current Report on Form 8-K dated December 20, 2006.

Pursuant to the Third Amendment, LVTI may elect to pay to the Company a payment of $250,000.00 on April 2, 2007 and another payment of $250,000.00 on May 1, 2007 in order to extend the date on which the second deposit of $40,000,000.00 (the “Second Deposit”) is due from March 31, 2007 to May 31, 2007 (the “Third Extension Payments”). In exchange for the extension of the Second Deposit due date, the purchase price will be increased to $475,000,000.00 if LVTI does not pay the Second Deposit to the Company on or before March 31, 2007. If LVTI pays the Second Deposit by April 30, 2007, then it does not have to make the $250,000.00 payment on May 1, 2007. The Third Extension Payments, if paid, are non-refundable and will not be applied against the purchase price under the Agreement.

Further, on March 30, 2007, the Company and LVTI entered into a fourth amendment (the “Fourth Amendment”) to the Agreement between the Company and LVTI, as amended in the First Amendment, the Second Amendment and the Third Amendment. Pursuant to the Fourth Amendment, should LVTI elect to pay the Second Deposit on April 3, 2007, then LVTI does not have to pay to the Company a payment of $250,000.00 on May 1, 2007 and the purchase price will not be increased to $475,000,000.00, but will remain at $450,000,000.00.

Copies of the Third Amendment and the Fourth Amendment are filed as exhibits to this Report."

Categories: Business of Gaming, Casino Design, Las Vegas Strip


Comments

Read archived comments (10 so far)
April 4, 2007 12:55 AM Posted by mike_ch

Someone (land-owner, Milam, whoever) had a plan in mind here.

I've mentioned it about five times already, I know, but keep in mind nothing was announced in this lot until Clark County demanded that a use for the site be announced else the property be condemned for the shoddy state of the remaining water park infrastructure. Someone saw that Fountainbleu and Turnberry were building nearby. The Sahara being sold and invested into was also a likely possibility. Somebody wanted to hold onto this land and wait for the right buyer to come by at the right price, probably Fountainbleu but it may be the new Sahara owner as well since he doesn't seem keen to demolish anything.

And what better way to drive up the price than to announce a project that's incredibly far reach for any kind of development in the US? Suddenly an ignored waterpark is hot property! It's making the papers, the columns, the podcasts, etc. Hell, let's really try to look serious and hire those SOM guys to draw up a plan for a building so even the "experts" will think they're going to go through with it! Better buy it now before Milam starts building (tee hee.)

I don't know whose idea this is. But it seemed pretty obvious to me after I got over the shock value of an 1800' tower that this put an ugly, ignored little patch of the Strip into front-page Vegas news. And it's right in the middle of a renewed development zone, too. Who'da thunk it?

April 5, 2007 12:07 PM Posted by Leonard Stern

mike_ch, considering that Milam has an option on the Wet'n Wild property that extends until almost the end of this year, he obviously is hedging his bet by continuing to postpone laying out big bucks until he has arranged financing for the project. The fact that SOM is still working on the design development phase + that there has been some "preliminary" site preparation already, would be entirely foolish for [him] to continue with if the project were indeed "dead" at this juncture, FAA approvals aside. I hardly believe that is an indication of some sort of conspiracy to drive up per-acre value of that specific land, based on adjacent proposed projects. The existing Sahara property went for $25M/acre. Milam has had previous, extensive past partnerships with LPC (Lincoln Property Company) in developing several of his larger Texas projects, LPC were also one of my former long-term clients. I "speculate" that he [Milam] cannot pull off a project of this magnitude without a joint-venture deal with a company the size of LPC. They certainly have the resources to finance this thing privately, if they wanted to, since they are currently the largest commercial diverse developer in the country. Deep pockets to say the least! This would be a way for LPC to enter the gaming market in a big way. They alreay own + manage thousands of apartment + condo properties here in Las Vegas through their residential division. For any real estate developer to continue to spend resources on escalating architectural + consulant's fees would just be bad business. Whatever [they] are doing with the site is unclear, but it does include erecting construction trailers onsite + preliminary grading work as well as demolition activity. SOM/Chicago has just about the highest billable hourly rate of any architectural firm in the nation, including other SOM offices in New York, San Francisco + L.A. With Adrian Smith's recent departure, however, it rasies the question of whether or not the Chicago office can continue maintaining their esteemed position. By far, Trump's ONLY decent building, from a design perspective throughout his entire career, either existing or proposed, is Trump's Chicago tower currently under construction which was the result of Smith's genius.

April 5, 2007 5:00 PM Posted by duma

The 1800' tower isnt approved yet by the city council. it was supposed to be heard a couple weeks ago but got postponed to May 2. dont buy into the conspiracy theories just yet because obviously any developer would not start their project unless it was approved.

April 5, 2007 5:12 PM Posted by Hunter

Well, if the only thing holding up the $40 million payment is the hearing before the Council for approval, I'll be surprised but I guess it is possible.

Either way, it's still a wait-and-see, no question about that.

April 5, 2007 7:22 PM Posted by Redneck

My point is that Milam is now at the mercy of archon.He could be in default on the option if archon had not agreed to these extensions. If somebody else came along and waved cash in archon's face archon could have took it, and milam would, and could still be, have been high and dry. Milam did secure a good price for the land and it would have made more sense IMO for him to pay the deposits and not risk getting denied, and if the tower didnt get approved he could still build a nice conventional resort and still see a good return or he could just flip the land with enough profit that would more than likely cover his expenses.

April 20, 2007 11:23 AM Posted by mike_ch

Is this the final blow that will sink the project? Chicago is close to going through with a 2,000ft business tower:
http://www.cnn.com/2007/US/04/20/tallest.building.ap/index.html

April 20, 2007 3:28 PM Posted by Mike P.

The Chicago Spire will be strictly a residential project.

Sorry, I don't see how the fate of one has any effect on the other. There were some parallel issues:

There were concerns about traffic and parking with CS. There might legitimately be some with LVT, but that doesn't seem to be a major concern with Clark County planners who I understand have already approved everything about the site plan except the tower height.

There was, and still is, some concern about whether Kelleher has the financial resources to build CS and whether he can sell condos at upwards of $1500/sq. ft. There are, I think, questions about Milam's financial resources also.

I don't know how much wrangling was done with the FAA to get the height of CS approved, but it shouldn't have been a major concern since it's in an area with obviously significant numbers of highrises and it's well south of the eastern approach to O'hare. That of course is a significant concern with LVT.

Chicagoans are highly sophisticated about highrise architecture, and there's been a huge amount of interest in the design of CS and its permutations over the past couple years. Architectural sophistication isn't a trait I'd ascribe to Las Vegans, and the design of LVT doesn't really seem to be a factor in its approval or disapproval by the Clark County plan commission. Public (especially Daley's) approval was very much a factor with CS.

Mike P.

April 20, 2007 4:26 PM Posted by Leonard Stern

mike_ch: The 150 story "Chicago Spire" by Spanish architect Calatrava is a definite GO! Financing is already in place + this tower will be a 21st century "masterpiece", certainly a great addition to the most architecturally significant American city (Chicago). This project has been around + proposed for quite some time now, preceding LVT + it has absolutely NOTHING to do whatsoever with Milam's proposed tower. The fact that it is taller than LVT is insignificant - I really do not understand your conclusion that the LVT is any less viable now as a result of The Chicago Spire moving forward. Both the developer(s) as well as the architect for these two projects have NO connection with one another.

May 26, 2007 8:00 AM Posted by Leonard Stern

MILAM (LVT) IS A GO!


http://www.lvrj.com/business/7700387.html

December 5, 2007 12:54 PM Posted by Mark D

The Crown project actually finally appeared before the Clark County Planning Commission today.

I was watching it on closed circuit TV and they said they are going to go ahead with the 1,064 foot height approved by the FAA and they said that the airport approved it too.

They also said it will probably now be twin towers, but that they will have to come back for another design review on that later.