x Abu Dhabi, UAEWednesday 24 January 2018

$300 million Las Vegas tower in peril

MGM Resorts International wants to demolish a partially-completed tower on the Las Vegas strip. The developer says structural defects in the project, co-developed with Dubai World, are beyond repair.

MGM Resorts International has urged the Clark County authority in Nevada for permission to demolish Harmon Tower in Las Vegas, which has been co-developed by Dubai World. Ethan Miller / Getty Images
MGM Resorts International has urged the Clark County authority in Nevada for permission to demolish Harmon Tower in Las Vegas, which has been co-developed by Dubai World. Ethan Miller / Getty Images

A US$300 million (Dh1.1 billion) Norman Foster-designed tower on the Las Vegas Strip, co-developed by Dubai World, is at the heart of a court wrangle that could result in it being torn down.

The construction company that built the 27-storey tower is disputing charges that the building is unsafe and needs to be demolished.

But MGM Resorts International has askedClark County, which has jurisdiction over the structure, for permission to pull down Harmon Tower, which is part of the $8.5bn CityCenter project. Structural defects in the almost-completed tower could not be repaired, MGM Resorts told county officials.

An engineering report commissioned by the developer this year concluded that the building might collapse in an earthquake.

But Perini Building has denied wrongdoing and formally objected to any plan to demolish the building.

"While substantial design defects are known to exist, MGM's claim that Harmon Tower presents a risk to public safety is patently and demonstrably false," Craig Shaw, the Perini chief executive, wrote in a letter to Clark County commissioners.

Repairs can be made for far less than the cost of demolishing the building, the construction company argues.

Demolition of the tower would "perpetrate a $300m waste, create a public blight, and is a far greater risk to public safety than the implementation of the straightforward repair Perini is proposing," Mr Shaw wrote.

The effort to demolish the tower is the latest chapter in a long-running saga of CityCenter, which has been described as the most expensive private development project in the US.


Tower, continued on 2

The Harmon is one of six towers in the project, each designed by a different internationally renowned architect.

In 2009, Dubai World, which owns a 50 per cent stake in CityCenter, filed a lawsuit against MGM Resorts over cost overruns on the development, accusing its partner of mismanaging construction. The case was settled out of court.

Dubai World owns a 5.3 per cent stake in MGM Resorts through its wholly owned subsidiary, Infinity World.

In 2009, MGM Resorts cut 200 condominiums from the Harmon and capped the tower at 27 storeys, instead of the originally planned 49, after irregularities were discovered in the installation of the steel support.

Since then, MGM Resorts has been in a legal battle with Perini, which claims MGM is refusing to make $200m in payments owed to contractors on the tower. Perini argues that MGM Resorts is simply using the construction company as a scapegoat for the financial downturn that decimated the market for condominiums.

The rest of the CityCenter complex, anchored by the 4,000-room Aria Resort & Casino designed by Pelli Clarke Pelli Architects, began opening in 2009. But work was halted on the Harmon as concerns rose over the construction and the dispute with the contractors escalated.

Perini argues the tower can be efficiently fixed to meet building codes. But MGM told county officials that planning and executing the repairs would take years.

Demolishing the tower would be "the fastest and safest way to resolve public safety concerns created by the structural defect issues," MGM said

Although the tower sits on the edge of the tightly packed CityCenter complex, an implosion could bring down the building without damage to the neighbouring buildings, MGM said.

However, any plans to demolish the tower will be held up by a court order restricting any alterations to the building until the dispute with the contractors is resolved.

MGM has appealed to the county for permission to demolish the tower, hoping to break the deadlock.

Meanwhile the tower sits empty and its blue-glass facade is used as space for advertisements promoting events on the Las Vegas Strip.