The Perini Building division of Tutor Perini Corp. has made good on its threat to file a near half-billion-dollar mechanic’s lien, in addition to a breach of contract lawsuit, against the developer of the massive CityCenter complex on the Las Vegas Strip. And a Perini memorandum obtained by NACM provides new and greater detail of growing rift with MGM Mirage, including claims that the traditional casino/resort developer is refusing to make any additional payments to Perini or any subcontractors for work completed on the project.
As speculated in last week's NACM eNews, Perini filed a $492 million mechanic's lien prior to month's end against MGM Mirage in connection with a dispute over the $8.5 billion project. Perini, named Nevada's top contractor in recent years by publications Southwest Contractor and In Business Las Vegas, alleges MGM Mirage abruptly stopped paying for work already completed, specifically at the Harmon Hotel portion of the mixed-use City Center. The suit also contains Perini's allegations that MGM Mirage made thousands of change orders on the project's design well after an agreed-upon deadline. For its part, MGM Mirage has publicly threatened its own suit against Perini, which served as general contractor, amid allegations of numerous design and construction defects.
In a written communications between Perini and subcontractors obtained late this week by NACM, the contractor says it was notified by MGM Mirage on March 17 that “no further payments were going to be made” to the general contractor and all subcontractors associated with the CityCenter project. The private memo goes on to allege MGM Mirage’s reasoning behind the payment stoppage, and a subsequent contractor lockout at the site, stems from $261 million of “nonconforming work and offsets.” Perini says it knew of $46 million in such costs, but received no notice or description of the remaining $215 million despite written requests.
“It is unknown at this time as to what work and components are at issue, and which subcontractor balances may be effected,” said the Perini memo penned by Pat Hubbs. “Perini demanded back up information related thereto and will share this with the applicable subcontractors once and if MGM produces the information.” The memo ended with notices that Perini will make no payments to the many subcontractors that worked on CityCenter “until these issues are resolved and Perini is paid by MGM.”
Representatives from MGM Mirage and Perini have continually refused to answer NACM telephone queries about dispute regarding CityCenter.
The legal spat is the latest in a series of trouble signs for the epic venture, the most expensive private development in U.S. history at its inception. Though the opening of its CityCenter's casino (Aria Resort & Casino) and various retail offerings was hailed as a victory for the previously struggling MGM Mirage, the project had to deal with a national economic meltdown shortly after construction began, a housing and commercial real estate downturn that forced a surge in Las Vegas vacancy rates and a freefall in values, a controversy surrounding the perceived high number of worker deaths in the construction of the development and the downsizing of the Harmon Hotel to 26 stories from original plans to build nearly 50 stories.
Although the amount of the mechanic's lien represents less than 10% of the total project, it will still stand as one of the most expensive filings in the United States. And while bad blood appears to be quickly percolating between Perini and MGM Mirage, several familiar with both the companies and the project remain optimistic that the sides will come to a settlement without a drawn-out legal battle.
Brian Shappell, NACM staff writer