"I believe Pinnacle is a great project and would like to see it built," Schwartz tells GlobeSt.com. "But the construction delays have led to a feeling in most of us that we have waited long enough and there are better uses for our money. We are seeking the return of our deposits and the opportunity loss associated with the anticipated failure of the project."
The attorney representing the defendants--Pinnacle Las Vegas LLC, 4645 Tropicana Partners LLC, Falconi Group, Dick Pacific Construction Co., Elysium Enterprises Inc. and Praxis Resources--says the complaint is baseless. "Generally my clients do not comment on litigation when it is pending; however, we have done a review of this and do not think it has any merit," attorney Cynthia LeVasseur tells GlobeSt.com. "We will be filing a motion to dismiss the action with the court this week."
Pinnacle Las Vegas, an estimated $740-million project, was first announced in 2005. Three years and three general contractors later, the 12-acre site has been cleared but construction has yet to begin. Located across from the Orleans hotel, casino and arena, the project was originally scheduled to be complete in June 2009. Since that time construction and completion dates have been pushed back twice. The last time line announced by the developer called for construction to begin in mid-2008 and be complete in mid-2010.
Among many other things, the performance addendum to the sales contract signed by the plaintiff (among many other things) required that the project be completed by August 2009 and that the plaintiff and the other buyers ink sales contracts for 306 units, according to the complaint. Late last year, when the plaintiff attempted to have the deposits returned, the defendant stated that the plaintiff was in default of the agreement because it had not executed 306 sales contracts, according to the complaint. Schwartz counters that the window of time for the defendant to cancel the sales due to the 306 requirement closed more than one year ago.
The developers of Pinnacle Las Vegas are Falconi Group, Praxis Resources Inc. and locally based Elysium Enterprises. Falconi Group and Praxis are real estate development companies based in Pennsylvania. Falconi is led by Angelo Falconi, who owns shopping malls, auto dealerships and a piece of the Pittsburgh Penguins. Elysium Enterprises is led by Mike Bellon, a locally based entrepreneur and real estate developer who made his mark buying, developing and selling auto dealerships.
The development site, which Falconi has owned for some 20 years, used to be home to Falconi Honda, Bellon told GlobeSt.com in July. In the complaint, Schwartz alleges that the developers announced last November that due to falling water levels in Las Vegas, the property's benzene levels were outside of acceptable limits for construction absent remediation. "As of the date hereof, the plaintiff is still waiting for the results of the defendants' efforts to resolve this alleged environmental issue," states the complaint.
If built as designed, Pinnacle Las Vegas will be anchored by two curvilinear, 36-story towers connected by three sky bridges. Amenities are slated to include a three-acre "wet deck" on the sixth floor with a hibiscus-shaped pool; putting green; a pet-friendly area; a one-quarter-mile jogging track; and a "dive-in" movie theater. The development plans also include two 7,500-sf, full-service restaurants; multiple lounges; a fully equipped fitness center; a full-service spa; and 50,000 sf of street-level retail below 40,000 sf of executive office space. In addition to the units in the towers, there will be two-level condominiums on the sky bridges and 31 townhomes surrounding the pool deck.
The developers are currently working off of a $50-million pre-development bridge loan from New York City-based Berkshire Capital Financial. Berkshire senior loan officer Timothy Callahan, who originated the loan, told GlobeSt.com in May that the pre-development loan will be paid off by the construction loan, which is expected to come in at around $550 million. Gross revenue from unit sales is expected to top $900 million. This week, Callahan tells GlobeSt.com that the developers are not in default on their loan.
The average sale price for units in the towers has been in the mid-to-high $700 per-sf range, which is well below the price of most of the product on the Strip due to the location and the developers' low-cost basis in the land. The developers were reportedly getting close to their pre-sale requirement for the construction loan last summer, which is right around when the housing crisis began. At that time, Bellon told GlobeSt.com that if sales remained strong both towers would be constructed at the same time. "It's feasible to build them separately but it would be more cost-effective to build them concurrently," he said.
The towers were designed by Jon Sparer of Youngblood Wucherer Sparer Architects Ltd. Dick Pacific Construction is the general contractor. Publicly held Interstate Hotels & Resorts of Arlington, VA, has agreed to manage the resort. The sales office for the project is at 4780 W. Tropicana.
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