LAS VEGAS-The Las Vegas City Council next week is expected to extend the city’s deadline for a signed deal with Real Estate Interests Group for a Downtown sports arena. The Bloomfield Hills, MI-based company’s proposal calls for the arena to be developed in the first phase of a $10-billion, 85-acre mixed-use development on the West side of Main Street.

The city approved the development plan for the overall project in June and selected REI Group as its preferred arena developer in July. The 60-day extension gives the two until the end of February to turn their Memorandum of Understanding into a binding development agreement.

The plan has been to have the arena up and running in 2010 just in case an NBA team wants to call it home for the 2010-11 season. For that to happen, site work would need to get under way sometime next year. The overall project is slated to include three casinos; 9,100 hotel, condominium and timeshare units; 785,000 sf of retail; four million sf of convention space; and 500,000 sf of office space.

REI president John Weaver could not be reached for comment on the negotiation, but has said in the past that without the arena the overall project would fall apart. The city’s business development director Scott Adams tells that there is “positive progress” being made toward a signed development agreement.

Along with extending the MOU the city is taking off the negotiating table a 12-acre site near City Hall that REI was going to control via a purchase option. The site was the city’s preferred arena site before it selected REI Group’s proposal to incorporate the facility into its larger development.

“[The 12-acre site] hasn’t been a significant factor in our negotiations and we want to be able to negotiate with other parties for non-arena developments,” he says. “We will continue arena negotiations exclusively with REI for their site.”

While all this is going on, a pair of 800-pound entertainment gorillas Anschutz Entertainment Group and Harrah’s are making positive progress toward a 2008 groundbreaking for a $500-million arena just off the Strip, immediately east of Paris and Bally’s. Harrah’s says the project remains on track for a 2010 opening. The duo plans to construct and configure an arena in a manner that will make it capable of housing an NBA or NHL franchise as well as concerts, boxing matches, special events and awards presentations, tournaments and exhibitions. Plans are currently being finalized for submission to Clark County for approval.

AEG is a developer and operator of sports venues such as Staples Center, The Home Depot Center, Target Center, London’s O2 Arena and NOKIA Theatre Times Square, and it has an existing presence in Las Vegas through its subsidiary AEG LIVE, which oversees programming for the Colosseum at Caesars Palace and other venues on the Strip.

By all accounts, the AEG/Harrah’s arena will be built, with or without an early commitment by a major league sports team to call it home. It’s unclear if same can be said of the Downtown arena, which may be one of many reasons for the negotiation extension.

REI Group president John Weaver told earlier this year that the Harrah’s project is meant to compete more with the other near-Strip entertainment venues operated by competing casino-resorts such as MGM and Mandalay Bay and Caesars than a Downtown arena. Indeed, he is confident the two arenas can coexist.

“We were always aware that Harrah’s had included this type of entertainment venue as part of their master plan, and that AEG has a tremendous presence in Las Vegas and a great reputation for delivering high quality events and close ties with the NHL and other leagues,” he said. “We believe our location and access and cooperation with the city sets us apart; I think there are certain events, including those that require a casino-neutral location, and other opportunities for which we may have an economic advantage.”

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