High-Rise Condo Project Shuts Down

LAS VEGAS-Pinnacle Las Vegas, the distinctive high-rise condo project planned for a site across from the Orleans hotel, casino and arena, has shut down operations. Norm Fornella, chief executive of Dick Pacific Construction Co., a partner in the project and also the general contractor, confirmed for GlobeSt.com that the sales center has been closed, that the sales staff has been let go and that Nevada Title had been instructed to release buyers’ deposits along with interest in accordance to their contract.

“The financial markets just turned on us,” Fornella says. “The [construction lender's] requirements for presales increased dramatically and condo sales weren’t happening.”Pinnacle Las Vegas, estimated at $740 million, was first announced in 2005. The project was originally scheduled to be complete in June 2009. Since that time construction and completion dates had been pushed back twice. As of earlier this year, the 12-acre site on Tropicana Avenue had been cleared but no construction had taken place. The last time line announced by the developer called for construction to begin in mid-2008 and be complete in mid-2010.

Fornella says the shutdown was not related to a lawsuit filed last month by disgruntled buyers who wanted their deposits back following multiple development delays. On behalf of Florida-based Green Cable LLC and 250 other buyers who each put down a 10% deposit for a unit in the project under contracts with addendums that included certain performance targets for each side, local attorney Samuel A. Schwartz filed a would-be class-action complaint in the US District Court of Nevada. The complaint claims breach of contract and seeks upward of $5 million in returned deposits, damages and attorney fees.

At the time of the lawsuit, Schwartz told GlobeSt.com that while he would have liked to see the project built, “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.” This week, Schwartz tells GlobeSt.com that he has not yet received his deposit back and that at this stage he is not dropping the lawsuit. “We’ll have to wait and see what comes back first,” he says.

Cynthia LeVasseur, 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–previously told GlobeSt.com she believes 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,” she said.

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. Dick Pacific Construction is a Honolulu-based subsidiary of Pittsburgh-based contractor Dick Corp., which served as the frame contractor for the Venetian resort, and as a prime contractor for the Atlantis resort in the Bahamas, a two-tower development linked by a sky bridge that was the inspiration for the bridges would have connected the two 36-story towers anchoring Pinnacle Las Vegas.

The developers had been 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 would be paid off by the construction loan, which was expected to come in at around $550 million. Last month, Callahan told GlobeSt.com that the developers were not in default on their loan. He could not be reached this week for comment.