LAS VEGAS-Texas developer Christopher Milam and his Australian billionaire partner James Packer have been making monthly payments since September to maintain their option to acquire a 27-acre former water park on the Las Vegas Strip, according to a year-end report filed with the SEC last week by the seller, Archon Corp. The option must be exercised in the next 120 days.

Located immediately south of the Sahara hotel-casino, the site is one of the last large available properties on the Strip that has not recently traded. Milam and Packer plan to develop a $5-billion resort anchored by Las Vegas Tower, a 1,063-foot-high tower that would be by far the tallest in the region, albeit some 800 feet shorter than originally designed due to its proximity to the airport.

If the “carry option” payments have continued into 2008 as expected, Milam and Packer have made $61.2 million in non-refundable payments to would-be seller Archon Corp., including at least $16.2 million that won’t be applied to the $475-million purchase price, which was bumped up from $450 million last year following a delayed option payment.

The duo is scheduled to make another $2.3-million payment this month, after which the monthly cost will rise to $2.9 million until it closes on the property. Milam and Packer must exercise the option prior to June 30 or lose everything they have invested. Neither Archon nor Milam could be reached for comment.

Assuming they exercise the option in June and close in August, Milam and Packer will have made more than $78 million in payments on the option, approximately $33 million of which won’t be applied to the $475-million purchase price, taking the total cost of the property to approximately $508 million. Even after all the extra payments, it still appears to be a good deal.

At $508 million, the purchase price would still be less than $20 million per acre. That’s well below the $34.7 million per acre Israeli billionaire Yitzhak Tshuva’s New York City-based Elad Properties paid for the 34.5-acre former New Frontier casino-resort site immediately north of Fashion Show Mall, across from Wynn Las Vegas.

“Wet N’ Wild looks very good at that price,” says David Atwell, a long-time Strip property whose firm, Resort Properties of American, was involved in the New Frontier sale. “Prices have been going up consistently and our deal on the Frontier created a new threshold that has driven up every value in proximity.”

Milam tied up the Wet ‘n Wild property in June 2006, the same month Packer invested $22.5 million to gain a 37.5% interest in the project. Tentative plans for the site call for a 5,000-room hotel-casino that would be the tallest building in the Western hemisphere. Milam reportedly has retained Paul Steelman Group for the casino, RTKL for the retail component and Skidmore, Owings and Merrill for the hotel tower.