Slot machines flickered to life Wednesday at the Moulin Rouge, the first racially integrated casino in Las Vegas, which hasn’t operated as a functioning business since 1955.
The machines, 16 in two rows in abandoned office space along Bonanza Road, didn’t make much, if any, money for developers Moulin Rouge Development Corp. or Republic Urban Properties.
But the slots did help them extend their USD 500 million vision for a new Moulin Rouge on the 17-acre site.
Now all that’s left is to find someone willing to invest the money it will take to build a casino-hotel in a long-maligned section of Las Vegas at a time when the credit market for land deals is brutal to nonexistent.
„What we are seeing throughout America is an absolute credit depression,“ said Michael Van Every, senior vice president of development for Republic Urban, a Washington, D.C., firm with about USD 4 billion in property investments and a specialty in reviving urban core sites. Republic Urban joined the project in February.
„Goldman Sachs, no money, Lehman Brothers, no money; it goes on and on and on,“ Van Every said.
Still, the slots were up and running, and that represents progress, said Van Every and Dale Scott, president and CEO of the Moulin Rouge Development Corp.
Running the slots fulfills a requirement that the company offer gambling on the site at least one day every two years in order to maintain the parcel’s gaming license. The slots were on from 6 a.m. to 2 p.m., just long enough for a visit by gambling regulators to verify and a few customers to straggle in.
In the grander scheme, extending the life of the gaming license gives developers more time to ride out the rough credit market and capitalize on what they have, a site that has grown exponentially in value thanks to a zoning change that will allow the site to host a casino resort with as many as 1,727 hotel rooms and nearly 400,000 square feet of commercial space.
According to Van Every, the zoning change in April helped boost the value of the site and some land options in the neighborhood around it to about USD 80 million.
That’s a big jump from the USD 14 million Scott paid to acquire it in 2002. The two groups, Moulin Rouge and Republic Urban, are seeking to refinance the site under the new valuation in order to raise funds to use in producing construction documents and to demolish the existing, dilapidated structures.
Van Every said there is cash available on the credit markets, but the price is way too high.
He said lenders are offering interest rates near 20 percent. The Moulin Rouge developers say they will keep shopping until they can find rates around 10 percent to 12 percent.
„We have gotten some interest, gotten some terms, but they are not great terms,“ Van Every said.
Keeping costs low by holding out for good rates will make it easier for the project to turn a profit when it does get off the ground, he said.
It can also help during development. Less spending on financing means more money for construction. For example, gaming-approved property in the Union Park site a few blocks from Bonanza Road will cost developers about USD 3.5 million more per acre, according to Van Every and Scott.
In the meantime, the plan is to proceed with construction documents and start demolishing as soon as possible. Van Every says Urban Republic will stay in as long as it takes to get the project going, which would likely be 18 to 24 months after securing financing.
Scott says he’s been dedicated to the project since 2002 and isn’t going anywhere. That, he says, is enough to establish he is sincere about creating a casino-resort in a neighborhood marked by boarded businesses, litter, homelessness and vacant lots.
„We have been here six years; the time says a lot for MRDC,“ Scott said. „We haven’t run around town, we’re staying close by.“