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Two years after the plug was pulled on the Rusty Palms project and one year after it was taken over by Celtic Bank of Utah there are signs that there is some interest in the property according to Bank officer.
“In the past couple of month we have had some very serious interest in the property that we have not seen before.” He said. “Hopefully there will be an announcement in the near future.”
Celtic Bank foreclosed on the all but completed project in February 2011 when developer Steve Weinstein could not come up with about $2.5 million.
Weinstein officially defaulted on the loan in 2010 and for 12 months Celtic Bank had been trying to off load the two property parcels to another developer with no success.
Now with the project officially back in the banks hands, Celtic can slash the price and recoup at least some of the money it lent.
That is if a buyer can be found.
The most natural potential purchaser of the property was considered to be the Peppermill Corporation already the owner of three of five West Wendover casinos. With the original Peppermill located just south of I-80 from the Rusty Palms, the corporation could look to expand across the interstate. At the same time such a purchase could prevent unwanted competition from its back yard.
The company pulled out all stops two years ago to prevent the West Wendover city council from modifying the city’s 150 hotel room minimum for new casinos.
But while Rusty Palms property might be attractive to the local gaming giant there are signs that the company simply cannot afford it even at a cut rate price.
Like most gaming companies the last three years have been hard and especially for those casino companies based in northern Nevada. For some properties gaming revenues are down over 20 percent from what they were in 2007.
In addition the Peppermill has shown signs that it is done with any more large capital outlays in Wendover for the near future.
After going on a buying spree of formerly city owned property including the fire station, the central section of Wendover Boulevard and the softball fields in the center of town in 2007, the Peppermill unexpectedly postponed plans for any expansion in 2008 and has not revived them since.
The recession may not have come at a worse time for the northern Nevada gaming giant, just one month after it opened its new $500 million luxury tower in Reno the stock market crashed in 2008.
While the crash hurt the Peppermill it was devastating to the Rusty Palms.
The project won final approval from the West Wendover City Council in November 2008 and construction began almost immediately and continued through the winter. However while workers began building Weinstein began to receive troubling news, several of the businesses who first expressed interest in coming to the Palms either backed out or went out of business as the Great Recession began to take its toll in Utah.
Facing prospects of a diminishing list of possible tenant Weinstein began to look for ways to save his investment and found one– turn it into a casino.
The only hitch to the plan was West Wendover 150 room hotel room minimum ordinance passed the year before.
Five years ago the council passed an ordinance severely restricting new casino development and putting a requirement that a new casino had to have at least 150 hotel rooms before it could win council okay.
The restrictions are not unique to West Wendover. Indeed several Nevada cities have similar restrictions on the books.
However in West Wendover’s case the city has not seen a new casino since 1986 with the exception of a small slot operation inside the Pilot Truck Stop.
According to Weinstein, a few of the council appeared to be receptive of his request.
But when Weinstein made his request he was vigorously opposed by the Peppermill, first in a two page letter from Corporation President Bill Paganetti read out loud during the meeting and by local Peppermill executives in the audience including Chief of Wendover operations Gary Lewis.
All testified that rescinding the ordinance would have a direct detrimental economic impact on the corporation.
Of the five West Wendover City Councilmen, four of them Emily Carter, Johnny Gorum, Roy Briggs and Adam Rowley all work for the Peppermill and were subordinates of the executives who spoke so forcefully against Weinstein’s request.
While the four Peppermill councilmen were later found to have violated Nevada Ethics law when they made their votes, the vote stood.
Still work continued on the project, but a month later of 2009 it ran into another problem, one costing about a half a million dollars and more important than the money was the time.
According to Weinstein he was only informed through the city that April that he was going to be charged a half a million dollars by the NDOT for a right of access, essentially permission to for the road leading to the Rusty Palms cross an imaginary line.
“It was certainly a surprise to me and frankly I was completely unaware that I was liable for that charge.” Weinstein explained.
The fact that the developer only learned of the charge after construction on the project began meant that the hefty surcharge was not taken into account in Rusty Palms financing.
Finding half a million in good times is not the easiest task, finding it during a national recession of unprecedented proportions would have been even more difficult.
Weinstein first appealed to the NDOT and then to the Governor Jim Gibbons. Melville also met with NDOT officials and in May, Assemblyman Carpenter got involved along with state Senator Dean Rhodes.
Two more months of phone calls and negotiations passed and finally the city, the NDOT reached an agreement that in essence gave the right of access to the city and thus eliminate the half a million dollar charge.
But while giving a verbal okay from Carson city and Washington DC was one thing, getting the written approval that would have allowed work to continue on the project was it turned out quite another.
The permit was issued in February 2010 and by then it was simply too late. Facing payments due on his construction loan, no other income coming in, and no new chance at financing Weinstein’s dream turned into a nightmare.
