There’s an old saying in Las Vegas that the grand casinos lining the city’s Strip weren’t built on the backs of winners. But Sylmar contractor Tutor Perini Corp. just scored a huge jackpot from MGM Resorts International in Vegas. And, ironically, it came as a result of a hotel that’s now being dismantled because of alleged construction flaws.
Tutor reached a nearly $190 million settlement with MGM after the casino operator had failed to pay construction costs owed to the contractor for work on an unfinished hotel, the Harmon, at the 67-acre CityCenter development in the heart of the Strip. MGM and Dubai World each own half of CityCenter. Tutor announced details of the settlement, reached Dec. 12, in a Securities and Exchange Commission filing last week.
Tutor was the general contractor on the Harmon, a planned 48-story tower that was designed as the showpiece for the $9 billion development. However, construction stopped at 26 floors after a structural engineer hired by MGM discovered fatal construction defects. MGM sued Tutor in 2010, alleging shoddy construction. Tutor countersued, saying that the fault lay with MGM’s flawed design.
After more than a year of negotiations, and just days before the two parties were set to face off in court, Tutor and MGM agreed to the deal.
CityCenter was announced in 2004 and broke ground in early 2007. From the start, it was plagued by a series of construction worker deaths and the impending financial crisis, which very nearly brought the whole project – and the city itself – to its knees. Dubai World almost bailed in early 2009, refusing to make a $200 million payment. Dubai World and MGM resolved that dispute in April of that year.
Today, CityCenter is basically complete – with the notable exception of the Harmon, which is being demolished.
Neither Tutor nor MGM returned requests for comment. All parties to the settlement have signed a nondisclosure agreement, according to the Las Vegas Review-Journal.
Tutor’s stock jumped on the news, climbing 6 percent on the New York Stock Exchange the day of the announcement, though that wasn’t enough to make up for losses earlier in the week. Shares closed at $21.95 on Wednesday, down 2.1 percent for the week.
