City reaches deal to sell Old Reno Casino to buyers of Fitzgeralds - Sunday 12th of June 2005

Reno officials have negotiated the sale of the Old Reno Casino, along the downtown railroad tracks, to the family buying Fitzgeralds Casino-Hotel, closing a bizarre chapter in the city’s use of its eminent domain powers.

LLH Holdings has agreed to buy the building and property along Commercial Row between Virginia and Sierra streets for $630,000, said Reno Property Manager Dennis Johnson.

The City Council still must approve the deal, which is also contingent on the company’s purchase of Fitzgeralds.

LLH Holdings General Manager Jay Hafter said he couldn’t comment on the purchase because the deal for Fitzgeralds is still pending.

“We don’t have any specific plans (for the Old Reno Casino) at this time,? Hafter said.

How the city acquired the building in the first place was a drawn out process involving a veritable casino turf war, questions over the city’s eminent domain powers and a secret settlement between two high-powered gaming companies.

In January 2003, the Reno City Council agreed to condemn the land as part of a complex deal with longtime gaming lobbyist Harvey Whittemore.

The deal had the city pay $1 for the land while Whittemore transferred the gambling license to the parent company of the Peppermill Hotel-Casino.

The Peppermill’s ownership of that license prompted officials from the Atlantis Casino Resort to sue to block the deal.

The Peppermill and Whittemore had been looking at using the license to build a casino at South McCarran Boulevard and South Virginia Street, within a mile of the Atlantis.

The suit was dropped after the companies reached a settlement. The terms weren’t disclosed.

Whittemore now plans to use the license to build a casino project along Pyramid Highway in Sparks.

Whittemore could not be reached for comment.

Because the lawsuit was dropped, the issues surrounding the city’s use of eminent domain weren’t resolved. Atlantis officials claimed the condemnation wasn’t proper because there was no public use for the building identified.

Reno lawyer Michael Chapman, who worked on the case for the city, said acquiring property is legitimate under the state’s condemnation laws.

“The legislation allows the acquisition of property to exchange for other property that you need to acquire for a public project,? Chapman said.

The city tried to use the property as a bargaining chip in other condemnation cases, but those negotiations didn’t work out, he said.

Kermit Waters, a Las Vegas attorney who represents property owners in condemnation cases, said Reno’s use of eminent domain violated the intent and letter of the law because the deal was cut to help a casino developer, not the public.

“A public need and necessity means a school, a highway, a courthouse or something like that,? Waters said.

Johnson said LLH Holdings was the only company that offered to buy the building.

“That place is in pretty rough shape. It’s old. It’s very old. The equipment’s bad. The carpet’s bad. The walls are bad. The rest room facilities are bad. It’s in rough shape,? Johnson said.

Because the city paid on $1 for the building, the sale will be nearly all profit for Reno. The council will have to decide what to do with the money.

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