Mayor playing favorites again, downtown

Henderson city officials didn’t exactly look like savvy wheeler-dealers when they bought into a $1.2 billion multi-stadium deal pitched by aspiring Texas developer Christopher Milam, which they now allege was a land-flipping fraud from the get-go.

Somehow they missed a few little warning flags, like that $1.1 million fraud judgment against Mr. Milam, and the 2010 lawsuit to repossess his 2005 Mercedes.

But give it a few weeks: Las Vegas may be poised to outdo its neighbor to the south, once again.

It was all smiles last July, when Las Vegas Mayor Carolyn Goodman visited Neonopolis to join owner Rohit Joshi and Kelly Murphy, operator of the Drink and Drag tavern on the urban mall’s second floor, and of Krave, a longtime gay nightspot near the Strip.

Buttressed by showgirls, the trio were there to announce the abandoned movieplex on the third floor of Neonopolis would soon be home to Krave Massive, an unorthodox 80,000-square-foot pleasure palace with an outdoor pool, five themed dance rooms and a performing arts venue.

“Having the world’s largest lesbian, gay, bisexual and transgender nightclub will undoubtedly draw tourists from around the world to visit our city,’’ the mayor gushed in a written refusal to a recent Review-Journal request for an interview on how things are going. “All you have to do is look at the incredible success of Krave on the Las Vegas Strip.”

All Las Vegans hope the ongoing efforts at downtown revitalization succeed. But no, “looking at the incredible success of Krave on the Las Vegas Strip,” since closed, may not be enough. In fact, there have been multiple warning signs.

Krave Massive has yet to open, in the inward-facing downtown concrete blockhouse sometimes dubbed NeoFlopolis. And 1,600 pages of city staff emails about the project, obtained by the Review-Journal under the public records law, convey deep doubts about the project’s chance for success.

For starters, there was the lawsuit from a prospective landlord who accused Mr. Murphy of falsifying records to secure a lease and then skipping out on the rent. And those Drink and Drag employees who say their paychecks bounced, that liquor laws were flouted and that Mr. Murphy isn’t paying taxes now. Yet the mayor has continued to boost the project at every opportunity, even pressing city staff to steer incentives to the project, including a program that reimburses businesses as much as $50,000 to offset the cost of code compliance during renovations.

And the City Council didn’t seem concerned, either. In January the council unanimously approved the $50,000 construction reimbursement grant. No one publicly asked why Mr. Murphy’s grant application affidavit hadn’t been completed. The paperwork asks applicants to warrant their project is free of liens, to declare they haven’t had a recent bankruptcy and are current on federal, state and local taxes. Mr. Murphy left those boxes blank.

In Krave Entertainment LLC’s 2010 bankruptcy, Mr. Murphy and his business partner listed just $153,416 in assets and $3.5 million in liabilities, including more than $1 million in unpaid taxes. But on Oct. 18, after Mr. Murphy complained directly to Mrs. Goodman about a sewer hookup bill for nearly $70,000, Ms. Goodman appealed to the city manager: “Anything we can do here?? It’s for KRAVE MASSIVE???”

In response, the city manager asked Economic and Urban Development Director Bill Arent if the project could qualify for a redevelopment agency Quick Start grant.

In November, Mr. Murphy’s vice president, chief financial officer and bookkeeper walked off the job. In his resignation letter, bookkeeper James Burkhardt told Mr. Murphy: “It has become obvious that the reason you insisted you would handle various tax reports is because you have been lying on those reports and that you haven’t been paying them. … My bank no longer accepts your checks.”

On Dec. 20, another employee emailed city officials to report Drink and Drag was buying booze from liquor stores, not authorized distributors as required by state law.

Krave Massive is supposed to open in April. “It is all on track and we are moving forward,” says Mr. Joshi. Though the company still has a delinquent sewer bill for $12,434.

Here’s hoping.

Business is tough, especially in an urban downtown struggling to come back, and especially in the current economy, already massively suppressed by piled-on taxes and fees and regulations often designed to favor some players over others. (Why should the state care where a tavern buys its liquor?)

So struggling entrepreneurs including Mr. Murphy should be should be applauded for their job-creating efforts — up to a point. And that point is reached when city officials start offering help and exemptions to chosen players while others see their dreams go a-glimmering because arbitrary new “green building” standards drive up the costs of downtown renovation, or because they can’t satisfy the Byzantine requirements after being told they now need some “teen dance-hall license.”

If the bureaucrats and elected officials of Las Vegas can find ways to reduce costs and bureaucratic hurdles for all downtown businesses, across the board, that’s great.