What happens if a building is found structurally unsound?
For five years, CityCenter, projected to be the next great megaresort in Las Vegas had been in limbo as it waited for the court’s decision on petitions to tear down the building which posed a danger to the public.
CityCenter Owners: Dubai World And MGM Resorts
CityCenter is jointly owned by Dubai World and MGM Resorts. Dubai World, a known investment company the bears the flag of the emirate in global investments with assets spread all over the world, including:
- DP World
- Nakheel
- Istithmar World
Dubai World is popularly associated with The Palm Islands and The World development projects. MGM Resorts, on the other hand, a Nevada-based hospitality, entertainment and gaming company owns and operates 15 properties in Michigan, Mississippi, and Nevada, and four other properties in Nevada, China, Macau, and Illinois.
Major Players In The Hospitality Industry
The two major players in the hospitality industry have jointly invested in CityCenter – a mega resort aimed at giving Las Vegas a new hub for entertainment-hungry high rollers in search of a relaxing stint in Las Vegas. Unfortunately, what was expected to be a profitable venture, ended up to be the biggest mistake in the history of Las Vegas and the subject of a $400 million lawsuit between Tutor Perini – the builder, and MGM Resorts and Dubai World – the CityCenter’s owners.
Tearing Down Harmon Tower
Less than five years after the megaresort was completed in December 2009, Harmon Tower which is one of the property’s most visible towers is being torn down in pieces according to the court’s demolition orders. Halfway through the construction of the CityCenter, the owners discovered that Harmon Tower which is at the front entrance of the $8.5 billion resort is structurally unsafe. The $400 million court battle between the owners and the builder is ongoing even as the tower is being demolished, piece by piece.
What Caused The Problem?
Rebar that was misplaced within 15 floors of the Harmon Tower was determined as the initial cause of the problem. The incorrect rebar placement had weakened the entire structure. In any mega structure like CityCenter, structural soundness requires precision in the placement of even the tiniest components such as bolts and nuts, steel LC CR soft flat washers, screws, and many more. Even if a single piece of hardware is missing, it could have an impact on the structural soundness of the building.
Wrong Rebar Placement And Structural Integrity
In the case of CityCenter, wrong placement of the rebar either too low or too high in a floor failed to hold the structure together. Rebar is placed in the middle of the structure to support the weight of a large concrete slab and hold the concrete together. When placed incorrectly, it will cause the structure to become weak and unsafe.
More Defects Uncovered
When the problem was discovered, the initial solution was to reduce the building height from 47 stories down to 28. But when Chukwuma Ekwueme, a structural engineering firm ran its tests on the structure, more than 7,000 defects have been discovered, rendering the building unsalvageable.
Harmon Tower has not generated even a dollar in revenue since its completion and after the court’s decision in August, it will never have the chance to earn a dime as the structure was approved for demolition.
Who Pays For The Grave Mistake?
The remaining unresolved issue now is who’s footing the bill for the $400 million mistake? The courts have yet to decide who’s at fault. As it is, the joint owners MGM and Dubai World have already lost hundreds of millions in potential revenue especially if you take into account the condo sales from Harmon Tower’s upper floors.
Loss Of Potential Income
CityCenter was supposed to benefit indirectly from income from gamblers traveling through the resort and neighboring Monte Carlo and Bellagio. With an outstanding view overlooking the Las Vegas Strip, the Harmon Tower could have dictated and garnered some of the highest room rates there.
Construction Method Error Equates to $400 Million Operational Losses
The unfortunate construction method error has in effect generated $440 million in operational losses over the past year. This is a terrible and unacceptable figure for a brand new resort valued at $8.5 billion. And even if the court decided that the builder was at fault and therefore responsible to the $400 million debacle, the owners have already lost five years of potential income that could have made the entire resort a profitable venture.
For the builder, Tutor Perini, it has already anticipated the losses from the tower which should be covered by insurance including lawsuit claims. CityCenter is business as usual until the trial with MGM commences in February.
Regardless of the outcome of the legal battle, Harmon Tower is definitely coming down, soon ending one of the biggest debacles in the Strip. And what will MGM and Dubai World do with the land after the tower’s demolition is completed? MGM has made no announcement yet on its plans for the land. But a new construction project is not likely.
Do you know of any similar project that ended up being demolished even before it was operational?
Article Sources:
http://www.fool.com
http://en.wikipedia.org
http://en.wikipedia.org
