Recreational business is prohibited in shopping center

The parking lot of 4209 S. Carson St. is empty, except for a man holed up in the corner cleaning the outside of his recreational vehicle. No activity. No customers. No money.

The lack of development at the old Wal-Mart site, which has been vacant since July 2002, stirs the Carson City rumor mill. Has the owner sold it? Did he lose his financing for Jethro's Beverly Hillbillies Mansion and Casino?

Max Baer Jr., the former "Beverly Hillbillies" star who bought the property for $4.3 million in August 2003, responded to the rumors by placing a large sign on the front of the building.

"This property is owned by: Max Baer Productions Inc. And is not for sale or lease."

But he can't build his dream, either.

Shopping center rules prohibit the development of a recreational business such as Baer's proposed casino. The other two shopping center property owners, Glenbrook Co. and J.C. Penney, have said they will not change the rules for Baer. They want retail. They want a Wal-Mart back.

And it isn't just wishful thinking on their part. Wal-Mart contacted Baer earlier this year and offered to repurchase the 12.8-acre site to build a Sam's Club. Wal-Mart site consultant Doug Baker said in 2002 the market wasn't there for the members-only bulk retailer.

Now Wal-Mart is willing to pay Baer more than $4.3 million for the location, but the site consultant won't say exactly how much. Wal-Mart wants to invest $12 million in constructing a Sam's Club at the site.

There's a successful Costco down the street, the Carson City freeway is under construction and the population is growing.

"I'm pursuing it," Baker said. "I'd still like to buy it, but this is Max's dream. If you listen to him, it's a simple matter of how to solve the problem, and it's never simple."

Baker said he has tried to amend shopping center rules in the past, and it's not an easy process.

Wal-Mart's supercenter opened on 35 acres in Douglas County in August 2002, leaving behind an empty 119,000-square-foot building. That two-mile move down Highway 395 cost Carson City about $1 million annually in sales tax revenue.

Baer said the only thing he'll build there is his casino/hotel, and he's never wanted to force anyone. But Baer said he never would've bought the old Wal-Mart if he thought Carson City, Glenbrook Co. and J.C. Penney would fight him.

"Only an idiot would've bought the Wal-Mart for $3.8 million and put an additional half million in it if they believed Carson City, Glenbrook and Penney didn't want it," he said.

Baer contends that Carson City welcomed the development. Former Carson City Mayor Ray Masayko said that during his term he did not try and restrict the Hillbillies Casino.

"He was an entrepreneur looking to develop private property, and if he has the where-with-all to do it, do it," Masayko said. "I knew he had a challenge with the restrictive covenants on his property, but it was his idea, his money."

Baer also contends that Glenbrook Co., a development corporation headed by Carson City Supervisor Shelly Aldean, supported his casino and had signed a statement, saying it agreed with changing the shopping center rules for the casino. Letters submitted as court evidence for a 2003 lawsuit Baer filed against Glenbrook and J.C. Penney back him up.

In a March 22, 2002, letter to J.C. Penney's real estate department from Aldean, who was working as Baer's broker at the time, she asked the retailer to amend seven provisions in the shopping center covenants and restrictions to allow Baer to convert the Wal-Mart building into a hotel/casino. Aldean wrote that once Baer closed escrow and he received the intent to vacate, he would finalize his design work and submit his plans to J.C. Penney and Glenbrook for their review "with the understanding that any approvals required from the parties to the ECRs (Easements with Covenants and Restrictions) shall not be unreasonably withheld."

Aldean signed the letter for Glenbrook. Baer and his partner, Roger Camras, signed for Max Baer Productions. Absent from the letter is any signature from a J.C. Penney representative.

The timeline is complicated. The sides disagree on who thought what when.

Baer said he believes Glenbrook and J.C. Penney never gave him a reason to believe they wouldn't support his plans.

"My goal has been the same since the beginning," Baer said. "The only thing that seems to change is Glenbrook. I don't change."

Aldean said she made it clear to Baer months before he closed the sale that neither Glenbrook nor J.C. Penney wanted a casino in that spot. Aldean said she consistently told Baer that because of the competition in Douglas County and multiple vacancies already in Southgate, Glenbrook couldn't take an action that would encourage the loss of another retailer, J.C. Penney.

"I don't begrudge the guy his dream," she said. "But he doesn't have to do it there. For him to push this is lunacy. Penney doesn't want to co-occupy with a casino."

What Penney wants

Between J.C. Penney and the old Wal-Mart building is one occupied store front, three empty spaces decorated only with Eden Management "for lease" signs and a vacant Maurice's. It may only be a short walk between the two, but a chasm of disagreement separates them.

From March 2002 to May 2002 Aldean acted as Baer's broker and advocated for the casino/hotel project to J.C. Penney. In March, she attempted to get J.C. Penney to sign the letter amending the shopping center rules. Penney's response is not documented. At that time, Baer had already made an offer to purchase Wal-Mart, contingent on securing the amendments to the center's rules.

In an April letter that Aldean wrote to Dale McDonough of Penney's real estate department, she says: "In my opinion, there has been very little customer bleed-over between Wal-Mart and other businesses within the shopping center. Wal-Mart is very internally directed and, quite frankly, disinterested in joint advertising opportunities. Mr. Baer, on the other hand, believes very strongly in the value of synergism and would not only be a far superior neighbor, but a more aggressive advocate for collective promotions."

She continues: "At this juncture, we are not asking for any specific amendments to the ECRs, but are merely requesting written confirmation that Penney has no objection to the idea of having the Wal-Mart building used as part of a hotel/casino/theater complex, provided that parking and access issues are adequately addressed."

Aldean requested confirmation by the next day. J.C. Penney's response, if there was one, was not included in the case file.

In May, Aldean wrote again to McDonough. In this letter she mentions her frustration about Penney's hesitation to amend the rules, which would permit a casino to move into the space.

"When you deliberate on the ramifications of permitting an onsite casino use versus permitting the Wal-Mart building to go dark, you need to assess the negative impact of a 118,000-square-foot vacancy on the other Southgate landowners who do not share your reservations about gaming," Aldean wrote in the May 8 letter.

In the response from J.C. Penney the next day, McDonough wrote:

"What you propose would require a major amendment of the ECRs, which requires the mutual consent of the parties. However, I will reiterate to you that which we have discussed in our many telephone conversations why we do not approve the proposed casino/hotel project on the site of Southgate mall under the current proposal."

The J.C. Penney representative then lists six reasons why the company doesn't favor Baer's plan, including the company's desire that the building remain as retail and its belief that the casino/hotel could be detrimental to the store's sales and profit.

McDonough wrote that the real-estate department would be willing to make a recommendation to the senior management to approve the amendments if "you and/or Mr. Baer would protect us on the downside risk."

He asked Baer to provide a three-year guarantee that he would buy out Penney's property if the store experienced adverse effects from the casino.

Baer said he met with McDonough in Las Vegas at the Paris Las Vegas Hotel during a shopping center convention in late May and discussed the terms and agreements of this plan. Baer said that he accepted it and a deal was made, though nothing was put in writing.

McDonough declined to comment for this story, referring only to the company's press agent. Penney spokesman Quinton Crenshaw would only comment on the court case that was decided in 2004. In that case the court determined that the governing rules do not permit the development of a recreational business such as a casino, unless the rules are changed by all parties. He said Penney "stands behind the court's decision."

Aldean said she has discussed this with McDonough and he had said nothing was finalized. It would have gone to a capital appropriations committee after a deal was reached with Baer.

On May 13, Aldean resigned as Baer's broker. She said she resigned because Wal-Mart wouldn't accept an offer from Baer because it didn't want the used for gaming at that time, and Penney didn't want a casino as a co-anchor.

Aldean said she didn't want to lose Penney to Baer if he had to buy them out because of this agreement. That would leave her with a shopping center with no anchor.

In summer 2003, the empty building was bought by developer John King, who negotiated to remove the gaming restriction for an additional $480,000, then sold the store to Baer. Baer announced his plan to develop a Beverly Hillbillies project. He went to Glenbrook to cash in on the promise that they would amend the rules for him. Baer said he walked into Glenbrook's office with the letter Aldean had signed promising to change the shopping center rules, and was rebuffed.

Baer said he didn't continue discussions with Penney because Glenbrook changed its position.

But Baer says he has hope. Baer plans to release a study by accounting firm Piercy, Bowler, Taylor & Kern Group of Las Vegas.

This study will show the economic impact of a Hillbillies casino on Carson City, not just the sales tax revenue but every revenue stream.

What's next?

Carson City government has recently got involved in the debacle. Mayor Marv Teixeira directed Carson City's manager for economic development to look at the old Wal-Mart site and consider adding it to a redevelopment district. If it is annexed into the business development district, the city would have more leverage on its development, which includes the power of eminent domain. Eminent domain allows government to take or purchase private property for public use.

Teixeira said he wants the site to be developed - and that could mean using eminent domain to put the property into another developer's hands.

Baer said he wants to continue negotiating in good faith so he can build his monument to the Beverly Hillbillies.

"I would like to continue to go forward in a reasonable way," he said. "I have never been the obstacle. I am the one who has tried to go forward.

"I want to build this thing," Baer said. "I want to be a good tenant in Carson City. I believe in the people of Carson City. I believe if they know all the facts that they will see that I have acted in an honorable way since day one."

n Contact reporter Becky Bosshart at bbosshart@nevadaappeal.com or 881-1212.

Carson city's cut

Jethro's Beverly Hillbillies Mansion & Casino

(a $54 million casino complex)

•It would pay about $500,000 in property taxes annually

•$180,000 of that would go to the city

•$112,000 in annual sales tax revenue would go to the city

•Room tax revenue would go to the Carson City Convention and Visitors Bureau, majority of casino tax revenue would go to the state

•Total $292,000, plus room tax and casino taxes

Sam's Club

(a $12 million members-only retailer)

•It would pay $111,000 in property taxes annually

•$40,000 would go to the city

•$880,000 in sales tax revenue would go to the city annually

•Total $920,000

Source: Carson City Finance Director Tom Minton