City alleges developer with arena plan only wanted cheap land

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Developer Chris Milam repeatedly lied to Henderson officials about the viability of his massive sports arena complex as a way to buy cheap public land and then sell for profit to other developers, the city alleged in a lawsuit.

Milam, his lawyers John F. Marchiano and Christopher C. Stephens, land consultant Michael Ford and public relations-lobbying chief Lee Haney are accused of using a city-approved development pact to fraudulently buy roughly 485 acres near the M Resort from the U.S. Bureau of Land Management for a proposed Las Vegas National Sports Complex.

Instead of following through on the project plans, efforts were made to sell the land “piecemeal” to residential and commercial developers at a “substantial profit,” says the 35-page complaint, filed Monday in Clark County District Court.

Milam deposited the balance of the land’s $10.5 million purchase price into escrow on Nov. 28 and, also that day, hand-delivered a letter to City Hall saying he was terminating the project agreement because the arena plans were not viable.

That same day, after city officials “confronted” Marchiano about Milam’s actions, Marchiano “confessed” to Henderson City Manager Jacob Snow and City Attorney Josh M. Reid that “Milam had been lying to the city” about his project intentions, according to the lawsuit.

“Haney has also tried to come clean by claiming ignorance about what Milam was doing — a claim that defies belief,” says the complaint.

City officials are seeking a judgment declaring that the development agreement remains in full force, as well as a court order that bars the defendants from selling or developing the land for any uses not outlined in the agreement. The city also is seeking unspecified punitive damages.

Jacob Hafter, attorney for Marchiano, said his client “never confessed to anything because he didn’t know of any of these issues.” He also said the group was allowed to buy the BLM land “free of any restrictions,” and either they or the city could terminate the project agreement.

According to Hafter, the group terminated it as a way to renegotiate the terms. He said they could not obtain project financing because of its onerous development restrictions, though he couldn’t cite any of them. He also said the lawsuit is “filled with hype and rhetoric.”

“This is nothing but a political stunt,” he said.

Milam, Stephens, Ford and Haney did not immediately respond Tuesday to requests for comment.

Stephens, a shareholder with the Brownstein Hyatt Farber Schreck law firm, is a California licensed attorney. According to the lawsuit, he “regularly engages in the unauthorized practice of law in Nevada,” including in connection with the sports arena project.

Ford, a partner with Henderson consulting firm Abbey, Stubbs & Ford, spent 25 years working for the BLM. According to the lawsuit, he has tried “to pressure” the BLM into issuing Milam’s group a land patent, thereby transferring title.

He also allegedly “threatened” Reid, the Henderson city attorney, in a Nov. 30 phone conversation, saying Reid and the city should not interfere with the land transfer and indicating there was nothing they could do to prevent BLM from handing over the ownership, according to the complaint.

The BLM has not yet transferred ownership of the 485 acres to Milam’s Silver State Land LLC. The escrow closing date was extended last month to Feb. 6.

Milam, who lives in Texas, is the CEO of International Development Management. His stadium plans have been viewed skeptically, partly because he has proposed other Las Vegas Valley sports deals that flopped. Also, no teams have said they would move to his Henderson project site.

Building a speculative U.S. sports arena or stadium — let alone a cluster of them, as Milam envisioned — is practically unheard of, given their huge price tags.

In September 2011, the Henderson City Council approved an initial project agreement with Milam’s group and voted to support the BLM land sale. The next month, the council approved rezoning the land.

Milam’s companies announced nearly a year ago that Shenzhen, China-based China Security & Surveillance Technology had tentatively agreed to finance a $650 million, 17,500-seat indoor arena suitable for a basketball team.

Once the arena was completed, Milam has said he planned to build three other stadiums that could host soccer, baseball and football contests.

Their combined price was expected to be more than $1 billion.

He told the Henderson City Council last April that the China Security financing was “fully approved” and construction of the indoor arena could begin as early as October.

Milam has allegedly said in marketing materials that even if sports facilities weren’t built, mixed-use and residential projects still could be developed.