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Bankruptcy lawyers in Las Vegas circle in as North Las Vegas’ financial woes deepen

March 2, 2014

The city of North Las Vegas is in financial trouble, and it took another big hit late last month when the Nevada Supreme Court added to its tally of millions of dollars owed in settlement by rejecting its long pending appeal over a botched land deal with privately owned 5th and Centennial. A decade in the works, the judgment issued over this dispute may be the breaking point for North Las Vegas, the Review-Journal reports. Whether North Las Vegas anywhere near the recent situation faced by Detroit, bankruptcy lawyers in Las Vegas can’t say, but what is clear is this most recent judgment is a straw on the proverbial camel’s back.

James Dehaven of the Review-Journal calls North Las Vegas “recession-ravaged,” and wonders whether it can afford the $4.25 million in damages awarded to 5th and Centennial. More than a decade ago, North Las Vegas proposed a North Fifth Street overhaul to the tune of $135 million, and in its exercise of eminent domain, lost 5th & Centennial more than $18 million by condemning the privately-owned land under pending contract. Ten years later, bankruptcy lawyers in Las Vegas wonder about the city’s practices and whether they’ll win them anything in the end. The 5th & Centennial property is still vacant, with the North Fifth Street overhaul project stalled for lack of funds.

The most recent ruling comes on the heels of another District Court deciding that North Las Vegas wrongly froze some $25 million in union employee pay raises suspended under a city-declared “fiscal emergency” two years ago. With an $18 million budget deficit, the “revenue-starved” city might be sinking. Bankruptcy lawyers in Las Vegas like Elizabeth DeFlyer can’t accurately or officially predict what’s in store for North Las Vegas, but it doesn’t look good. The city’s attorney Sandra Douglass-Morgan is declining comment regarding appeals and fiscal ramifications.

But the city doesn’t look to be in good shape. It hasn’t issued a plan that would cover the court-ordered damages, and next year’s budget deficit gap is in the tens of millions. City officials aren’t talking either. The chairman of the Committee on Local Government Finance Marvin Leavitt is reporting that the city hadn’t reached out to him to discuss Friday’s ruling. City Finance Director Darren Adair didn’t return requests by the Review-Journal for comment. Deputy State Tax Director Terry Rubald denies contact between her office and the city officials to discuss the financial implications of last month’s ruling.

Civil services are worrying, too. Police Supervisors Association President Leonard Cardinale is surprised that the pending ruling for the $4.25 wasn’t mentioned last month when they discussed the proposed $7.7 million union settlement with the city last month. “We’re hoping they find a pocket of money big enough to pay everything,” Cardinale says. “That would be the best thing for the citizens, is just to settle all of this litigation and get it over with.”  But settling costs money, and observant bankruptcy lawyers in Las Vegas like DeFlyer aren’t optimistic for North Las Vegas without a hefty new source of revenue.

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