Economy

Is the Vegas dream gone?

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Anyone want to buy Steve Friess’ one-bedroom condo unit at the Panorama Towers for $485,000? $200,000? $1?
Photo: Steve Marcus

I have spent the past several days becoming reacquainted with someone I once was. Much like the city he observed, he was full of boundless, unrealistic optimism, he believed a lot of the hype he was fed, and he spent money like there was no tomorrow or as though there would always be more to spend.

You see, an agent of the Internal Revenue Service is scheduled to visit my home to audit my returns for the year 2007. That’s not that big of a surprise; my accountant told me it was bound to happen sooner or later, that it’s part of the cost of being a self-employed person working from home and taking lots of work-related deductions. We think we’ve got it under control, and it’s entirely likely that the agent will realize I did not write off some things I should have and not the reverse. We can hope, anyhow.

That said, the experience is no fun, exceedingly stressful, quite distracting from my normal duties and costly in time, angst and billable hours at the CPA. But in the process of preparing by re-examining every bit of minutiae—receipts, checks, credit-card charges, travel logs, mileage records, the stories, blogs and podcasts I created—I’ve had this profound sense that I’ve been doing a forensic analysis of how so many of us wound up in the present joyless economic predicament.

You see, 2007 was The Last Great Year. It’s like reviewing a case history on how we all ended up where we are.

That was the year, most significantly, that I closed on the $485,000, one-bedroom condo unit at Panorama Towers, a condo building across I-15 from CityCenter. My father, his friend and I had reserved it in early 2005 with a large nonrefundable deposit. When they were done building it in July 2007, here’s how I wrote about our options: “We continue to debate how to proceed, whether to sell it immediately and take our profits or to rent it.” I stopped putting money into my IRAs, figuring real estate was just as good for my long-term financial health.

So how’d that work out for us? Well, we pay about $3,200 a month in mortgage and fees, we have a renter who covers slightly more than half of that, and I shudder to take a look at zillow.com to see what we sell the money pit for. But the logic at the time was that CityCenter would be opening by late 2009, and that event would create a flood of high-end would-be condo owners willing to buy or rent ours just to be nearby.

Ah, CityCenter and MGM Mirage. One of my blog headlines read, “MGM to Take Over the WORLD,” a reference to news that the company had bought even more land on the Strip, this time near Circus Circus, for about 100 contiguous acres upon which, surely, CityCenter II was in the offing. Don’t hear much about that anymore. I found some notations in my mileage logs about visiting the multimillion-dollar, newly opened CityCenter sales office by the Monte Carlo and wrote that I found it “intriguing” that so much of the project’s construction funding relied upon deposits from condo buyers. I can find nothing anywhere where I even thought to wonder what would happen if they couldn’t sell them. That seemed impossible at the time. Today “intriguing” would be replaced by “alarming.”

Going through my material is, in fact, like leafing through a Vegas yearbook. I actually turned to my partner at one point and said, “Oh, here’s a funny one!” I had found a notation about covering an MGM Mirage shareholder meeting where the hot story was that Kirk Kerkorian, majority owner of MGM Mirage, was so frustrated by his company’s “low” stock price that he was bidding to buy CityCenter and Bellagio and take them private. I kid you not. The stock was at about $70. It rallied a bit at the time, Kerkorian withdrew his interest in purchasing the assets, and MGM stock hovers these days around $11.

My, weren’t we all so smug and haughty in 2007? I covered two implosions in 2007, those of the Stardust and the Frontier, and we all eagerly awaited the explosive demises of, say, the Sahara, the Riv, the Trop and perhaps even the Imperial Palace. In fact, when I asked a top Harrah’s exec at the time why the IP hadn’t been integrated into the Total Rewards system, I received this snark: “If you owned Imperial Palace, would you want it in your rewards club?”

I’ve got to think that Boyd, owner of the Stardust and now part-built Echelon, would love to still have the Stardust operating right about now. And Elad paid a record $35 million an acre on the Frontier property to Phil Ruffin in May of that year, only to now be sitting on such a vast empty space. By the end of 2007, Elad was on its way to a successful court battle to use the Plaza name, a Pyrrhic victory seeing how odds are good they’ll never actually build it. As for the IP? Harrah’s has spent 2009 luring journalists to the place to see all its new entertainment options, finally showing respect for the long-neglected workhorse.

My personal balance books are similar. My work in 2007 focused on the nation’s biggest publications and paid less mind to smaller, less glamorous ones that now keep me afloat while the media giants crash. I see huge purchases and large credit-card payments all over the place in 2007 that would be impossible now because, despite never having missed or been late for a single payment, I’ve had my credit lines squeezed down by the credit-card companies. I see a reliance on the equity in my real estate to keep things in balance from time to time; there is no equity to lean on anymore.

Surprisingly, the reality of the financial farce that was 2007 and prior seemed to dissipate almost at the stroke of midnight on January 1, 2008. Here’s the January 4, 2008 headline on my blog: “News Flash: Vegas Real Estate Sucks.” It was meant to be sarcastic, as if it was plainly obvious. But it wasn’t obvious at all until, of course, it suddenly became shockingly, painfully obvious.

As I’ve looked back at my every move and expenditure in 2007, I’m not even sure I remember what it felt like to be that cocky and reckless. I’m determined that the auditor who comes on Wednesday be greeted with books and documents that make sense to the IRS. I just wish they made sense to me.

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