Operator of Dotty’s taverns may buy Moulin Rouge site

Nevada Restaurant Services, Inc., parent company of Dotty’s, documented its interest along with the city-recommended waiver in a settlement agreement approved by the council Wednesday to end years-long litigation between the two sides. Nevada Restaurant Services sued the city in federal court in November 2015 after the council repeatedly declined to issue a permanent tavern license for one of Dotty’s locations.

In March, the company was awarded a $3.9 million verdict and the city later filed an appeal that remained unresolved as of Wednesday. The settlement freezes litigation. It will ultimately dismiss the lawsuit and the judgment, provided the city takes certain actions, the agreement says.

The potential purchase of the Moulin Rouge is unrelated to any dispute within the lawsuit, but it stands out because it reveals that the embattled site of the city’s first racially integrated hotel-casino has drawn renewed interest. Fires have completely gutted the property in recent years, and would-be buyers have come forward only to bow out.

Paula Graziano, president of Nevada Restaurant Services, confirmed the company’s longstanding interest to the Review-Journal. Graziano said they had been contacted in the past to purchase the property but were unable to make a deal.

The council still maintains discretion over whether to approve the staff-recommended waivers on civil penalties, which city spokesman Jace Radke said have reached $1.9 million. Graziano said she saw a waiver as an alternative to the verdict’s cash payout and as a way to “maintain a great relationship with the city of Las Vegas.”

She said the company was well aware of the property’s historic difficulties and open to ideas for the site: “We want to be good citizens, good community members. It was a wonderful location back in the day.”

Councilman Cedric Crear, whose district encompasses the Moulin Rouge property, said it isn’t enough just to build on the site, but that it should incorporate the site’s history. The Moulin Rouge opened in 1955 for six months when the rest of the city’s casinos were segregated. Five years later, it hosted the meeting that effectively ended segregation in Las Vegas casinos and resorts.

Crear said he preferred the site be a mixed-use development with a housing component.

“I think that any business is going to look at the viability and if it pencils out and it makes money,” he added, noting that the city has no control over who is selected as the buyer.

No deal, but talks ongoing

Nothing is binding, according to Graziano.

But it is perhaps close. Kevin Hanchett, the court-appointed receiver for the property, said discussions were underway despite the lack of a contract. He called Nevada Restaurant Services “the strongest” potential buyer to come forward for the 15-acre site due to its size and experience in the gaming industry.

Hanchett said the company initially submitted a letter of intent to buy only the roughly 5-acre parcel associated with an active gaming license, but he countered to include additional property in order to split the land less awkwardly, he said.

The company was amenable to the counter offer, according to Hanchett, but he declined to share details of a proposed purchase price until the agreement is signed.

Officials: Settlement terms not unprecedented

Hanchett disputed whether there were any penalties against the land, saying the city’s request to impose penalties was not granted because of “several flaws in the process.”

But the city stood by its assertion Wednesday. Officials also rejected the idea that waiving $1.9 million in civil penalties was unprecedented because such waivers have been considered in the past.

As part of the verdict, and also listed as a condition of the settlement, the council last month approved a permanent restricted gaming license for 15 slot machines at the Dotty’s Tavern located at 10000 W. Sahara Ave. — the site that was central to the legal battle.

Elected officials previously authorized just seven slots at the location after they “rationally concluded” the limit aligned with Las Vegas municipal code, argued Philip Byrnes, the lawyer representing the city in its appeal, in a court document.

The council also amended its ordinance Wednesday to increase from 20 to 35 the number of gaming machines allowed at tavern locations that had been issued licenses before July 1, 1992, which effects only two Dotty’s locations.

Settlement terms dictated that Las Vegas leaders agree to increase the cap at those locations by Oct. 2. The addition of 15 slot machines is also predicated on a green light by the state, however, and the settlement is void if the state rejects the increase, the settlement shows.

In such a scenario, the company and the city may renegotiate a new agreement, according to a copy of the terms.

There were other concessions as well.

City officials will not object to a transfer of an existing gaming license for Walgreen’s, located on Las Vegas Boulevard, to Bourbon Street Bar, a Nevada Restaurant Services-owned establishment on Paradise Road.

All Dotty’s locations may also list inside the premises the purchase prices of packaged liquor sold within each location, the terms show.

Crear, who was not present Wednesday to vote on the deal, said he took the advice of legal counsel that it represented a best-case scenario for the city.

Councilman Bob Coffin said he missed a briefing on the settlement, but he voted for it even though he would have preferred a public hearing.

“On the merits, it looks okay to fix that eyesore right down Bonanza from the (Review-Journal),” he said in a text message. “The rest of council was comfortable so I trust their collective judgement.”

Contact Shea Johnson at sjohnson@reviewjournal.com or 702-383-0272. Follow @Shea_LVRJ on Twitter.