Even if Fontainebleau were nothing but an empty patch of land, Carl Icahn would have to pay property taxes on it, by virtue of being its owner. According to Clark County Assistant Assessor Doug Scott, property taxes are calculated (on a case-by-case basis, of course) by the market value of the property and any improvements thereupon, "determined by replacement costs." Depreciation is subtracted from this, at a 1.5% rate, along with "any additional obsolescence on the property."
Nevada also has a property tax cap. It pegs the tax assessment at last year's tax amount plus "a moving average" that varies by year. In 2015, the cap was set at +0.2 percent. This assumes that no changes have been made to the property nor has there been a change in its use. (All of which applies to Fontainebleau.)
The cumulative amount that Carl Icahn has paid for the Fontainebleau site since he purchased it on Nov. 23, 2009, is not available. However, last year the two parcels on which it sits were valued for tax purposes at $1,801,391.52. Icahn then enjoyed a cap-imposed tax reduction of $215,297.29. That meant that his total levy for the year was $1,585,824.23. Given the limited movement in Nevada's property tax rates, Icahn would have racked up something in the ballpark of $9.5 million in property taxes during the period he's owned Fontainebleau. So, while he got it for a tiny fraction of its cost ($156 million, outbidding Penn National Gaming), just keeping the building sitting there is hardly cheap.
Last fall, the Motley Fool's Travis Hoium gave Fontainebleau the dubious honor of being one of the five biggest flops in Las Vegas history. It didn't get the top spot, which went to CityCenter's $400 million Harmon Hotel, which MGM Resorts International had to completely dismantle without ever opening it. Nor was it the biggest money-loser. (That would be The Cosmopolitan of Las Vegas, victim of a $2.2 billion write-off.)
But Fontainebleau was in there pitching, representing a $1.85 billion loss. It's estimated that another $1 billion-$1.5 billion would be required to finish the resort. (Perhaps more, since Icahn has sold the furniture and the custom-built escalators, and shipped the construction crane to Arizona.) Regardless of who buys Fontainebleau from Icahn – and his representatives say they've got a pigeon in hand -- finishing it will take deep pockets and a lot of intestinal fortitude.
