Nicky-O Might be Dunzo

The developer building Nicky Hilton's South Beach hotel said he might part ways with the celebrity, citing an online video. It's the latest hurdle for the Nicky-O. The developer behind Nicky Hilton's planned South Beach hotel said Friday he is considering scuttling the project because she allegedly filmed a private videotape with older sister Paris making racist remarks.

''I'm very concerned about it. I'm shocked actually that she would participate in something like that,'' developer Robert Falor said. The video is making the rounds on the Internet and is the subject of a lawsuit by Paris Hilton.

Falor's comments offer the first signs of strain in a partnership between a developer known for sparring with associates and the 23-year-old celebrity heiress, who has become one of South Beach's most high-profile hoteliers. Though still under construction, the 95-room ''Nicky-O'' condo-hotel has won favorable mentions by Vanity Fair, People and even David Letterman.

In her lawsuit filed in federal court in Los Angeles, Paris Hilton claims the tape in question was obtained from her storage unit in California. The video on YouTube seems to show Paris mocking Jewish and African-American people, with Nicky behind the camera. Falor said he has not talked to Hilton or her business partners and hasn't made a decision on the project's future. ''I'm trying to get all the facts together,'' he said. ``I'm going to take the weekend.''`''There's been no tension,'' he said. "Everything has been working fine.''

Still, he seemed eager to distance himself from a celebrity he once touted as both the creative force behind the project and a marketing star. ''There's been some negative press on Nicky about the clothing line and the handbag line recently,'' he said. Women's Wear Daily has reported that Hilton's merchandise is not doing well, and Macy's dropped her Chick junior sportswear line. ``Now there's this issue. We're evaluating -- and want to make the decision quickly -- whether this is something we want to be a part of.''

Zilbert said demand was strong for the units, priced at $500,000 and up.