Low February 2018 Oakland Raiders Las Vegas Stadium Room Tax Revenue Continues Bond Subsidy Problem

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Low February 2018 Oakland Raiders Las Vegas Stadium Room Tax Revenue Continues Bond Subsidy Problem

Low February 2018 Oakland Raiders UNLV Las Vegas Stadium Room Tax Revenue Continues Bond Subsidy Problem

Thanks to Clark County Commission Chairman Steve Sisolak’s tweeted answer to my question of what the February 2018 Stadium Hotel Tax Revenue was, the resultant answer of $3,032,971 revealed the continuation of a problem. The rate of 88/100ths of 1 percent on rooms around the Las Vegas Strip, and the .5 of 1 percent for the County hotel rooms ourside of that zone, is not bringing in enough money to retire the monthly debt service and mainstain a debt coverage ratio of 1.5 to 1. That means a proposed bond issue of $750 million, let alone $650 million, would still call for Clark County Taxpayers to fill in the revenue gap – contrary to claims made that the public’s stadium subsidy would be paid for strictly by tourists.

Prior to today’s revenue update, the average revenue from the stadium hotel tax was just approximately $4,016,000 through January; now it’s at $3,961,078.17. The $3,032,971 for February 2018 represents a 30.6 percent drop from the reported $4,370,417 for January 2018 – that’s the single largest month-to-month decline in the short history of the collection of the tax.

In my video-blog on why the Las Vegas Stadium Authority should not approve a document authorizing the proposed bond issue, I wrote this:

“Right now, the stadium tax revenue will not cover the bond debt service plus the debt coverage ratio. Here’s why. As I’ve done before, let’s see what happens when a full serial bond issue of $750 million is proposed over a 30 year payback period. According to sources, the best rating Clark County can expect is AA, not AAA – the rate for that, as of today, is 3.15 percent. Using an available online municipal bond spreadsheet or calculator, what we get is a monthly debt service of $3,223,026.62 and with a debt coverage ratio of 1.5 to 1, that comes to $4,834,593.93. Comparing that to the average monthly stadium tax revenue to date of $4,045,451.55 – and we have a monthly average deficit of -$789,088.38, which over 30 years becomes a giant cost of that is not covered by the stadium tax and will be paid by the Clark County taxpayers via its general fund: -$284,071,818.44 So let’s say that the bond Clark County floats is $100 million less, or $650 million (which is relevant because Clark County told Moody’s that all the money it would protect in case the stadium tax was not sufficient, and the taxpayer-fueled general fund had to be used. Then we have a monthly debt service of $2,793,289.74 and with a debt coverage ratio of 1.5 to 1, that comes to $4,189,934.61. Well, given that the the average monthly stadium tax revenue to date is $4,045,451.55, we still have a problem that will cost Clark County taxpayers -$52,013,903.24. This is a set of calculations anyone can do, even as the stadium consultants try to make this matter sound like a foray into rocket science. It’s not. Given this, signing the “Stadium Authority Findings Required by Sec. 36.1 of Senate Bill 1 (clean version)” document now would be criminal. The action would be kicking the can down the road a bit, and until that time when the bond underwriters come looking to collect and have to get general fund money because the stadium hotel tax is not enough.”

Now, with the new February report, a $750 million bond issue would now cost taxpayers $314,446,234 – but that’s assuming last week’s muni-bond rate of 3.15 percent; this week it’s at 3.25 percent. So, at that 3.25 percent rate, it’s $336,597,450.60 that would have to be taken out of the Clark County General Fund over the 30 year bond period. If the bond were $650 million, then the cost to taxpayers is $101,586,037.30.

The question is, what level of subsidy can Clark County afford? The answer is that at $600 million, there would be a tiny surplus of $15,919,668.60. But, at a $550 million subsidy, the taxpayer surplus is $133,425,375. So, why not do the $550 million?

Ironically, it was proposed to the Raiders as an alternative plan via Jeremy Aguero, serving as consultant to the Southern Nevada Tourism Infrastructure Committee formed by Governor Sandoval, and on June 23rd, 2016. But Raiders President Marc Badain balked at the idea, saying the team was “disappointed by what we saw today. The signal that today will send, bringing the $750 down to the $550, would be negative.”

The Nevada Legislature approved the $750 million subsidy plan, problems and all. If done by Clark County, it would result in a fee for the bond underwriter of over $16 million, a record payout in sports history. That would seem to be the motivating reason why this subsidy has been pushed, even though the County’s stadium hotel tax rate clearly can’t handle it. As long as the Clark County taxpayer cleans up the mess, the bond underwriter is happy. Question is, did anyone ask the Clark County taxpayer?

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