June 07, 2011
Vegas sports subsidy bill killed dead
The funding bill for a Las Vegas arena, or a Las Vegas stadium, or a Las Vegas arena/stadium/floor wax was declared officially dead last night by the bill's sponsors:
Asked if any elements of the various public financing measures presented to lawmakers would survive, former state Sen. Terry Care answered: "It'll be the surprise of my lifetime if it does."
Care was the chief lobbyist for Texas developer Christopher Milam, who had proposed building a $1.9 billion project including a ballpark, arena and stadium near Interstate 15 and Russell Road.
"It was a difficult bill to begin with," Care said.
Dead, of course, is a relative term when it comes to sports subsidy bills, so it's always possible that some of these proposals will be revived in the next legislative session. That's not until 2013, though — Nevada legislators take alternate years off, presumably so they can spend them at the craps tables — unless the governor calls them into special session before then. Quebec, you can breathe one-third easier now.
June 06, 2011
Legislative clock running down on Vegas stadium and arena deals
It's getting late early out there in Nevada, as the state assembly adjourns tomorrow, leaving little time to hash out the details of the complicated arena tax-increment financing bill that three developers are seeking to take advantage of (and a fourth is seeking to have amended so it can get in the running).
So far, legislators seem wary — "it is kind of hard to get all these bills like this at the last minute and often extremely difficult to get them through," said state senator Sheila Leslie — but that's not necessarily a major obstacle: "Typically, agreements are not made until the end," local AFL-CIO official and former state legislator Danny Thompson told the Las Vegas Review-Journal. "That is the way this place works."
Of course, the Nevada legislature has been called into special session five times in the last six years, so as we're seeing in Minnesota, it ain't over even when it's over.
May 31, 2011
Nevada legislature readies TIF financing bill for Vegas arena
Las Vegas still has more arena and stadium plans than you can shake a stick at, but pretty much all of them have one thing in common: They'd use tax increment financing, the much-derided financing scheme that kicks back property taxes (and sometimes other taxes) to help a developer pay off construction costs. And now there's a bill in the Nevada legislature to create a TIF district for an arena (or a stadium or something), introduced as only the Nevada legislature can:
This is the murky way some policy gets made in the final days at the Legislature: No agenda, no formal meeting on the bill. The "fiscal notes" meant to tell lawmakers and taxpayers the potential cost of a bill to the public were not available. Instead, lawmakers gathered to the side of the Senate Chambers - "behind the bar" - as press and lobbyists tried to listen in.
Sen. Ben Kieckhefer, R-Reno, and Sen. Barbara Cegavske, R-Las Vegas, voted against introducing the bill.
"I have no idea what it means," Kieckhefer said. "I've had six different lobbyists tell me it means six different things."
Potential beneficiaries include Chris Milam's proposed $1.95 billion sportsplex, the old Cordish plan, and, well, pretty much anything. No word yet on the bill's likely fate, probably because legislators are still reading it to figure out what the heck it means — not that that's stopped anyone before.
May 24, 2011
Vegas $2B arena-and-stadium plan doesn't come with parking
So it turns out that not only is developer Chris Milam proposing to build a $1.95 billion sports complex in Las Vegas, but that doesn't include land for parking:
Nearly a dozen artist renderings depicting the stadiums on a 63-acre site west of Interstate 15 across from Mandalay Bay show the facilities linked by walking paths through greenbelts.
But the renderings depict zero parking spaces, though the largest stadium would seat 36,000 soccer fans.
Stadium developers are reportedly targeting an estimated 50 acres nearby for parking, event marshaling and facility maintenance.
But unlike the site for the stadiums, which is empty desert controlled by Texas developer Christopher Milam, much of the area planned for parking is already occupied by older single story industrial properties and warehouses.
The Las Vegas Review-Journal, which reported the above, didn't include estimated land costs in that area, so it's hard to say for sure exactly how much has just been added to the $1.95 billion price tag, but suffice to say it ain't nothing. And, of course, we have no idea how that cost would be paid for.
Speaking of paying for the sports complex, the same article includes more details on Milam's proposed funding plan:
He said he stadium project might be scuttled unless the Legislature approves the special taxing district, which would add a 12 percent ticket sales tax for any event at the three arenas.
The legislation would also allow stadium owners to keep sales, live entertainment, property and other taxes generated there for reinvestment in the facilities.
A ticket sales tax effectively comes out of Milam's own pocket, so it seems silly for him to be insistent on that — if it comes down to it, he could accomplish much the same thing by just raising ticket prices 12 percent and devoting the added money to paying off construction costs. Unless he's counting on these "user fees" to distract attention from that "also": kicking back sales, property, and other taxes that would normally go to government coffers. As I noted before, this guy does have a knack for thinking big.
May 20, 2011
Milam's Vegas sports complex would use tax dollars
Remember how I wondered last week whether Texas developer Chris Milam, who was proposing a $1.95 billion privately financed sports complex in Las Vegas, had something up his sleeve? Well, now Milam has shown his cards:
Investment banker Morgan Stanley is seeking to raise revenue through bonds that would be leveraged against the creation of a special taxing district that must be approved by state lawmakers. The proposed district would draw a line around the 63-acre site and would bond against the tax revenues generated by the project, the source said.
Yup, it's a straight-up TIF. So when Milam says "privately financed," he apparently means, "a private financial firm would sell the bonds, and taxpayers would pay them back."
I actually should have suspected this last week, as Milam proposed a similar funding scheme last year, when all he wanted to build was a basketball arena. That's the same time that he declared that "we have an NBA team under contract" to move once "other pieces of the puzzle fall into place." The guy certainly does seem to have a knack for outrageous claims — but then, he is from Texas.
May 10, 2011
Developer proposes $1.95B Vegas sports complex
Texas developer Chris Milam has bought the minor-league Las Vegas 51's baseball team, which wouldn't normally be notable here — except for what Milam insists he plans to do next:
Milam has labeled the privately financed $1.95 billion project the Las Vegas National Sports Center.
With a 9,000-seat ballpark for the 51s, the proposed center, which will be located on a 63-acre parcel, will feature a 17,500-seat arena designed to house an NBA basketball team and a 36,000-seat stadium for a Major League Soccer squad.
"It's the beginning of the greatest thing ever to happen for sports in this community," said 51s executive director Don Logan, who helped broker the sale of the Pacific Coast League franchise.
That's right, $1.95 billion for an MLS stadium, an NBA arena, and a minor-league baseball stadium — and all privately financed! Since typically all three of those items put together wouldn't cost more than $600 million tops, either Milam has something up his sleeve or he's completely insane, or both. Though to be fair, it's got to cost a lot to build stadiums out of liquid metal.
For those playing along at home, this looks to be the warmed-over Cordish plan, which hasn't been heard from in a couple of years, but stadium and arena plans never really die, especially in Vegas. The baseball stadium would be expandable to 36,000 seats to be MLB-ready if a team could be lured there; as Craig Calcaterra notes, Las Vegas' entirely tourist-based economy is a lousy fit for MLB, but as vaportecture goes, at least Milam is dreaming big.
March 25, 2011
Vegas arena plans, Anaheim Kings subsidies, and more
A few items that fell through the cracks over the last week:
- Those plans for a tax-increment-financing-funded arena on the Las Vegas Strip got officially killed last week by the Nevada legislature — which then immediately expressed its intention to put a different arena plan on the ballot in 2012.
- The Anaheim city council is considering paying for upgrades to the Honda Center if the Sacramento Kings move there. No word on how much the renovations would cost, how they would be paid for, or why the city would have any reason to pay for them in the first place.
- Bronx borough president Ruben Diaz Jr. reiterated his call for a new hotel near the Yankees' stadium to help bail out those money-losing parking garages. Diaz presumably is more interested in using the garage fiasco as leverage to get more development for his borough; why city taxpayers should want to throw good money after bad is another question...
- A Canadian government analysis projects that for the federal government to pay for a Quebec hockey arena and a Saskatchewan Roughriders stadium, it would require ticket taxes of as much as $42 per ticket to pay off construction costs. That sounded crazy to me at first, but given that we're only talking about a million fans a year (combined NHL and CFL), it actually makes sense: A $42 ticket tax would generate $42 million a year, which is about enough to pay off $600 million in costs spread across two stadiums. It would also be insane, of course, but it's a good reminder of why teams don't generally jump to build stadiums with their own money — new sports facilities face a hugely uphill battle to earn back their own construction costs.
July 16, 2010
Vegas developers: Build it, and NBA team will come
In one of the weirdest arena campaign moves ever, the CEO of a development group hoping to build an NBA arena in Las Vegas said this week that "we have an NBA team under contract" to move to Vegas — but only if the city approves a tax-increment financing district to kick back property taxes in the surrounding area to help pay off arena construction costs.
The arena plan is scheduled to be discussed at an August 4 county commission hearing, but meanwhile, everyone wants to know: Really? An NBA team? Which one? The Las Vegas Sun briefly mentioned that the Detroit Pistons are for sale, leading to an immediate denunciation of any such thing by the team's current owners. And Sacramento Kings owner Joe Maloof says it's not him, either.
NBC Sports asked around among team execs at the Summer League currently underway in Las Vegas, and came to the conclusion that the development group "got a 'we agree to have a serious conversation with you if you get your arena built' rather than any kind of agreement to sell." Which would explain NBA officials' statement yesterday that they "categorically deny" that any such contract is in place.
In any case, though, expect Las Vegas to show up in lots of stories about NBA teams seeking subsidies for the next few months, whether it's in Detroit, Sacramento, Indianapolis, or wherever. Maybe if they play their cards right, Las Vegas can even be the new Kansas City!
June 16, 2010
Pacers may not get their lease subsidy before self-imposed "deadline"
It looks like talks over the Indiana Pacers' demand for an even sweeter sweetheart lease will go down to the wire — or a wire, anyway. The team's owners set June 30 as a deadline for resolving the dispute, but Ann Lathrop, president of the state Capital Improvement Board (who was, incidentally, Indianapolis city controller at the time the original lease was signed) says there's no guarantee a deal will be reached by then.
The big sticking point appears to be not the $15 million in annual operating-cost subsidies the Pacers want, which the CIB, despite its own budget woes, seems willing to cough up, at least in part. Rather, according to the Indianapolis Star, "the central sticking point has been who controls Conseco Fieldhouse," with the CIB saying if it's going to take on the cost of paying all operating expenses for a tenant that already pays no rent, it wants control of the arena back. The Pacers are reportedly "resistant" to this.
The Star article also quotes me (as saying that these kinds of talks always drag on longer than expected), but the quote of the day goes to economist Roger Noll, who told the paper: "In the absence of an active attempt by some other city to get them, deadlines like that are meaningless. The crucial issue has to do with whether they have any other options, and those don't come overnight."
In other words, pay no attention to the Pacers' "deadlines," pay attention to what's going on in other cities. Like, say, Las Vegas, which is busily working on new arena plans to lure ... um, whoops, never mind.
June 11, 2010
Vegas arena plans tumble after comptroller slams them
The Clark County commission hasn't even met yet to discuss building a publicly subsidized arena, and already one of the prospective arena builders has dropped out: The Las Vegas Arena Foundation says it's pulling out of the bidding, citing the "harsh reality" that "there is no appetite right now among the commissioners, we understand, to support any public funding for an arena."
This leaves two prospective developers, International Development Management and Olympia Development (I'm not actually sure what happened to Cordish Cos., which was rumored to be a fourth candidate last month — and the Las Vegas Sun says that Olympia may soon back out as well.
What's apparently causing all the sudden reticence is a report by county comptroller Ed Finger that notes that arena revenues wouldn't cover the public costs, and calls the need for a new arena "questionable," noting that "numerous studies have come to the conclusion that the economics of an arena with sports franchises are worse than without" and that "current arena owners report that existing arenas have excess capacity." It's still conceivable that a Vegas arena plan will rise from the dead, but don't count on it happening anytime soon.
May 19, 2010
Vegas officials, MGM Mirage cool to arena subsidies
Clark County held its first public hearing on competing Las Vegas arena proposals yesterday (there are now four, up from two in March), and county commissioners weren't exactly thrilled at the plans, especially the bit where all four would require public subsidies.
"I'm not against an arena," said commissioner Susan Brager. "I just don't think the funding mechanism is where it needs to be at this time." Added her colleague Larry Brown: "Public financing — it takes away the private competition. A pro team is not the panacea for Las Vegas."
Not helping matters was the stated opposition to public arena subsidies by MGM Mirage, which is not only one of the largest casino operators in Vegas, but also runs two arenas of its own at MGM Grand and Mandalay Bay. MGM Mirage officials complained that giving subsidies to a new arena while theirs go subsidy-free would create an uneven playing field; according to the Las Vegas Review-Journal, "a couple of commissioners seemed less inclined to back public funding" after MGM chief marketing officer Bill Hornbuckle testified.
Hornbuckle also warned that as the arena has no tenant lined up, Vegas could end up with an arena but no team, like Kansas City. Which is a point that many people, yours truly included, have made; but when the guy pointing it out is the big dog in your local economy, elected officials tend to sit up more and take notice.
March 12, 2010
Chicago businessman claims seat scheme can fund Vegas arena
The guy behind Las Vegas' abortive 2004 bid to woo the Montreal Expos is back on the scene, this time with a new financing plan for the city's proposed arena. The brainstorm of Lou Weisbach — a Chicago-based Democratic fundraiser and marketing businessman who previously tried to buy the Cubs, is to sell luxury boxes and personal seat licenses, but with a twist: Instead of paying their license fees up front, they'd pay for them over time, like a home mortgage. (This is actually how most luxury box deals already work, but never mind that for now.) Weisbach calls the concept "Equity Seat Rights," and notes that it's been used by the University of Kansas and UC-Berkeley to help finance expansions of their college football stadiums.
Leaving aside that from a stadium builder's perspective, it doesn't really matter whether your funders give you the money up front or over time (any more than a home seller cares much whether a buyer is paying cash or taking out a loan), could this actually work? The projected cost of building an arena is at least $400 million, not counting land. Weisbach says that by selling 1,000 PSLs — oops, ESRs — plus 150 suites, he could make the project work with no public money.
The big question here is what he could get for the suites: If they were to go for a quarter-million per year apiece, which is the low end at L.A.'s Staples Center (which has four pro sports teams to the Las Vegas arena's zero), that would indeed cover most of his construction costs, regardless of whether the ESRs sold. If the price were lower, not so much. And that's assuming that they all sell — it's going to be dicey, to say the least, to get people and corporations to pay top dollar to seats at an arena with no guarantee of what team if any will even play there.
Add in that Vegas' baseball stadium plan also initially was proposed to be taxpayer-free, but then turned out not to be, and there's plenty of room for skepticism here. Though in the Las Vegas Sun article on Weisbach's plan, it was called "a common-sense approach" by Chad Wilkins, a consultant who ... erm, works for Weisbach. But if you can't trust a consultant to a marketing guru, who can you trust?
March 05, 2010
Vegas hit with two competing tax-subsidized arena plans
I'm being interviewed by Las Vegas radio on Monday morning (tune in here at 6:50 am Mountain time), and now I think I know why: Two would-be developers have proposed building a sports arena near the Strip, and will be presenting plans to county commissioners in the next couple of weeks.
Both plans involve major public subsidies. One plan, pushed by the nonprofit Las Vegas Arena Foundation and Harrah's casino, would raise sales taxes by 0.7% in an "entertainment corridor" near the Strip, to help fund a $488 million arena. (No breakdown on how much money would come from the tax hike.) The other, from International Development Management, would reestablish a redevelopment agency to kick back property taxes to the developers — that's right, yet another TIF. The IDM arena would cost $751.7 million ($404 million for construction, $347 million for land).
As for who would play there, an IDM spokesperson said that the city "needs the arena to host bigger and better events." (Because, you know, there's nothing much to do in Vegas now.) This will no doubt fuel renewed speculation about an NBA franchise moving to Vegas, though the league hasn't been thrilled with the idea so long as betting on basketball is allowed there.
County commissioners, meanwhile, are both intrigued and wary of committing public funds — though not necessarily clear on how modern arena finances work. Commissioner Tom Collins — who, may I just say, has the best Vegas elected official name ever — told the Las Vegas Sun, "If it involves any public funding, then I think the county should own it." Noooooooooooooo!
November 05, 2009
Only three months after its plan for a new downtown arena fell completely apart, Las Vegas is back at it again, signing an exclusive two-year deal with the Cordish Co. to "study the feasibility" of a new NBA/NHL facility, including public financing.
Cordish, according to the Las Vegas Sun, "specializes in revitalizing depressed urban centers by developing entertainment and mixed-use projects." In English, that means that it has never actually built an arena before, though it does have experience building sports-related development projects — if you count Kansas City's troubled Power and Light District and St. Louis' still-stalled Ballpark Village as "experience." Still, Mayor Oscar Goodman is willing to bet beer on them, so they must be good, right?