A’s seeking mega-TIF plus tax credits from Vegas, worth at least half a billion dollars and maybe more

Now that the Oakland A’s have cast their lot with Las Vegas, intentionally or otherwise, their next step is to figure out how to pay to get a baseball stadium build there. And, as is usual, this actually means figuring out how to get someone else to pay for a large chunk of it.

Initial reports have been a stadium project (with other, unspecified elements as well) with a price tag of around $1.5 billion. The details, though, have been a little blind-men-and-the-elephant from there:

  • The Nevada Independent, citing “multiple sources,” said the A’s plan would “allow for sales tax proceeds to be reinvested in the area, along with an allocation of transferable tax credits estimated to be worth around $500 million.” That’s not super-well phrased — is that $500 million in tax credits plus an unspecified amount of sales tax kickbacks? or sales taxes plus tax credits totaling $500 million, which normally you would expect to require a comma before “estimated”? — but it’s certainly at least half a billion dollars.
  • Over the weekend, former Las Vegas Raiders exec and non-economist-though-the-media-calls-him-one Jeremy Aguero said the public money being sought amounted to “up to” $500 million, in the words of the Las Vegas Review-Journal, and “roughly $500 million,” in the words of the Las Vegas Sun. And he clarified that this wouldn’t be just sales taxes getting kicked back, but rather all taxes, including property, sales, live entertainment, and business taxes: “All of the taxes, fees and charges that would otherwise be generated will be put back into the project that would generate revenue that would then be available to support a bond that would be issued by Clark County.”
  • A’s owner John Fisher is also seeking transferrable tax credits (total: unspecified), similar to what Nevada has given to Tesla and to film studios operating in the state. These are basically get-out-of-taxes-free cards that a recipient can sell to anyone they like who owes lots of taxes, generating profit for the credit holder and costing the state tax revenue that it would otherwise be entitled to.
  • Fisher also wants “redevelopment tax incentives,” which were relegated to a subordinate clause in the Sun and didn’t even make it into the Review-Journal’s reporting. These could mean just about anything — though it certainly won’t be in the form of tax breaks on the stadium, since all stadium taxes will already be funneled straight back to pay off construction costs.

Okay, so: One of the more common public funding mechanisms for stadium deals, or development deals in general, is tax increment financing, or TIFs. The way this typically works is that a city or county or state draws a circle around a project (how big around can vary, more on that in a skosh) and decrees that any new property tax revenue from the project will, instead of being used to pay for schools and roads and police and all the things that a new development typically requires, be handed right back to the developers to help pay off construction costs. This is, for example, what the Chicago Bears owners are trying to extract for their planned stadium in Arlington Heights.

Or sometimes, instead of property taxes, it’s sales taxes that are instead kicked back, which is sometimes called a STIF. This is what the Tennessee Titans owners are currently trying to get from the state of Tennessee and city of Nashville.

If Aguero is to be believed, though, Fisher is seeking the rarely employed mega-TIF, wherein every tax dollar owed from within an as-yet-to-be-determined stadium district, whether from sales taxes, property taxes, or any other taxes, would go right back to paying off a share of the team’s construction costs. This could be tricky, as Nevada law appears to only allow property taxes to be bundled into a TIF, but presumably any new state legislation for an A’s stadium could include authorizing new forms of tax kickbacks.

The selling point of TIFs is that they allow developers to claim that the subsidies require no new taxes — in fact, here’s Aguero saying, “The obvious difference between the Raiders deal and this deal is that this deal does not increase taxes. There’s no new tax, no charge, no anything.” But that’s not actually true: Since not all tax revenues from a TIF district are new to the region (some money spent on A’s tickets would otherwise have been spent elsewhere in Vegas) and since projects come with not just tax revenues but fresh expenses (see the aforementioned policing costs, etc.), what you typically end up with is a project that cannibalizes the local government budget while leaving the public with new costs and no way to pay for them other than either raising taxes or cutting services.

As for how much this will cost Nevadans in total, that’s anybody’s guess. One of the great/dangerous things about TIF districts is you can draw them any size you want, so if the revenue from just the immediate stadium area isn’t enough to fund the A’s plans, they can always just include a few more blocks to claim as “stadium-related” tax money. And all the sourcing on this so far comes from Aguero, who is a paid consultant to the A’s, so has an incentive to be vague about the actual public costs.

So we’re back to where we were at the end of last week: A’s owner John Fisher is seeking at least $500 million (since Aguero almost certainly wouldn’t float that number if it were really less) and possibly more as a requirement for moving to Las Vegas. Why Vegas, Clark County, and Nevada legislators would entertain that amount when Fisher may have nowhere to play as soon as next year if pissed-off Oakland officials decline to extend his lease, I have no idea — well, I have some idea. One hopes that we’ll at least find out how much of a cash grab Fisher is attempting before the money is approved, but there’s no guarantee of that either.

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29 comments on “A’s seeking mega-TIF plus tax credits from Vegas, worth at least half a billion dollars and maybe more

  1. Playing devils advocate Neil: Vegas seems to be the one spot where TIF’s, or even “Super” TIFs, make sense, only because there’s soo much money flowing into the desert! Who’s gonna notice if one new venue/development isn’t contributing to tax coffers? New venues, casino resorts, retail establishments; there will always be a spot where tax dollars will be spent where they could’ve been spent elsewhere (did that make sense?). Viva Las Vegas!

    1. No, that doesn’t make any sense. The only way giving tax breaks to new development isn’t a drain on public coffers is if 1) nobody would be coming to town if not for the development and 2) there’s enough tax money left over to cover needed public services for the project. In the first case, Las Vegas is absolutely the worst example of a city that nobody would visit without a sports team (that would be Oklahoma City, maybe?); in the second, 100% of tax money will be kicked back to pay for the stadium, so there will be … let me do the math here … 0% left over to pay for services.

      “We already have lots of money, we may as well give some of it away” is terrible budget policy, whether for governments or for business owners. The difference is that business owners usually seem to know that a dollar left on the table is a dollar that could have been used for something else, whereas elected officials too often tend to believe (or pretend to believe) that if you have money on hand, there’s nothing to do with it except hand it out to the first billionaire who asks.

      1. Slight quibble, Oklahoma
        City would get visitors from the cattle and petroleum industry with no sports team and be generally fine.

        The city that is a better example is Green Bay in the winter when even the bull shipping industry says nope, not happening.

  2. There are provisions in Nevada law that allow for the pledge of certain sales taxes in a similar mechanism – a number of projects have been created in so-called “tourism improvement districts” that allow for the pledge of 75 percent of sales tax revenue generated from within the district. They have been referred to as STAR (or sales tax anticipated revenue) bond districts, because their use in Nevada and other states (such as Kansas) is to pay for bonds issued to build certain projects.

    This isn’t to say that it’s a good idea for the state to allow for a project where 100 percent of the taxes are pledged, rather than only 75 percent, but the precedent already exists there.

    1. I thought I remembered reading here a year or two ago that the Nevada legislature banned STAR bonds after one failed spectacularly in Sparks,NV.

      1. Looks like Sisolak vetoed the STAR bond ban a couple of years back, though the article is hard-paywalled so I can’t read beyond the headline.

        1. Not sure if links get caught up in the filters here, so will refrain from posting a direct one to the NV 2021 AB368 Veto Statement (searching that string should bring it up). Not terribly satisfying, but from the horse’s mouth. And that particular horse also happens to be trained to say “BC OF THE A’S, DUMMY.’ But they also taught it about not saying the quiet part out loud, I guess?

      2. The Legislature passed a bill in 2021 that would have prevented new ones from being formed in any county except for Clark County, but the governor vetoed it. They are in place in both Reno and Las Vegas right now, though I don’t know if any have been created within the last couple of years now.

  3. Congratulations Nevada!

    You win John Fisher and his army of paid lobbyists! Hold on to your wallets!

  4. I’ll be disappointed (though not surprised) if Nevada doesn’t even attempt to drive a harder bargain after Kaval gave away any leverage with Oakland. Nothing about this has the fingerprints of the A’s actually intending to announce a move rather than driving a bidding war, they just now are trying to roll with it as there’s not much of a way to walk it back.

    1. I won’t either Joe. It would be interesting to me if, should the A’s be unable to get significantly more from LV/Nevada than they can from Oakland… what do they do?

      If you’ve got $700m promised in Oakland (enough to build at the existing site but not HT) and a similar or lower amount (say, $500-600m) toward the LV plan, what do they do?

      Public pronouncements notwithstanding, I have to think that both the A’s and the city of Oakland would backtrack if they thought this was the best deal. But maybe not?

      From the (excellent) linked article, it seems Kaval has ALREADY started with the “well, the $500m or so would be used for infrastructure, and we have already had discussions with the city/county on how they can best link the site to the casinos across the street…”

      Ah, so somebody else will be paying for infrastructure related to the stadium… as well as the infrastructure related TO the stadium. Classic Kaval.

      With each new pronouncement, this looks like an ever shakier proposition for the A’s (and Nevada taxpayers). It may happen… but right now I would be betting heavily on the against on this one.

  5. Don’t the A’s own 50% of the Coliseum site? IIRC the A’s bought the Alameda County’s portion of the Coliseum site. So while Oakland could certainly veto any new contract to stay at the Coliseum the A’s would be able to veto anything Oakland was trying to do with the site too (correct?).

    1. Correct, assuming a 51% majority vote is needed to approve any future use of the Coliseum site, which makes sense but I haven’t seen any confirmation.

    2. I mean, the A’s want to build a bunch of very expensive housing or other development where the stadium is now though. The fact they are willing to cut and run if Oakland doesn’t build them a stadium somewhere else makes this perfectly clear. A free stadium is just a cherry on top of the huge development cake.

      1. The problem with building expensive housing on even partially public land is you have to offer it up first for affordable housing via California law. The new arena in San Diego ran hard into that requirement.

        1. Who actually enforces that though? As far as I can tell, you just promise to build it sometime, then keep kicking that can down the road, and there’s no actual enforcement or anything.

    3. The city could use it’s power under law to compel a sale of the other party’s ‘half’ of the site if, just as an example, the A’s were being particularly obstructive and attempting to veto anything happening there.

      Fisher does not have that power himself, although he certainly has the finances to tie up any litigation for a very long time.

      Once the A’s are no longer playing at the coliseum site, it seems to me any legitimate argument Fisher might have about interference with his ongoing business etc would be moot. But he could still be a thorn in Oakland’s side… unless and until they buy him out voluntarily or expropriate.

      In that limited sense I would say the city/state always has the advantage in these situations. When you are in a partnership with an entity that can literally write new laws you are always at a bit of a disadvantage. But sometimes that can be a profitable position all the same…

  6. If they were to move to Vegas I’d like to propose that they be called the VegAbonds

    Spelling and capitalization intentional.

  7. If the A’s are financing $1 billion or so by themselves- does this mean they’re likely to do PSLs? I can’t imagine a worse way to introduce yourself to a new market.

    For the raiders it worked cuz they got ticket brokers and SoCal raiders fans.

    1. I sincerely doubt Fisher will really put up $1B himself.

      And have any baseball teams done a significant number of PSLs? It’s really tough in a sport where sellouts are rare.

      1. Only if you are relying on the casinos to buy them to us as perks for gamblers. Not exactly reliable money.

  8. So this can all be taken with a grain of salt. But Las Vegas gossip bloggers aren’t hearing great things about Dave Kaval.

    https://twitter.com/LasVegasLocally/status/1651071218018295808?s=20

    https://twitter.com/VitalVegas/status/1651107873349566464?s=20

  9. Interesting tidbit from the latest Nevada Independent story

    “However, the A’s are reportedly keeping the gaming entitlements on the former Wild Wild West property, meaning taverns and restaurants that are part of the entertainment district could offer restricted gaming — 15 or fewer slot machines — through a slot route operation.”

    So the A’s will own gaming entitlements- that seems pretty odd right?

    https://thenevadaindependent.com/article/as-turned-down-1-plot-in-resort-corridor-before-settling-on-site-for-1-5b-vegas-stadium

  10. Some time ago a lawyer-reporter named Clark Mollenhoff said “in any investigation of corruption, follow the dollar.” What these people are doing might be legal but is certainly questionable.

    If the Sport Teams that are “private” want a subsidy what’s in it for the taxpayer?
    I am a fair weather sport fan, but I understand the Green Bay Packers is owned by the town of Green Bay, Wisconsin. That’s fair.

    If they want the “wealthfare” what do we get in return?

  11. The A’s have been in Oakland long enough to become a multi generational tradition, it is obvious that ownership has met the team decline to curb fan interest, in turn, creating a reason to relocate.
    It is indeed a sad reality that we saw in the Seattle area with our sports teams

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