Monday, July 16, 2001 | 10:50 a.m.
The developers of a 57-acre downtown furniture mart who are asking the city of Las Vegas for a $115 million incentive to build their project may come away empty-handed.
The developers of the furniture mart, World Market Center LLC, have submitted a financial proposal that is scheduled to be considered by the City Council Wednesday. But according to reports compiled by the city, the redevelopment agency is recommending the council turn down the proposal because it could affect the agency's ability to fund future projects.
Las Vegas Mayor Oscar Goodman has said it's likely the city would refuse to provide incentives to the World Market Center. The mayor said he is unsure as to how the project would meld with the nearby 61-acre "gem" that one day will be home to a performing arts center, academic medical center and residential towers. The council this month chose Southwest Sports Group as master developer for the 61-acre parcel.
According to the financial proposal, the furniture mart developers are asking the city to reimburse the property taxes -- estimated to be about $115 million -- the project is expected to generate over the next 25 years. When the entire project is completed, the 57-acre furniture mart near Grand Central Parkway and Bonneville Avenue is expected to cost $750 million.
The developers also want the same incentives the city provides to the developer of the 61 acres.
The redevelopment agency has several problems with the financial proposal, said Deputy City Manager Steven Houchens.
Dana Pretner, a spokeswoman for World Market Center, said Friday that the proposal would not be heard Wednesday because the developers are continuing to negotiate with the city.
Houchens said Friday he had not heard from the developers and, as far as he knew, the council would be voting on the proposal.
Houchens said the city would not reimburse the developers the projected property tax revenue because it would leave less funding available for other projects proposed for the area.
Property tax revenue generated from projects in the redevelopment area go to the agency's coffers, and portions are often redistributed to entice other developers. If all property tax revenue was turned back to the World Market Center it would limit the agency's ability to assist other development, Houchens said.
What's more, Houchens said the $115 million number is overstated. Houchens said the project would likely generate between $30 million and $40 million in property taxes over 25 years.
Nevertheless, Houchens said a $115 million debt over 25 years would affect the city's bond rating. Bond rating agencies, which last year boosted the city's rating from an A+ to an AA-, base their ratings on a city's outstanding debt. Houchens said a $115 million debt could lower the city's rating, which would result in higher interest rates.
Houchens also said that the city would not enter into an agreement to give the World Market Center the same incentives given to the developers of the 61 acres. The incentives that the city may or may not provide for the 61 acres have not been determined and could change as the project progresses, Houchens said.
According to city reports, World Market Center must purchase, for $13.1 million, 20 acres of the property owned by Union Pacific Railroad by July 31.
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