Casinos ask for property tax cut

Diana Sahagun

Friday, Feb. 1, 2002 | 11:22 a.m.

The Clark County Assessor's Office determines the taxable value on properties each year by calculating the amount and cost of materials and labor it would take to replace the property.

The assessor places value on the land, buildings and personal property.

Values are formulated from market sales or other appraisal methods and are added to the value of improvements.

The value changes based on a number of factors including the use of the property, new improvements, and the county's annual reevaluation of properties.

More than 30 Clark County casinos are seeking huge cuts in their property taxes, asking officials to slash the taxable value of their properties by more than $2 billion.

Government officials fear that if the county's Board of Equalization -- an independent panel appointed by the County Commission that will decide the issue later this month -- agrees with the casinos, their property tax-dependent budgets could be crippled.

The 33 casinos at issue, according to the county assessor, are worth more than $6 billion. Initial casino estimates, with nine casinos still figuring their taxable value, puts the value at under $2 billion.

In terms of tax revenue for county governments, a $2 billion cut in the casinos' taxable value would result in an estimated $20 million decrease in property tax revenue, the county assessor's office said.

Clark County and Las Vegas are already experiencing a revenue loss since Sept. 11, with sales tax and room taxes on the decline.

"Right now it's not horrible, but it's not good," said Steven Houchens, deputy city manager for the city of Las Vegas. "It's been tough on the city. Since the first part of last year, revenues have been lower than what we would have liked to have seen."

George Stevens, the county's finance director, said the county has lost between $5 million and $6 million in sales and room tax since September. Sales tax was down 10 percent in the month of September, he said.

Governments typically use property taxes, which make up 35 percent of the county's budget and 18 percent of the city's budget, to fund services such as police and fire departments.

Based on initial estimates, the city of Las Vegas could see a $3 million loss in property taxes from the 10 downtown casinos that are asking for at least $300 million reductions in taxable value. Clark County could see an approximately $10 million loss in property tax revenue if $1 billion in cuts are granted to casinos in its jurisdiction.

"It's significant, because $3 million is roughly equivalent to 60 employees," Houchens said. "And we're not looking at a lot of growth anyway, so any diminishment of revenues at this point could affect services."

The casinos are appealing their tax bills for the 2002-2003 fiscal year, which they would have to start paying in August.

Houchens said if cuts were foreseeable, the city would have to look at the services it provides to determine which ones are discretionary. The largest component of the general fund goes to pay Metro Police, but there would be no cuts in that area, he said.

Stevens said it would be difficult to determine what the impacts would be on the county's budget because the appeals do not show whether the casinos received a discounted rate last year. Reductions by the county board are only good for one year.

"Property taxes make up 30 percent of our budget so anything that reduces a stable revenue source would be grounds for concern," he said.

But if the county had to make cuts, the first thing that would be axed would be capital expenditures, which make up 10 percent of the city's general fund, he said. Capital expenditures include buildings, parks, replacement of equipment, and vehicles.

On Feb. 25, the county Board of Equalization will hear the appeals of 33 casinos in Las Vegas and Clark County, which are appealing Clark County's assessment of their taxable values, which includes land, improvements and personal property.

Industry watchers say the casinos' requests come because of the economic downturn over the last year, which was worsened by the terrorist attacks.

"Sept. 11 is a big factor in this," Carole Vilardo, who heads the Nevada Taxpayers Association said. "The income value of these properties is down. I'd be hard-pressed to find a county with a hotel-casino that is not appealing their values."

Vilardo said the casinos often make the argument that their properties aren't worth as much because their income levels have decreased.

"It's been a very difficult year for the industry," said Bill Bible, president of the Nevada Resort Association. "For gaming revenues, total casino revenues, and bottom lines. "

Business appeals of taxable value aren't uncommon, county assessors said, as companies seek to lower their tax bills. That's especially true for big property owners in a tough year economically. The Howard Hughes Corp. has also appealed the county's value of several parcels of land, but has not estimated a new value, said Jeffrey Payson, property appraisal manager for the county.

Several Reno hotel-casinos are seeking a combined $85 million in taxable value reductions. Washoe County's Board of Equalization will conduct hearings this month.

Occupancy levels for local hotels -- a major source of casinos' revenue -- are still lagging behind last year. In November, hotel occupancy rates in the valley were down 9.1 percent from the previous year, according to the latest figures from the Las Vegas Convention and Visitors Authority.

Richard Stewart, deputy assessor for Clark County, said there are a third more casinos appealing their taxable value compared to last year.

The $2 billion number, he added, could change because of the way tax agents fill out the forms. Some casinos did not report a value in their appeal because they are waiting for appraisals.

Other applicants do not specify what value the casino is disputing -- land values or real property -- and the tax agents do not always know the correct value of the property when submitting the appeal.

MGM Grand is asking for the largest cut, from $1.04 billion to $171 million.

But Payson, property appraisal manager for the county, said that number may reflect personal property. The form does not specify and MGM Grand officials did not return calls seeking comment.

Caesars Palace, which has a taxable value of $579 million, is appealing its rate but has not indicated a new value.

The bankrupt Aladdin, which has a taxable value of $618 million, filed for a reduction to $200 million.

Downtown Las Vegas properties are seeking $374 million in taxable value cuts. Several of the properties have not indicated a new value.

The Stratosphere, which has a taxable value of $259 million, is seeking a reduction to $80 million.

Vilardo said the casinos should not be criticized for asking for cuts, even if it takes money away from government coffers.

"I truly belive the casinos would rather not be appealing and having their business than having to appeal because their business has gone down," she said. "They would much rather pay the property tax because it would speak well to the income."

Before the appeals hearing, county assessors will meet with the property owners and go over income levels and new improvements. Typically, the county makes a recommendation to the board, either to approve the applicant's request, approve a portion of the request, or to maintain the county' assessment.

The applicants can appeal the board's ruling to the state Board of Equalization, made up of members who are appointed by the governor.

Bill Thompson, professor of public administration at the University of Nevada, Las Vegas, said the casinos have an argument, but the board shouldn't jump too quickly to grant the requests.

"We just have a little blip right now, but a year ago we were in a big growth phase," he said. "We could have an economic turnaround before a year. I would not think the board should make quick decisions, rather make them based on 4-5 year trends."com