Garages fall short on revenue

Ed Koch and Sito Negron

Thursday, Jan. 29, 2004 | 11:09 a.m.

The Las Vegas-financed parking garage at Neonopolis is not making enough money to repay the bonds that were issued to build it, and the city's parking facility across from City Hall may be in similar financial straits.

Mark Vincent, the city's finance director, said that between Feb. 1, 2003, and through the end of this month, the 600-space parking garage at Neonopolis is expected to generate $340,000 at $1.50 an hour per car. It needed to make $738,000 to pay the debt service on the general obligation revenue bonds, he said. The garage never has been filled to capacity.

And while Vincent did not have immediate access to figures on the garage across the street from City Hall, he did say he suspects "it also is not meeting projections to pay for debt services (on the bonds).

That means that in addition to shoving coins into meters to help pay for building the garages, residents also are seeing their tax dollars being drained from the general fund budget to meet those obligations.

Also, because of the way the bonds were structured, the city cannot shift gears and allow free parking in those garages as a means to generate more business, which would boost tax revenues that in the long run would offset the costs of maintaining the garages and in effect raise additional revenues to pay for the facilities.

"That option does not exist," Vincent said, noting that parking garages traditionally do not meet break-even projections until their 15th to 20th year of operation.

"To do that (make the parking free) the bonds would have to be rewritten to swap out some other revenue source that would be acceptable to the bond holders."

The parking garage shortfall is yet another setback for the $99 million Neonopolis entertainment venue that opened in May 2002 amid much speculation it would provide a needed transfusion into an anemic downtown economy but has struggled to gain a significant audience.

The city has a $32 million investment in the project, including $15 million for the parking garage.

Las Vegas Mayor Oscar Goodman today said he was not surprised to hear that the Neonopolis parking garage was not making enough to cover the bond.

"Am I disappointed? Yes, because there are bonds out there that have to be retired," he said.

"I have to try to make succeed through the private sector what was conceived and developed under a prior administration, so I'm doing everything I can to make Neonopolis a success ... I'm looking for ways to step in."

The 227,000-square-foot mall is anchored by a 14-screen movie theater and features two restaurants and several smaller food and drink outlets, some retail shops, and the family entertainment center Jillians, which has bowling and games.

The parking dilemma comes on the heels of an incident involving Donald Troxel, an Ohio club owner who planned to open a cabaret-themed nightclub in Neonopolis modeled after his club in Ohio that caters to a gay audience.

Troxel said after spending more than $200,000 on contracts and a liquor license application, Neonopolis managers told him they were not going to sign his lease. He said they told him that at least part of their concern was his planned club's gay audience.

Goodman says he asked the city attorney to research options in dealing with Neonopolis and said that if Troxel was discriminated against, that's "unacceptable."

The Nevada American Civil Liberties Union is investigating to see if action can be taken against Neonopolis, which was built in part with public funds.

A Neonopolis spokesperson declined to comment on the Troxel allegations, saying the company does not speak to individual lease negotiations.

Theresa Miller, spokeswoman for Prudential Real Estate Investors, owners of Neonopolis, said in terms of the performance of the mall, "we're doing everything we can to figure out how to improve the performance."

"We are currently awaiting the outcome of a consultant's review of Neonopolis so we can create a revised strategy to retenant and reposition the center."

The consultant "will come back with a recommendation on what type of tenant mix we should have" in a couple months, she said, noting she didn't know if that might include office space.

Goodman criticized Neonopolis in June when it leased some space for office use.

In July, the City Council approved allowing some slot machines in hopes it might encourage people to stay longer at Neonopolis.