Las Vegas Sun

March 29, 2024

Arena’ bill overstepped its bounds

CARSON CITY - If Las Vegas ever hopes to host a professional basketball team, it's going to need an arena.

Arenas, however, cost hundreds of millions of dollars, can be community-dividing affairs if taxpayers are asked to chip in, and they often don't live up to the economic expectations that came with their sales pitches.

With that as the backdrop, a bill that remains alive in the state Legislature has a chance to outdo them all in terms of controversy - at least among lobbyists and legislators who have caught wind of Assembly Bill 598. Its labored path through the Legislature reveals a little about how lawmakers and lobbyists work, especially in the hectic final days of this legislative session.

In its preamble, AB598 is described as a bill authorizing "the creation of theme park districts."

It goes on to describe theme park districts not as some kind of Disneyland, but as any combination of facilities "for recreation, professional sports, gaming, accommodations, retail sales, amusement or culture."

Like a casino? Or a mall?

The bill also specified that such a district could be "contiguous or noncontiguous," so long as it stayed within the bounds of the municipalities that governed it. So, for instance, you could create a Clark County district that had one section in Las Vegas, then another part in, say, North Las Vegas, maybe in Rachel, 90 miles to the northwest. They'd be in separate parts of the county, but they'd be part of the same district.

At the same time, these districts would operate without paying any taxes. As the bill was written, "all revenues of the district and all activities of the district ... are exempt from all state and local taxation."

So imagine a place with hundreds of slot machines, taking in millions of dollars, but never having to pay any taxes on it.

In addition to not paying taxes, the bill would allow the governing body of the district to impose user fees on any business within the district. Those fees would then be used to pay for any loans they took out for construction or other capital costs. (One lobbyist called this the "sovereign nation" section of the bill, because of the great power the governing body would have over fees imposed on businesses.)

In short, AB598 was written quite broadly. And the potential lost stream of tax revenue would be so huge, one lobbyist summed it up as "the green tax-rebate bill of 2007."

The lobbyist was referring to the green-building tax-break law that is expected to cost state and local governments hundreds of millions of dollars in lost tax revenue.

As of Sunday, the theme park districts bill was teetering on the edge of death. But it is still teetering.

As it started out, AB598 was all about trying to figure out how to fund a basketball arena using revenues from surrounding businesses to pay off construction costs. It's an idea Las Vegas will have to face soon enough, if Mayor Oscar Goodman's dream of getting a professional sports team ever becomes a reality.

One of its backers, in fact, is someone who had a very successful basketball career at UNLV. The bill was proposed by former UNLV basketball standout Jackie Robinson, said Assemblyman Morse Arberry, D-Las Vegas, a friend of Robinson and chairman of the powerful Ways and Means Committee. Robinson played basketball for UNLV from 1973 to 1978 and has since been a partner in the operation of dozens of Pizza Huts in San Diego and some concessions at McCarran International Airport.

Even with that business background, Robinson's idea began to raise eyebrows as it stayed alive in the Legislature. On May 11 Carole Vilardo, president of the Nevada Taxpayers Association, wrote to Arberry and members of the Ways and Means Committee, stating her "unequivocal opposition to the bill as originally written." Non-partisan, Vilardo is one of the most respected fiscal gurus in Carson City, especially when it comes to questions of the taxation and the monetary effect of a "money" bill.

Shortly thereafter lobbyists went to work, both in opposition to the bill and in trying to rewrite and save it.

The gaming industry, which had moved swiftly to capitalize on the green-building legislation, opposed the proposed exemptions for entertainment districts and the tax advantages they would grant to possible competitors locating inside them. One lobbyist said casino honchos in Las Vegas ordered their armies of lobbyists to do nothing to help the bill become law.

"If it has to do with public funding of an arena, (they) were told to stay away from it," the lobbyist said.

Behind the scenes, others started to narrow the bill's scope. According to one lobbyist who worked on changes, the tax-exempt status of the district was eliminated, the bonding authority of the district was eliminated, the noncontiguous part of the bill was eliminated. Even any mention of "arena" was taken out.

What was left, he suggested, was a bill "that everyone could live with."

In its narrower form, the bill now amounts to this: It would give a governmental body the ability to create a "tax incremental financing" district, known as a TIF, for entertainment purposes.

A TIF district is typically created in a redevelopment or blighted area to help it recover. Enterprises within a TIF pay lower taxes for a specified period of time, expecting that after those enterprises get on sound footing, they can pay the full amount. The legislation would extend TIF designation to include entertainment districts, which in this case would mean an arena - although the bill doesn't specifically mention an arena.

One lobbyist said Sunday that the the bill is not dead. But the taint of being associated with the original, overly broad bill - that might be difficult to overcome with just 24 hours left in the current session.

"Nothing is really dead until midnight on Monday," he added.

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