Wednesday, Jan. 15, 2014 | 6:40 p.m.
It won’t be easy to find a downtown business operator who favors an 11th-hour arena proposal in large part because of a tax the city wants to levy on downtown businesses to help pay for it.
A proposal to extend an exclusive negotiating agreement with Cordish Cos., whose current agreement with the city expires Jan. 27 after three years, will be up for consideration by the City Council next Wednesday.
Rough details in the proposed extension reveal a plan to finance an arena in Symphony Park that would cost roughly $400 million.
Those details: Cordish would contribute $151 million to the project, about 37 percent of the total; the city would contribute $240 million, with nearly $190 million coming from city-backed bonds; the other $52 million would come from a special tax on downtown businesses.
City-backed bonding means if the project fails to make projected earnings, the city has to find other ways to make bond payments.
City Manager Betsy Fretwell emphasized that a favorable vote next week would only mean a four-month extension that would give the city and Cordish time to work out details.
“So if the City Council wants to give an extension, this is their time to do it,” she said. “I don't want people to walk away thinking we’re done. But I will say some of the major tenets — to minimize risk to the city and to acquire a significant private contribution not seen by other public arenas around the country — are here.”
Fretwell added that an arena is part of a decade-long, three-pronged development plan for Symphony Park. One prong was to get a performing arts center, which is done. Another was to bring in a medical component, which is partly done. The third was to get an arena capable of hosting a professional sports team.
If the arena were built, the city would own it. Under the tentative agreement terms, it would also be first in line to use arena revenues to pay off its debt.
Though the proposal is merely to extend the exclusive negotiating agreement, business owners downtown were livid when they learned about it Wednesday.
“It’s a bad idea, a bad deal for the city and it just doesn’t make sense to me,” said one business owner. “There’s already too much competition in the marketplace. It’s dangerous for the city to take on such economic risk.”
“Is that a Hail Mary, an attempt at survival for a bad project that’s gone nowhere in three years?” asked another owner.
He then ticked off other arena proposals already being developed: UNLV is studying an idea to build a 55,000-seat arena on campus; MGM Resorts International and AEG expect to start building a $350 million arena this year.
Terry Murphy, president of the Downtown Las Vegas Alliance, a consortium of business owners, said questions have also arisen about how the special $52 million business tax would affect, or deflect, an idea being worked out to create downtown business improvement districts. These are districts that tax businesses in exchange for keeping streets clean, safe and providing other amenities.
“I’m hearing a lot more questions than answers,” Murphy said, as her phone lit up with calls Wednesday afternoon, many of them from business operators. “They’re quite fearful.”
An idea to tax downtown businesses to support redevelopment or a new arena is nothing new.
During the 2013 legislative session, for example, the city tried to gain passage of a proposal to extend a 20-year-old room tax on downtown hotels by an additional 25 years. The original tax was to pay off bonds used to build the Fremont Street Experience. The new proposal went nowhere.
And during the 2011 legislative session, a bill supported by Cordish would have placed a $1,000 tax on each parking space within 3,000 feet of a proposed arena, as a way to help defray arena costs. That bill, too, failed in Carson City.
City Councilman Bob Beers, during Wednesday’s taping of “The Joe Downtown Show,” KUNV, 91.5 FM, said the vote next week will only be up or down for a contract extension, giving Cordish and the city time to work out details.
He added that the city has a “strong interest” in seeing the Symphony Park land put to use because it has invested $100 million in park infrastructure. Symphony Park lots haven’t sold, however, so the city last year had borrow money at a higher rate to pay off that $100 million.
“So the city is sitting on a huge investment and has a strong interest in seeing that land get sold,” he added.
His personal feelings about the plan?
“My thoughts are that (Cordish) had an opportunity for three years and nothing’s happening, and the key components I’m looking for are a functional revenue forecast and some sign that they actually have this money,” he said.
He also said he is “concerned that their revenue model is not realistic,” adding that the city “has one study that says we’ll have enough revenue but we have to take all of the Thomas & Mack’s business at current rates to get it.”
One debate Beers sees happening next week will be over whether the city should simply give up on Cordish and give someone else a chance.
“Is this the time when city should look at other alternatives for that land?” he asked. “Those are the difficult questions.”
Joe Schoenmann doesn’t just cover downtown, he lives and works there. Schoenmann is Greenspun Media Group’s embedded downtown journalist, working from an office in the Emergency Arts building.