Will the Oakland Raiders have to pay $100 million of what was to be a Clark County-provided $750 million subsidy, thus making it really a $650 million subsidy? Or will the Silver and Black have to pay any level of money toward the bond issue that wasn’t clearly explained while the deal was being formed in 2016? Did Clark County play “bait and switch” with the Raiders, promissing a $750 million subsidy, but really giving less because the Raiders had to pay the County part of that money?
According to the 2017 “Clark County Debt Management Policy”, (page 69) which says that the County will only ‘backstop’ $650 million in bonds, as the policy reads “The bonds will be additionally secured by other dedicated incremental increases to the region’s hotel room tax rate, the intended repayment source, that are 0.88% for the Las Vegas Strip area and 0.5% for surrounding areas. The public subsidy is limited under Nevada’s Senate Bill 1 to $750 million from a combination of tax collections and bond proceeds. These dedicated room taxes are already being collected and deposited to a special account for the project.”
“The Clark County Debt Management Policy”, available on the County’s website as of this writing, essentially left a $100 million gap between what the County would ask the taxpayers to protect if the stadium hotel tax revenue for the bonds fell short of required debt service and coverage ratio levels. In other words, that $100 million gap would have to be filled in, in part, by the waterfall, or the “dedicated room taxes are already being collected and deposited to a special account for the project” – but who pays the difference between that and the total of $100 million needed to reach $750 million? Given that the Raiders are the stadium developer, it would have to be Oakland.
Right now, that “dedicated room taxes are already being collected and deposited to a special account for the project” totals $44,499,967. Thus, the gap the Raiders have to fill is $55,500,033 if all of the $750 million is to be accounted for with respect to the bond issue. The trouble is, according to the Clark County debt policy document, the Raiders aren’t really getting the kind of public subsidy they would not have to pay in – instead, they don’t have a true “public subsidy”. And the Raiders are being asked to pay the first $100 million of stadium construction – something the organization’s doing right now. But that’s $100 million in addition to the $55,500,033 – so the Raiders real up front cost before bonds can be floated is $155,500,033.
If the Raiders refused to pay the $55,500,033, the team would have to wait for the “dedicated room taxes are already being collected and deposited to a special account for the project” to reach $55,500,033. And according to my projections based on the rate of collection to date (which, itself, has been less than expected), that could take another 13.7 months, pushing back the stadium financing time, and delaying the construction of the facility by a year in the process, since there would be no money to pay for building activity, as the bonds would not be floated by Clark County until that $55,500,033 mark was reached.
How we got here.
When the Oakland Raiders Mark Davis and Team President Marc Badain visited the Southern Nevada Tourism and Infrastructure Committee in 2016, one of the first stipulations of any continuation of talks toward building a new NFL-ready stadium in Las Vegas was that the State of Nevada and Clark County provide a subsidy of $750 million.
When it looked like the Southern Nevada Tourism and Infrastructure Committee (SNTIC) Consultants were going to give less in a public subsidy than the $750 million the Oakland Raiders and Las Vegas Sands and Majestic Realty (who were partnered) wanted, Mr. Badain said he was “disapponted” with the alternative proposal of a $550 million subsidy, and threatened to walk away from the SNTIC.
So the SNTIC Consultants went back to work and fashioned a way that, on paper, it looked like a $750 million subsidy was affordable to Clark County without raising the hotel tax rate to one percent or greater – the rate is 88 100ths of 1 percent.
The final version of the subsidy called for collection of the staidum hotel tax until a “waterfall mark” of $50 million was reached – this would allow Clark County to float a bond of only $700 milion, but contribute a total subsidy of $750 million. That was the idea presented – or so it seemed. Trouble is, it seems the Raiders were not made aware of the $650 million backstop issue.
As of now, the Las Vegas Stadium Authority has not determined how large the bond issue will be, and that’s due in large part to the less-than-expected performance of the stadium tax revenue