Stadium Hotel Tax Rate Can’t Pay For Oakland Raiders Las Vegas Stadium Bonds As Proposed – LVSA Approval Now Is Criminal
The Las Vegas Stadium Authority will take up a giant agenda on Thursday, one that includes a document called “Stadium Authority Findings Required by Sec. 36.1 of Senate Bill 1 (clean version)” If it’s approved, the paper authorizes the release of up to $750 million in bonds – the debt service is to be paid for by the 88-100ths of 1 percent increase in the Clark County Hotel Tax Rate along the Las Vegas Strip, and .5 rate (or one half) for hotels beyond The Strip, yet in Clark County.
While the document is clearly for (or should be for) discussion purposes, and not approved on Thursday, it’s important to explain that it should not be approved on Thursday, or until after the problem of the rate being too small is cleared. Right now, the stadium tax revenue will not cover the bond debt service plus the debt coverage ratio. Here’s why.
As I’ve done before, let’s see what happens when a full serial bond issue of $750 million is proposed over a 30 year payback period. According to sources, the best rating Clark County can expect is AA, not AAA – the rate for that, as of today, is 3.15 percent. Using an available online municipal bond spreadsheet or calculator, what we get is a monthly debt service of $3,223,026.62 and with a debt coverage ratio of 1.5 to 1, that comes to $4,834,593.93. Comparing that to the average monthly stadium tax revenue to date of $4,045,451.55 – and we have a monthly average deficit of -$789,088.38, which over 30 years becomes a giant cost of that is not covered by the stadium tax and will be paid by the Clark County taxpayers via its general fund: -$284,071,818.44
So let’s say that the bond Clark County floats is $100 million less, or $650 million (which is relevant because Clark County told Moody’s that all the money it would protect in case the stadium tax was not sufficient, and the taxpayer-fueled general fund had to be used. Then we have a monthly debt service of $2,793,289.74 and with a debt coverage ratio of 1.5 to 1, that comes to $4,189,934.61. Well, given that the the average monthly stadium tax revenue to date is $4,045,451.55, we still have a problem that will cost Clark County taxpayers -$52,013,903.24.
This is a set of calculations anyone can do, even as the stadium consultants try to make this matter sound like a foray into rocket science. It’s not. Given this, signing the “Stadium Authority Findings Required by Sec. 36.1 of Senate Bill 1 (clean version)” document now would be criminal. The only way for this to happen is for an all too in a hurry and ignorant stadium authority board given doctored data (for example, a calculation chart showing a bond issue with an interest rate far below the 3.15 percent market yield) and political pressure in an election year, to approve the paper, and also cause Clark County to back the bonds in April. The action would be kicking the can down the road a bit, and until that time when the bond underwriters come looking to collect and have to get general fund money because the stadium hotel tax is not enough.
When that happens, the members who voted for this, and the consultants to caused the vote to happen should be in jail for fraud. Nothing is so important the taxpayers of Clark County have to be manipulated and back-stabbed with lies and fake news.