Last week, the Oakland Athletics (A’s) and several Nevada lawmakers—including Governor Joe Lombardo— announced that a tentative agreement had been reached for a public financing deal to go towards the construction of a new, $1.5 billion ballpark on the land where the Tropicana now sits, but details of the funding plan itself were slim.
Now, an official draft of the proposal has been reported by the Nevada Independent, shedding a little more light on just how many public dollars would be spent on the ballpark, should the bill pass all its requisite hurdles before the current legislative session adjourns June 5.
According to the Independent, the package is capped at a total of $380 million, which is just about in line with Governor Lombardo’s previous promise that the end sum would not exceed one-fourth of the total stadium costs.
The few details of the proposal that had already been circulated, including the $180 million in transferable tax credits from the state and Clark County’s commitment of $120 million in bonds, were consistent in the draft, but the language is still subject to change before it is formally considered or approved by the Legislature.
One detail included in the draft expands the responsibilities and oversight of the nine-member Las Vegas Stadium Authority (LVSA), which oversees and manages the Raiders’ Allegiant Stadium, to include the A’s new stadium as well.
The draft also includes a stipulation that Clark County must create a “resort corridor homelessness prevention and assistance fund,” the purpose of which is rather spelled out in the name. The fund would be managed by the A’s alongside the Nevada Resort Association, and no contributions would come from the LVSA until the stadium is constructed with no debt obligations remaining.
In all, the $380 million package is miles removed from the $500 million the team had originally sought when it announced on April 20 it was partnering with Red Rock Resorts to build the stadium on the site of the former Wild Wild West casino. Soon after the A’s backed out of the deal on May 15 in favor of the Bally’s-Tropicana agreement, it was revealed that the public asking price had been significantly reduced, but that still does not guarantee passage of the proposal.
This is especially true given the ongoing tensions between Lombardo, a Republican, and his Democratic counterparts in the Legislature over the state budget as a whole, which includes the stadium financing.
Two prominent state Democrats—Senate Majority Leader Nicole Cannizzaro and Assembly Speaker Steve Yeager—said at a recent press conference that they will refuse to advance any legislation until the budget is signed by Lombardo.
Conversely, Lombardo has now threatened twice to veto the budget if certain measures introduced by his office are not advanced. However, the governor has not specified whether he would veto the budget as a whole or just specific bills included in it—there are five separate pieces.
In any case, the draft bill caps spending at $380 million or the amount contributed to construction costs from taxes, fees and other mechanisms, whichever is lesser.
As mentioned previously, the LVSA would be authorized through the bill to allocate as much as $180 million in tax credits from the state, but those would be capped at $36 million per year, and the credits would expire after a period of five years from the date of issue. Additionally, if the LVSA eclipses $90 million in issued credits, it would be liable to repay any excess funds back to the state via tax revenues from the stadium district.
These tax credits can be redeemed against an organization’s owed gaming license tax, insurance premium tax or payroll tax, and they are often sold by companies to help facilitate project development.
The amount of bonds that would be issued by the county is still undetermined, due to fluctuations in interest rates as well as the amount of tax credits that are contributed. Sources indicated to the Independent that they expect the county to kick in at least $120 million, in addition to a $25 million credit for infrastructure costs it is also responsible for.
Per the language of the draft, the county would be eligible to create a “mega-TIF (tax-increment financing)” district around the stadium site, through which all tax revenues, including payroll and sales taxes, would go towards paying off the public liability for the stadium. If the district is established specifically for the stadium repayment, those taxes would be redirected to the construction fund rather than the county programs and services they would typically go toward.
The state treasurer would also have the authority to provide a credit enhancement on the bonds in efforts to improve the county’s credit profile and rating, to help with repaying debt. This would also give the State Infrastructure Bank, established in 2021, more flexibility in providing assistance for bond repayment.
Two other key provisions included in the draft pertain to property taxes and relocation—if approved, the stadium site would receive a 30-year property tax exemption, which one source estimated to be worth approximately $55 million, according to the Independent.
In return, the LVSA would retain ownership of the stadium, and the A’s would have to sign a 30-year lease agreement to stay at the site. The team would face steep penalties if it were to leave or back out of the agreement before that period is up. Those penalties would include any outstanding bond repayments and perhaps more.
As another source of fundraising, the LVSA could choose to sell personal seat licenses (PSLs) for the stadium, which are essentially placeholders that fans pay for in order to get first dibs at buying tickets for that particular seat—the Raiders sell the licenses for thousands of dollars.
Harkening back to the resort corridor homelessness fund, the LVSA would also be required to begin contributing at least $5 million to the fund each year once the majority of the construction and development for the project is completed.
Despite the optimism from A’s brass, the new deal really is a big gamble for the team, given that it would be responsible for any cost overruns related to construction that push the total costs over the projected $1.5 billion, unless the overrun was directly attributable to a mandate from the LVSA. The MSG Sphere venue, currently under construction down the road, has already gone over $200 million over its projected budget of $1.9 billion since construction began in 2018.
Notably, neither the team nor the Tropicana are named specifically in the bill, it just refers to the project as “the financing of a Major League Baseball stadium project.”
According to sources quoted by the Independent, this was done purposely, in order to provide for maximum flexibility between partners; after all, the team has already pulled out of one deal and is relying heavily on public assistance for another.
Regardless, one thing that is clear is that the state will not receive tax revenue from home ticket sales, as any professional sports teams playing home games within the state are not included in the Live Entertainment Tax provision.
As far as next steps, the bill will be considered by either the Senate Finance Committee, the Senate Revenue Committee or by a joint Assembly hearing. This will be the first opportunity for officials, lobbyists and local residents to submit public comments on the proposal.
Typically, the draft would require a work session and committee vote on a separate day, but due to time constraints in the current session, that process could be shortened if needed. Then, the bill would hit the Senate floor, and if passed, it would await the same fate in the Assembly before proceeding to Lombardo, who could sign it into law.
According to the Legislative Counsel Bureau, the bill would just require a simple majority vote, and not the high constitutional bar of two-thirds from each house, which is typically required for legislation that increases taxes.
Aside from the Legislature, the A’s also need the deal to be OK’d by Major League Baseball by January 1, and the Associated Press recently reported that the owners from around the league could vote on the matter during their upcoming annual meeting on June 13-15.
Additionally, due to the stadium’s proximity to Harry Reid International Airport, the project will have to receive approval from the Federal Aviation Administration before construction can begin.
