Stadium, convention center investments make sense

This week, the Legislature will consider approving an investment of hotel room tax dollars into two world-class tourism infrastructure projects that will strengthen and diversify the array of our core economic assets — the expansion and renovation of the Las Vegas Convention Center and the construction of an NFL-ready stadium that will also give the UNLV Rebels a much-needed new facility.

Before the Legislature is a tremendous opportunity to boldly step up and invest in infrastructure that Las Vegas needs to make its position as a top tourism and trade show destination much more secure. The global tourism market is hyper-competitive and our competitors have us directly in their sights. We cannot risk losing stature in an ever-expanding trade show and events economy by not taking advantage of opportunities that make sense.

Las Vegas must stay at the top.

The recommendations in front of the Legislature result from 15 months of hard work undertaken by the Southern Nevada Tourism Infrastructure Committee, a governor-appointed group of private- and public-sector leaders. I had the honor of serving on this committee. The committee was presented with thousands of pages of information, data and analysis, and heard hours of testimony. After 16 meetings, the committee voted unanimously to forward for legislative review and approval these two worthy proposals.

The proposals were not without controversy. The projects are expensive and public funding is required to support the $1.4 billion convention center expansion and renovation (a 0.5 percentage point room tax increase to fund a $420 million bond issuance) and the $1.9 billion stadium project (a 0.88 percentage point room tax increase for Strip properties and 0.5 percentage point hike for those off-Strip, to fund $750 million of public investment). Good, tough questions were raised both within the committee structure and outside of it. And, that’s why it took time — to study the needs and opportunities, to review the impacts and projected returns on these investments and, importantly, to minimize any risks to taxpayers.

Having done that analysis, we can confidently say there is a strong business case for both of these projects. There are strong economic and fiscal impacts to be returned to our community — and taxpayers in Southern Nevada will be adequately protected. And even with the proposed increase in room tax, Las Vegas still will be at a reasonable level when compared to other tourism-dependent cities.

First, each of these projects will fill significant gaps when it comes to keeping our brand strong and continuing to attract visitors. No doubt we are a top destination today, but we are falling behind when it comes to tourism infrastructure. Among peer tourism cities, Las Vegas is the only one without a 60,000-plus seat stadium. This means that cities such as Dallas and Orlando have a competitive edge.

Additionally, other cities — such as Chicago, Orlando, San Francisco, Washington, D.C., and Houston — have invested in their convention centers to make them more attractive and accommodating. Our convention customers are telling us that they want to grow and they need more space with better facilities; they may stay for a while but not for long if we do not improve. Plus, we want more opportunities to attract new shows from other cities.

The expected returns to the community look to be significant. Each of these projects will provide annual incremental gains to jobs, visitor spending and public revenue for our state’s general fund, for local governments and for education spending.

It is estimated that the stadium will attract 450,000 annual visitors, create nearly 6,000 permanent jobs (plus more than 18,000 construction jobs) and return at least $35 million in annual incremental tax revenue that can help fund education, infrastructure and other services.

The convention center expansion is expected to attract, incrementally, in excess of 600,000 annual visitors, create nearly 8,000 permanent jobs (plus almost 14,000 construction jobs) and contribute more than $49 million in new, annual tax revenue to support public services. The increase in jobs and the related economic boost will be felt by the entire region.

In terms of the stadium, there are also protections for residents and businesses built into the proposal. By using the room tax as the sole funding mechanism, the burden on local taxpayers is mitigated. And because private developers will be taking on the risk of construction cost overruns and operating losses, there is no threat that the level of public contribution will rise.

In addition, the assumptions supporting repayment of the bonds through the room tax are based on a thorough, realistic and relatively conservative set of data and analysis. There is a safe structure built into the proposal to protect taxpayers, including a healthy cushion in a debt service reserve fund to account for any volatility in the level of taxes. The project will be publicly owned, and there will be appropriate governance and oversight through a stadium authority board to provide the necessary stewardship to make sure the public funds are spent responsibly and prudently.

Las Vegas has grown up around significant milestones — the Hoover Dam, the Flamingo, the Mirage, UNLV and our airport, to name a few. These and other large infrastructure projects have fueled the growth and development of Las Vegas over the entire time of its existence. And now, we have the next-generation opportunity to propel our city forward. Together, these projects will provide the chance for a return on investment unmatched by any infrastructure project the community has seen perhaps since the construction of the Hoover Dam.

The business case is strong to support each one of these projects. Both of them should be approved.

Kristin McMillan is president and CEO of the Las Vegas Metro Chamber of Commerce.