Las Vegas Convention Center to gain more land

The Las Vegas Convention Center could grow a smidgen later this year.

At its Tuesday meeting, the Las Vegas Convention and Visitors Authority’s board approved the agency’s request for up to $25 million in Clark County bonds for land purchases. The bonds would have a 20-year payback with interest rates averaging
3.2 percent, a carrying cost that authority financial consultant Kathy Ong called “very low” for its long horizon.

The authority would pay back the bonds through revenue from local hotel room taxes.

The convention is eyeing three parcels totaling almost 7 acres south and southeast of the 155-acre Las Vegas Convention Center. Officials say it’s a rare opportunity to add to the center’s landlocked position, because it’s unusual for several parcels to be available at once.

Vice President of Finance Rana Lacer said the authority could use the land for additional exhibit space, event parking or freight loading and unloading. She added that the property would be open to other convention centers that needed extra freight-marshaling space.

One municipal-bonds expert praised the deal.

Ken Daniels, a professor of finance at Virginia Commonwealth University, agreed with Ong that the interest rate was “very good for 20-year money.” He also called the arrangement “a good example of effective municipal finance.”

Plus, the recession has made it difficult for revenue authorities to issue money since 2008, so access to the municipal-bond market is tight. The issuance of bonds at such low rates “would indicate a certain level of financial credibility based on a track record,” Daniels said.

He also noted that the authority’s three previous bond issues from 2005 to 2010 showed the organization had credit ratings of AAA to AA+, with interest rates ranging from 4.18 percent to
5.46 percent.

“Under casual inspection, (the newest bond) seems like a reasonable bond issue by a well-run authority that has used a financial adviser in the past with access to a good bond counsel and underwriters,” he added.

Lacer declined to identify the parcels or their owners because negotiations are continuing. A search of the Clark County Assessor’s website shows about half a dozen parcels to the south and southeast of the convention center, bracketed by county-owned space. The parcels are either vacant or home to apartments and commercial space.

It’s not the first time the authority has purchased smaller parcels to boost parking and staging space. Prior deals show the arc of Las Vegas real estate prices before, during and after the market’s peak.

If the authority ends up paying
$25 million for all three parcels, that would be about $3.5 million an acre. A similar deal at the recession’s beginning, in January 2008, cost $50 million for 8.4 acres, or $5.9 million an acre, of additional parking and freight space at Sierra Vista Drive and Swenson Street. And back in early 2004, before the real estate boom, the authority spent $1.5 million on 1.6 acres of land adjacent to its South Hall.

Sale prices on the parcels now under negotiation may not end up totaling
$25 million, Lacer said. For starters, some of the owners may decide against selling. If the authority can buy just one parcel for a few million dollars, it could skip the bonds and pay cash. If authority officials strike a deal with all three for less than $25 million, they’ll take only what they need to close the purchases. And if there are no deals, then there’ll be no bond issue.

Asked if setting a $25 million ceiling for the parcels assures that sellers will negotiate for the full bond amount, Lacer said she didn’t think so, because the sellers don’t know one another’s identity, and don’t know the sale prices other parties are offering.

The bonds would be available in August, with an estimated land-purchase date in early September. Lacer said authority executives would bring final purchase terms to the board for approval before they closed on any deals.

Contact reporter Jennifer Robison at
jrobison@reviewjournal.com or 702-380-4512.

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