Strip arena petition issue heard by high court

CARSON CITY -- The state's high court should kill a petition to raise sales taxes to build a sports arena next to the Strip, opponents argued Tuesday.

A lawyer representing casinos opposed to a Caesars Entertainment's petition told the Nevada Supreme Court that citizens who signed the petition were not told of all of its ramifications.

"Nothing was said in the (petition's) description of effect about eliminating competing arenas," said Scott Scherer, representing Taxpayers for the Protection of Nevada Jobs, a group led by MGM Resorts International.

He said that if the Arena Initiative Committee petition is approved by voters in November, then the Clark County Commission could not pick what it might consider a better location for an arena in unincorporated areas of the county if it wanted to use this sales tax money.

Caesars Entertainment, through its Harrah's subsidiary, collected enough signatures in 2010 to put on this year's ballot the proposal to impose a 0.9 percentage point increase in the sales tax rate within a three-mile radius of a proposed arena. Harrah's proposed to donate a 10-acre site, valued at $182 million, behind the Imperial Palace.

The plan was to use the tax money to build a $500 million arena and attract a National Basketball Association or National Hockey League team to Las Vegas.

Although the court is not expected to issue a decision for several months, Justice James Hardesty questioned whether the proposed tax increase is an unconstitutional tax.

Lawyer Jason Woodbury, representing the Arena Initiative Committee, said he would want to prepare supplemental legal briefs if Hardesty's points were of concern to the court. But he noted that the Legislature has permitted unique taxes based on populations of counties, such as those that affect only Clark County. Woodbury is no relation to former County Commissioner Bruce Woodbury, who led the arena petition effort.

But Hardesty said those population-based taxes themselves might be unconstitutional.

There is no certainty that voters even will approve the arena tax. Legislators last year approved a competing ballot question designed to induce voters to kill the proposed tax increase. It would block a higher sales tax from ever being levied in one part of a county. It will appear on the November ballot unless a lawsuit by the Arena Initiative Commission to block it is approved after a March 20 Carson City District Court hearing.

Jason Woodbury's primary argument was the court should allow the public to decide whether to support the tax increase because proponents collected enough signatures to place it on the ballot. He noted that in past decisions the court's "public policy" has been to let voters decide ballot questions.

He said state law limits to 200 words what can be stated in a petition's "description of effect," the language that voters generally read before signing a petition. Not everything can be mentioned in that limit, he added.

Woodbury acknowledged that the petition, if approved, would prevent other proposed arenas from being built with the sales tax revenue in unincorporated areas of the valley, but noted an arena could be built anywhere in the 1,700-acre gaming zone on the Strip and surrounding areas.

Under the petition language, the arena must be built on donated land in unincorporated Clark County within two miles of 95,000 hotel rooms.

But Scherer said those 1,700 acres are the "most expensive real estate in Nevada." He called it "unrealistic" that any other company would be willing to donate such valuable land needed for an arena.

Scherer said if the justices let voters decide in November, then the Arena Initiative Committee would spend millions of dollars on a campaign to persuade voters to approve the tax increase, and his casino clients would be compelled to fund a campaign against them.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.