Council seeks hard figures on cost of city hall project

Most Las Vegas City Council members are still interested in building a new city hall.

On Wednesday, they told staff members to nail down construction and financing costs so they can vote, perhaps as soon as September, on whether the city can afford one.

Mayor Oscar Goodman asked for a review of the project because of continuing jitters in the financial markets. The city's initial projections included an interest rate lower than what is being quoted now, a potential difference of millions of dollars.

The council voted 5-1 to proceed, for now, saying that the risks of doing nothing are worse than seeing whether the project can be built.

"I don't think we have a choice," Goodman said. "Unless we want to throw up our hands and go back to the direction this city was going in 10 years ago."

Added Mayor Pro Tem Gary Reese: "We get chastised for even thinking about it -- and that's all we've done. Now we're going to get out there and really try to buy that new car. And if it turns out we can't afford it, I won't support it."

The city has spent $10.1 million on planning and preparation work, including relocating utility lines. Figures presented Wednesday estimate the new city hall's cost at $157 million, plus $28.9 million for a nearby parking garage.

The city has approval to borrow up to $267 million to finance the project. With the council's blessing, city staff members are supposed to get hard numbers for construction cost and figure out the financing.

What had been proposed was a "lease-purchase" deal in which investors are paid back via annual lease payments appropriated as part of the city's budget. Unlike general obligation bonds, they do not have a dedicated funding source and are considered a riskier investment, and they carry a higher interest rate.

Still, they give the city more flexibility in paying off the loan because it could make smaller annual payments in the beginning and larger payments later, when the economy is expected to recover, according to documents furnished by the city.

General obligation bonds would be cheaper but would require a fixed payment, and the documents said that the city "can't absorb (the cost) in (the) near-term budget."

Councilman Stavros Anthony voted against continuing with the project, saying the city should not incur millions of dollars in debt when it's uncertain when the economic cloud will clear, allowing city revenues to rebound.

"For me, it comes down to what everybody has mentioned: risk and timing," he said. "I think it's too risky right now, and it's getting riskier."

Councilwoman Lois Tarkanian voted to continue the project, although she expressed misgivings. She noted that the work the council approved Wednesday already had been budgeted.

"I'm very concerned about going forward," she said. "It may not be feasible."

Councilman Steve Ross abstained. He is the head of the Southern Nevada Building and Construction Trades Council, a coalition of unions, and Goodman said he had been discussing the possibility of having labor union pension funds invest in the project.

Ross said he did not know which unions Goodman had spoken with, and Goodman didn't say, but Ross said he decided to abstain "out of an abundance of caution."

The new city hall has been pitched as a catalyst for more downtown development because it would free up the existing city hall site on Las Vegas Boulevard for something flashier and, hopefully, more economically stimulative.

The developer of the new city hall, Forest City Enterprises, would get access to a tract of land in Symphony Park to build a hotel-casino once the new city hall is complete.

Contact reporter Alan Choate at achoate@reviewjournal.com or 702-229-6435.