State regulators are scrutinizing an $80 million loan that the city of Las Vegas is seeking to make to itself as a way to keep downtown redevelopment projects going during the economic downturn.
The Nevada Department of Taxation has to approve the loan, which would come from a fund designated for wastewater treatment plants. Officials want to make sure of the city’s ability to pay itself back.
The size of the loan is “unusual,” said Dino Dicianno, the department’s executive director.
“It’s still under review,” said Dicianno. “We still have some concerns.”
Mayor Oscar Goodman said he wasn’t worried about the request being turned down.
“No. It’s the right thing to do,” he said. “I can’t predict what they’re going to do. That’d be presumptuous of me. But I can tell you it’s a great project.”
In November, the Las Vegas City Council approved moving forward with the loan, which would take $80 million from the Sanitation Enterprise Fund and put it in a capital projects fund.
The loan would be paid back over 10 years at 3 percent interest, according to city documents. The money to do so would come from bond sales financing downtown projects as well as land sales in the 61-acre, city-owned Union Park development.
It’s necessary to tap those funds — the Sanitation Enterprise Fund has $148 million in it now — to keep infrastructure work going on downtown projects, such as Union Park and the Mob Museum, according to a city statement.
“This loan carries the very small risk that the financial markets will not sufficiently recover within the next 10 years to enable the (Redevelopment Agency) to sell the bonds they have already been authorized to sell,” the statement says.
Much of the sanitation fund’s balance had been set aside for a treatment plant expansion if a North Las Vegas sanitation project did not go forward.
“Now that (North Las Vegas) is proceeding on their project, the city does not have an urgent need for plant expansion,” Las Vegas’ statement says. “Given the tight municipal credit markets, accessing these funds through a medium-term loan agreement makes sense until the credit markets ease up.”
Contact reporter Alan Choate at firstname.lastname@example.org or 702-229-6435.