Chris Milam has big dreams.
His previous attempts to build a state-of-the-art sports complex in Southern Nevada got headlines and hearings, but nothing more. The Clark County Commission rejected his idea for a mostly tax-funded north Strip arena, and the Legislature passed on his plan for a tax-supported south Strip megaplex with an arena and baseball and soccer stadiums.
Now Mr. Milam has taken his drawing board to Henderson. Last week, Mr. Milam met another milestone for his latest stadium-arena plan when he deposited $1 million into an escrow account for the land purchase. The Bureau of Land Management owns the 480-acre site near the M Resort. The agency is accepting bids of at least $10.6 million for the land, and when it unseals those bids on June 4, Mr. Milam’s Silver State Land LLC will be able to match the best offer.
Assuming Mr. Milam can gain title to the land this summer, his deal appears to get significantly riskier. According to a memorandum of understanding filed with the city, he will borrow $650 million from the Chinese firm CSST Smart Cities International at a 20 percent interest rate. Mr. Milam would be obligated to secure long-term refinancing before the loan matures just 3½ years later. Those terms make the subprime mortgages that started the housing meltdown look as safe as a certificate of deposit.
Mr. Milam is counting on the creation of a taxing district, comprising the entire site and allowing him to repay debt with revenues generated there, as well as the sale of revenue bonds by the city.
Mr. Milam is anxious to start construction this year, and understandably so. He may have competition.
In November, voters will decide a ballot question that seeks to raise the sales tax rate on the resort corridor to fund a Strip arena on land donated by Caesars Entertainment. And come winter, one of the top items of business in the 2013 Legislature will be a plan to build a multipurpose stadium on the UNLV campus.
Henderson officials have been appropriately guarded in dealing with Mr. Milam. Mayor Andy Hafen has made it clear that he won’t support increasing taxes to fund Mr. Milam’s project, and that Henderson taxpayers will not be on the hook for any bills if the deal collapses. Good.
But Henderson officials should apply additional scrutiny to a deal with major short-term borrowing costs. And they can’t ignore Mr. Milam’s financial and legal problems, which piled up in previous unsuccessful plans. Even if taxpayers are protected from liability, it would be a blow to have such a massive construction project halted, leaving another steel skeleton in view of Interstate 15.
By all means, let private investors take risks to grow the economy. But Mr. Milam wants public financing. The Henderson City Council and development officials should proceed cautiously.