May 27, 2016 - 10:44 am
The Southern Nevada Tourism Infrastructure Committee on Thursday dug into the details of a complex financial proposal to build a $1.4 billion domed stadium that could lure the NFL’s Oakland Raiders to Las Vegas.
The board spent about three hours examining a public-private project that would use $750 million in hotel room tax revenue as the public’s stake in the project. The proposal was presented to the committee by a partnership comprising casino operator Las Vegas Sands Corp., Majestic Realty and the Raiders.
Committee members took the information under advisement for further study as they move toward issuing recommendations at meetings in June and July. Those recommendations, due at the end of July, are nonbinding and would be forwarded to Gov. Brian Sandoval for possible consideration by the Nevada Legislature.
The committee also viewed a five-minute video on the stadium that incorporates interviews with 12 project supporters. Statements on the video suggest bipartisan support for the project, with remarks from state Senate Majority Leader Michael Roberson, R-Henderson; state Senate Minority Leader Aaron Ford, D-Las Vegas; state Sen. Scott Hammond, R-Las Vegas; and state Sen. Kelvin Atkinson, D-Las Vegas; as well as Clark County Commission Chairman Steve Sisolak, a Democrat who sits on the infrastructure committee.
The lengthy review of the financial material generated new questions about the proposal, including a discussion about potential stadium sites.
Rob Goldstein, chief operating officer of Las Vegas Sands, said concerns about proximity to McCarran International Airport have pushed his partners to consider alternatives to a previously discussed 42-acre site owned by the University of Nevada, Las Vegas, along Tropicana Avenue east of Koval Lane. The site’s closeness to two McCarran runways could have caused cuts in flights as well as traffic problems at one of the airport’s main access points.
The three sites most prominent in the discussion: acreage near the shuttered Riviera hotel-casino; the Rock in Rio festival grounds at Las Vegas Boulevard and Sahara Avenue; and the Cashman Center site in downtown Las Vegas.
Jeremy Aguero, a principal for Applied Analysis who is providing data analysis for the committee, presented a “stress test” illustrating how several variables could affect the financing plan developed by the private investors.
Committee Chairman Steve Hill said the committee has yet to finalize any agreement and there are no assurances of return on investment for the private partners, but the committee reviewed models showing a 9 percent return that would make it feasible for the project to be undertaken.
The proposal includes investments of $750 million in public funds, $110 million in NFL personal seat license revenue, $200 million from an NFL loan, $100 million from the Raiders and $240 million from the Sands-Majestic partnership. The model also assumes 46 event dates in the stadium, which includes Raider and UNLV home football games, two football bowl games, including the Las Vegas Bowl, neutral-site college games, stadium-format concerts, rugby and soccer matches, NCAA basketball tournaments, boxing and mixed martial arts and championship motorsports events.
With $750 million in public money and $650 million in private funds, the investors could receive an 8.78 percent return on investment under the model. If those amounts were reversed, the return would be 5.66 percent — right on the edge of an adequate return for a business investment, said Hill, executive director of the Governor’s Office of Economic Development.
Aguero also tested a return based on different numbers of events. The 8.78 return on investment for 46 events would drop to 4.02 percent if just 36 events were booked, but increase to 12.71 percent if 56 events were scheduled — more than one per week.
Hill said the committee is looking at how the public could realize a greater return if the venue hosts more events than currently projected.
Aguero also reviewed potential consequences if attendance predictions fall below projections and what would happen if every stadium revenue source — from tickets and parking to facility rents and concessions — were raised by 1 percent. Aguero modeled what would happen if the cost of the facility ballooned by 25 percent, although the investors indicated they would absorb any cost overruns and the public funds request wouldn’t move from $750 million.
The investors on Thursday acknowledged that the cost of the facility, with infrastructure improvements around the building, could increase to $1.6 billion. The partners also intend to build a $100 million practice facility for the Raiders.
The vetting of the financing package is moving quickly; Hill announced two special committee meetings would be scheduled to make sure the panel’s recommendation to the governor would be completed on schedule.
The committee is scheduled to meet next on June 23, and Hill asked committee members to block out the next day if the group couldn’t complete its work at the regularly scheduled meeting.
He also is planning a special July 11 meeting, the likely date of a final vote on the financing package.
Even if those deadlines are met, more steps remain to move the project forward. Sandoval would have to call a special session of the Legislature to approve the financing. The private investors are counting on moving ahead quickly once they’ve established a site and have financing in order. Under the Sands-Majestic timeline, investors hope legislative approvals, which would include the creation of a stadium authority to develop and manage the facility, would be in place by August and that collection of $50 million a year in room taxes would begin Jan. 1.
The developers plan to make a site selection and have an agreement in place with UNLV by August. They expect NFL approval to relocate the Raiders by January, and completion of the stadium design by July 2017. Construction drawing and contract bidding would occur in September 2017. The closing of private financing and launching of public financing and a groundbreaking for the project would take place in February 2018, with the closing of public financing occurring a month later.
If all goes as planned, the stadium would open in August 2020, and the first Raider games would be played in the stadium in the 2020 season.
Earlier in the meeting, the committee worked to wrap up a financing plan for a $1.4 billion expansion of the Las Vegas Convention Center campus.
Committee members asked for additional information on whether the Las Vegas Convention and Visitors Authority should raise fees on rental space.
The LVCVA board last year approved a rate increase that takes effect July 1, with another increase coming July 1, 2018. But committee members said they wanted to review whether rates could be expanded even more because the Las Vegas Convention Center’s rates undercut those of private facilities operated by Sands and MGM Resorts International.
The rate of 29 cents per net square foot, in effect since Feb. 14, 2006, would be increased to 33 cents per square foot on July 1 and to 35 cents per square foot on July 1, 2018.
Rates are expected to be reviewed and discussed at a future meeting.
The Review-Journal is owned by the family of Las Vegas Sands Chairman and CEO Sheldon Adelson.
Contact Richard N. Velotta at email@example.com or 702-477-3893. Find him on Twitter: @RickVelotta
An earlier version of this story reported that the Southern Nevada Tourism Infrastructure Committee had settled on a financing package that assured private investors a 9 percent return on investment for its $1.4 billion stadium project. The committee has not taken a vote or given any indication of a position on the plan proposed by Las Vegas Sands, Majestic Realty and the Oakland Raiders. The committee reviewed several return-on-investment scenarios, but the private developers would assume all risks on the project and are assured nothing.