LOS ANGELES — Congress just put a hitch in Nevada's efforts to subsidize a stadium for the Oakland Raiders in Las Vegas.
Construction was anticipated to begin this fall, with the Raiders were expected to move into their Nevada stadium by 2020.
Under plans unveiled Thursday by House Republican leaders, in proposed House Resolution 1, bonds for professional sports stadiums would no longer be tax-exempt, retroactive to Nov. 2.
Clark County supervisors have not issued $750 million in hotel-tax backed tax-exempt bonds anticipated to be the government contribution toward the $1.9 billion, 65,000-seat National Football League stadium.
Richard Jost, director of Las Vegas law firm Fennemore Craig, said he doesn’t know if the Raiders’ stadium deal falls apart without public money. He's not involved with the stadium.
“It certainly negatively impacts all the pro formas that have been done," he said.
“I would like to believe as the H.R. 1 works its way through there will be a grandfathering provision for the local states and governments, who have spent so much time on projects such as this. In Nevada, we actually had a special session of the legislature to move this forward.”
The tax plan could cause similar problems in Arlington, Texas, which is preparing to issue tax-exempts for a Texas Rangers baseball stadium.
It would be unfortunate on many levels if H.R. 1 passes in the current form, Jost said, without some attempt to grandfather in existing projects that haven’t sold bonds yet.
He doesn’t know if state legislators or Clark County supervisors, who would be issuing bonds for Raiders’ stadium, have contacted federal legislators about adding a grandfather clause, but Jost said, he would be surprised if they had not.
“I am hard pressed to believe that someone didn’t think there would be projects under way that particular localities had put effort into that would be impacted,” Jost said. “And if they want to cut off that category from the day of the resolution’s introduction, they need to give some thoughts to projects that are in the mill already.”
If tax reform moves forward, perhaps there will be early amendments, Jost said.
“I think the effect on the Las Vegas stadium is most immediate problem,” Jost said. “But I wouldn’t downplay the impact, H.R. 1 would have on tax exemption for the rest of the state… like the ability to provide affordable housing.”
The NFL owners voted in March to allow the Raiders to move to Vegas. The team is scheduled to play in Oakland for at least one more season, if not through 2019, until the Las Vegas venue is built.
The county would issue debt secured by a hotel tax increase with its general obligation limited tax pledge as a backstop.
The county has already began to collect the pledged hotel tax, which Moody's Investors Service said in March report provides Clark County with dedicated stadium funding at a rate of 0.88% for hotels on the Las Vegas Strip and 0.5% for other areas.
The Raiders and a $650 million loan from Bank of America would cover the balance. The team would be required to spend $100 million on the stadium before public funds become available under Nevada Senate Bill 1, which authorized the public spending.
The legislation also requires that a 30-year lease and developer agreement be structured and the stadium site finalized by the Clark County Stadium Authority before the county issues debt. Cost overruns also would be covered by the team.