SAN FRANCISCO - The Nevada Supreme Court is scheduled to hear oral arguments this afternoon on a case that could severely limit redevelopment agencies if the plaintiffs are successful.
The issue the court will hear about today in Las Vegas Taxpayer Accountability Committee v. City Council of Las Vegas is narrow - election law, specifically - but the plaintiffs' ultimate goals are to limit the powers of the Las Vegas Redevelopment Agency, and to limit the city's ability to issue lease revenue bonds.
The conflict grows out of a political tussle between the Culinary Workers Union Local 226, which represents rank-and-file casino workers, and Las Vegas Mayor Oscar Goodman.
In an effort to derail Goodman's plans for downtown redevelopment, including a new city hall, the union gathered petitions to place two measures on the June election ballot. One referendum would repeal the city's redevelopment plan, and the other, an initiative, would require voter approval for any new redevelopment plans or projects, or agreements, as well as require voter approval for city "lease-purchase" agreements.
The lease-purchase restriction is targeted squarely at Goodman's plans for a new city hall, as he plans to use city lease-revenue bonds to build it.
The City Council refused to place the two measures on the ballot, arguing they were patently unconstitutional.
The state's high court, which agreed to hear the case because of the looming election deadline, will decide if the measures should go before voters.
If they do, and one or both of the measures pass, more lawsuits will follow.
Las Vegas and its redevelopment agency argue that the court should not grant the union's request for a court order (or mandamus) to put the measures on the ballot.
"Where a municipality has rejected a ballot measure, a court can only issue mandamus where the measure would, if enacted, be constitutional and legally valid," said Las Vegas' brief, signed by city attorney Brad Jerbic and its outside attorney for the case, Daniel Polsenberg.
Among their arguments: that Nevada redevelopment law specifies the permitted ways that a city can organize a redevelopment agency, none of which include voter-approval requirements; that the ballot measures are intruding into decisions that are administrative in nature; and that the initiative requiring voter approval for both redevelopment plan changes and city lease-revenue bonds violates a "single-subject" rule.
The brief also argues that the ballot measures violate contract clauses in both the state and federal constitutions, because of their impact on the agency's outstanding bonds.
The Redevelopment Agency's brief said it had more than $70 million in outstanding securities. It priced another $85 million redevelopment issue last month.
"Tax increment funds received from the property taxes from the redevelopment area provide the exclusive funding for these securities," the brief said. "The agency has no authority to impose taxes. Consequently, eliminating the redevelopment area would eliminate the source of payment for the outstanding securities."
That would leave the bondholders hanging, the city's lawyers argued.
That doomsday argument is hogwash, the initiative's backers wrote in their reply brief.
"The referendum would operate in a prospective manner only and would not impinge on the redevelopment agency's ability (or obligation) to service existing indebtedness," they wrote.
The Redevelopment Agency priced the $85 million issue in March. The bonds, rated A by Standard & Poor's and underwritten by Stone & Youngberg LLC, were priced to yield between 6.12% for the 2015 maturity to 8% for 2030s.