COVID-19 Causing Las Vegas Stadium Hotel Tax Revenue To Take Massive Fall, Clark County Taxpayers Could Take Hit
COVID-19 Causing Las Vegas Stadium Hotel Tax Revenue To Take Massive Fall, Clark County Taxpayers Could Take Hit
As Las Vegas Stadium AKA Allegiant Stadium construction continues, seemingly having overcame its issues with materials delivery and errors in assembly, another problem is rapidly forming: the revenue from the stadium hotel tax is taking a giant hit due to the COVID-19 Coronavirus pandemic.
That the decline is happening is without question; the real question is, will the cut be so deep that bond debt reserves are exhausted and Clark County Taxpayers wind up footing the bill for the $750 million Las Vegas Stadium Bond Issue?
According to this vlogger’s research, as of this writing, the known cancelled major convention events sets for Clark County and the Las Vegas Strip total 55,900 visitors, a loss of $22,721,500, and a loss in hotel stadium tax revenue of $199,949.20. The events cancelled or postponed are Channel Partners Conference & Expo, Security industry conference ISC West, NXT Global Summit, Atmosphere ’20, Adobe Summit, MISS Conference, and SAP Ariva Live.
Since the average hotel stadium tax revenue per month has been about $4,200,000, so right now, that’s just about 4.7 percent of the monthly average. The trouble is, the real problem is the cancellations of visits to Las Vegas for March and for April are not confined to the events named – the list keeps growing.
Moreover the decline in non-convention visitors, though not subject to an official count in real time, is constantly mentioned in social media. It’s either a tweet reporting that “people call to cancel rooms through July”, or “a certain hotel looks empty”. What ever the specific mention, the overall picture is one of a Las Vegas without its normal levels of visitors.
It’s not off-base to say that it would seem Las Vegas has suffered a 50 percent drop in visitor rates for March, thus far. If that does, indeed, turn out to be the case, then the hotel stadium tax revenue would fall to $2 million for March. That would be a record low for Las Vegas Stadium Hotel Tax Revenue. Even worse, it would be a tally less than the bond debt times the debt coverage ratio of 1.5, which would be $4,247,343.75 – that would produce a March shortfall of $2,247,343.75.
The reserve of $9 million would cover that, but leave $6,752,656.25 – another bad month like that would drop the reserve and then just one more would take it out. Clark County would have to dip into its general fund to pay the Las Vegas Stadium Bond Debt plus the debt coverage ratio. In other words, Clark County taxpayers would wind up paying for the Raiders Stadium Bond.
How Clark County could get out of this is simple: it needs to install a property tax increment financing zone around the Raiders Stadium. The zone should be designed to raise another $300 million to $400 million from the rising property values around the Raiders Stadium.
If Clark County doesn’t take action, it, and it’s taxpayers, will wind up holding the Raiders bag – just like Oakland.
By the way, this problem would not have happened in Oakland because that stadium financing was not based on something as iffy as a hotel tax – which makes everyone worry about hotel visitor rates. It was based on a combination of more robust sources, including tax increment revenue, a subsidy give back, and a private loan from Fortress Investments.
But this is not a time to gloat over Las Vegas problems, but to jump in and help with ideas. Pandemics hurt all of us, so what bad happens to Las Vegas hurts you and me, and vice versa.
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