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Oakland A’s Las Vegas Ballpark Update: Stadium Will Be Publicly-Owned Not Privately By A’s
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The ballpark planned by The Athletics Investment Group in Las Vegas will be publicly-owned, and not privately-owned as proposed for Howard Terminal Ballpark in Oakland. That news comes from a confidential-as-to-origin Las Vegas ballpark project related information forwarded to Zennie62Media on the afternoon of Thursday, May 4th, 2023.
This means the financing structure for the A’s Las Vegas ballpark will be more like that for Las Vegas Stadium for the Raiders, now called Allegiant Stadium – except that it will not use a hotel tax, or any new tax. In other words, Clark County will issue the bonds, which will be in a kind of “multiple tax increment financing” structure. In other words, and to repeat, no new tax will be created to finance the ballpark for the A’s in Las Vegas.
Now, if you are familiar with tax increment financing law in California, you’re probably saying “Does that mean the A’s don’t pay a property tax?” The answer is that since the facility is publicly-owned, but for a private use, the Athletics would pay a “possessory interest” tax, and that revenue stream, combined with money gained from annual sales taxes, and other monies that make up what was described to me as a financing “layer-cake”. So, the other question from you should be “What about the tax rate that will take the place of the property tax?
The answer is, it is still a property tax, but for a government-owned building – one built for the Las Vegas Athletics. With that in mind, I was directed to information in a document called “The Nevada Red Book”. The online-based Nevada Red Book is a listing of property tax rates for the State of Nevada.
The actual rate the creators of the Las Vegas Athletics Ballpark Public Financing use will be a combination of several rates and points to the possible involvement of the Las Vegas Stadium Authority, but I haven’t confirmed that. I write that, because the Las Vegas Stadium Authority’s original legislation called for it to have tax increment financing power over a 25-mile-radius. From the information I gathered, using the Las Vegas Stadium Authority’s original legislative power may be part of the proposed legislation for the Oakland A’s Las Vegas Stadium.
If that comes to be the case, then the Athletics Investment Group no longer has to concern itself with building a lot of property just to gain a healthy tax increment. It’s likely that the “possessory interest” tax rate the A’s pay would be at 3.2396 percent, much greater than the 1 percent in California. Also, Nevada has a property tax annual inflation rate of 3 percent. The length of the bond issue – the number of years the law allows to collect revenue to pay its debt service – will be 30 years. In Oakland and California, it’s 45 years.
The TIF revenue will be $1,216,171,403 against $912,128,552.52 in bond costs (a difference of 289,140,211) and assuming that only the ballpark at $1.5 billion is used for the assessed value base year and the tax rate is 3.2396 percent, and, again, over 30 years. The objective is a target of a $550 million bond issue with a 3.5 percent annual rate over 30 years. That will produce an annual “level” (same each year) debt service of $29,904,232.
But a level debt service structure will not be used, otherwise, the stadium financing planners would have to wait 17 years until the tax increment revenue reached $31,336,686.35, or greater than the annual $29,904,232 (a total bond cost of $927,031,192). So, a non-level-debt service structure will be used, so that the first year debt service is lowest and the final year is highest, thus allowing the Athletics to start building the stadium before the first year of the life of the bond issue.
But the fact remains that with a two-to-one debt coverage ratio, the net revenue available would be $456,064,276.26 and that’s -$93,935,723.74 less than the $550 million bond issue target. So, it’s clear that more buildings than the ballpark itself are needed. So, a $500 million second structure would be necessary, which would bring the total assessed value here to $2 billion, the total TIF revenue to $608,085,701.68, and the net revenue available over the bond issue period to $58,085,701.68.
But, if we think about it, if the tax increment financing zone “map” is to be larger than the 49 acres the A’s have optioned, then the total available revenue from both possessory interest payments, and surrounding tax payments by exisitng properties within the zone will be much greater than $608,085,701.68. Just how much depends on the total assessed value of the properties within the zone. Just what that is, at this point, I do not know.
What The A’s Are Planning In Las Vegas Is Far Different Than What The Media Has Reported
What this means is the Las Vegas ballpark project is far larger and more representative of a public-private effort involving the Governor of Nevada than has been reported. At the end of the day, the project ownership will be the State of Nevada and possibilly the Las Vegas Stadium Authority. But the jokes about what people think Dave Kaval, John Fisher, and Major League Baseball have done, really sink to a very juvenile level. This is happening because a lot of people in Nevada, from the Governor of Nevada to pretty much everyone, and especially the Casino Industry, and also I think Raiders Owner Mark Davis (who may be playing a smoke-screen-role), wants this to happen (in fact, he’s said so).
Because of this, the idea that the project is going away after 34 days and the end of the 2023 Nevada Legislature term is not true. Far more than likely to happen is a call for a special session of the Nevada Legislature. This is serious, folks. And it’s important to add that the net TIF revenue could be used to help local education and transportation efforts in Clark County.
Oakland, and California, should take notes on what really is a giant business attraction effort that will transform Las Vegas into an entertainment metropolis for the 21st Century.
Stay tuned.
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