The total cost of the project is $200-million. Of that, the developer (a partnership of Cordish and the Findlay family) will pay $44.25-million. Taxpayers are responsible for the rest, but it’s complicated.
There are four sources of taxpayer funding for the remaining $155.75 million (78% of the total funding, and a little more than $250 for each of the 600,000 men, women and children in the City of Las Vegas proper):
- $14-million – this is cash the city already has on hand. It could be used for many other things. The city is giving this money to the project, and not asking the developer to pay any of it back.
- $5-million – this cash is not in the bank. It’s complicated, but the federal government issues local governments tens of millions of dollars of coupons to sell to rich people. Local governments auction them off to high-income taxpayers. The rich people buy them for less than face value and use the coupons, instead of money, to pay their income tax bills. City staff estimates that if we could latch on to about $25-million of those coupons, after paying all the middle men and women it would raise $5-million in cash. The cost would be the federal government losing out on $25-million in income tax. Apparently, the federal government thinks that’s no problem .
- $22-million – this cash would be borrowed. Again, it’s complicated. This part has the City creating a STAR district – “Sales Tax Additional Revenue”. Within the district, which would include all the undeveloped land in Symphony Park plus the almost-built expansion of the Factory Outlet Mall, all sales tax would be treated differently. Normally, sales tax goes into a big bucket and is distributed to local governments based on population. With a STAR district, that sales tax would all go to the City of Las Vegas for 20 years. The pledge of those dollars to pay the bonds back gives rich people enough comfort to loan the City money in the first place. The opposition would include all other local governments in Clark County, who lose out on their usual portion of this money.
- $115-million – this is the largest chunk and the plan is to borrow it, pledging all city revenues toward the obligation to pay it back. Drill down, and the city plans to redirect about $3-million a year from park maintenance funds for 30 years, plus another $4-million a year from soccer team profits (for the first ten years) and $5-million a year from soccer team profits (for the twenty years after the first ten) to make the loan payments. That’s only a plan – if the soccer team decides it isn’t making enough profits to make those payments, then city taxpayers are on the hook. Either taxes will be raised, or the city will stop delivering $4- to $5-million per year of existing services (in addition to the $3-million of park maintenance) in order to make up the difference.
So, in the final analysis, the City is planning on funding stadium construction by making the developer pay $44-million (22%), giving the developer $19-million (9.5%) and borrowing $137-million (68.5%). The borrowing will be paid back mostly by profits of the stadium (few American arena/stadiums end up with any) and by not performing park maintenance. If the profits fall short, unidentified current city services will be cut.
And as a “bonus”, the City “gets to own it” meaning no property tax revenue will be generated.
And not included in the above discussion is the land in Symphony Park that the City is giving the developers. The City has already spent ten or so million getting the site of the old UP train wash to the point where it is today. That money was borrowed, and the City continues to make payments (and rack up interest expense).