Question of the Day - 11 June 2021

[Editor's Note: This answer is written by our own David McKee.]

“To be clear, there was no $1.50-per-night levy," local economist Jeremy Aguero tells us. Instead, "The transient lodging tax rate was increased to support the public’s $750 million contribution to the $2 billion stadium project.”

Occupants of hotel rooms on or near the Strip pay an additional tax of 0.88%; that increases the average nightly rate by $1.50, but of course it can be more or less, depending on the rate. The increase is 0.5% for rooms within the rest of the stadium district, which comprises a 25-mile radius around the Clark County Government Center downtown.

Otherwise, the Raiders are on the hook for the remaining $1.25 billion and all operating costs beyond the public’s $750 million, Aguero says. With any luck, these costs will be paid down by July 31, 2051, when the Raiders’ lease expires. 

But what about those hotel taxes, given the recent hit taken by the lodging industry during the pandemic?

“First, the stadium bonds have reserve funds which are accessed,” explains Aguero. “In the very unlikely event that the reserves are completely depleted, Clark County would be required to fund any shortfall.”

“Very unlikely”? Maybe not.

Clark County has already raided the reserve fund not once, but twice, in the past six months. The county owes $16.1 million, due June 1, and is going to have to take $11.7 million from the reserve in order to meet it.

“This action does not constitute a default and was expected in light of the decline in tourism to Las Vegas,” Clark County Director of Communications Erik Pappa wrote to Sportico.com.

This follows an $11.6 million emergency draw last November, at the height of NFL season — during which the Raiders played to an empty stadium.

The room-tax increase is backed by bonds that are a general obligation of Clark County, putting taxpayers on the hook once the reserves run dry. In fiscal year 2022, the county’s obligation is $35.4 million, with a balloon payment of $59.2 million coming in 2048. The interest on the bonds ($709 million) will ultimately exceed the principal of $645 million remaining.

Sportico says the Raiders merely loaned money toward the stadium — and only $600 million. Another $250 million was covered by the sale of stadium-seat licenses, of which the National Football League chipped in $200 million.

Those who argued that Las Vegas was giving away the store to get the Raiders might be starting to think about saying I told you so.

And that's not all. When top executives of the Oakland Athletics came to town last month to explore the possibilities of relocating the MLB team here, Clark County officials were decidedly cool to the idea of helping to fund the new stadium. Though that idea isn't quite dead on arrival (Vegas usually isn't averse to raising "export" taxes like the one on rooms that mostly visitors pay; another major league team, especially one that plays 81 home games, would be a major draw; and the A's are shopping in other cities, which might offer support via public funding), it's definitely a case of once bitten twice shy.