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By Brenna Goth
Nevada raised taxes, sold bonds and broke ground on a $1.9 billion stadium to bring the Raiders football team to Las Vegas.
But the state’s race for governor could put a new wrinkle in the record-setting $750 million deal for taxpayer funding to build it. At least one candidate says he’ll do everything he can to renegotiate the agreement if he wins—or withhold money for the roads to get to the games.
Public financing for the 65,000-seat stadium is a divisive issue among leading candidates in the June 12 Republican and Democratic primaries. The state’s treasurer, attorney general, and two county commissioners with opposite positions on the project are among the contenders.
The election comes as the Las Vegas Stadium Authority recently approved agreements paving the way to sell bonds for the project. Clark County, where the stadium will open, sold earlier this month roughly $645 million in bonds in about an hour-and-a-half, a county spokesman told Bloomberg Tax in an email.
Changes to the Raiders deal at this point will be difficult from a practical and legal perspective, said Travis Leach, a partner at Ballard Spahr LLP who has worked on stadium financing issues. That doesn’t mean a new governor couldn’t try.
“These fights get messy,” Leach told Bloomberg Tax.
The Raiders are targeting to play their 2020 season in what will be one of the most expensive stadiums in the country. Gov. Brian Sandoval (R), who can’t run for re-election based on term limits, supported the state funding a portion of the project.
He called the stadium part of “the new Nevada” in a statement this week, announcing a committee to woo major sports events to Las Vegas.
But that support could flip depending on who wins the November election for governor. Nevada State Treasurer Dan Schwartz, a Republican candidate, vows major changes if he takes office.
Clark County raised its hotel tax last year to fund the state’s $750 million portion of stadium land, infrastructure, and construction costs under legislation signed by Sandoval. The rest will be privately funded.
Schwartz told Bloomberg Tax he wants that money for Nevada’s education system and will try to force negotiations to strip the stadium of public funding.
His main leverage as governor would be stadium-related Nevada Department of Transportation projects. Officials could reconsider the deal or forgo state roads providing access to the facility, Schwartz said.
“You can get there on roller skates,” he said.
Schwartz faces Nevada Attorney General Adam Laxalt in the Republican primary. Laxalt’s campaign didn’t immediately respond to requests for comment.
There’s likely a way for the governor and Legislature to follow through on Schwartz’s idea, said Jeremy Aguero, principal analyst for Applied Analysis and lead staff for the stadium authority. The authority’s focus, though, is developing the stadium under rules that already cleared elected officials, he said.
The team also would have legal recourse if those transportation projects are referenced in any of the stadium documents or disclosures, Leach said.
Democratic candidate Chris Giunchigliani also opposes Nevada’s stadium funding, but said the legislation is written to prevent any changes. Giunchigliani, a Clark County commissioner, has voted against moving the stadium forward and called the deal the “biggest tax giveaway in the U.S.”
Among her concerns are parking issues at the stadium and hotel tax collections that have dipped below projections several months this year. Giunchigliani wants the Raiders to be successful in Las Vegas, but not at the expense of the public, she told Bloomberg Tax.
“It shouldn’t be on the backs of taxpayers,” she said.
Giunchigliani is running against one of the project’s more vocal supporters in the Democratic primary. Clark County Commissioner Steve Sisolak argues the stadium, which will also be used by the University of Nevada, Las Vegas, will boost jobs and business.
The Southern Nevada Tourism Infrastructure Committee predicts the stadium could create nearly 6,000 permanent jobs. And the hotel tax increase is “a tax on tourists, not Nevadans,” Sisolak told Bloomberg Tax in a statement.
It’s unclear, though, how the stadium issue will play with voters, particularly outside of the Las Vegas area, said Eric Herzik, professor of political science at the University of Nevada, Reno. Some conservative lawmakers voted for the public funding in the Legislature, while major unions were divided.
And casino owner and Republican mega-donor Sheldon Adelson backs the project, though he pulled his initial financial support. Those positions make it hard to tell whether a stance on the issue will help or hurt candidates, Herzik told Bloomberg Tax.
“I can make a case both ways,” he said.
Public funding for sports stadiums nearly always sparks controversy over the costs and benefits. But officials hammer out disputes over agreement terms before signing deals, said Andrew Zimbalist, the Robert A. Woods Professor of Economics at Smith College, who has looked at stadium finance issues for more than two decades.
Pledges to change the plans after that are likely political posturing, he told Bloomberg Tax. Zimbalist said he hasn’t seen governments change agreements once they’re in place.
“It’s not viable,” Zimbalist said.
A new governor would have some leverage to ask the Raiders to renegotiate, but movement would be difficult, Leach said. The team would have to go back to its investors with any new proposals.
“It would be a complex process to change it,” Leach said.
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