Attorneys argued for more than 90 minutes Thursday regarding the constitutionality of a state law that established a $380 million public financing deal to build a baseball stadium for the Oakland Athletics in Las Vegas. 

But Carson City District Court Judge Kristin Luis did not make a decision.

Instead, Luis told attorneys that she would issue a written decision on the case, giving each side 10 days to file their proposed ruling. Once she receives the proposed rulings and reviews them, Luis will issue her decision.

The challenge to the stadium funding was brought by Strong Public Schools Nevada, a political action committee affiliated with a state teachers union. Lawyers representing the Las Vegas Stadium Authority and the Legislative Council Bureau argued in favor of the legislation.

The lawsuit centers around the constitutionality of a law passed during the Nevada Legislature’s special session last year that provides up to $380 million in a public financing plan — through a combination of bonds and transferable tax credits — to construct a $1.5 billion baseball stadium in Las Vegas.

The Nevada State Education Association (NSEA) has vehemently opposed the legislation and criticized the use of public funding for a private stadium deal, echoing sports economists and studies showing that the costs to taxpayers are not worth the benefits. Supporters have said the project will generate jobs, tourism and revenue for the state.

Filed in February on behalf of two individuals and the Strong Public Schools PAC, which is affiliated with the NSEA, the lawsuit said SB1 violates the Nevada Constitution in five ways, including a claim that it would increase public revenue but was not passed by the constitutionally required two-thirds majority vote of legislators. 

The lawsuit, brought against Republican Gov. Joe Lombardo and Democratic Treasurer Zach Conine, is the second legal matter the union has been involved in this year over the proposed stadium.

The first was the challenge brought by two labor leaders of a ballot petition filed in September by Schools Over Stadiums — a separate NSEA-backed PAC. The petition sought to repeal public financing for the stadium. The labor leaders won an initial victory in court, and the Supreme Court upheld the lower court’s ruling, rejecting the language of the proposed referendum for being “legally deficient,” and at times, “confusing.”

Arguments

Attorneys for Las Vegas Stadium Authority and the Legislative Council Bureau told the judge that the plaintiffs lacked standing to bring the lawsuit because no public dollars have yet been spent on the project, and therefore no harm had occurred to merit the legal challenge.

Kevin Powers, an attorney with the Legislative Counsel Bureau, said that there’s a long way to go before any public dollars are spent. The private financing component for the stadium needs to be met, he said, and the development and community benefits agreements need to be approved, along with other requirements, before the public financing portion kicks in.

“If, at any juncture, those agreements can't provide that, then this legislation for financing doesn't become operational,” Powers said. “In this case, there’s no injury at all. There’s no issuance of bonds … and there may never be.”

He added that once agreements are in place and public dollars have been expended then sufficient standing for a lawsuit would be established. At that point, Powers said, the court would be involving itself at the appropriate time.

The PAC’s attorneys argued that the legislation establishing public financing for the stadium threatened funding for public education and could potentially harm students. 

Luis responded that the argument appeared speculative, especially because constitutionally, schools have to be funded first, to which the PAC’s attorney, Grant Ingram, responded that the deal has the potential to negatively affect the state budget.

The PAC’s attorneys said that because the law establishes a public financing apparatus which lets the state treasurer draw unspecified amounts of money to support Clark County’s bond debt, it violates the Constitution. They added that the public financing structure of the deal “impermissibly results in public debt” without a way to repay it. They said the pledge of taxes for bond repayment requires the state to assume Clark County’s debt.

However, opposing counsel countered by saying that nowhere in SB1 is there an obligation to keep making appropriations if something is not paid and there are stipulations within the law to pay off county bonds and ensure that the project is solvent.

Future financing

The public financing for the stadium includes $180 million in transferable tax credits from the state (which the team could sell to other businesses for cash), an estimated $120 million in Clark County bonds and a $25 million credit from the county for infrastructure needs around the stadium. The bill stipulates that the bonds are to be paid off through revenues generated by the stadium.

Last month, Sandy Dean, a representative for the A’s, told the Las Vegas Stadium Authority the team would use about $350 million of the legislative-approved financing, leaving the remaining $30 million to help with any cost overruns. 

Dean said the team was in “good shape” on securing financing for the ballpark. But he didn’t offer specific details on how the franchise will fund its expected $1.2 billion share of the construction costs. 

He said the team intends to borrow $300 million, but a lender or lenders weren’t named. Sports financing company Galatioto Sports Partners has reportedly been retained to find investors.

Dean said the A’s are seeking equity investors to help offset a portion of the $850 million that team owner John Fisher needs to secure for the 33,000-seat ballpark project.