Nevada lawmakers question why public funds needed to lure A’s to Vegas Strip
Nevada lawmakers began a special session Wednesday to consider a public financing package of up to $380 million for the proposed Oakland A’s baseball stadium in Las Vegas — with a sizable number of lawmakers expressing staunch opposition to the proposal.
The special session is the second convened by Gov. Joe Lombardo in two days since the end of the regular session Monday, with only one bill up for consideration. SB1 is a copy of SB509 from the 2023 regular session — a bill that failed to pass during the final hours of the session Monday night.
Unlike Tuesday’s budget-related special session, Wednesday’s special session is structured around Committees of the Whole, which include all members of each house. As part of that process, SB1 was heard by the Senate Wednesday afternoon, and will next face a committee vote, followed by a floor vote in the Senate.
Those votes will likely come Thursday, as the Senate Committee of the Whole adjourned without a vote just before midnight Wednesday.
If the bill passes, it will head to the Assembly, which will repeat the Committee of the Whole process before a floor vote and, if passed, go to Lombardo. Even before convening the latest special session, Lombardo had expressed support for the proposal and is expected to sign the bill if it reaches his desk.
But getting SB1 to Lombardo is far from a done deal.
Lawmakers on both sides of the aisle voiced frustrations over the amount of public funding in the bill during the measure’s first hearing in the Senate, while questioning stadium proponents about the A’s commitment to the Las Vegas community, the quality of jobs the stadium could create and the security of the proposed state and county investments in the project.
Still, some lawmakers lauded the bill as a way to generate job opportunities in Southern Nevada and establish a budget-friendly professional sport option in the Las Vegas-area. That included multiple Republican senators who agreed with the bill’s backers that it would be a worthwhile investment of public funds.
The team has also engaged in a heavy persuasion campaign — hiring a small army of professional lobbyists and bringing on board a diverse coalition of supporters, including organized labor groups such as the Culinary Union, chambers of commerce and many of the state’s major casino resort companies (who stand to benefit from the team moving to Las Vegas).
Several Democratic senators who aired concerns with the size of the proposed public funding package also pointed to bills whittled down during the legislative session or vetoed by Lombardo, questioning why the state should approve up to $380 million for a baseball stadium when legislation seeking to fund health care and other programs failed.
“The people that we represent don't expect us to come here and rubber stamp [this]," Sen. Pat Spearman (D-North Las Vegas) said. “We have to do our due diligence because this is a lot of money.”
Others said they wanted changes to the bill.
“To say I'm extremely disappointed that no work has been done on this bill over the past 10 days is an understatement,” Sen. Rochelle Nguyen (D-Las Vegas) said. “We are literally looking at the same bill that was presented.”
Stadium backers, again, make their pitch
Supporters of the bill on Wednesday gave the same presentation provided to lawmakers just a week and a half ago when SB509 received its only hearing of the regular legislative session. They reiterated similar arguments that the proposed stadium would create thousands of good jobs, mainly concentrated in the construction phase of the project, and that it would generate more tax revenue for the state in the long run — even with an upfront investment of tax credits and county bonds to fund construction.
Under the bill’s structure, the A’s could receive a package of $180 million in transferable tax credits and upward of $120 million in Clark County-issued bonds. Those funds would support development of the $1.5 billion, 30,000-seat stadium the A’s are seeking to build at the site of the Tropicana on the Las Vegas Strip, with the team required to put forward more than $1.1 billion for construction.
Tax revenues generated by the stadium, from sales tax on construction materials to payroll taxes paid on wages to stadium employees, would pay off those bonds and half of the tax credits over 30 years. The stadium land, which would be owned by the Las Vegas Stadium Authority, would also receive a property tax exemption, which could be valued at tens or hundreds of millions of dollars over the lifetime of the stadium.
Sports economists, however, have pushed back on those claims, pointing to extensive research that show publicly funded stadiums are not worth the costs to taxpayers because they redirect spending away from the local economy, with tax revenues captured by the stadium used instead to pay off costs of the project.
Still, proponents of the bill argue that because of its tourism-driven economy and high capacity for visitation, Las Vegas is different from other cities that have not seen positive returns from public investments in stadium projects.
“The difference is that we are different as an economy, which sets us apart,” said Jeremy Aguero, a principal analyst at economic analysis firm Applied Analysis, which the A’s hired to conduct research on the proposed stadium.
Steve Hill, CEO of the Las Vegas Convention and Visitors Authority and chairman of the Las Vegas Stadium Authority, also argued that the ballpark would fill the sports event calendar in Las Vegas, adding baseball games to typically slower summer months and serving as a draw for visitors.
Under the bill, the Stadium Authority would be responsible for oversight of the baseball stadium, as it is with Allegiant Stadium, the home of the Las Vegas Raiders. Lawmakers convened in a 2016 special session to pass legislation that brought the Raiders from Oakland to Las Vegas by establishing a $750 million public funding mechanism to support the football stadium’s development.
A Senate grilling
With all 21 senators able to ask questions during Wednesday’s hearing, SB1’s presenters ran into a buzzsaw of questions on the bill’s financial projections.
They also entered a Legislature still raw with tension from the high-stakes negotiations that typically define the end of the state’s 120-day legislative session. Budget negotiations between Democrats and Republicans collapsed with just minutes left in the regular legislative session on Monday, leading to finger-pointing and forcing the late Tuesday special session to pass a budget bill identical to the one Senate Republicans united to kill the day prior.
In the hours before the Wednesday hearing, Sen. Ira Hansen (R-Sparks) — who voted against the budget deal — taped a piece of paper to his office door announcing that his vote had shifted from a “weak no” to a “hell no” following the “debacle last night.”
“Do not waste your time or mine please,” the note read, on a day where lobbyists were roaming the halls.
During the hearing, Hansen said that even as bill backers have argued the special tax revenues would not displace any existing revenues, “somebody has to make up the tax revenue that is not being generated.”
“That's where I think the small business community basically is being used to subsidize a form of corporate welfare for some exceptionally big people that, honestly, should be able to finance their own projects without the need of a Nevada tax,” he said.
Across the aisle, Nguyen, a Democrat, questioned Hill and Aguero about the need to support the franchise’s billionaire owner John Fisher with public dollars. That included a question of why the state should agree to a property tax exemption that would mean millions of tax dollars diverted from government services.
“Can you explain to me why we need to provide hundreds of millions of dollars for a billionaire team to come to the Las Vegas Strip on some of the most valuable property in the world if we can't provide funding for critical resources like summer school and health care?” Nguyen asked, a reference to Lombardo’s veto of a bill to mandate summer school plans over the next two years.
Hill said “we know that the state will have more money” because of the stadium — though that assertion is based on projections for the revenues generated by the proposed Las Vegas stadium and stands in contrast to research from sports economists finding that publicly funded stadiums have little net positive economic impact on local economies.
Hill also argued the stadium would make the remainder of the plot surrounding the stadium — 27 acres on the corner of Las Vegas Boulevard and Tropicana Avenue that would lie outside the stadium — a more valuable piece of property for whatever other buildings, such as a casino, are constructed there.
But the projections for boosting state revenue faced strong opposition from Sen. Dallas Harris (D-Las Vegas), who repeatedly questioned Aguero’s projections for stadium attendance given the team’s league-worst attendance in Oakland. While she argued investing public funds in education or infrastructure could be more beneficial for the state, Aguero remained steadfast in his argument that Las Vegas defies trends because of its tourism economy.
Sen. Heidi Seevers Gansert (R-Reno) supported that argument, pointing to data from Billboard listing Allegiant Stadium as the top grossing stadium in the world in 2022 among stadiums hosting concerts and T-Mobile Arena as the fourth highest grossing venue with a capacity of 15,001-plus.
“I think there's been great success in Las Vegas,” Seevers Gansert said. “So I think we need to keep that in mind that the evidence is here. It's in writing.”
The Wednesday pitch also drew comparisons to the 2016 special session to bring the Raiders to Las Vegas — but not entirely positive ones.
Sen. Edgar Flores (D-Las Vegas) said even after a year of conversation about the Raiders in the leadup to that special session, “the community benefits program that was promised was not delivered.”
Flores said he wanted to see stricter requirements for the community benefits agreement — a contract that would require the A’s to make certain contributions to the community, such as meeting diversity thresholds in hiring and addressing infrastructure needs around the stadium. He suggested it could be put into state law, rather than leaving that agreement to be reached between the A’s and stadium authority, to increase accountability for the agreement.
Flores also suggested that lawmakers could include putting funding clawbacks in place if the community benefits agreement requirements are not met.
“We are incredibly hesitant,” he said. “The community benefits programs sounded great. But very little of it was actually delivered.”
In a back and forth exchange with A’s President David Kaval, who did not present in either hearing of the public funding bill, Sen. Fabian Doñate (D-Las Vegas) questioned whether Kaval would commit to having the A’s pay the state’s Live Entertainment Tax to provide equity with smaller businesses that pay the tax. After Doñate called on the A’s executive to come down from the second floor Senate gallery to answer a single question, Kaval repeatedly dodged the question, not answering yes or no and saying the legislation “does not contemplate” that.
Under state law, professional sports teams, including the Vegas Golden Knights, are exempt from the Live Entertainment Tax when playing home games in the state. Doñate asked that the exemption either be removed for baseball games, or the Live Entertainment Tax be removed from the list of tax revenues redirected to pay off stadium bonds, to ensure other events held at the stadium are not paying a tax toward construction costs that the A’s aren’t paying.
But at least some lawmakers appeared amenable to the bill as written. Sen. Jeff Stone (R-Henderson), called the measure “exciting” and lauded the “very conservative” risk presented by the bill’s bonding structure, including several years of coverage provided through cash reserves and a state line of credit.
“I don't think Clark County would subject our general fund to too much risk, and being an investor myself, there's no such thing as a no-risk investment,” he said. “But I think that you've done a very good job of minimizing the risk of taxpayers.”
Sen. Lisa Krasner (R-Reno), said she had met with Fisher — the team owner who has not testified before lawmakers on the Las Vegas deal and who has become the center of public criticism of the deal, particularly from fans of the team upset with his lack of investment in the team. The A’s have had one of the lowest payrolls in Major League Baseball for years.
Saying Fisher “seems like a fine man and a person of high integrity,” Krasner said the owner had assured her ticket costs would remain affordable relative to other sports.
But after hours of questioning, at least a handful of senators seemed unconvinced.
Spearman said she had a problem with the state providing transferable tax credits to the A’s, with those credits reducing the amount of general fund dollars the state has to spend on other government programs. Under the bill, the A’s could receive up to $180 million in such credits which could be sold to other companies for cash, usually at a rate of less than one-to-one, likely leaving the A’s with fewer dollars than they received in credits.
And Sen. Dina Neal (D-North Las Vegas) pressed Aguero and Hill over the number of tax streams that could be drawn into paying for the stadium — at least 17 taxes will be used to pay back bonds in the bill language — raising concerns “with the revenue and how the revenue comes down.”
“I think we're at a philosophical difference because I haven't come to the belief that we need a second publicly funded stadium,” Neal said.
Update: 6/7/23 at 11:47 p.m. — This story was updated to reflect the decision by the Senate Committee of the Whole to adjourn its Wednesday hearing without a vote on SB1.
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