Deeper in debt
The proceedings started off with a review of the benefits of expanding the National Bowling Stadium into such a center for conventions and, well, events. The expansion and other costs would be funded with $120 million in bonds. The city would own the center. The RSCVA would run it. Room taxes would, hopefully, pay off the debt over a 30-year period.
Chicago-based consultant Charlie Johnson said that it’s reasonable to assume that a mountainous resort area that offers gambling could handle two large convention facilities. He called the assumptions that Reno’s room tax revenues would grow “reasonable.” But he kept using disturbing phrases like, “If the facility ever turns a profit…” and “Whether the operating deficit will decline over time.”
For some, this brings to mind past losses. Former city councilwoman and mayoral candidate Candice Pearce told the council she spent four years on the RSCVA listening to idealistic predictions about the growth that would pay for the bowling stadium.
“Those assumptions are based on rosy pictures,” Pearce said. “Reno is going down, not up. There’s no reason to believe that occupancy rates are going to go up. … I know how much money we put into the bowling stadium. It was an albatross.”
Most worrisome is the idea that the bonds would be secured with up to 15 percent of the city of Reno’s general fund. So if the room taxes don’t generate the expected revenue to do service to the debt, guess who has to pay? Yup, you got it.
Casino lobbyist Tom Clark, who works for John Ascuaga’s Nugget and the Peppermill, didn’t speak to the council Tuesday. But he did have some interesting 30-year room tax projections with him, just for fun. A “flat” scenario with no growth in the next decade followed by 20 years of modest 1- to 2-percent growth leaves the city $30 million in the hole. A “recovery” scenario shows a realistic decline in room tax revenue for the next eight years (it’s currently down 2.1 percent), followed by 20 years of growth for a deficit of $55 million—that’s some $93,647,057 less than the RSCVA’s predicted income from the center after 30 years. And that’s only predicting eight years of revenue losses. Who knows what Reno’s room tax situation will be in a decade or two or three?
‘ Twas a relief that citizen activist Sam Dehne brought his guitar for public comment and composed an off-the-cuff cover: “You load 16 ton and what do you get? Another day older and deeper in debt. Saint Peter, don’t you call me, ‘cause I can’t pay. I owe my soul to the RSCVA.”
Laughs all around.
The council moved to continue the discussion at a joint meeting with members of the RSCVA on March 26, so that they can vote on the issue the same day if possible. Time’s of the essence because they want to make sure to get a good interest rate on those bonds.
Smart thinking, all that planning ahead stuff.