Foiled by downtown again!
There’s been a lot of talk surrounding the proposed new convention facility in downtown Reno. The Peppermill, Atlantis and John Ascuaga’s Nugget have formed a coalition to look at the funding for the center.
We are often accused of trying to kill this project. That is simply not true. Two years ago, we supported a $30 million room tax revenue stream to build the downtown convention center, and we negotiated in good faith to allow for the project to move forward. We support the construction of this facility. Our primary concern is the project’s funding.
In a Feb. 23, 1999, article in the Reno Gazette-Journal, Mayor Jeff Griffin called this project a “public-private effort, funded primarily by private dollars.” Now the proposed project will be entirely funded by public tax dollars, mostly from a downtown room tax increase—revenue that has historically been used to benefit the entire region.
Our concerns stem from the use of this tax to pay all of the facility’s expected losses. While the project is getting up and running, these losses have been estimated at about $2 million a year. Even after three to five years, estimated losses could be more than $758,000 a year.
The Reno City Council, acting as the Reno Redevelopment Agency, is being asked to hand the facility’s ownership for 30 years to a private company called NewCo. The company is made up of the Eldorado, Silver Legacy, Mandalay Bay (Circus Circus) and Harrah’s.
The $65 million project is to be built with public tax dollars, given to four casinos, and then subsidized for 30 years. The casinos are expected to loan the project $5 million each, but they will be paid back—with 6.25 percent interest—once the bonds are paid off.
By their own study, the convention facility will generate tens of millions of dollars each year for the four casinos. Yet they won’t have to cover maintenance, marketing, employees, etc. Pretty good deal if you’re one of the four casinos.
We think it’s a pretty bad deal for the region.
We agree that some room tax can be used for constructing a facility up to $65 million. But the money used to cover the facility’s losses would be better spent on things like marketing the entire region or providing incentives to airlines to increase air service.
Everyone from the big casinos to taxicab drivers, dry cleaners, food and beverage suppliers and mom-and-pop hotels will feel the effect of California’s Indian gaming. This is the biggest threat we have ever seen, and we must work together to create a comprehensive regional plan to address the issue.
Our message to the City Council: If the four casinos are going to own the new convention facility, they should put their $20 million in as equity and be responsible for covering all operating expenses and losses. If the entire project is built and subsidized by public tax dollars, then given to a private company to own and operate, where is the incentive to control costs and reduce the facility’s losses?