Development bills rebuff the logic of Vegas’ tax breaks

By Sam Skolnik

Wednesday, April 1, 2009 | 2 a.m.

One of the central premises of the Culinary Union’s attempt to rein in the Las Vegas Redevelopment Agency is that the city is giving huge tax breaks to developers when it should be using those resources to better fund vital government services such as schools.

The union is fighting to put the issue before Las Vegas voters on June 2. Regardless of whether the Culinary is successful, like-minded state legislators may soon achieve some of the union’s goals for it.

There are several bills moving through the Legislature, sponsored by members of both parties, that attempt to reprioritize how redevelopment agencies throughout the state spend money.

Assembly Bill 397, sponsored by Assemblyman Joe Hardy, R-Boulder City, would give redevelopment agencies the option to use funding “for the improvement of schools.” This would amend a law stating that such agencies can use their money to acquire property in redevelopment zones or carry out a redevelopment plan that has been adopted by a city council or other legislative body.

Hardy said education is severely underfunded in the state and creative solutions are needed to address the problem. In his district, he regularly hears of public school teachers who spend $1,000-$1,500 of their own money to buy school supplies.

“This isn’t about changing redevelopment as we know it,” Hardy said. “It’s about giving them the opportunity to help fund education more directly.”

Hardy’s bill is a rebuke of the logic used by Mayor Oscar Goodman and other Las Vegas officials who have argued that the city’s redevelopment agency doesn’t take money from education — and that it in fact does much to fund it by increasing the area’s tax base.

The Legislature created the city’s redevelopment area in 1986 to help prevent decay downtown. The area encompasses 3,079 acres, including downtown Las Vegas and other commercial areas.

The city’s Redevelopment Agency supports development projects with tax revenue collected in those areas. Often, the city grants developers significant tax breaks and other financial incentives to build downtown.

“They deny that they’re taking money from education, but clearly Dr. Hardy’s bill contradicts that notion,” said Pilar Weiss, the Culinary’s political director.

The union is backing two ballot measures: One would require voters to sign off on lease-purchase agreements similar to Las Vegas’ city hall plan, and the other would scrap the city’s current redevelopment plan. The Nevada Supreme Court will decide whether the Culinary’s proposals should be placed on the ballot.

Weiss said the Culinary has been following bills in the Legislature that would affect redevelopment agencies, but is not behind any of the proposals.

Another bill, sponsored by Assembly Speaker Barbara Buckley, D-Las Vegas, would take a more mandatory approach than Hardy’s bill. Assembly Bill 458 notes that municipalities often give tax credits or refunds to lure developers and other businesses to economic development zones. The bill would mandate that cities limit the breaks to taxes that do not fund public education.

This would limit the types and size of tax breaks the city gives to encourage downtown development, such as those to Forest City Enterprises for the proposed city hall and to CIM Group for renovation of the Lady Luck.

Assemblywoman Debbie Smith, D-Sparks, has sponsored legislation to address the broader issue of cities doing more to protect education funding.

Her legislation, Assembly Bill 422, addresses “tourism improvement districts,” which can use special bonds that capture a portion of sales tax generated by a project and feed it back to the project’s developer. The state has only two tourism improvement districts, both in Northern Nevada. One is in the works for CIM Group to develop the area near the Lady Luck.

Smith’s bill would exclude school support taxes from pledges of revenue for financing projects within such a district. That means a portion of the money would instead go toward education instead of back to the developer for further business improvements.

Ted Olivas, the city’s top lobbyist, is monitoring these bills. It’s clear the city is concerned about the potential effect of Buckley’s and Smith’s bills, at a minimum.

Scott Adams, director of the Las Vegas Office of Business Development, could not be reached for comment.

When asked at his latest news conference whether the Legislature was considering any bills that concerned the city, Goodman said he was closely watching Buckley’s bill regarding tax incentives.

Capital Bureau Chief Cy Ryan contributed to this story.