As state eyes takeover, 5 reasons North Las Vegas is in financial trouble

Richard Brian / Special to the Sun

City leaders ceremoniously break ground on a new North Las Vegas City Hall on June 4, 2009. Tossing dirt were, from left: contractor Paul Schmitt, vice president of Whiting-Turner, architect Michael Winters, City Manager Gregory Rose, Councilwoman-elect Anita Wood, Mayor Pro Tem William Robinson, Councilwoman Stephanie Smith, Councilman Robert Eliason, Mayor-elect Shari Buck and Mayor Michael Montandon.

By Joe Schoenmann

Tuesday, July 12, 2011 | 2 a.m.

More news about North Las Vegas

Last week, state officials said they might have to take control of North Las Vegas’ finances. City officials acknowledged that if things continue the way they are, the city won’t be able to make payroll starting in October.

Such a move would be a first for a Southern Nevada city, or any large Silver State city for that matter.

Some have blamed firefighters and police unions for North Las Vegas’ plight. The city was set to move forward with cost-saving layoffs before the police union sued. District Judge Nancy Allf halted the layoffs, agreeing with the officers’ union that the city would violate the employment contract if it went ahead. That ruling is expected to bolster another lawsuit, by firefighters, trying to prevent 35 layoffs.

The result: The city says it is spending $165,000 a week ($8.6 million annually) that it could have saved by cutting its police and fire workforce. (Note: The city and its firefighters agreed to a 5 percent salary reduction Monday, a move that will save $2 million and the jobs of 35 firefighters).

But a city doesn’t reach the brink of insolvency because of one hardheaded union, or even two. Recent and past moves by city officials, the unions and residents have led to this fix. North Las Vegas, once among nation’s fastest-growing cities, has seen steep declines in tax revenue during the recession, while its operating costs have risen to pay for big projects planned in anticipation of continued growth.

Here is a review of some of the missteps:

Photo by Justin M. Bowen
A new City Hall

First proposed during the boom, in 2005, the city didn’t break ground on the building — whose announced price tag rose from $113 million in 2005 to $135 million in September 2009 — until June 2009. By then, the Great Recession had come down on the city with its full weight.

The Silver Nugget, located near the City Hall site, postponed $200 million in renovations because of the poor economy, nine months before the city broke ground. Mayor Mike Montandon and acting Mayor Shari Buck were among the city officials to turn the first shovels of dirt. The old city hall, built in 1966 when the population was 35,000 versus 216,000 in 2009, was deemed too small for the growing municipality. The Sun could not immediately obtain debt payment figures for the facility from city staff. Then again, that might not be a problem soon: One of the budget-saving measures being considered is selling the building to a private company, then leasing it back. Many businesspeople are expected to visit North Las Vegas officials this week to look at purchasing the new City Hall, sources say.
Photo by Steve Marcus
Sewage treatment plant

The North Las Vegas Water Reclamation Facility was also proposed in 2005, when 1,300 people were moving into North Las Vegas every month. Officials broke ground in January 2009. Officials said the plant would save the city a total of about $240 million by 2030 — the city said it paid Las Vegas $35,000 a day to treat its wastewater. The plant is now mired in a lawsuit because it is discharging treated water, which residents say is foul-smelling, into the county-owned Sloan Channel without permission. Built for about $300 million, the plant will cost city taxpayers about $18 million a year for decades. But again this might not be a problem in the near future, as the city is also thinking about selling the utility to private industry.
Photo by Justin M. Bowen
Union troubles

North Las Vegas hoped to draw more businesses and jobs, and the taxes that go with them, by building a safe, business-friendly community. But the police union may have hurt those hopes by bolstering an impression that the city is unsafe. The union has lined city streets with A-frame signs: “Warning: Due to recent police layoffs, we can no longer ensure your safety!” One person close to the process in North Las Vegas told the Sun, “As a businessperson, and without a dog in this fight, I look at all the crap going on and I don’t want to be a part of that, and I don’t want my business to be a part of that.”

The irony: The city had an unsafe reputation for many years with a fully staffed police department and without signs advertising it.
Photo by Paul Takahashi
The “new” North Las Vegas — on hold

Worldwide architectural firm Gensler won a $500,000 contract from North Las Vegas in January to develop a vision/master plan that would buff the city’s dull exterior in an effort to make it a hub for international business. In March, Gensler said "forget it." They gave up rather than deal with the political fallout. Mayor Shari Buck and Steve Horsford, state Senate majority leader, had called the project a waste of money. Others saw the project’s demise as another loss for the city. “North Las Vegas threw its chance away,” Otis Harris, a developer whose company had a public-private partnership with the city to create the master plan, told the Las Vegas Review-Journal.
Photo by Sam Morris/Las Vegas Sun
Close to bankruptcy

Talk of the state taking control of the city’s finances isn’t inspiring confidence. And that’s probably an appropriate response.

Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas, described what could happen if the state Taxation Department has to step in: “The law says the residents have to make up the difference (in the city’s debt) ... The residents would lose. They already have one of the highest tax rates in the state and they’d likely have to pay more ... Taxation would be looking at $30 million in debt that the city, the residents, need to pay off in three years. Senior citizens’ property taxes would go up and their home values would decline. How are they going to pay and what additional services would they get? And who is held accountable? It’s just really unfair.”