County assists Bishop Gorman with refinancing of debt

By Joe Schoenmann

Thursday, Nov. 17, 2011 | 2 a.m.

Clark County commissioners will allow Bishop Gorman Development Corp., which built the private high school’s new $115 million campus, to issue county special-limited obligation bonds to refinance $25 million in debt.

Commissioners unanimously approved the plan this week after being assured that the county won’t be liable to pay the debt and is solely the bond issuer.

Bishop Gorman is a Catholic school that continuously fields dominant athletic teams. Its alumni include influential figures in government and business in Southern Nevada. Officers of the Bishop Gorman Development include casino chiefs Michael Gaughan and Lorenzo Fertitta, and Tito Tiberti. Water czar Pat Mulroy helped raise funds to build the campus at Hualapai Way and Russell Road that opened in 2007.

In its application, Bishop Gorman Development said the bond will benefit the county “by assisting the corporation in providing educational services” for its residents.

By state law, qualifying organizations can ask the county to issue Economic Development Revenue bonds to raise money as long as they demonstrate firm financial footing and show that the money will be used to benefit “the social welfare of the residents” of Clark County.

Since 1999, the county has issued bonds for such causes six times: Alexander Dawson School in 1999 raised $31.5 million; Faith Lutheran, $11.6 million in 1999; the UNLV Foundation, $6.18 million in 1999; Alexander Dawson, $8.72 million in 2003; Bishop Gorman, $15.3 million in 2006; and University of Southern Nevada, $26.74 million in 2007.

The Gorman refinancing is needed, an analysis filed with the county says, because its outstanding bonds are secured with a letter of credit — an additional layer of security for bonds — from Allied Irish Bank. That letter of credit will expire in February.

In addition, the European debt crisis has stoked investor concerns and the trading performance of Allied Irish Bank’s short-term debt instruments has “declined significantly,” the analysis says.

So instead of Allied Irish Bank, the Development Corp. wants to go with Bank of America, resulting in lower interest payments.

Interest rates will be variable, so Commissioner Steve Sisolak questioned the deal.

“What happens if, as many people experienced over the last few years, rates shoot up?” he said after the meeting.

He was assured the county would have no payment obligations. However, he warned, if for some reason Bishop Gorman were unable to make interest payments on the bond, Clark County could be hurt by having its name attached to the deal.