Published Wednesday, Jan. 22, 2014 | 1:34 p.m.
Updated Wednesday, Jan. 22, 2014 | 4:55 p.m.
Despite a majority of its members opposing the current plan for a new $390 million downtown arena, the Las Vegas City Council voted to extend an exclusive negotiating agreement today that will give the developer behind the project four more months to work out the financing.
The council voted 4-3 to extend the agreement with Baltimore-based Cordish Cos., the developer behind the proposed arena at Symphony Park.
Councilmen Bob Beers, Bob Coffin and Stavros Anthony voted against the extension, which gives Cordish until June 1 to complete a construction feasibility report and an investment-grade feasibility study. Councilwoman Lois Tarkanian voted in favor of the extension, but said she wouldn’t support the plan in June without changes, including removal of public funding for the project.
“I’m really disappointed in what has transpired over the years since we’ve been with Cordish...Where has all this time gone? What have we done?,” Tarkanian said. “If we were voting on the Cordish proposal today I would probably vote no, I’m not in favor of the use of public funds.”
In voting for the extension, Tarkanian said she believes in second chances and that she hopes Cordish will make substantial progress on the proposal by June.
The city has been working with Cordish to develop an arena downtown for several years, but the latest plan emerged suddenly last week, catching some council members and downtown businesses by surprise.
The exclusive negotiating agreement with Cordish was set to expire at the end of January, forcing quick action, city staff told the council.
One major detail left to be resolved by June is finding an additional $52 million to fund the project.
Under the proposed plan, Cordish would contribute $151 million in equity, with the city issuing $187 million in bonds that would be paid off by arena revenues.
The city had planned to raise the remaining funds through a special tax on downtown businesses, but scrapped the idea after public outcry.
Now, officials are planning to plug that $52 million gap with additional private equity, although it’s not clear where the investment would come from.
The city will have to hire an outside attorney at an estimated cost of $100,000 to provide legal counsel on negotiations with Cordish related to the arena project, City Manager Betsy Fretwell said. The attorney would have expertise the in-house City Attorney's Office can't provide. No other direct costs will be incurred to the city as a result of Wednesday's extension.
Representatives from several downtown organizations, including Boyd Gaming and the Downtown Las Vegas Alliance, which represents dozens of downtown businesses, spoke out against the use of public funds for the arena and criticized the city’s lack of engagement with the broader community on the project.
“Neighbors don’t know what to think ... things keep changing,” said Terry Murphy, president of the Downtown Las Vegas Alliance. “We’re here every day and apparently this has been worked on for quite some time. Nobody’s ever asked our opinion, nobody’s ever said, ‘Hey, what do you think.’”
Others criticized the project as speculative and unnecessary because several existing arenas and at least one more are planned. Although the city-backed bonds used to build the project will be paid for using revenues from the arena operations, any shortfall would likely put the city on the hook to make up the difference.
“The revenue projection is just wildly unrealistic. It suggests that we’ll take all of Thomas & Mack’s business away, which is kind of a preposterous premise,” Councilman Bob Beers said. “Without that revenue this project is likely to fail, I believe, and that will leave the taxpayers holding the bag again.”
Supporters of the arena project were undeterred, confident that any issues could be ironed over and that the project has the potential to transform downtown, in addition to creating thousands of new jobs.
Mayor Carolyn Goodman spoke forcefully in support of the proposal, framing it as a necessary step to keep Las Vegas an international leader in tourism.
“We have to be the leaders and look forward. I couldn’t agree more with the comments that have come before, but we’re already at the dance,” Goodman said. “There’s going to be a four-month time here where I would expect our city to be deeply involved in many, many meetings to get all the information together in hopes that we can do this.”