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October 25, 2014

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With a $29 million funding gap, Las Vegas works to pull together Major League Soccer bid

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Rendering of the proposed MLS stadium in downtown Las Vegas.

Updated Monday, July 28, 2014 | 6:41 a.m.

Developers proposing a $201 million Major League Soccer stadium must first plug a $29 million funding gap and reduce the taxpayers' share of the project's costs, according to city officials and records obtained by the Las Vegas Sun.

The records show that the city of Las Vegas is proposing picking up 74 percent of the stadium's total cost. The developers would be on the hook for the remaining 26 percent. The city would own the land and stadium. The developers would pay the city rent to use it.

But Bill Arent, the city's economic and urban development director, cautioned that the two-page "city funding model" document dated July 22 is still under negotiation. Two key points: the funding gap and splitting the stadium construction cost.

On the funding gap, Arent said they will search for ways to reduce the construction costs and the developers will explore other revenue sources.

On who pays for the stadium, Arent said he expected the city's final share would be closer to a 50-50 split with the developer by the time the negotiations are finished.

A 50-50 split would be roughly in line with recent MLS stadium construction projects. Forbes reported that team owners provided 46 percent of the stadium financing for 11 stadiums built between 1999 and 2013.

Justin Findlay, who represents Las Vegas developer Findlay Sports and Entertainment, said in a text message that he is "still in negotiations with the city, and any comment at this time would be premature."

Findlay is also partnering with the Cordish Cos. of Baltimore, a powerhouse developer of sports and entertainment districts around the country.

Even if the City Council endorses the proposal, the MLS bid must clear other hurdles before the stadium would ever be built.

Findlay's team must win a competition to land Major League Soccer's last expansion team before 2020. If they do, the Findlay group must pay the league's franchise fee that has fluctuated between $40 million and $100 million in the last four years.

Led by former Mayor Oscar Goodman, Las Vegas has been lobbying for a pro sports franchise for more than a decade. Current Mayor Carolyn Goodman, Oscar's wife, shares her husband's vision.

The MLS bid comes at time when one Las Vegas arena is already under construction and a second is in the works. MGM Resorts' arena broke ground in May and UNLV is proposing a football stadium that would also be partly funded by Clark County taxpayers.

Under Las Vegas's current MLS proposal, the stadium would cost $201 million and the city has identified $172 million in funding.

The developers share would be $44 million.

The city's share would be $128 million and would be covered by:

• $99 million by general obligation bonds. The annual $8 million debt payment on that bond would be repaid through rent the developers pay to the city, revenue generated by non-soccer events at the stadium and hotel room taxes.

• Another $15 million in bonds would be repaid by sales taxes generated near the stadium.

• And $14 million in cash would come from a city fund that pays for development costs.

The city records also indicate that Las Vegas will seek a commitment from the developers to build out land around the stadium. The area, known as Symphony Park, is a 61-acre lot east of Interstate 15 and west of the Fremont Street Experience. The deal would be modeled after one used in Detroit for a hockey arena for the Red Wings.

But the city has lots of details yet to sort out, including the terms of the developers' stadium lease.

Neil deMause, a skeptic of publicly financed sports stadiums and the author of "Field of Schemes," said the lease will detail the city's risk and long-term cost.

“Who gets the naming rights money? Who is getting luxury suite money? Money from ad boards? From parking?” deMause asked. “The team? The city?”

Stadium public meetings

Aug. 4: Doolittle Community Center, 1950 N. J St., at 6 p.m.

Aug. 7: City Council chambers, 495 S. Main St., at 5:30 p.m.

It's not clear yet if Findlay's group has the political support to get the bid through the City Council. Council members have expressed concern about taxpayers helping foot the bill for a privately operated sports stadium.

City leaders are scheduled to review the funding proposal with downtown casino executives on Thursday.

The public will get a chance to weigh in on the proposal during two public hearings next week. The city is also collecting public comment online until Aug. 11. The City Council is expected to take its first vote Aug. 20.

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