Las Vegas Sun

March 29, 2024

City sewer fund has $148 million — a good place to steal money for a mob museum

That's just one fact revealed 29 hours after I asked city officials for basic information about an $80 million loan they hope to use to fund the mob museum and other redevelopment projects, including, perhaps, the Oscar Goodman Memorial City Hall. I have pasted the answers to my questions below. And at right you will find the resolution the council quietly enacted to facilitate the loan and the agenda item.

I understand the city late last year approved an unusually large interfund transfer -- $80 million — from its sewer fund to pay for a number of redevelopment projects, including the mob museum. I have a few questions:

1. What is the rationale for this transfer since redevelopment and sewers don’t have an obvious nexus?

A: This was not an interfund transfer but an interfund loan that will be paid back over a 10 year period with 3 percent interest on any outstanding balance. The city has used interfund loans in the past. The Sanitation Enterprise Fund has about $148 million in unreserved fund balance, and much of that was to go toward plant expansion if the North Las Vegas Sanitation Project did not proceed. Now that NLV is proceeding on their project the city does not have an urgent need for plant expansion. Given the tight municipal credit markets, accessing these funds through a medium-term loan agreement makes sense until the credit market s ease up .

2. Which projects are covered by this transfer?

A: The resolution did not specify, but states that the money would be used to finance the cost to acquire, improve and equip certain public improvements in and around the city's redevelopment area.

3. How much money is in the sewer fund — the Sanitation Enterprise Fund?

A: See answer to #1, about $148 million.

4. Please provide me with a list of other interfund transfers — if there are any — during the last six months.

A: There were no other interfund loans during this time period, and again, that is what this is a loan, not a transfer. We are working on pulling together the information on the interfund transfers.

5. Does this need to be approved by the Department of Taxation, and isn’t it true they have raised questions about this transfer?

A: Yes, the Department of Taxation has to approve the interfund loan. Some routine questions have been asked of the city and they have been answered to the Department of Taxation's satisfaction. The city expects the loan to be approved soon.

6. Isn’t this risky if the city cannot pay back the $80 million?

A: All loans carry repayment risks. In this case the risk is very small that the financial markets will not sufficiently recover within the next 10 years to enable the RDA to sell the bonds they have already been authorized to sell. The interfund loan will be paid back from these bond proceeds. Additionally, Union Park's land sale proceeds would also be available to repay the loan as well.

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