Published Friday, Aug. 23, 2013 | 12:40 p.m.
Updated Friday, Aug. 23, 2013 | 1:35 p.m.
Clark County officials may have to break open the piggy bank to finance the $167.4 million acquisition of Metro Police’s headquarters, a move they say could save millions of dollars in lease costs long term.
Metro paid $12.5 million last year to rent the trio of buildings on Martin Luther King Boulevard near downtown Las Vegas. That number will continue to escalate over the life of the 30-year lease, leading county officials to consider exercising an option to purchase the property outright.
“In 15 years, you’d essentially pay in lease payments the amount it would cost to acquire the building now,” County Manager Don Burnette said. “With a long-term lease such as this, it just makes financial sense for the county and ultimately the taxpayers."
Burnett said the purchase could save the county $150 million over the life of the lease.
Metro was pushed out of its previous, much smaller space at the old Las Vegas City Hall in 2011 after the city relocated to its new spot and the building was sold.
The new 370,500-square-foot campus at 400 S. Martin Luther King Blvd. allowed the department to consolidate most of its administrative and investigative units, putting dozens of agency bureaus on a single campus after years of being scattered throughout the valley.
The department is funded jointly by the county and the city of Las Vegas, along with a portion of property and sales tax revenues. After it chipped in an extra $8 million this year to help Metro close a budget gap, any money being spent on excessive rents is essentially coming out of the county’s coffers.
Purchasing the buildings will cost at least $167.4 million under the terms of the purchase agreement, possibly more depending on an appraisal.
Clark County commissioners approved a notice of intent to purchase earlier this week to the property’s owner, HQ Metro LLC, a company backed by developer Mark Fine.
The purchase window extends for a year starting July 1, 2014, and wouldn’t reopen until 2019 if a deal isn’t reached.
Although it would like to purchase the building, the county hasn’t yet figured out how it will pay for it.
“We don’t know quite yet. We don’t have a firm plan. There are a couple options we need to give some thought to,” Burnette said. “We’re nowhere near making a final decision.”
The cash-strapped county has about $116 million in general fund reserves after spending $41 million to close a budget deficit of its own for the upcoming year.
One proposal that has been floated is to tap into funds the county keeps on hand to pay for miscellaneous retirement benefits to finance part or all of the acquisition.
Under that scenario, the county would own the building, with Metro paying rent under terms of a renegotiated lease.
“My understanding is it was designed so that it would give that (retirement) fund a greater return on the money than just leaving it in the bank,” County Commission Chairman Steve Sisolak said. “That is guaranteed rent since it’s coming from Metro.”
Sisolak, who oversees Metro’s finances as part of its fiscal affairs board, says he’s open to purchasing the building after consulting with county staff.
“The rent is enormous over there," he said. "It provides a huge rate of return for the group that built it.
"They’re telling me we’d be better off taking it over. I’m very anxious to see what the appraisal comes back at.”