Velotta: Building an arena is an investment in Las Vegas’ future

Representatives of the commercial real estate industry listened intently as Caesars Entertainment’s Marybel Batjer spelled out at a recent breakfast meeting how her company plans to get a 20,000-plus-seat arena built on land east of the Imperial Palace on the Strip.

Obviously, not everybody is thrilled with the Caesars plan, which is to go directly to voters for permission to create a tax district in the resort corridor to impose a 0.9 percent sales and use tax to finance stadium construction. It would be a public-private partnership with the public kicking in less than a penny per dollar spent on the Strip and Caesars supplying the land to build the arena.

Batjer and panelist Marshall Minor, vice president of Las Vegas-based Valtus Capital Group, told representatives of NAIOP, the Southern Nevada chapter of the Commercial Real Estate Development Association, that in this day and age, it’s virtually impossible to build an arena without some taxpayer support.

Just about everybody is in agreement that a sports arena could do great things for the local economy. It would be a necessity for housing a major–league sports team, likely a National Basketball Association or National Hockey League franchise. It would be an insurance policy toward keeping the National Finals Rodeo, one of our city’s wintertime salvations, out of Dallas Cowboys owner Jerry Jones’ hands. It would also be a suitable venue for another specialized category of events that are too big for the Thomas & Mack Center or arenas at MGM Grand, Mandalay Bay and the Orleans.

MGM Resorts International has led the charge against establishing a tax district, in part because it’s protecting corporate interests against its biggest competitor. And it’s also a reality that our state is well populated with citizens espousing a free-market libertarian philosophy.

But at some point, we have to recognize what building an arena is—an investment in Las Vegas’ future.

It’s easy for critics to point at Caesars and say, “You pay for it.” But the reality is that the entire community would benefit from an arena, some more than others, and a 0.9 percent tax on transactions on the Strip doesn’t seem like too much to pay for that, especially if it jump-starts the reinvention of the Strip we’re counting on to climb out of our economic despair. Most of us wouldn’t pay the tax every day anyway. Even if we did on special occasions, paying an extra quarter on a $25 meal doesn’t seem that onerous to me.

The centrally located arena site could help both the north and south ends of the Strip, and as NAIOP members were reminded, the north end has the greatest need for reinvention with the hulking Fontainebleau, skeletal Echelon, shuttered Sahara and aging Riviera and Circus Circus lining the street.

A few days after reporting on NAIOP, I covered the Nevada Economic Development Commission, which considers tax-break incentives for companies relocating to or expanding in the state. It took about 15 minutes for the commission to figure out that giving a company called US Micro Corp., a technology hardware recycler, a $182,000 tax break today would reap $2.3 million in net new taxes within ten years.

US Micro will provide 100 jobs that pay well above the average hourly wage, and it’s a small slice of economic diversification for a state that badly needs it.

But the point is that the commission saw an opportunity for investment, finding that to be more important than worrying about whether the tax break would be viewed as corporate welfare. Likewise, tax dollars being used to build an arena should similarly be viewed as an investment in Las Vegas’ tourism future because it will contribute to our collective prosperity.

The Legislature did a disservice to Southern Nevada by failing to take action on enabling a funding mechanism for the UNLV Now arena proposal and Chris Milam’s three-stadium complex across the highway from Mandalay Bay. Hopefully, when voters see a tax district initiative on their ballots in 2012, they won’t make the same mistake and recognize that it’s an investment in the city’s tourism industry infrastructure.