Over the last year, the GSR Reno arena project has generated a lot of conversation but has seen little progress. Local outlets reported ahead of Wednesday’s city council and Redevelopment Agency Board (RDA) meeting that an agenda item had surfaced with a report saying that the GSR had applied to the RDA to designate the development as a “catalyst project.” That designation would make it eligible to receive $97 million in tax increment funding (TIF) from the RDA.
This appeared to be a stark reversal from the original announcement. At that time, University of Nevada, Reno (UNR) president Brian Sandoval told cheering crowds that “there will be no public dollars” put toward the project. Sandoval, a former Nevada governor, is said to have a strong relationship with GSR owner Alex Muruelo.
Andrew Diss, chief strategy officer for Muruelo Gaming, told officials that that was a misunderstanding. Sandoval’s comments referenced the university, not the casino.
“What we have maintained all along and what Mr. Muruelo has been adamant about is that we are not asking (UNR) to contribute any capital to this project,” he said. “The university does not have money for new facilities and it’s in critical need for them in their athletic department. That’s what the comments were directed to.”
Proponents: project still in early phases
The scattered–and at times, heated–conversation at the Reno City Council meeting was the first step in what could be a lengthy process. Diss and Bryan McArdle, revitalisation manager for the city, explained several times that stakeholders were simply seeking approval to move forward with next steps.
Those next steps would include more financial, economic and market feasibility analysis for the GSR Reno project. Ultimately the council voted 7-1 in favor of moving forward. Most members did so with the warning that there are several details still yet unknown. There is no set timeline for when the matter will be back before the council, but the estimate is 30 to 90 days.
In addition to the arena, the GSR is also proposing an 865-room hotel tower, a 50,000-square-foot ice skating rink, a 25,000-square-foot “retail fan zone,” a new waterfront golf driving range, a 300-unit workforce housing building and a 2,400-unit parking garage. The arena would open in fall 2027 and the entire project would take 10 years.
The venue is slated to become the new home of UNR men’s basketball and Muruelo’s AHL hockey franchise. UNR’s men’s and women’s teams have played at the on-campus Lawlor Events Center since 1983. The women’s team would remain at Lawlor, which actually has a higher capacity than the proposed arena (11,200). As Diss clarified, UNR will not contribute funds to the project.
What is the RDA?
GSR’s “Catalyst Project” application is the first under new RDA participation guidelines approved in August. The RDA was created in 1983 “to attract and assist private investment, facilitate development in the City’s urban core and surrounding areas, and increase property values in the region,” according to its website.
As a mature gaming market with limited growth since the 1970s, Reno has long worked to diversify its economy. Thus the RDA was formed to “identify, support and facilitate successful redevelopment opportunities.” Its board is composed of the city council and mayor Hilary Schieve.
There are currently two RDA-zoned “redevelopment areas” in the city. “RDA 1,” also formed in 1983, encompasses downtown. “RDA 2,” formed in 2005, encompasses other popular areas on South Virginia Street, East Fourth Street and elsewhere. The GSR project falls into RDA 2.
For nearly 20 years, the RDA was largely dormant because of debt and other struggles. But the recent application guidelines were designed to inject life back into the agency.
Off to a ‘very clouded’ start
The lengthy conversation on the item did not get off to a good start. Before McArdle could begin the presentation, councilwoman Jenny Brekhus asked that it be tabled due to a conflict of interest. City attorney Karl Hall, she noted, is married to GSR’s legal counsel Ann Hall.
“Out the gate, we start with a very clouded consideration” of a substantial matter, she asserted.
As Schive attempted to mediate, assistant city attorney Jonathan Shipman downplayed the accusation. In response, Brekhus snapped that Shipman works “at the sole discretion” of Hall and was hired soon after Hall took office.
Coincidence or something fishy?
GSR’s application is the first under the new RDA program. The timing didn’t sit well with Brekhus, who argued the circumstances don’t paint a positive picture.
“It feels like we’re redoing the RDA in service to this entity and their ask, and I think that’s really problematic,” Brekhus said. “We’re talking about a public subsidy for a sporting venue. You don’t have to look very far to see failed sporting venues, we’ve got two of them.”
This was a reference to the National Bowling Stadium and Greater Nevada Field, the home of the minor-league baseball Reno Aces. Both venues have underperformed projections and cost the city money.
As a final note, she brought up the fact that Muruelo-backed entities have made political contributions to several candidates in town. She later cast the lone “no” vote.
What exactly is TIF?
Over the course of the presentation, McArdle championed the economic benefits of the project. It would, he said, generate $23.5 million in annual economic impact if fully built out. He also pointed to the affordable housing benefits and flood mitigation on the nearby Truckee River. These points were fairly straightforward. What was not, however, was how the city’s money would be involved.
Much of the conversation that followed aimed to understand TIF and how it would apply here. Multiple councilmembers said they wished to know more about it before making commitments. Essentially, TIF diverts future property tax revenue to fund redevelopment. It is popular but controversial in the US for its complicated nature.
McArdle asserted that it is not as simple as giving developers public funds. Rather, there is no liability because the TIF only kicks in once the project is completed. And the city gets to dictate the exact terms of the agreement. Most TIF deals, he said, are for 4%-10% of the overall cost–at $97 million, this deal would be right around 10%.
But those caveats wouldn’t change the fact that city services would not receive their usual funding from such development during a time when many departments are already overstretched, argued councilwoman Meghan Ebert.
Bring in the consultants
The next step will be to enlist third-party consultants to conduct feasibility studies and analyse the financial projections. McArdle said those costs are viewed as operating expenses to be paid back at the completion of the project. There are three firms, he said, that the city is currently considering.
Overall, the council approved the item with trepidation. Some, like Brekhus and vice mayor Naomi Duerr, were outright skeptical. Despite a “yes” vote, Duerr stated a longstanding dislike for sports stadiums getting public funds, including the Raiders’ Allegiant Stadium and soon-to-be Las Vegas A’s stadium in Las Vegas.
Others, like councilman Devon Reese and councilwoman Kathleen Taylor, specifically sought more clarity on how TIF would be utilised. And mayor Schieve was nuetral with a dash of optimism.
“I don’t think there’s any reason to be negative but we don’t know the details,” she said.
Original article: https://igamingbusiness.com/casino/gsr-reno-public-tax-dollars-misunderstanding/
