Language in a tax reform bill could affect a new Las Vegas stadium that is expected to open for the Oakland Raiders in the coming years.
As unveiled last week, a bill from Republicans in Congress includes language that would put an end to tax-exempt status on bonds used for the construction of facilities for professional sports franchises. Plans such as the $1.9 billion stadium project that has taken shape in Las Vegas could fall under that criteria, as the funding model for the venue includes a $750 million public contribution that is to be financed through tax-exempt bonds. According to a stipulation attached to the proposal, the legislation would apply to bonds issued after November 2, 2017.
If the bill is approved, and the current language concerning tax-exempt bonds for financing remains in place, it could end up having an effect on the financing for the new Las Vegas stadium for the Raiders. The extent to which it could affect the stadium, however, remains unknown, according to Jeremy Aguero of Applied Analysis. More from The Las Vegas Review-Journal:
“The stadium, as designed, appears to meet the definition of a project that could not use tax-exempt bonds,” Aguero said Friday. “That could potentially affect the financial models we have been using in estimating the potential cost of the project. The extent to which that is is unknown.”
Aguero said at its most fundamental, the proposal would increase the interest rate and either make the project more expensive or decrease the yield.
“We stress-tested the model for things like higher interest rates,” Aguero said. “We understand the potential that comes with either legislative risk, or interest-rate risk or development risk, for that matter. I wish I could tell you it’s going to cost X amount of dollars in order to make it work but we need to go through the exercise of making sure we understand all the components of that legislation because that’s not the only one that will affect municipal finance.”
The tax bill has not passed to this point, though president Donald J. Trump has pledged to approve it by Thanksgiving.
Rendering courtesy MANICA Architecture.
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