GADCAPITAL: RAIDERS’ STADIUM REQUIRES EXTRA FUNDS TO Cover DEBT PAYMENTS AGAIN.
Clark County, Nevada, is drawing massive amounts of money from reserve funds for the second time in six months to make a payment on the Las Vegas Raiders’ one-year-old stadium.
In regulatory documents, the county revealed that it would make an unannounced withdrawal of 12 million dollars from one of the reserve funds used to guarantee the $595 million in bonds issued in 2018 to help construct Allegiant Stadium. The county has a twenty million dollar bond payment due on June 1st.
In an email, Clark County director of communications said, “This move does not imply a default and was anticipated in light of the reduction in tourism to Las Vegas.”
“Fortunately, the Stadium Authority bonds’ financing includes cash for a debt service reserve fund to weather economic downturns like the one Las Vegas is now experiencing as a result of the epidemic.”
Municipal officials drew twelve million dollars from reserves in November to cover the semi-annual payment due on Dec. 1. Clark County levies a 0.88 percent hotel tax along the famous Strip and a 0.5 percent hotel tax near the stadium to repay the bonds. According to data from the Las Vegas Convention and Visitors Bureau, hotel occupancy is improving in the city, but it is still 36 percent below the 2019 level in March.
While the county promises to have a bond reserve equal to two times annual debt service payments, the drawdown isn’t a default—a particular move that allows bondholders legal recourse—according to the conditions of the bonds. Whether or not tourists secure rooms in the city again, area residents are ultimately responsible for the bills:
The bonds were issued as a general obligation of Clark County, meaning that the government promises to utilize all of its taxing power to ensure that the debts be paid.
Starting July 1, the county must pay $35.4 million in the coming fiscal year, rising to $59.2 million in 2048, when the last of the bonds matures. Clark County will have spent $709 million in interest on top of the $645 million in principal for funding the football stadium by the time the Allegiant Stadium debt is canceled.
The two billion dollar domed arena, which opened last summer, was funded by Clark County, two-hundred million dollars from the NFL, three hundred million from stadium seat licenses, and a six-hundred million bank loan to the Raiders.
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