The Southern Nevada Tourism Infrastructure and Clark County agreed to make substantial economic benefits by raising the casino and resort tax.
The agreement was made in order to help raise substantial funding of $1.97 billion for the National Football League stadium near the Strip.
But less than one year after the Allegiant Stadium has opened, the supporter of NFL Las Vegas Raiders, the county is using the reserved funds to complete the mandatory bond payments.
Clark County enticed the Raiders and pledged $750 million as a commitment to build the National Football League stadium situated on the west of I-15 and Mandalay Bay. The promised money was contributed by Clark County in 2017 and also raised the funding by issuing bonds on behalf of the Las Vegas Stadium Authority (LVSA).
Clark County increased the taxes on the night occupancy for hotel room stays in the Las Vegas Strip and the surrounding areas. The tax was increased by 0.88%. The overall hotel tax increased more than 0.5% on all the hotels within the 25-mile radius surrounding the Clark County Government Center.
The increase in the hotel tax was expected and somehow completely obvious to repay the bond money but, the Covid-19 restrictions and shutdown changed everything.
Hence, this week the Clark County confirmed that they withdrew $1.17 million from the promised LVSA’s debt reserve fund account to complete the bond payment of $18.6 million which was due on 1st June 2021.
Covid-19 posed a great tragedy for Las Vegas tourism. More than 150,000 hotel rooms available around the city had an occupancy rate of 42.3% in the last year.
The average nightly rate of the hotel rooms was just $120.36 per night which means that the stadium tax was just $1.08 per night of guest stay.
The June 1 debt was the second time Clark County used the reserve funding. During December the Clark County took $11.5 million from the reserve fund to make their payment even for the first time.
Despite admitting multiple withdrawals from the reserved fund the Clark County spokesperson, Dan Kulin, claims that everything is smooth.
He says, “This action does not constitute a default and was expected in light of the decline in tourism to Las Vegas. Fortunately, the financing for the Stadium Authority bonds included the funding of a debt service reserve fund to weather economic declines like the one Las Vegas is currently experiencing due to the pandemic”
Principal At Applied Analysis, Jeremy Aguero, who also works at LVSA claims that the reserve fund account remains sturdy. He claims that the reserve fund account has more than $54 million which he anticipates that even the future withdrawal will not come near to the amount.
When the Nevada Government approved the legislation that allows Clark County to help build the NFL stadium, the tax generated from the Hotel night stay payment was needed to the initiated reserved fund. Revenue generated from the room tax is used to pay the bond debts and also used to fund the reserve.