MINUTES OF THE
SENATE COMMITTEE ON GOVERNMENT AFFAIRS
Sixty-seventh Session
May 7, 1993
The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 11:35 a.m., on Friday, May 7, 1993, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Ann O'Connell, Chairman
Senator Sue Lowden, Vice Chairman
Senator William J. Raggio
Senator Dean A. Rhoads
Senator Thomas J. Hickey
Senator Leonard V. Nevin
Senator Matthew Q. Callister
STAFF MEMBERS PRESENT:
Caren Jenkins, Senior Research Analyst
Diana Gamble, Committee Secretary
OTHERS PRESENT:
Marvin Leavitt, Lobbyist, City of Las Vegas
Jennifer Stern, Swendseid and Stern, City of Las Vegas
Don Snyder, President and Chief Executive Officer, Fremont Street Experience
Scott Higginson, Councilman, Las Vegas City Council
Barry Shier, Golden Nugget
Bob Cloud, Jerde Partnership
Helen Foley, Lobbyist, Downtown Progress Association
Chairman O'Connell called the meeting to order and opened the hearing on Assembly Bill (A.B.) 433.
ASSEMBLY BILL 433: Authorizes formation of districts to finance costs of improving central business areas. (BDR 21-1586)
Don Snyder, President and Chief Executive Officer, Fremont Street Experience, spoke in favor of A.B. 433 stating the bill would facilitate the development of the Fremont Street Experience. He
informed the senators the Downtown Progress Association (DPA) had done a complete business plan (Exhibit C. Original on file in the Research Library) which laid out in depth what kind of redevelopment they planned on doing through the Fremont Street Experience, how it would be managed by the private sector and how the private sector/public sector alliance would be structured.
Scott Higginson, Las Vegas City Council, testified in favor of A.B. 433, telling the committee Las Vegas downtown is facing a crisis which could result in the loss of 22,000 jobs. He said there is an investment of over a billion dollars in property in the downtown area of Las Vegas. Recent trends in the gaming industry indicated a less than positive outlook in store for the Las Vegas downtown area unless a revitalization effort proposed in A.B. 433 is passed, explained Mr. Higginson. The effects of A.B. 433 would provide a catalyst for continued investment and job creation. Mr. Higginson continued:
Downtown must have an attraction of its own in order to compete with those already in existence and those under construction along the Las Vegas Strip. The big question became where to put it. As you know, downtown the hotels just sit on small city blocks not the large acreage that you find along the Las Vegas Strip. So, I believe a marvelous concept was designed to take the street and turn it into the attraction, tying the street and all of the casino along the downtown Fremont corridor to each other. Mr. Jerde has done a marvelous job there and I think you'll hear more about that and have an opportunity to review some of his work and what the project really entails. I'm convinced the downtown revitalization is essential and that in order to succeed we must start with the area of the center, the critical mass. Only by starting with the heart of downtown will we be successful in enhancing and preserving what has for years brought tourists and locals alike to the core of our city.
The city will be participating in a much more traditional, local government, redevelopment role as part of their effort. As the redevelopment agency, the city's financial contribution to the Fremont Street Experience will take the form of a very common redevelopment project approved in communities throughout the country, a downtown parking garage. The 7-story parking garage will accommodate the increased downtown visitation and provide retail space on the street level. The bonding capacity will be utilized to construct the facility but repayment of the bond will come from parking fees and validation charges. I might point out one of the things I think is exciting is the opportunity for the retail space to be introduced back into
the downtown core which can be found in the bottom of the
parking garage. The street scape improvements provided by the city will address the concerns raised in many previous studies. The recommendation downtown beautification and enhancement....as a 10-year resident of Las Vegas I've seen numerous studies always on the front page, this is the way to improve downtown by fixing Fremont Street. And that will occur, the street improvement funding was made possible by the passage of Question 10 with the support of this legislature as well as the support of the citizenry. The canopy and sky parade portion of the project are to be funded both directly by the DPA and through the proposed room tax increase before you today. As a councilman in one of the fastest growing cities in America, I'm deeply concerned about the growth related success enjoyed by the Strip and how it might irreversibly harm the jobs and economic benefits provided by a vibrant downtown. Both can grow and both can improve together. Today we present to you what I am certain is a successful and competitive cornerstone project that will balance the economic prosperity of the Las Vegas Valley and will in turn provide a strong base on which other redevelopment efforts can be built. A.B. 433 plays an essential role in the creation of one-of-a-kind entertainment experience that together with vast street and sidewalk improvements and more parking it is guaranteed to keep the tourists in our downtown core.... Remember it's (A.B. 433) legislation that is uniformly embraced by those it will provide a tax to, the downtown properties. Together with all of us at the city, the members of the DPA have caught the vision provided by the man widely considered as the Walt Disney of downtown revitalization, Mr. John Jerde.
Mr. Barry Shier, Golden Nugget, Las Vegas, told the committee the property owners in downtown Las Vegas are unanimously in favor of the revitalization of the downtown area. He said there was a sense of urgency because of the erosion of the downtown gaming market.
Marvin Leavitt, Lobbyist, City of Las Vegas, told the committee A.B. 433 allows for the creation of a district by the city council which would be used as an area in which to levy room taxes. The district would be restricted in area and to only cities over 200,000 in population. The bill allows for the city council to increase the room tax by an amount not to exceed 2 percent. Mr. Leavitt explained the 2 percent would be used to fund the construction of a portion of the project and would be specifically used to repay principal and interest on bonds that would be issued for the project.
Senator Raggio asked:
Mr. Leavitt, in order that we may have this on the record. The proposal is for the revenues from the room tax to repay the bonds and have you or your organization performed the appropriate study so that you can assure the legislature that the revenues anticipated will be sufficient to service the bonds.
Mr. Leavitt answered:
That is correct. We have analyzed room tax receipts in the past, what we are currently collecting from room taxes and we can indicate to you that the room tax that is being currently collected is sufficient. We apply that ratio to the 2 percent to repay the principal and interest on the bonds. We are not basing this payment of principal and interest on growth, even though we believe it will occur. But we do not need that growth to repay the principal and interest on the bonds. What is currently available will be sufficient.
Senator Callister commented on the main street project:
I remember the Fremont Street of my youth in a far different way than I perceive it today and so I think it's an extraordinary wedding of traditional of what the Fremont Street area is known for with a vision of what it can be....
Senator Callister asked when the project construction was going to begin and when was the anticipated time of competition.
Scott Higginson, City Councilman, City of Las Vegas, said:
With the passing of this bill (A.B. 433) it would put us in the position to move through the bonds process. We anticipate beginning construction in August and in the fall of 1994, we would be looking towards the latter part of the fall to completion. So, it's approximately a 14- to 16- month construction process.
Senator Callister asked:
In terms of rights-of-way and access, have those issues been looked into in order to be able to expedite your construction process.
Bob Cloud, President, Jerde Partnership, answered:
Yes, part of the task force that we had between the city, the John Jerde Partnership and of course, the Downtown Progress Association involved in all the design meetings, the input from the fire department. So we were with police, fire, all the appropriate services have been involved in the complete design process of the project.
Senator Callister asked if there was uniform support among the participants in the design process. Mr. Cloud said the support was unanimous. Senator Callister asked why levying a tax was the best device for financing the project.
Marvin Leavitt answered:
We've gone through a huge number of possibilities since we've developed this project. We've considered everything from special districts which are special assessments districts,.... for instance, to something to do with property taxes to, you can almost name it, and we've considered it. You've heard comments that perhaps the special improvement district would be the ideal way to develop this. I'm going to indicate that we've considered that very strongly in the initial phases of this project and because of the complexity of the underlying property owners, not just the hotels but many of the hotels sit up on properties that are owned by numerous individuals and where an improvement district takes a 100 percent approval by every underlying property, we decided that was not practical. We decided not to go that route and when we did turn to this route, we've got 100 percent agreement as has been stated. We have no one upon whom a tax is going to be levied that has not agreed to this payment.... So, because of that I think this is the very best alternative after we've considered many many different alternatives to the financing.
Senator Callister asked Councilman Higginson:
On page A-3 of this booklet, (Exhibit C), it looks to me that the only new retail that's scheduled or anticipated is at the intersection of Las Vegas Boulevard and Fremont Street. Is that correct? Beneath the new parking structure.
Councilman Higginson answered:
Well, if you look at the Fremont Street core there's 38,000
square feet that is dedicated retail space under the
parking facility. However, part of the whole process and one of the wonderful experiences I had in performing case studies of all John Jerde's redevelopment projects, in each case a mall concept was used. Retail was brought in to become the anchor. And the retailer took the risk. Typically, the investor brought the retailer in for very low costs per square foot and then those retailers became the reason why all the other services came into the area, be they restaurants, office buildings, hotels, etc. What has happened in this particular case, the gaming environment now is the anchor. And, because we have a mass of people, the retailers that we're already talking through the Jerde organization are going to enable us to look at this project like the rings of Saturn. So that we can develop ripple effect rings of development. So, we're already looking at Ogden [Street], we're beginning to look at Carson [Street] as far as the development moving outward. More importantly this project was designed with the intent that it is module. So you can expand this project very, very easily without creating any problems with the existing core development.
Senator Lowden asked if Ogden and Carson streets in Las Vegas could support the new increase of traffic which would be caused by the close of Fremont Street.
Councilman Higginson answered:
Well, the traffic studies, interestingly enough before we ever even looked at this project, the traffic studies that had been done had actually called for the closure and one way of casino center which was something we were very much against for quite some time because of the unloading of passengers on buses and of course unloading which you have at the Four Queens and at the Fremont [casinos]. So, when you look at the project now and the different traffic issues, the traffic issues are not going to be worsened. In fact they're going to be helped. The parking facility is between Fourth and Las Vegas Boulevard and that is going to enable us the ability to bring people in through Las Vegas Boulevard which currently today is not even used as an artery of entry into the downtown area. So we have very, very carefully placed the parking structure. In the future if we were going to ever look to develop another parking structure, it would be on the other end which would be between Main Street Station and of course, Union Plaza. And, I think one of the other issues that's very, very
positive through all of this is that Main Street Station which we all know right now has been lying idle, is now
being considered by two different organizations for operation and they're all sitting back waiting to see what happens with the Fremont Street Experience.
Senator Rhoads asked what would happen if there was to be a major fire when everything was enclosed as proposed in the Fremont Street Experience.
Councilmen Higginson answered:
The project itself, if you look at the grid, the actual celestial vault, it is not an enclosed structure. It's a mesh of almost like a chicken wire fence but in a little larger scale because again remember, it's 100 feet from the ground to the apex of the structure. It provides a shade but it provides complete ventilation. It also provides us the ability to move equipment in to that general area. But, the hotel towers are now all accessible from the side streets. So, that was the main concern and consideration of the fire department when we were going through this whole process. The ability to take gridding out is also available. But again this is part of the design structure but the access is all in place.
Senator Rhoads was concerned about the heat with all the lights and the temperature outside and asked if a lot of water was going to be needed to cool the area under the structure.
Bob Cloud, Jerde Partnership, answered:
The amount of water that is anticipated to be used in the misting system, which is really the only source of water, would not exceed the average usage of three single family residents in a given year. With respect to heat generated by lighting, what we intend to do is select a limited number of fairly intense sources and use those sources to reflect light off of millions of reflectors that would be on the bottom of the space frame. So, the idea would be to create this multitude of points of light but do it from limited number of sources that will occur at the columns that are supporting the space frame.
Senator Rhoads asked if the canopy would create a place for homeless people.
Councilman Higginson answered:
This is a traffic issue. When we looked at many of John's [Jerde] projects, one of the reasons why many downtowns
that have tried to close off their streets to traffic have failed because the business hours are typically limited. They run from 10 in the morning until 9 or 10 at night and then they are closed and that's when you have the problem is in the evening hours. We're in the 24-hour business. Therefore our opportunities run around the clock, our security runs around the clock. Privatization of the street, in order to provide the security to provide the cleanliness but again leaving the assets intact for the city because there isn't a vacation of the street is the way we get around that entire program and provide a environment that's attractive for people to come to.
Addressing section 7 of A.B. 433, Chairman O'Connell asked Mr. Leavitt if A.B. 433 would take money from any other revenue-producing project.
Mr. Leavitt responded:
One of the joys of bond counsels, they put language like this in so that they provide, not only the security for the bonds that we're discussing, but any other monies that might happen to be available for it. Now, as we discussed just a little bit with you on yesterday, there's several sources of revenue that are coming into the project in general. We've discussed, for instance, with business organizations buying time when the floats operate down there when it might be specific to those organizations whereby revenues will be produced from the operation of the facility itself. There's also revenues that will be produced by these sales and such that take place within the parameter of this. And, this is just simply designed so that if monies are available over and above the cost of operations and such that they could be used to supply to enhance the debt service on the bonds. It's not going to be required. I think I've indicated to you originally that the monies from the room tax are sufficient to pay the bonds. What this simply does is provide that there's another alternative if such money should be available. We do not have any plans to do anything specifically to do that other than what I discussed with you. At the same time it just enhances the process. All it says, if revenues are available, it can be used. We're doing something to add security to the bonds.
Chairman O'Connell requested a letter from the Las Vegas City Council stating it was not the intent to take funds away from any other
projects. She also asked if there would be any money requested from the Convention Authority for this project.
Councilman Higginson responded:
Over the course of the existence of the downtown, approximately $63 million has been contributed in room taxes to the Las Vegas Convention and Visitor's Authority. If you look today at most of the reports and studies that have been done by outside agencies that have been hired by the Las Vegas Convention and Visitor's Authority, they will tell you that there has been a distinction and separation between downtown and strip. I think today that it is probably more evident than ever when we look back in the early '80s when approximately 80 percent of all individuals that came to the Strip at least visited downtown one time during their stay. Today, unfortunately, it's down to 20 percent. That's a dramatic change in what we are and I think what's been created is a tale of two cities. Laughlin, on the other hand, is a group of properties that have come on the line and contributed in the course of the last few years of operations when these numbers have been tabulated probably closer to $9 million in contributions to the LVCVA (Las Vegas Convention and Visitor's Authority). On an annual basis it's about 3 and a half million dollars per year. Whereas the downtown area is more in the neighborhood of around $9 million per year. Laughlin receives over $900,000 in direct advertising monies directly from the monies contributed plus $500,000 in operating office expenses on an annualized basis. I think what are looking to do, because this is a recreational environment, this is an environment that promotes tourism, we are not asking that the LVCVA underwrites or funds this but provides an income stream minimal at best, about $8 million over the course of 8 years. So, it's a million dollars per year. Which when you measure it against the $9 million that are being contributed each year, it is a much lower percentage than the particular example of Laughlin. These monies would be used to enable us to go out bond additional capital for this project. And, that's done at the end of that period of time. As a board member, I know that the board is very concerned, 'does this open up pandora's box and does this create other problems'. I appreciate and I understand the fiduciary responsibility we all have to the community and more importantly the 18,000 people that work downtown. But, more importantly we're trying to preserve the integrity of the 9 million that's going to the LVCVA now. And, if we don't protect it, it
may cost you a million a year for eight years to protect nine, but if you don't give the million you're going to shrink to about 7 then 6 then 5. It's the kind of
investment that most people would make and jump in a real quick move. Unfortunately, because of the situation at hand, it hasn't been done and because of that and it's going to be a working process that we're going to have to go through. This particular point is critical to the downtown development, this project and we're looking for your support in that regard. The LVCVA issue becomes an issue that we need to discuss with the LVCVA in the upcoming months.
Chairman O'Connell asked for a motion from the committee regarding A.B. 433.
SENATOR HICKEY MOVED TO DO PASS A.B. 433.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Chairman O'Connell closed the hearing at 4:16 p.m.
RESPECTFULLY SUBMITTED:
Diana Gamble,
Committee Secretary
APPROVED BY:
Senator Ann O'Connell, Chairman
DATE:
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Senate Committee on Government Affairs
May 7, 1993
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