Las Vegas Stadium Authority Games Construction Dates; Raiders PSL Revenue For Bond Debt?

The Las Vegas Stadium Authority does an interesting job of making the Raiders Stadium’s dark story patches look rosy, this blogger has to give it credit for that. What follows is my personal, experienced, opinion on the recently released “summary report” prior to the May 23rd scheduled meeting of the Las Vegas Stadium Authority. Buckle up – video view below and here.

The Las Vegas Stadium Authority effort can be summed up in three words “cover your butt” and that’s the sanitized version. Regular readers will recall that this space pointed to Las Vegas Stadium Authority and Oakland Raiders documents that showed the construction end date was quietly moved back from July to mid-September of 2020, and as recently as the report from March 21, 2019.

Well, in the wake of vlog and blog posts from Zennie62Media like the one above, this new report for the May 23rd 2019 Las Vegas Stadium Authority meeting has this note: “The project schedule changed slightly during the reporting period. Substantial completion has been revised back to the originally reported July 31, 2020,with the stadium’s opening event now slated for August 16, 2020.”

And the Oakland Raiders Construction Manager Don Webb writes “We continue to work through schedule challenges imposed by delays in the fabrication and erection of major structural steel in an effort to preserve the Substantial Completion date of July 31, 2020. Although the sequencing and durations of the schedule’s 22-thousand tasks continue to change, the Project is on track for an on-time completion.” That reads like “cover your butt” talk, for sure – rather than admit what previous reports showed: that they were behind their original schedule.

And that was accompanied by a new bar graph that shows the “design administration” stops in July again, and not mid-September, as before. Now, take time to digest and to note this issue: as far back as October of 2018, the construction end date was in July, then in November it was moved toward September, then by February 28th of 2019, it was mid-September. Got that?

Now, after record Las Vegas rain days and rains causing known work stoppages, the Las Vegas Stadium Authority now has the idea it can skip over all of that, and present a rosy picture that any observer knows is not even close to reality.

The Las Vegas Stadium Authority essentially admits they’re moving the date back, but they don’t explain why – there’s no explanation of why the date was adjusted, just that it was changed. Webb writing “We continue to work through schedule challenges imposed by delays,” points to a problem, pure and simple. And that’s not the only area where there’s no explaination of an action. Let’s look at the stadium bond revenue and bond debt picture.

Las Vegas Stadium Authority Presents Mysterious Money Source

Item 12 on the May 23rd 2019 LVSA Meeting Agenda is called “12. Resolution to Augment FY19 Budget Fund 2960” – they’re going to add $31,178,331 to the Las Vegas Stadium Authority’s fund. It reads like this, basically: “The source of funds for the augmentation will be provided by unanticipated revenues and unanticipated beginning fund balance.” Well, that sure as heck didn’t come from the Stadium Hotel Tax Revenue, and we know this for two reasons: 1, the difference between what they expected to get and what they’re getting, or $102,133,028 minus $102,073,915 is just $59,113, or six-100th’s of one-percent, and 2, if it was because of a giant increase in revenue from the Stadium Hotel Tax, they’d have told us about it. (Have a read here.)

(And speaking of which, the Stadium Hotel Tax Revenue report shows a 0.1%, or 1-tenth of a percent, difference, between what was expected in total revenue or $102,073,915 and what was received, which was $102,133,028, but when you do the math to check the Stadium Authority’s division, you get 0.057878 % – that’s 5.78 onehundreths, and not 1-tenth of a percent. In other words, here again, the Las Vegas Stadium Authority plays games with numbers to pain a rosy picture, rather than just give us the real news – or it’s just terrible at math. Now, keep in mind, this is all being done with public money, okay? Just because I favor subsidies for sports as economic development doesn’t mean I favor pulling the wool over the public’s eye. It’s horrible to treat Las Vegas and Clark County residents like that, but here we are. But I digress.)

This Was The Revenue Stream Promised By Sntic
This Was The Revenue Stream Promised By The SNTIC

Additionally, the problem of declines in visitors to Las Vegas hotels continues. Looking at data posted by the Las Vegas Convention and Visitors Authority (LVCVA) , it shows that after what appeared to be a rebound in visitor counts in January and February, there was a slight drop of 1.4 percent in March of 2019. But that data detail for that March showed a 29.3 percent drop in convention-related visitors for the month of March since 2017 – all of that hurts revenue to the $645 million bond issue. In fact, March of 2017 was the only month in the history of the Las Vegas Stadium project to top 5 million in hotel tax revenue – not since that time has the 5 million revenue in one month mark been reached according to Las Vegas Stadium Authority data.

This decline in per-month stadium hotel tax revenue is the opposite of what was promised by consultants to the Southern Nevada Tourism and Infrastructure Committee (SNTIC) in 2016.

Las Vegas Stadium Authority Reports Better Than Expected Oakland Raiders PSL Sales

The one bit of massively good news worthy of celebration is that the Oakland Raiders have sold $284.2 million in PSLs and luxury suites.

That news, alone, is huge, and because it points to a sound financial future for the Raiders in Las Vegas and blows away all skeptical ideas (including from me) that the Raiders could sell seat licenses and luxury suites at the prices they were asking. And while I’m tempted to say “Let’s wait until they’re completely paid for,” I’m going to jump on what should be a nice bandwagon and say congratulations to the Raiders on this news.

It’s great news, so great the Las Vegas Stadium Authority mentions it. So great that, since the Las Vegas Stadium Authority points to it, but doesn’t explain where that $31 million in unanticipated revenues came from, could it be that the $31 million was transferred from the PSL revenue? It surely looks like it.

Raiders Were Supposed To Come Up With $250 Million In PSL Sales; $284.2 Million is $34.2 million Over, So…

So, given that the Oakland Raiders were supposed to come up with $250 million in PSL sales (in fact, the “Marketing and Sales Agreement” between the Stadium Authority and the Raiders says so, have a look), but gained $284.2 Million is $34.2 million, it looks for all the world like the LVSA took $31 million of that and applied it to its stadium fund.

And if’s that’s the case, then why not say so? And that leads to two items of cost that’s left out of this discussion: the mechanics lien and the parking and off-site infrastructure costs.

First, regarding the $278 million mechanics lien that was filed by Merill Steel (something universally called an alarming act pointing to a concern on the steel company’s part that it wasn’t going to be paid), the Las Vegas Stadium Authority reports “CAA ICON reported that the lien from Merrill Steel has been resolved with no financial impact to the stadium budgetand that discussions with TABContractors remain ongoing, however,CAA ICON anticipates a resolution with no financial impact to the stadium budget. Staff has requested that Grand Canyon Development Partners (“GCDP”) continue to closely monitor the progress of the project with particular attention given to the items outlined above.” Okay, but the report doesn’t say who or what “CAA ICON” is?

Moreover, the report leaves out that the mechanics lien was $278 million and reported almost $100 million in change orders. That said, an amazing bit of crisis management that the LVSA and the Raiders were able to resolve such an embarassing issue with Merrill Steel.

Second, there’s almost no report on parking and off-site infrastructure costs, save for this: “The Construction Monitor provided a separate analysis of the stadium’s off-site infrastructure budget, again noting however that the “full scope of the Off-Site Infrastructure will be established in the near future.” The monitor noted further that “should the final costs within the Off-Site Infrastructure Budget exceed the budgeted costs, other sources of funds would be needed.” It is unclear when the full scope of the off-site infrastructure will be made available to the Construction Monitor,as the past several reports have indicated it will be provided in the “near future” and Jones Lange LaSalle has not been provided any guidance relative to when it might expect to actually receive this information.”

For whatever reason details on “Off-Site Parking and Parking Shuttle Transportation System Development” costs have been consistently eliminated from Las Vegas Stadium reports, to date. The Raiders agreed to pay for pedestrian bridges, underpasses, and emergency services, but that doesn’t even start to include the cost for parking, widening and lighting for streets around the stadium, and other items that totaled up to $900 million, according to the Nevada Department of Transportation’s October 4th, 2016 Study.

In all of the focus on the construction of Oakland Raiders and UNLV’s Las Vegas Stadium, it seems like its easy for some to forget that this is an enormous venue that will substantially and significantly alter traffic patterns and volume in the South Strip Area of Las Vegas. Pushing back what are giant-sized cost considerations and discussion is like playing with fire, but that’s something the Las Vegas Stadium Authority appears to enjoy doing.

Stay tuned.

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