Citing misunderstanding, GSR’s $1 billion arena project seeks tax increment financing from city of Reno – iGaming Business

Over the past year, the GSR Reno arena project has generated a lot of talk but seen little progress. Local media reported ahead of Wednesday’s meeting of the city council and the Redevelopment Agency (RDA) board that an agenda item appeared with a report saying GSR had applied to the RDA to designate the development as ” catalyst project’. That designation would make it eligible to receive $97 million in tax increment financing (TIF) from the RDA.

This seemed like a sharp turn from the original announcement. At the time, University of Nevada, Reno (UNR) President Brian Sandoval told cheering crowds that “there will be no public dollars” for the project. Sandoval, a former governor of Nevada, is said to have a strong relationship with GSR owner Alex Muruelo.

Andrew Dees, Muruelo Gaming’s chief strategy officer, told employees it was a misunderstanding. Sandoval’s comments referred to the university, not the casino.

“What we’ve maintained all along, and what Mr. Muruelo has been adamant about, is that we don’t want (UNR) to put capital into this project,” he said. “The university has no money for new facilities and there is a critical need for them in their athletic department. That is what the comments were directed at.”

Backers: the project is still in the early stages

The fragmented — and at times heated — conversation at the Reno City Council meeting was the first step in a long process. Dees and Brian McArdle, the city’s revitalization manager, explained several times that stakeholders are simply seeking approval to move forward with next steps.

These next steps will include more financial, economic and market feasibility analyzes for the GSR Reno project. In the end, the council voted 7-1 in favor of moving forward. Most members did so with the caveat that there are a few details that are still unknown. There is no set timeline for when the matter will come back to council, but the estimate is 30 to 90 days.

In addition to the arena, GSR is also proposing an 865-room hotel tower, a 50,000-square-foot ice rink, a 25,000-square-foot “retail fan zone,” a new waterfront golf course, a 300-unit apartment building workforce and a 2,400-unit parking garage. The arena will open in the fall of 2027 and the entire project will take 10 years.

The site is slated to become the new home of the UNR men’s basketball team and the Muruelo AHL hockey franchise. The UNR men’s and women’s teams have played in the Lawlor Events Center on campus since 1983. The women’s team will remain at Lawlor, which actually has a larger capacity than the proposed arena (11,200). As Dees clarified, UNR will not contribute funds to the project.

What is the RDA?

GSR’s Catalyst Project application is the first under new RDA participation guidelines approved in August. The RDA was established in 1983 “to attract and support private investment, facilitate development in the city’s urban core and surrounding areas, and increase property values ​​in the region,” according to its website.

As a mature gaming market with limited growth since the 1970s, Reno has long worked to diversify its economy. The RDA was thus created to “identify, support and facilitate successful redevelopment opportunities”. Its board consists of the city council and Mayor Hilary Sheave.

There are currently two RDA-zoned “redevelopment areas” in the city. “RDA 1”, also established in 1983, covers the city center. “RDA 2,” created in 2005, encompasses other popular areas on South Virginia Street, East Fourth Street and elsewhere. The GSR project falls under RDA 2.

For almost 20 years, the RDA was largely dormant due to debt and other struggles. But the latest application guidelines were designed to breathe life back into the agency.

The start is “very cloudy”.

The extended conversation on the subject did not start well. Before McArdle could begin the presentation, City Council member Jenny Breckhus asked that it be tabled due to a conflict of interest. City attorney Carl Hall, she noted, is married to GSR legal counsel Anne Hall.

“Out of the gate, we’re starting with a very blurred view” of a substantive issue, she assured.

As Shaive tries to mediate, Assistant City Attorney Jonathan Shipman downplays the charge. In response, Breckhus snorted that Shipman was working “at the sole discretion” of Hall and was hired soon after Hall took office.

Coincidence or something suspicious?

The GSR application is the first under the new RDA programme. The timing did not sit well with Breckhus, who claimed that the circumstances did not paint a positive picture.

“We feel like we’re remaking the RDA in service of this entity and their inquiry, and I think that’s really problematic,” Brehus said. “We are talking about a public subsidy for a sports facility. You don’t have to look far to see failed sporting venues, we have two of them.’

This was a reference to the National Bowling Alley and Greater Nevada Field, home of the Reno Aces minor league baseball team. Both locations have inadequate projections and are costing the city money.

On a final note, she brought up the fact that Muruelo-backed organizations have made political contributions to several candidates in the city. She later voted no.

What exactly is a TIF?

During the presentation, McArdle defended the economic benefits of the project. He said it would generate $23.5 million in annual economic impact if fully built out. He also pointed to the benefits of affordable housing and flood mitigation on the nearby Truckee River. These points were quite clear. What wasn’t, however, was how the city’s money would be involved.

Much of the conversation that followed was about understanding TIF and how it would apply here. Multiple council members said they wanted to know more about it before making commitments. Essentially, a TIF diverts future property tax revenue to fund redevelopment. It is popular but controversial in the US due to its complex nature.

McArdle argues that it’s not as simple as giving public funds to developers. Rather, there is no liability because the TIF only kicks in once the project is complete. And the city can dictate the exact terms of the agreement. Most TIF deals, he said, are for 4%-10% of the total cost — at $97 million, this deal would be about 10%.

But those warnings won’t change the fact that city services won’t get their usual funding from such a development at a time when many departments are already overburdened, Council Member Megan Ebert argued.

Bring in the consultants

The next step will be to engage third-party consultants to conduct feasibility studies and analyze financial projections. McArdle said those costs are viewed as operating costs that must be repaid when the project is completed. There are three firms, he said, that the city is currently considering.

In general, the council approved the item with trepidation. Some, like Braekhus and Deputy Mayor Naomi Duerr, were downright skeptical. Despite the yes vote, Duerr expressed a long-standing dislike of sports stadiums that receive public funds, including the Raiders’ Allegiant stadium and the recent Las Vegas A’s stadium in Las Vegas.

Others, like Councilman Devon Reese and Councilwoman Kathleen Taylor, specifically sought more clarity on how the TIF would be used. And Mayor Shive was neutral with a dose of optimism.

“I don’t think there’s any reason to be negative, but we don’t know the details,” she said.