Would an NBA team come to Vegas if Clark County subsidized an arena?
"We have an NBA team under contract," Milam said, declining to name the franchise. But the deal will take effect only if "other pieces of the puzzle fall into place: One of those pieces will be that a building (arena) is approved," he said.Now if a developer wanted to build an arena with private money, that would be fine. The problem is raising taxes on others to subsidize private development. And as tempting as it would be politically for commissioners to "create" jobs (and a basketball team) by raising taxes on the arena's neighbors, it wouldn't be the right move economically.
The key to Milam's plan is persuading Clark County to revive its redevelopment area and fund the arena using what is known as tax-increment financing.
Milam is scheduled to make his case to county commissioners at an Aug. 4 meeting.
Commissioners last month discussed arena proposals - three plans have been floated this year - but did not vote on whether they would support construction of any project. Based on their remarks, there appeared to be little support for any arena plan requiring public assistance. ...
Milam's plan calls for resurrection of the county redevelopment district. Developers would then be allowed to keep increases in property tax revenue over current levels. Taxes derived from the district to support the arena would be capped at $125 million.
The 4,000 construction jobs that Milam says would be created would be temporary, and the 7,000 jobs he says would be created either directly or indirectly from the stadium would be mostly part-time and low-paying hourly jobs.
How do we know this? Because that's exactly what happened in other cities where stadium subsidies were sold as economic stimulators.
For many years the "economic boom" idea of building stadiums seemed to make sense and city after state pumped billions of taxpayer's dollars into such projects. But starting in the early 2000s, economists began to have enough data to show that the claims of beneficial end result of building stadiums was not as advertised.The Clark County commissioners don't even need to look to other states to see how redevelopment areas are failing to create jobs. Just check out Las Vegas' redevelopment area.
In fact, these days economists that disagree amongst each other about so much have developed a wide consensus based on the belief that sports teams in and of themselves are not great economic engines for a city and that building giant new stadium complexes are not the automatic boon to the area such as they were sold.
The reason that these stadiums are not as great an investment as previously thought is threefold according to Andrew Zimbalist, the Robert A. Woods professor of economics for Smith College and renowned sports economist. Zimbalist spoke in early 2009 to Freakanomics author, Stephen J. Dubner in the pages of The New York Times.
For one thing, Zimbalist says, the money that will be spent on the events held at the new sports arena or stadium is money spent by local residents. This is not new money but money that would simply have been spent on other entertainment in the metropolitan area if the stadium didn't exist. Secondly, the big money that goes to players, owners and investors does not stay in the area but is invested elsewhere. Third, the city or state is often chipping in up to a third of the continuing costs and this is tax money wasted, not revenue made. ...
There are other problems with these projects, as well.
For one thing, the jobs created are for the most part low paid, part time and offer no benefits. Because of this "jobs" are not really created by a sports complex. Also, very few ballparks have been much of a boon to surrounding businesses. Few people that attend sports events stay around the area in which the stadium sits to shop, eat, or look for other entertainment. They go to the park and then they leave. About the only thing locals get are traffic nightmares and litter.
The prospect of an enlarged Las Vegas redevelopment area received a cool reception Tuesday, with West Las Vegas residents wondering why the supposed economic benefits haven't materialized there while large projects are under way elsewhere.Just another example of why government shouldn't pick the winners and losers in an economy.
The chief concern was jobs. One of the goals of a redevelopment area, which is set up to encourage private investment in struggling areas, is to match residents of the area with jobs created by the investment.
The city of Las Vegas has not measured up to its own goals in that category, acknowledged Bill Arent, the city's business development director. ...
"They haven't been met for any of the projects that have been awarded," said state Sen. Steve Horsford, D-Las Vegas, referring to the jobs goals. Without a clear demonstration of benefits, he said to general applause, "I for one do not believe that this expansion should occur."
County Commissioner Chris Giunchigliani is still strongly opposed to this scheme, and Steve Sisolak is at least wary, so there's hope Clark County will avoid falling into the arena pipedream that has financially trapped other cities.
For ways to increase economic development without redevelopment agencies, check out NPRI's report titled "Rolling the Dice on the Taxpayers' Dime."