Old Vegas lives

“Free” tax money is available, but integrity is hard to find

By Geoffrey Lawrence
  • Wednesday, February 25, 2009

Board members of the Las Vegas Redevelopment Agency (LVRDA) and those who are dependent on them for taxpayer subsidies apparently have little shame.

In response to recent public opposition to the LVRDA and its use of tax dollars to build lavish public facilities and subsidize big developers, board members of the LVRDA have jettisoned adherence to the state's ethics laws.

Steve Ross was elected to the Las Vegas City Council in 2005. Two years later, still on the city council, he was elected Secretary/Treasurer of the Southern Nevada Building and Construction Trades union. Last week, more than 300 members of the union showed up at a city council session to lobby and campaign for the proposed Oscar B. Goodman City Hall. Union members asserted the project was necessary since it would create jobs for them.

Although Ross is beholden to the construction union as one of its top officers, he ignored his conflict of interest and voted for the measure for which his own union members were vocally demonstrating. 

As recently highlighted by Jon Ralston, Nevada's ethics laws clearly declare that public officers are obligated to avoid such conflicts of interest. NRS 281A.020 says: "A public officer or employee must commit himself to avoid conflicts between his private interests and those of the general public whom he serves."

NRS 281A.400 further states: "A public officer or employee shall not use his position in government to secure or grant unwarranted privileges, preferences, exemptions or advantages for himself, any business entity in which he has a significant pecuniary interest, or any person to whom he has a commitment in a private capacity to the interests of that person."

Ross brushed aside these provisions to vote for the lease-purchase financing mechanism for the proposed $267 million, $881-per-square-foot city hall. Presumably for Councilman Ross, the public's ethics concerns are merely an annoying impediment.

Indifference to standards, however, is not confined to LVRDA board members. It also reverberates among the private developers who use the LVRDA as a tool to extract generous sums of money from local taxpayers. Redevelopment agencies in Nevada function primarily to divert property taxes paid by residents of redevelopment zones into the pockets of politically favored private developers. Normally, those taxes would fund government services such as local schools or fire and police protection. As outlined in a recent study by NPRI, this method of redevelopment actively invites rent-seeking behavior and corruption.

In Las Vegas, the rent-seeking dynamic is on full display. Developers who rely on the LVRDA to provide them with subsidies have come to the LVRDA's defense in order to oppose two ballot initiatives that would limit the LVRDA's tax diversion power. The ballot initiatives, proposed by the Culinary Union, would require voter approval for lease-purchase agreements and would repeal the city's redevelopment plan.

The Downtown Las Vegas Alliance, an alliance of subsidy recipients and proponents, has retained a legal team to challenge these initiatives in court and is considering forming a political action committee in order to launch a public relations campaign on behalf of the LVRDA. According to Rich Worthington, head of the alliance and president of the Molasky Group, "We need to make sure that the city still has its basket of tricks to land redevelopment projects downtown." This is a classic case of mutual back-scratching in which corporate welfare recipients act to protect the agency that bestows "free" tax dollars on them.

Interestingly, as NPRI's study noted, Molasky Group principal Irwin Molasky was previously one of the LVRDA's most vocal critics—publicly complaining that he was forced to pay taxes that subsidized his competitors. It was not until Las Vegas Mayor and LVRDA Chairman Oscar Goodman approached Molasky, offering him a taxpayer subsidy for his own project, that Molasky became an ardent supporter of the LVRDA. 

Taxpayers certainly deserve a voice in how their tax dollars are used. It is becoming obvious that members of the LVRDA and those who rely on them for subsidies are seeking to evade democratic oversight. 

The mutual back-scratching and clear violations of ethical standards surrounding the proposal to build a $267 million city hall during a recession are an insult to local taxpayers and should not be tolerated.

Geoffrey Lawrence is a fiscal policy analyst at the Nevada Policy Research Institute.

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