City officials had been concerned it would have to pay too high an interest rate on the debt it needed to build the new city hall but its use of Build America Bonds authorized by the American Recovery and Reinvestment Act prompted the major ratings agencies to give the city's lease-purchase financing arrangement their fourth-highest rating. As part of the stimulus package, the federal government pays 35% of the interest expense on the bonds.
The city's chief redevelopment officer Scott Adams tells GlobeSt.com that the bonds were underwritten by Stone & Youngblood LLC, as representative for itself and Citigroup Global Markets Inc., and Siebert Bradford Shank & Co. LLC. The group purchased $174.5 million of Build America Bonds and $13.77 million in City of Las Vegas Tax Exempt Certificates of Participation, according to city documents.
The new city hall would be built on a block surrounded by Lewis and Clark avenues and Main and First streets. Forest City Enterprises would develop the property in exchange for property within the Union Park redevelopment on which it would develop a casino hotel. Forest City also owns several blocks surrounding the new city hall site. The latest cost estimate for the new city hall is $185 million, down from nearly $270 million prior to the recession.
As for the existing city hall, the city recently signed an exclusive negotiating agreement with Baltimore-based Cordish during which it will study the feasibility of developing an arena, a casino resort and an entertainment district on about 20 acres that includes the existing city hall. Tentative plans call for a casino resort where city hall now stands and, next to it, an 18,000-seat sports arena for an NBA or NHL team and an entertainment district with free live music, restaurants, bars, comedy clubs, art galleries and specialty shops.
The project would be not unlike the $850-million Kansas City Power and Light District, an eight-block mixed-use area near the new Sprint Center that was developed by Cordish in partnership with the City of Kansas City and the State of Missouri. Earlier this month, a columnist for the Kansas City Star predicted a deficit for the project due to less foot traffic and more vacancy that originally projected, a deficit that would be covered by taxpayers given that it was paid for with public bonds.
The agreement with Las Vegas calls for Cordish to put up a $100,000 deposit that could be refunded at the end of a two-year study period if it is determined such a development is not feasible. In addition, the city will reimburse Cordish for up to $150,000 of third-party expenses related to its analysis.
Las Vegas has managed itself from the corner of Stewart Avenue and Las Vegas Boulevard since the 1940s. The current city hall was built as the American Legion War Memorial building in the early 1970s.
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