On Oct. 16, I moved the following item: “Like Target before it, the new Sparks Marina Lowe’s store is being built with tax money that would otherwise go to parks, schools, roads, police and fire protection. Like Target, Lowe’s will close an existing store. While Sparks City Hall sat shiva, Lowe’s hired an unqualified low bidder to do the steel. That outfit has walked and highly-skilled union iron workers are now doing the job right.”
Tribune editor Nathan Orme followed up by confirming the closure with Lowe’s.
“Legends General Manager Dennis McGovern said ... that Lowe’s is receiving no STAR bond subsidies,” Orme reported.
“People assume every store on the property gets to pull from that pool,” McGovern said. ‘That is not the case.”
Mr. McGovern may be correct in the narrow but wrong in the wide. Sparks taxpayers are indeed subsidizing the whole Marina enchilada. The former Helms gravel pit is in serious jeopardy of becoming a money pit that sinks city hall.
Orme’s research revealed that Target and Lowe’s would have to increase their sales by 400 percent to replace the sales tax revenue lost to the STAR bonds taxing district.
Sales Tax Anticipation Revenue (STAR) Bonds are supposed to underwrite projects that will generate more than half their business from tourists. There is no accountability, follow-up or penalty in state law applying to the Marina.
“McGovern said his informal conversations with management there indicate (Target’s) move from Prater Way has resulted in an increase of about 15 percent in total sales,” Orme reported.
In his Oct. 18 report, Orme noted, “Mayor Geno Martini and Sparks City Councilman Ron Smith, whose ward includes Legends, learned of the store’s closure Monday (Oct. 17).”
That means that neither had read the Oct. 16 Tribune. That’s OK, guys. I’m used to getting dissed on East Prater Way.
However, either you knew or should have known that Lowe’s was going to shut down its Oddie Boulevard store, which means that the now-vacant Target and soon-to-be-shuttered Lowe’s create exactly the urban blight that corporate welfare projects are supposed to correct.
The solution is now the problem.
“As for tourist-targeted development at Legends, Smith said the idea for a casino there is still alive and that construction should pick up at Legends in the next few months,” Orme reported.
There has been a lot of recent PR fluff fanning fading hope for the long-delayed high-rise hotel-casino at the Marina. Well before the economic depression, financial advisors warned city hall that the project would be non-viable without that component.
Officials had to tap three sources of revenue to get the Marina project started. The city is close to becoming tap city as a result.
The state can take over financial affairs and raise property taxes if a municipality becomes insolvent. Both Reno and Sparks are on the edge.
In his 2009 State of the City address, “Sparks Mayor Geno Martini gave an extended defense of STAR bonds,” former Tribune reporter Dennis Myers wrote in the Reno News & Review.
“Without this important economic development tool established by the Nevada Legislature, the Legends would not have been built in Sparks. STAR Bonds provide a mechanism to finance developments that attract visitors, the majority of whom come from out-of-state as determined by the Nevada Commission on Tourism,” Hizzoner asserted.
Actually, all developers have had to do is bring in a highly paid ‘expert’ to present a glossy ‘study’ that predicts over half of the customers will be tourists. Financial fiction-writing.
“Martini and other defenders of STAR bonds say that it is unfair to judge them based on their performance in difficult economic times,” Myers wrote, adding, “Barbano says just the opposite – that the test of STAR bonds is in hard times. “These new tourist magnet stores should have insulated us from a slump, but apparently it can’t happen here,” he said.
Wait, there’s more.
“A difference from the Kansas STAR bonds, where cities are liable in case sales tax revenues are inadequate to make the debt payments, Sparks is not on the hook in case this ever happens. Only (tax improvement district) money can be used to pay off the Legends bond debt, according to (Sparks finance director Jeff) Cronk,” Orme reported.
Maybe Mr. Cronk should walk down the hall and talk with his lawyer.
In 2006, City Attorney Chet Adams sent a memo to the council noting that the Marina deal “must be viewed in the greater context of ... federal securities law” and “to address an apparent widely-held, and mistaken, belief that the Tax Improvement District legislation absolves the city of all liability in the event of a default.”
Adams’ opinion will be available with the expanded web edition of this column at NevadaLabor.com.
For a broader history of Nevada’s sordid STAR bonds saga, go to Cabellyup.com. RED Development, the Kansas pimps who put together the Marina deal for an exorbitant fee not yet paid in full, are currently repeating their suede-shoe shuffle in Eagle, Col., Rancho Mirage, Calif., and Blue Springs and Lee’s Summit, Mo.
Stay tuned for more rape and pillage at the hands of the city’s saviors.
Do ostriches eat crow?
Be well. Raise hell.
Andrew Barbano is a 43-year Nevadan and editor of NevadaLabor.com. E-mail email@example.com. Barbwire by Barbano has originated in the Tribune since 1988.