For the second time in six months, Nevada’s Clark County has to pull millions of dollars from reserve funds to meet a payment on the Las Vegas Raiders’ one-year-old stadium.
The county disclosed in regulatory filings that it will make an unscheduled draw of $11.7 million from one of the reserve funds backstopping the $645 million in bonds issued in 2018 that helped finance Allegiant Stadium. The county has a $16.1 million payment due on the bonds for June 1.
“This action does not constitute a default and was expected in light of the decline in tourism to Las Vegas,” Clark County director of communications Erik Pappa wrote in an email. “Fortunately, the financing for the Stadium Authority bonds included the funding of a debt service reserve fund to weather economic declines like the one Las Vegas is currently experiencing due to the pandemic.”
In November, municipal officials pulled out $11.6 million from reserves to meet the Dec. 1 semi-annual payment. Clark County dedicates a hotel tax of 0.88% around the famed Strip and 0.5% from hotels near the stadium to repay the bonds. Hotel occupancy is rebounding in the city but still fell 36% short of the 2019 level in March, according to data from the Las Vegas Convention and Visitors Bureau. While the county pledges to maintain a bond reserve of two times annual debt service payments, the drawdown isn’t a default—a specific action that gives bondholders legal recourse—under the terms they were issued.
Ultimately, whether or not tourists ever rent rooms in the city again, county residents are on the hook to pay the bills: The bonds were issued as a general obligation of Clark County, meaning the government pledges to use its full power of taxation to ensure the bonds are paid.
The county has to pay $35.4 million in its next fiscal year, starting July 1, rising annually to $59.2 million in 2048 when the last of the bonds mature. By the time the Allegiant Stadium debt is retired, Clark County will have paid $709 million in interest on top of the $645 million in principal for its financing of the football stadium.
The domed arena, which opened last summer, was built at a cost of $1.8 billion—$750 million from Clark County, $200 million from the NFL, $250 million from stadium seat licenses and a $600 million bank loan to the Raiders.