In the Oct. 12, Record-Courier, Dan Holler makes the Max Baer casino look like a financial savior to Douglas County. Dan claims lost sales tax on 130,000 square feet of retail stores displaced by the casino will be a deficit of only $36,000, more than offset by $250,000 in room tax and $182,400 gaming tax, making the county better off by almost $400,000. I doubt it.
I never opposed the casino on grounds of county financial impact, but overstatement benefits nobody. This is the same county government that whacked residents for a 1 percent fee (2 percent in 2009) on utilities and wants a business tax to burden small businesses. For what? To subsidize north county box stores and this casino.
Why is it, everything respecting north county development seems controversial, like the grossly overstated tax benefits reported in a Holler interview in the Nevada Appeal a few weeks ago (subsequently corrected by The Record-Courier), the ridiculous flap by otherwise reasonably intelligent elected officials over a simple process of taking minutes of meetings, and now this extremely generous forecast of county tax revenue from the casino.
The Meridian study justifying cash payment of $24.7 million by the county redevelopment agency to the north county developer assumed 600,099 square feet of retail space and $306.13 retail sales per square foot at 2006 prices. A simple calculation using Meridian's inflation factors for 130,000 square feet of retail space in 2009 generates $41.8 million of retail sales, 75 percent of which are taxable producing county sales tax revenue of $428,000. If the net annual sales tax reduction from casino versus retail stores is only $36,000, then the casino must produce $392,000 in sales tax revenue. To do that it must have either 119,000 square feet of retail floorspace or must produce far more taxable sales per square foot than Kohl's and other stores.
Calculations ought to compare taxable retail sales by Mont Bleu, Horizon, Harrah's, and Harveys at Stateline per retail square feet and per room. Retail space in Mont Bleu certainly isn't 119,000 square feet. Ten high-priced shops of a generous 1,000 square feet each would be only 10,000 square feet. The Baer casino's taxable sales per square foot and per room should use proven statistical factors, if the Baer team has done its homework. I bet it doesn't support $392,000 sales tax revenue.
Room tax of $250,000 annually based on 80-85 percent occupancy doesn't seem to account for "comps," the practice of offering free rooms to high rollers not subject to room tax. Isn't the average net occupancy in South Tahoe under 70 percent?
Isn't gaming tax revenue of $182,400 unrealistic for a 240-room hotel-casino compared to the $1.4 million gaming tax collected from all the Stateline casinos, CVI, and smaller county gaming establishments? Half seems more appropriate considering gaming tax per room. All in all, the total of the three taxes generated by the casino probably will exceed the $428,000 sales tax revenue from 130,000 square feet of commercial space, but not by anywhere near $400,000.
Lastly, casinos commonly take advantage of a state law permitting property tax to be assessed on revenue or net winnings instead of normal assessed property value. That could generate much less property tax revenue for the Redevelopment Agency than a commercial retail store. If the Baer team and county budgeteers haven't evaluated that risk, they should.
With all the changes in Big George's project and the redevelopment area commercial space so radically changed, I again urge the now outdated Meridian study to be updated with current and factual data. Financial viability of the county now hangs on north county.
-- Jack Van Dien is a Gardnerville resident
