In 2003, the Nevada Legislature enacted, and the Governor signed into law, Assembly Bill 205.  This legislation, subsequently codified in Chapter 432, Statutes of Nevada, Sec. 6.6 to 6.9, imposed an additional tax at the rate of two and half percent (2.5%) on the gross receipts from the rental of transient lodging in the City of Sparks (“Lodging Tax”). The Lodging Tax is paid to the Reno-Sparks Convention and Visitors Authority which distributes the proceeds to the City Council of Sparks. The City Council may expend these proceeds after obtaining the “advice and recommendations” of the Sparks Tourism Facility and Revitalization Steering Committee (“Committee”), which was created per Sec. 6.8 of Chapter 432.

For the December 12, 2018 meeting of the Committee, its membership was comprised of:

-     Charlene Bybee, Sparks City Council, Chair

-     Jennifer Cunningham, Executive Director of Marketing, RSCVA, Vice-Chair

-     Ed Lawson, Sparks City Council and Mayor Pro Tempore

-     Mark Sterbens, General Manager, Nugget Casino Resort (Mr. Sterbens abstained from consideration of this matter)

The Committee is required, per Sec. 6.9 of Chapter 342, to develop a master plan that identifies:

+    Proposed projects or capital improvements in Victorian Square, or that would provide a direct benefit to Victorian Square, that the Committee has determined would be advisable to promote tourism in Washoe County.

+    Method(s) pursuant to which the proposed projects and capital improvements identified in the plan will be financed.

The Committee first adopted a Master Plan in 2004, amended it in 2008 and amended it again in 2016 (refer to Victorian Square Master Plan attached to Resolution No. 4). The 2016 update specifically identifies incentives for private Victorian Square entertainment venues and facilities that increase the regional appeal of such facilities as an appropriate use of Lodging Tax proceeds provided the incentive is intended to fill an anticipated financial “gap” and leverages private investment on, at minimum, a one-to-one (1:1) basis. However, no specific private retail or entertainment projects were identified for funding in the 2016 Master Plan. The Master Plan specifies, therefore, that any proposed expenditures of Lodging Tax proceeds to incentivize private retail or entertainment capital projects need a Committee recommendation, in the form of a resolution, to the Sparks City Council.

Marnell Gaming, LLC has requested Lodging Tax proceeds to fill an anticipated financial gap in the cost of demolishing the vacant structure (the former Bourbon Square Casino) located at 1040 Victorian Avenue in Sparks, Nevada and replacing it with the proposed Nugget Events Center (the “Project”). The Project will consist of an outdoor amphitheater to host concerts and other events with a capacity of approximately 8,600 seats. The estimated total cost, exclusive of the cost of acquiring the property, is $6,400,000. Per the proposed terms agreed to between Marnell Gaming and City staff for the provision of financial assistance for this project, Marnell would invest at least $5,120,000 while the City would contribute $1,280,000 from lodging taxes. The proposed terms obligate Marnell Gaming to complete construction of and hold a live performance or special event in the Project prior to September 15, 2019.

On December 12, 2018, the Committee considered and approved, by a vote of 3-0, Resolution No. 4 (see attachment) which formally advises and recommends to the City Council that it expend up to $1,280,000 of Lodging Tax proceeds, beginning in City fiscal year 2019, to incentivize construction of the Project.

As discussed in the Background section above, the Committee’s Victorian Square Master Plan identifies incentives for Victorian Square entertainment venues and facilities that increase the regional appeal of such facilities as appropriate for the use of Lodging Tax proceeds, provided the incentive is intended to fill an anticipated financial “gap” and leverages private investment. In reaching its decision to adopt Resolution No. 4, the Committee reviewed and considered:

+    The project description for the proposed Nugget Events Center, including the conceptual site plan, which are representative of how Marnell Gaming is proposing to construct the project.

+    The proposed terms for the provision of financial assistance to the Project, per which Marnell Gaming would invest at least $5,120,000 while the City would contribute $1,280,000 from Lodging Taxes. This represents a private-to-public investment ratio of at least five-to-one (5:1). The proposed terms obligate Marnell Gaming to complete the Project and hold a live performance or special event in the Project prior to September 15, 2019.  (The proposed terms provided to the Committee are included as an attachment to Resolution No. 4).

+    A hypothetical cash flow analysis prepared by City staff (included as an attachment to Resolution No. 4) demonstrating that the City can provide $1,280,000 from the Lodging Tax for the Nugget Events Center while also paying previously approved and anticipated costs for Victorian Square infrastructure improvements, public art projects and renovation of the downtown movie theater by Syufy Enterprises and Galaxy Theatres. The analysis also demonstrates that there is sufficient funding, based on projected revenues and expenditures, for the Committee and City Council to fund other projects over the period through fiscal year 2023.

City Council acceptance of the Committee’s advice and recommendations, as provided for in Resolution No. 4, enables the City to expend, through separate action, up to $1,280,000 of Lodging Tax proceeds to incentivize construction of the proposed Nugget Events Center. 

1. The City Council can accept Resolution No. 4.
2. The City Council can reject Resolution No. 4.
3. The City Council can ask the Committee to reconsider or revise their recommendations.

I move to accept the advice and recommendations provided in Resolution No. 4 from the Sparks Tourism Facility and Revitalization Steering Committee regarding the expenditure of $1,280,000 in Lodging Tax proceeds for the Nugget Events Center