On January 28, 2019 the City Council approved incentive agreement AC-5547 between the City of Sparks and Marnell Gaming, LLC to provide up to $1,280,000 in lodging tax proceeds for construction of the proposed Nugget Events Center.  $853,760 is to be paid upon the opening of the project to the general public for a live performance or other special event.  The remaining payments will be made in equal installments of $142,080 in each of the three subsequent years (FY20 through FY22) provided the Events Center continues to be for concerts and other special events open to the public.

Funding sufficient to fulfill the incentive agreement are not included in the FY19 budget.  Since the first live event for the general public is expected to be held this fiscal year (FY19), City staff recommends augmenting the FY19 budget by $853,760 of lodging tax proceeds to cover the initial payment. 

Since anticipated available resources exceed those that were estimated, the provisions of NRS 354.598005(1) govern the procedures and requirements for augmenting or amending a budget.  Available resources are defined in NAC 354.410, and include unappropriated ending fund balances of Capital Projects Funds.  Based on the results of the FY18 audit, and in compliance with NAC 354.410, City staff has determined that sufficient resources remain available in the unappropriated ending fund balance of the Victorian Square Room Tax Capital Projects Fund.

NRS 354.598005 requires the governing board adopt a Resolution providing for the budget augmentations.  This requirement applies to all fund types.  In addition, NAC 354.420 requires a “Revised Revenue Schedule” (included as Attachment B-1 with this agenda item) be submitted along with the Resolution to the State of Nevada Department of Taxation.  

In order to make the contractually obligated initial payment to Marnell Gaming, LLC and comply with statutory budgeting requirements, it is legally necessary to augment the FY19 budget.  Attached to this staff report is a Resolution to augment the City’s Victorian Square Room Tax Fund.

The FY19 budget augmentation will be effective upon delivery of an executed copy of the Resolution to the Department of Taxation, which must occur before June 30, 2019.

1.  Council may reject the Resolution to augment the FY19 budget.  This could cause expenditures in the Vicorian Square Room Tax Fund to exceed appropriations, and would therefore be a violation of NRS 354.626.  The violation would be noted in the audited financial statements, and written explanations of the budget violation would need to be provided to the Department of Taxation which ultimately may refer the issue to the Nevada Attorney General for possible prosecution.

2.  Council may reject the recommendation of City staff and provide further direction to the City Manager.

I move to adopt Resolution No. 3347 to augment the FY19 budget of the Victorian Square Room Tax Fund by $853,760 to provide appropriations for a previously approved incentive agreement (AC-5547) between the City of Sparks and Marnell Gaming, LLC.