Grand Sierra Resort quietly seeks public financing, legislative help for basketball arena
Meruelo compared his planned venue to the privately financed, $375 million T-Mobile Arena in Las Vegas and said the school was off the hook.
'One thing that I made sure that I said over and over again — this arena will not cost the university one dollar,' Meruelo said at the September 2023 announcement inside a Grand Sierra Resort night club that was attended by cheerleaders, Wolf Pack mascots, school President Brian Sandoval and Reno Mayor Hillary Schieve.
Nobody asked whether Meruelo would seek public financing. A year later, it's clear the answer is 'yes.'
Grand Sierra is seeking $97 million in public money from the City of Reno through tax increment financing (TIF). The financing could raise close to 10 percent of the overall arena costs and fund other development elements, including a new hotel tower and non-gaming enhancements such as a Top Golf-style driving range surrounding the existing resort.
TIFs are a public funding mechanism that work by freezing property taxes in a given area, and then diverting property tax revenue generated from a new project back to the developer to pay for the construction costs. Proponents of TIF projects say they help reduce blight and fund infrastructure investments in areas that otherwise wouldn't be developed, but opponents say their structure can be overly opaque and keep tax dollars away from municipal governments, which still have to provide services to the region.
Simultaneously, state lawmakers are considering legislation that would benefit the project by extending the timeline of TIF funding for the city's redevelopment plans. Lawmakers and project proponents have noted that no public funding will come from the state, which is facing financial headwinds as the federal government weighs possible funding cuts.
But the plan is being opposed by a coalition of competing resort operators who don't believe TIF money should be used. The group, which includes owners of the Eldorado and Silver Legacy, Sparks Nugget and Peppermill, said the TIF funds are normally targeted at blighted areas to provide economic growth.
'(Grand Sierra Resort) is clearly willing and able to pay the up-front construction costs,' Joshua Hicks, an attorney from McDonald Carano that is representing the group, wrote in a letter to the Reno City Council on March 11. 'It seems clear that the (Grand Sierra) intends to use TIF not for construction costs, but instead to offset ongoing operational costs. We do not believe this is an appropriate use of TIF under Nevada law.'
In a statement provided to The Nevada Independent on Friday, Meruelo said his company has 'put forward a proposal that places all of the risk on the (Grand Sierra), which is why it's surprising the other local gaming operators are opposing this transformational development.'
Meruelo said downtown Reno 'has enjoyed the benefits of TIF funded projects for the past 30 years,' including the 9,100-seat Greater Nevada Field, home to the Triple-A Reno Aces, and the National Bowling Stadium.
'While these facilities have provided substantial direct benefits to the downtown casinos, they have also burdened the City of Reno with large debts,' Meruelo said.
In an interview Wednesday, Schieve said the initial discussions with Meruelo's group took place before the September 2023 announcement and the plans were 'very vague,' but her impression was that 'they were looking at certain economic development tools.'
The mayor said she is requesting Grand Sierra representatives and the university make a full presentation to the city council on April 9 'on exactly what the project is. That needs to happen before we can move forward.'
Developers said in October that the arena's construction was contingent on the Grand Sierra qualifying for the financing and would reduce future property taxes by $89.7 million.
Andrew Diss, senior vice president for Meruelo Gaming, which operates the Grand Sierra and the Sahara Hotel and Casino in Las Vegas, questioned why there is opposition.
'We can't figure it out. In Vegas, there is a mentality that something built near the Strip, whether it's Allegiant Stadium or the Sphere, benefits everybody,' Diss said in an interview last week. 'We're building a 10,000-seat arena, and we only have 2,000 rooms at (Grand Sierra). So people coming in for concerts or anything else are going to be staying at all these other properties.'
Diss said seeking public financing assistance had always been an option, especially for the arena component, which includes a public ice skating facility and a large parking structure.
Hicks, speaking on behalf of the coalition, said in an email the properties were initially supportive of the arena plans but felt obligated to speak against it when they learned the extent of the public financing request.
'We feel strongly that redevelopment funds should be reserved for blighted areas in need of public assistance and should not be committed to areas that are already developed,' Hicks wrote.
TIFs in Reno
Use of TIF funding structures is common in Reno — projects funded through the public financing system have helped fund development of the baseball and bowling stadiums, the city's Locomotion Plaza in 2021 and the 7,000-seat Reno Events Center, which opened in 2005.
Meanwhile, to address the funding mechanism's expiration in 2035, Sen. Edgar Flores (D-Las Vegas) is sponsoring SB401 on behalf of Meruelo Gaming. The redevelopment district that includes Grand Sierra was established in 2005, and under Nevada law, redevelopment district plans terminate after 30 years.
The bill would extend the termination timeline for redevelopment plans affecting blighted areas from 30 to 50 years in the city of Reno.
Flores said he probably wouldn't need to propose the law if the pandemic hadn't happened, leading to a slowdown in construction and longer development timelines, and the Grand Sierra Resort wasn't the only entity that reached out to him about extending the timeline.
He stressed that the bill does not intend to provide state funds for the project.
'We just want to look at what was out there now and allow them to utilize the full breadth of its timeline,' he said.
Though financial records show Flores received $3,500 from gaming industries, Meruelo did not donate to the senator.
Schieve, who could eventually vote on the TIF issue as a Reno City Council member, said she hasn't seen the bill from Flores and the devil is in the details. But she believes she could support expanding the redevelopment period because developers lost a lot of time with the COVID-19 pandemic and housing shortage.
Diss said extending the lifespan of TIF helps build projects such as Grand Sierra in phases. In addition to the arena, parking structure and ice skating venue, plans call for a new hotel tower to expand the nearly 2,000-room resort, condos for staff, a walkable promenade, driving range, fountain show and dining venues near the lake at the south entrance of the 150-acre property.
'You have to build a project like this in phases, and let's face it — tariffs are in place and structural changes, such as the cost of steel for the arena, have gone up 25 percent,' Diss said. 'In 10 years, we could be north of a billion dollars.'
Schieve said she wants to ensure the project benefits the city and sparks economic development and tourism.
'TIF is one of our tools (and) we're certainly looking at (it),' she said. 'We need to stay competitive.'
Diss said the bill 'needs to be approved in the next few weeks' because of the arena's construction timeline. Developers want the venue to be ready in fall 2027 for the start of the basketball season.
Public financing in other venue projects
The request by Grand Sierra Resorts isn't the first time public financing has been used on sports venues in Nevada.
Public financing — about one-third of which was covered by Washoe County's car rental tax — helped build Greater Nevada Field in Reno. The managing partners of SK Baseball were Manhattan Capital Sports Fund executives Stuart Katzoff and Jerry Katzoff, but real estate developer Herb Simon put in $50 million in private money.
Although Howard Hughes Corp. privately financed the $150 million Las Vegas Ballpark in Downtown Summerlin that houses the Las Vegas Aviators, the Las Vegas Convention and Visitors Authority helped with an $80 million naming rights agreement. The LVCVA is funded by hotel room taxes paid by visitors to Strip and downtown casinos.
Two large stadiums in Las Vegas — the $1.9 billion Allegiant Stadium and a planned $1.75 billion baseball park — were the subject of public funding bills during two legislative special sessions.
Allegiant received $750 million in public financing during a 2016 special legislative session.
In 2023, Major League Baseball's then-Oakland Athletics won approval from state lawmakers for a $380 million public financing package.
Striking out in Phoenix
This isn't the first time Meruelo has faced pushback on an arena he's tried to build.
A few years ago, Meruelo failed to construct a hockey arena in Phoenix for the NHL's Arizona Coyotes, which he bought in 2019 for $300 million.
In 2023, residents of Tempe, a Phoenix suburb, rejected a $2.1 billion entertainment district that would have included a 16,000-seat hockey arena. Meruelo sought other locations, including a portion of a 100-acre site in Scottsdale that was ultimately rejected by the city.
The Coyotes played two seasons in the 4,600-seat Mullett Arena at Arizona State University before the NHL ordered the franchise sold in 2024 to a Utah group for $1.2 billion. The group moved the team to Salt Lake City.
Meruelo is suing the Arizona Board of Regents to recover a $3.5 million security deposit paid to the school for use of the arena, saying the 'forced sale' of the team excused the franchise from the final year of its lease agreement.
Challenging financial times
The financing request comes amid unprecedented uncertainty about the state's budget status and as the City of Reno faces a $3.7 million shortfall in its $862 million annual budget.
Alongside the financial uncertainty, Northern Nevada casino operators told the Reno City Council in the letter that it should not award any TIF funds to the Grand Sierra because using the financing mechanism for hotel-casino 'does not appear to be lawful' — it is designed to revitalize blighted areas that would otherwise remain stagnant.
'As many of these parcels are well-kept and only serve the resort and guests, there is little need for redevelopment in this area and thus little need for redevelopment funding support,' Hicks wrote.
Diss said Grand Sierra began seeking TIF funding because the property is in an area of Reno designated as a redevelopment district.
'We weren't sure if we could do it all on our own,' Diss said. 'Nothing is getting cheaper. To do projects at this scale, (utilizing public financing) is the only way it pencils out that it will be successful.'
He said the public financing would generate returns for the city — a theory supported by a Reno city government staff report.
'The city wants the arena built first because of the sales tax generation it will create,' Diss said.
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