Cadre of local casinos oppose proposed GSR Arena getting public money, dubbing it unlawful

A coalition of local casinos are opposing public money being used on the proposed $1 billion investment into the Grand Sierra Resort, which would include a $380 million arena that would be home to the Nevada men’s basketball team.

As first reported by The Nevada Independent, several Northern Nevada casinos wrote a letter of opposition earlier this month to the Reno City Council in regard to the project’s funding model.

That letter was submitted on behalf of Caesars Entertainment, which includes the Eldorado, Silver Legacy and Circus Circus in downtown Reno, as well as the Peppermill, the Nugget, Bonanza, Golden Road Motor Inn and BCH Gaming Reno.

“As mentioned in the Coalition’s prior letter, the Coalition does not generally oppose the Project itself,” the letter written by McDonald Carano’s Joshua J. Hicks read. “However, the Coalition remains opposed to the use of tax increment financing (“TIF”) to fund the Project, which does not appear to be a lawful use of TIF.”

The GSR is requesting up to $89.7 million in tax-increment financing funding for the projected $1 billion redevelopment, or roughly 9 percent of the total cost. TIF funding is a “pay as you go” model, meaning no public money would be used unless resort improvements were completed. The GSR is asking for 100 percent of future property tax increases through 2035 to be abated through the TIF model. It has additionally requested a 26 percent abatement through 2055.

The coalition opposing the public financing said TIF is intended only for use in a “blighted area which constitute either social or economic liabilities, or both,” citing that specific language in NRS Chapter 279. The coalition also cited a 2024 city council meeting that stated the “Grand Sierra District consists mostly of the Grand Sierra Resort and the supplemental properties supporting the resort. 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.”

Last month, the Reno Redevelopment Agency Advisory Board approved by an 8-1 vote to move forward with the hiring of Hunden Partners as the city’s agent to complete a gap analysis with that cost running up to $90,000. The lone board member who voted against approval cited the fact GSR’s property is in good shape.

“To me, it’s the antithesis of blight,” the board member said.

As part of the gap analysis, Hunden Partners, who offered a full report on the project last month, will complete the “but-for” test, which is required to access TIF funds. Under that test, the developer must prove that area’s improvement would only move forward with TIF funding. In its letter to the city council, the coalition argued no TIF project in Reno has generated nearly as much revenue for the recipient with the projected net operating income for the arena being $169.4 million from 2028-37.

“Because the GSR is clearly willing and able to pay the up-front construction costs of the Project without TIF and is willing to do so despite the expiration of RDA 2 in 2035, it seems clear that the GSR intends to use TIF not for construction costs but instead to offset ongoing operational costs,” the letter reads. “We do not believe this is an appropriate use of TIF under Nevada law.”

The development has earned support from UNR president Brian Sandoval as well as the Nevada Wolf Pack athletic department, which would move its home men’s basketball games from the on-campus Lawlor Events Center to the new 10,000-plus seat arena, which also would likely be home to a minor-league hockey team as well as major concerts and entertainment events.

Sandoval initially said in a prepared speech during the redevelopment’s September 2023 announcement that no public money would be used on the project. Thirteen months later, the GSR offered a correction after submitting plans to use TIF funding, saying no university money would be used, which was the terminology used by GSR owner Alex Meruelo when the project was announced.

Also speaking at the 2023 announcement was Reno mayor Hillary Schieve, who told The Nevada Independent the initial discussions with the GSR about paying for the project were “very vague” but her impression was that “they were looking at certain economic development tools.”

The $1 billion project, if completed, also would include a 2,400-space parking garage; a 50,000-square-foot community ice facility; 24,300 square feet of retail; a high-tech aqua range hitting bay; beautification of the property’s lake for a nightly fountain show; 300 apartments (first offered to GSR employees); and a potential 500-room hotel wing.

Andrew Diss, the senior vice president and chief strategy officer of Meruelo Gaming, has shepherded the GSR’s proposal. He told The Nevada Independent the resort is puzzled by the opposition.

“We can’t figure it out,” Diss told the website. “In Vegas, there is a mentality that something built near the Strip, whether it’s Allegiant Stadium or the Sphere, benefits everybody. 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.”

In an email to The Nevada Independent, Meruelo said the downtown casino properties leading the public-financing opposition have benefitted from tax money going to the National Bowling Stadium, Reno Events Center and Greater Nevada Field, all of which in downtown. Greater Nevada Field’s original financing plan included $2.5 million in annual property tax abatements over 20 years, totaling $50 million plus a rental-car tax to help fund the project.

“While these facilities have provided substantial direct benefits to the downtown casinos, they have also burdened the City of Reno with large debts,” Meruelo told The Nevada Independent.

During the meeting with the Reno Redevelopment Agency Advisory Board in February another hurdle was presented when it was pointed out TIF funding is only allowed in Nevada through 2035. The GSR is asking for TIF funding through 2055, a 20-year extension past the current maximum allotment established in a 2005 bill. However, Sen. Edgar Flores, a Democrat from Las Vegas, is sponsoring SB401 on behalf of Meruelo Gaming that would extend redevelopment plans in blighted areas from 30 to 50 years in Reno. With the consensus being the GSR project will not move forward without TIF funding, that bill would need to be passed in the coming weeks for ground to be broken this spring, the goal for a 2027 opening.

The city of Reno is projecting a $24 million budget deficit for the upcoming fiscal year as city leaders forecast slower-than-expected revenue growth due to flat sales tax revenues. A Reno government report supported the theory the arena would generate returns for the city even after the TIF funding. Diss also added the GSR grounds are inside a redevelopment district, telling The Nevada Independent public money is needed to move forward.

“We weren’t sure if we could do it all on our own,” Diss told the website. “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.”

The GSR and university are scheduled to give a full presentation to the city council April 9 that could pit one of the region’s top resorts, the GSR, against a coalition of other Northern Nevada top resorts. Ultimately, the fate of the project lies with the Reno Redevelopment Agency, which has the final vote on the TIF funding. That board is comprised of those on the Reno City Council, including Schieve.

“There is no question that the GSR expansion presents exciting opportunities for the community,” the casino opponents of the project wrote. “However, the Coalition has serious concerns about the use of TIF funds to finance that expansion.”