Committee hears SB402 to create restoration improvement districts for historic buildings; gaming provision draws opposition

Senate Bill 402 would authorize counties and cities to establish "restoration improvement districts" that pledge a portion of incremental property-tax revenue to reimburse developers who rehabilitate qualifying buildings that are at least 50 years old and have been largely inactive for at least 10 years.

Jerardo Nataren introduced the bill, explaining it would provide developers rebates of incremental property tax generated by restored properties while the municipality would continue to receive the base property-tax revenue it had been collecting. "It doesn't allow for cities or counties to assume risk nor will payments be made using the general fund," Nataren said.

Washoe County Commissioner Alexis Hill, who joined sponsors and developers in support, said the tool would enable local governments to encourage rehabilitation of underused historic buildings and avoid demolition. Mike Draper of Argentum Partners and the McWinnie Group described how the mechanism could be used on complicated, non-revenue parts of large restorations such as the Cal Neva Lodge at Lake Tahoe and noted proposed amendments to limit municipal liability and require public notice to affected taxing entities.

Draper said the bill's key features include:

- eligibility criteria (building 50+ years old; effectively closed for 10+ years, subject to a narrow exception to preserve certain privileged licenses); - a requirement that the municipality adopt an ordinance specifying findings and the incremental-tax pledge; - a cap of 20 years on any incremental-tax rebate and a prohibition on creating general-obligation debt or using municipal bonding capacity for the district; and - a prevailing-wage requirement for construction performed after the district is created.

A central point of contention at the hearing was whether tax increment-style rebates could be used for projects that include gaming. Sponsors said they agreed to an amendment that would prevent a nonrestricted gaming licensee from using the restoration improvement district for that license, in recognition of long-standing gaming policy. Still, Caesars Entertainment, Peppermill Casinos, Boyd Gaming, the Nevada Resort Association and others testified in opposition unless the bill clearly barred gaming operations from receiving tax increment rebates.

Caesars attorney Michael Alonso said the company supports revitalization but "adamantly opposes the use of tax increment financing for a gaming related project. Caesars does not believe it's good public policy for casinos or casino related projects to receive tax increment financing, abatements, or other public funding for casino projects."

Local governments and affordable-housing and development advocates testified in favor. Jennifer Bertheum of the Nevada Association of Counties, Mindy Elliott of the Nevada Housing Coalition, Kelly McNeil of the Nevada League of Cities and others said the bill provides a narrowly tailored, municipal-led tool that preserves historic structures and stimulates development while limiting municipal fiscal risk.

Clark County staff said they were neutral with amendments under discussion and asked for formal notification and consultation provisions for overlapping taxing entities; sponsors agreed to add a requirement that overlapping municipalities and special districts be given certified notice and 30 days to respond, and that affected entities must vote to include their allocation of incremental taxes.

Outcome and next steps: After hearing extensive testimony for, against and neutral, the committee closed the hearing on SB402. Sponsors and opponents said they would continue negotiations on precise language, particularly the gaming-related carveout and notification mechanics for overlapping taxing entities.