Obtaining leases from three state agencies has been cited by the people pushing the Nugget Project as a critical piece to its success.
But, there’s been more than a little skepticism that the State of Nevada, staring down the barrel of a $3 billion deficit in its next budget, has any appetite for spending money it doesn’t have to.
For these agencies — the Gaming Control Board, Public Utilities Commission and Health and Human Services — to be able to move, they would have to make room in their budgets for all the expenses, according to Cindy Edwards, administrator for the Nevada Division of Buildings and Grounds.
To do this, these agencies will have to make cuts to their payrolls, and reduce their footprint so they don’t have to lease as much space. But reducing payroll is not without costs. Laying people off costs money in the short term. There is also the short-term costs of moving these agencies.
The problem is the state has a big short-term budget problem, which as already seen the government take actions that will create long-term costs in order to save money today.
The Nugget developers have hired Meridian Business Advisors to come up with a plan that shows how much these agencies could save by moving to this new facility. We’ll have to wait to see what they come up with to see just how the numbers come together.
Another potential problem might be the timing. The Nugget developers want to get signed leases from the state this year so they can get their financing lined up and start construction. But, according to Edwards, any leases that they sign now would come with a really big stipulation. Because these agencies’ budgets have yet to be approved by the legislature for the coming years, these leases would be conditional, meaning the state could walk away from them if they want.
So, would any financial institution make a big bet knowing the state, facing its biggest fiscal crisis ever, could cancel those leases?
Another hurdle for this project to clear is the Board of Examiners. Any long-term leases would need to be approved by this board, which could scuttle this deal for any reason.
There are a lot of questions yet to be answered, most of which will hopefully be handled by the plan being put together by P3 Development. But that process hit a snag last week as the vote by the Board of Supervisors was delayed because of a problem of missing text in the contract.
One question is if the state declines to participate, will the library/discovery center project go forward? It’s the assumption of many that P3 Development will propose something regardless of the state’s participation.
Only time will tell.
