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Car rentals short city on money for Smith Center

When backers of a yet unnamed downtown performing arts center went to local leaders in 2005 looking for seed money, the solution was a car rental tax hike on tourists.

On Wednesday the Las Vegas City Council shifted some of the burden of the $360 million Smith Center for the Performing Arts to locals, after estimates showed the tourism downturn hurting car rentals.

Estimates of proceeds from the rental car tax — originally projected at $150 million — dropped to $105 million.

The council approved Wednesday the sale of $105 million in bonds against the car rental tax, but the city still needed to make up the $45 million difference.

Like magic, the good news came: Acting Deputy City Manager Mark Vincent announced about an hour later at the council meeting that the city, after a long effort, was about to close on the $85 million sale of redevelopment agency bonds to go toward various high-profile redevelopment efforts.

The funding would include money to make up the rental car tax shortfall in the city’s obligation for the Smith Center, which will rise in the 61-acre Union Park, the budding second downtown Las Vegas.

The bonds will be repaid from tax revenue raised within the downtown redevelopment area, not from the general fund.

Still, the vote marked a shift toward financing more reliant on residents. When the Legislature authorized local government to raise the tax on rental cars by 2 percentage points and use the money for the center, locals were prominently exempted.

Vincent hinted that the city would be able to meet the shortfall in remarks he made Tuesday to the Clark County Commission.

“We believe we can cover any shortfall as a result of any temporary economic situation,” Vincent said.

Smith Center officials say they’re following a conservative economic model, meaning they need to have all financing in place before breaking ground. Don Snyder, chairman of the Las Vegas Performing Arts Center Foundation, said after the council meeting that he hopes groundbreaking will happen within 60 days.

Construction costs are estimated at $245 million.

Plans for the Smith Center are the result of a decadelong effort to build a world-class performing arts center downtown.

In December, Snyder said that in addition to the city’s funding, the center had been relying on a $100 million bond issue through Bank of America as well as private fundraising.

That’s changed, said Myron Martin, president of the foundation. In addition to the city’s complete donation, which includes another $20 million for a total of $170 million, the center about a year ago received a $100 million gift from the Donald W. Reynolds Foundation. It has also received 42 additional gifts of $1 million or more.

Added together, that’s more than $310 million. Much of the rest, said Martin, will come from a $30 million to $35 million bank letter of credit, instead of the $100 million bond issue.

After the council meeting, Snyder said fundraising is going so well that by the time ground is broken, he expects excess funds will go toward operating costs.

Martin and Snyder appeared visibly relieved at the council meeting when they heard the city’s obligations would be met.

“We did breathe a sigh of relief this morning when those redevelopment bonds had sold,” Martin said.

Much is at stake for the city in plans for the Smith Center. Though local media recently have been fixated on more controversial city redevelopment projects such as the proposed city hall or the mob museum, the fact is that without the Smith Center, much of Union Park is in jeopardy.

The Smith Center is the “anchor tenant” at Union Park, Vincent said at the council meeting — the one most of the others are counting on to succeed.By Sam Skolnik