LOS ANGELES — Clark County, Nev. and Oakland, Calif. are both able to manage the credit risk from the Oakland Raiders' plan to move to Las Vegas, according to a Moody's Investors Service report.
The 32 National Football league owners approved the move on Monday.
Clark County has agreed to contribute $750 million of the $1.9 billion cost of the 65,000-seat stadium.
The county would cover the cost by issuing debt secured by a hotel tax increase and its general obligation limited tax pledge as a backstop, Moody's analysts said in the March 30 report.
"Given its low debt burden and substantial tax base, the county faces manageable credit risk from the debt issuance," Moody's analysts wrote.
The county has already began to collect the pledged hotel tax, which Moody's said provides Clark County with dedicated stadium funding at a rate of 0.88% for the Las Vegas Strip and 0.5% for other areas. Las Vegas has roughly 150,000 hotel rooms and tourism grew to a record 42.9 million visitors in 2016 with hotel occupancy of 89.1%, which is well above the national average occupancy hovering around 62%, according to the report.
The Raiders and a $650 million loan from Bank of America would cover the balance. The team would be required to spend $100 million on the stadium before public funds become available under
The legislation also requires that a 30-year lease and developer agreement be structured and the stadium site finalized by the Clark County Stadium Authority before the county issues debt. Cost overruns also would be covered by the team.
The team's eventual departure, Moody's wrote, will have minimal credit impact on Oakland's $83 million in outstanding lease revenue bonds, which financed $127 million of facility renovations at the Oakland Coliseum in 1995 and amortize through 2026, Moody's wrote.
Over the past five years, Moody's wrote that Oakland and Alameda County have paid a combined total of $17 million to $22 million annually for the coliseum, because stadium revenues were not sufficient to meet operating costs and debt service payments. The Raiders and Major League Baseball's Oakland Athletics, the Coliseum's other tenant, have no financial obligation to support debt service.
Oakland officials had floated a competing plan to keep the team that would contribute less public money, but the NFL owners turned down that plan.
The Raiders have lease options to play in Oakland for the 2017 and 2018 season, but the Las Vegas stadium is not slated to be ready until 2020. A decision hasn't been announced as to where the team would play during the 2019 season.
