The Lucky Dragon, a planned Asian-themed hotel and casino being built just off the north Strip, failed today to advance its plan to get financial help from Las Vegas city leaders.
Las Vegas City Council members rejected a controversial request from the hotel-casino’s developers for the city to provide a subsidy to help complete the project.
The Lucky Dragon wanted the city’s Redevelopment Agency to award it with tax increment financing, which would allow the project to use some of the additional property tax revenue it would create.
The Lucky Dragon’s backers stressed that they only wanted approval to return with a specific plan — one that the agency could later reject — but the prospect of moving forward with the matter at all was met with strong backlash from the casino industry.
The agency, which is overseen by the City Council, has not made any major investments recently in hotel-casinos “as a matter of practice,” according to city staff.
That led to debate today about whether the agency should change its practice, with the Lucky Dragon arguing that it deserved the subsidy and casino industry representatives contending that any public help was unfair.
According to the Lucky Dragon’s application for tax increment funding, the $139 million project has already raised $60 million from foreign investors and more than $24 million in equity from its developers. The project has also secured a letter of intent from a bank for up to $30 million in development financing.
But the bank won’t provide “any portion” of that loan until the Lucky Dragon either gets a “material credit enhancement,” such as tax increment funding, or raises $25 million more from foreign investors.
The overseas funds come through a United States program called EB-5, which rewards foreign investors with permanent legal residency if they meet certain criteria. But the Lucky Dragon’s application said that the “uncertain and extended timeline” necessary to raise more EB-5 funds would force it to “cease all development activity in the coming months.”
The Lucky Dragon was represented by Richard Bryan, the former Nevada governor and U.S. senator, who told the council that the project’s potential EB-5 financing had “essentially dried up” due largely to a slowing Chinese economy.
Bryan said he understood the policy dilemma of whether to provide public assistance to a private hotel-casino development. But he argued that the Lucky Dragon was special because it was bringing new development — and lots of jobs — to a “horrendously depressed area.”
The Lucky Dragon site is located on Sahara Avenue just west of Las Vegas Boulevard.
Andrew Fonfa, a developer backing the Lucky Dragon, said the project would not take money away from the city but bring additional tax dollars that do not yet exist.
“There’s a misconception that we’re trying to raid the city coffers,” Fonfa said. “That’s not the case.”
Representatives of the Culinary Union, the Nevada Resort Association, Boyd Gaming Corp. and the El Cortez all opposed the request.
Generally, they did not feel it was fair for the Lucky Dragon to get financial support from the city when other hotel and casino developments have had to make do on their own — even in the face of substantial economic turbulence.
Virginia Valentine, the current Resort Association president and former Las Vegas city manager, said at the outset of today’s meeting that assisting the Lucky Dragon project was “probably one of the worst uses of redevelopment agency funds I can think of.”
The Lucky Dragon did receive strong support from Councilman Bob Coffin, whose ward includes the project. But Coffin was unsuccessful in convincing his colleagues, who shot down the request on a 6-1 vote.
Coffin got confirmation from city staff, however, that the request could be brought up again in the future.
The Lucky Dragon has already topped off its nine-story hotel tower. If built to completion, its features would include about 48 table games, 350 slot machines, five restaurants, four bar or lounge areas and a pool. Developers want to open the hotel-casino in August.