Las Vegas BABs

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Earlier this month, the City of Las Vegas moved forward on its plans to leverage a portion of its share of stimulus package into a new $188 million City Hall. Right now, any help that Vegas can get is a godsend: The city has built itself on a system subject to highs and lows as intense as those of the junkies coursing through its streets. Its economy is almost entirely based on luxury goods, so when the U.S. economy booms, Vegas explodes. When we take a dip, it starves. (Current TV’s Vanguard did a great rundown of the Vegas’s recessionary plight.)

The ideas behind the City Hall are manifold: Building a new government center puts people to work, frees up a section of land long considered an impediment to the cohesive development of the area, and cut down on CO2 emissions by about 2,300 tons to save the city an estimated $500,000 in energy costs a year.

The financing is a little tricky, and it involves a somewhat obscure feature of the stimulus plan called Build America Bonds. You’ve probably never heard of them; they’ve received scant press since they were included in the bill. But if there’s a major capital project going up right now, chances are that BABs are at work. Here’s what they do: Like regular municipal bonds, the city sells certificates out to lenders and gets money. But when it comes time for cities to pay back interest to bondholders, the Feds step in and subsidize interest costs.

For cities, these subsidized interest rates are especially important as many of them have to come up with five-year plans for their budgets (although Vegas is not among them). This means that long-term interest payments play a big factor into how they budget themselves for any current year, and if that cost is reduced two, three, or four years from now, then they have more money to include for services now.

On any other occasion, I would probably lambast the idea of a new city hall as white-elephant waste that is little more than temp work on a project without any real ends. But I’ve never been to Vegas, and if the city has plans in store for a wider development strategy in City Hall’s relocation, kudos to them. There is a disappointment, though: The development of the current City Hall site includes a new hotel-casino. Apparently, lesson not learned.

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