GSR: Reno’s $61 Million Tax Giveaway

Deal to Billionaire Developer Hurts Taxpayers and the City’s Future

The Reno City Council has approved a $61 million Tax Increment Financing (TIF) deal for the Grand Sierra Resort (GSR) expansion—a deal that hands an out-of-town billionaire investor millions in future tax revenue while burdening Reno’s taxpayers and city services.

90% of the future property taxes generated by this development will be funneled back to GSR under the TIF agreement—money that should go to funding city services and infrastructure maintenance.

Since the GSR is willing and able to pay the up-front construction costs without TIF it seems that the GSR intends to use TIF for ongoing operational costs. This is not an appropriate use of TIF under Nevada law.

What the City Gets:

• $6.8 million over 10 years. That’s less than $700,000 per year—a drop in the bucket for a city with mounting infrastructure needs.

• $3.4 million to a youth sports fund—again, a one-time sum dwarfed by the $61 million tax giveaway.

• Land for a fire station valued at $4–5 million—but the city already has a station there and was paying below-market rent. The so-called “savings” of $30,000 per year is negligible.

The Big Problem: Lost Revenue, Higher Burdens

Supporters of the project claim that this tax money wouldn’t exist without the project, but this ignores the purpose of property tax: to fund public services. The GSR expansion will increase strain on roads, fire protection, and other city services—without paying its share. This forces Reno to make up the lost revenue elsewhere, likely through tax hikes or service cuts.

Reno already faces a $26 million budget deficit, and there are active county proposals to raise property taxes. On top of that, the city is carrying nearly $1 billion in debt from past TIF-funded projects like the Railroad Trench, Cabela’s, and city-owned venues such as the Reno Events Center, The Reno Ballroom and National Bowling Stadium—none of which delivered the promised economic revitalization.

Low-Wage Jobs, Temporary Boosts

Proponents of the GSR expansion tout temporary construction jobs and future tourism. But most permanent jobs at casinos and arenas are low-wage. And GSR’s expansion might not bring new visitors to Reno—it could shift them from downtown. That means less revenue for city-owned venues that are already struggling.

The Myth of the $2.4 Billion Impact

Supporters claim this will generate a $2.4 billion economic impact—but these types of projections are speculative and historically overblown. TIF projects in Reno (and across the U.S.) have a poor track record of delivering on their promises. Look no further than the underused Bowling Stadium, struggling Event Center, and Ballroom or the unfulfilled promises of the STAR bonds at Cabela’s and the railroad Trench.

What Happens If We Say No?

The idea that doing nothing means getting “nothing” is disingenuous. GSR would still likely build—the economic pressure and property value incentives are already there. And if they don’t? Reno saves itself from another tax siphon and retains control over its revenue. The real missed opportunity is continuing to subsidize billionaires while asking taxpayers to make up the shortfall.

Lack of Transparency and Public Input

What’s worse, the city has sidelined citizen advisory boards and made no real effort to engage the public. City Council members, RDA officials and people in prominent positions post articles and conduct interviews touting the GSR deal.

But questions are left unanswered. Will Reno residents use the expanded facilities? Is moving the ball team from UNR to the GSR a good idea? Can Reno meet its financial obligations? How have similar past deals performed?

Reno Needs to Reevaluate Its Actions and Finances

TIF is for truly blighted areas that need a jump start. But GSR doesn’t fit that definition. This deal isn’t revitalization—it’s corporate welfare.

The GSR TIF deal isn’t just bad policy—it’s a betrayal of public trust. Reno’s taxpayers deserve transparency, fiscal responsibility, and leadership that prioritizes the public good over developer giveaways.

Reno needs to:

• Restore citizen advisory boards and act on their input

• Audit and publish financials on city-owned venues

• Invest property tax revenues into public infrastructure

• Stop issuing tax breaks that weaken the city’s long-term fiscal health

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Reno is Giving Away Tax $ with TIF

TIF and STAR Bonds are not a good idea for Reno

Tax Increment Financing (TIF), whether using Sales Tax Anticipated Revenue bonds (STAR) or reimbursement, is a mechanism where anticipated increases in property and sales tax revenue from development are used to finance development costs.

In 2007, the City of Reno established a Tax Increment District (TID) to support the development of Cabela's retail store near Verdi. This initiative involved the issuance of STAR bonds to finance infrastructure improvements for the project. The amount issued was $34.7 million.

The Cabela's store, spanning approximately 129,000 square feet, was envisioned as a destination retail outlet featuring a big game museum. The project was anticipated to generate significant economic benefits, including the creation of jobs and the attraction of over two million out-of-state visitors annually.

The anticipated results did not happen, instead other businesses suffered.

The reason why this story is significant is that the GSR Casino and Jacobs Entertainment are asking for $ millions in TIF from the City of Reno as are other developers.

(Note: Cabela’s got STAR bonds while the GSR is getting property tax reimbursement.)

Are STAR Bonds a good idea? The answer is no. STAR bonds are not good for the taxpayers or for the investor who buys the bonds on the market. STAR bonds are only good for the corporations that get free money, like Cabela’s.

STAR Bonds divert tax revenue from public works. New development brings competition that diverts revenue from existing businesses. STAR bonds reduce tax revenue to the city as 75% goes to debt payment. STAR bonds reduce the credit rating of the city as the bonds under-perform and their value decreases.

Typically, a corporation like Cabela’s would issue their own bonds to finance building projects. They would have the obligation to pay the interest and eventually to redeem the bonds. With STAR bonds the principal and interest are paid from estimated incremental sales tax attributed to the project. The corporation that gets the free money has no obligations and the bond investors are left holding the bag.

(Note: Jacobs issued $500 million of their own bonds which they have mostly spent on the Jands as I write about in another article.)

Results for Cabela’s

The financing for Cabela’s was based on optimistic projections of retail growth and out-of-town visitors, but revenues were lower than expected.

The “Meridian Business Advisors Report” from 2006 provided initial estimates used to justify Cabela’s STAR bond project. However, the later analysis in the report “Reevaluating STAR Bonds in Northern Nevada” by Matthew D. van den Berg from 2010 finds discrepancies between projected revenues and actual performance.

The Berg study highlights one major flaw in the original STAR bond projections—the failure to account for displaced retail spending. Cabela’s did not bring in new revenue but instead shifted existing consumer spending from other local retailers.

The Berg study notes a negative correlation between gaming revenue and sporting goods sales, suggesting that some tourist dollars may have shifted away from casinos and other stores to Cabela’s. The report found that the city council did not conduct a thorough displacement analysis, despite the Nevada STAR bond law requiring it.

As far as the tourism impact the original claim was that 68% of sales would come from out-of-state visitors. The revised estimate that Cabela’s later acknowledged is that only 57% of sales came from out-of-state shoppers. License plate surveys conducted for the study suggest the percentage could be even lower, meaning more local spending was diverted than initially projected.

The short fall of sales tax revenue was confirmed at a City Council meeting on Dec. 11, 2024 by Matt Taylor from Finance. While reviewing a recent audit report he explained that the Cabela’s debt, which appears unusual due to a negative $17 million balance in the fund, is because the city only pays the portion of the debt that has been covered by sales taxes from Cabela’s.

The City of Reno AFCR. (City of Reno Annual Comprehensive Financial Report, Fiscal Year Ended June 30, 2024) reveals that revenue covered by STAR bonds has only achieved 46% of projections.

Now the GSR is asking for Tax Financing

The Grand Sierra Resort (GSR) in Reno is advancing plans for a $1 billion development project that includes a $400 million arena. The project is on track for a groundbreaking in late June 2025, pending approval for tax-increment financing.

Initially, GSR indicated that the project would be entirely privately funded. However, in October 2024, GSR requested approximately $97 million in tax-increment financing from the City of Reno, representing about 9.7% of the total project cost.

The Reno City Council has authorized staff to continue discussions with GSR and to commission a third-party review to assess the project's potential impact on the city. GSR aims to begin construction in spring 2025, with the arena expected to be ready for use by the University of Nevada's basketball team in fall 2027.

As of now, the project is progressing through the necessary approval processes, and further developments are anticipated as discussions continue between GSR and the City of Reno.

(Note: The GSR had heir request for $61 million approved recently, as I wrote about in another article.)

Conclusion

The Cabela’s STAR bond project did not meet its original financial expectations. Sales were lower than projected, reducing tax revenue and weakening the argument that the project significantly benefited the local economy. Tourism impact was overstated, with many sales likely coming from local spending rather than out-of-state visitors. Better oversight and financial modeling are needed for future projects.

Current and future projects are likely to have similar unfortunate results The City of Reno should not be financing corporate properties. These bond-financed projects are not successful in any city. Given this situation, the residents of Reno should object to any further STAR bond issues.

(Note: Reno has bonds for the Train Trench, Ballroom, Event Center and Bowling Stadium which I will cover in other posts.)

The Neon Line: Promises Unfulfilled

A Buying Spree in West Reno

Jacobs Entertainment (JEI) is leading Reno into a real estate and financial disaster. JEI have not delivered on their promises, and they want the City of Reno to help finance their ill-conceived vision of a “Neon Line” west of downtown.

JEI began acquiring properties in Reno west of downtown in 2015 with the Gold Dust West. In 2017 they started buying again acquiring the Sands Regency hotel and casino for $26 million and the Gold and Silver Inn along with up to 100 other properties for an estimated total of $100 million.

JEI enticed the Reno City Council with promises of redevelopment and obtained permits to demolish up to 45 properties including 18 weekly rental motels, displacing hundreds of low-income residents.

JEI has built only one new property, the 245 Arlington Apartment, and renovated just one, The Renova Apartments. There has been no development progress across the remaining lots. The company has attempted to attract joint venture partners or to sell these properties, but there has been no progress since 2017.

JEI has focused on renovating the Sands Regency into the J Resort including building the Glow Plaza and is currently building an outdoor festival venue at 2nd and Arlington and appears to be betting the festival venue to boost them financially.

(Note: This article was first published 2/20/2025. An update will be posted soon.)

A Neglected Casino Property

The Sands Regency, an 800-room casino hotel, has changed hands multiple times since its expansion in 1988. It was sold to Herbst in 2006, Truckee Gaming in 2013, and JEI in 2017. It grew into disrepair.

JEI has reportedly taken on $500 million in debt at 6.75% interest to finance the renovation of the Sands Regency into the J Resort. This amounts to an annual interest payment of $33.75 million.

Renovations began in 2019, but the property now faces a mismatch in customer demographics. Historically, it catered to a blue-collar crowd, but the renovation has driven up prices, alienating its traditional customer base but not attracting many new customers.

Reviews on social media indicate widespread dissatisfaction with the price increases and they call out that it’s not a resort like other large casino properties in Reno.

Uncertain Viability of the J Resort

JEI is a private company that does not publish its accounting statements. Estimates and conclusions in this article are based on publicly available information, industry-standard factors, and financial ratios.

For the J Resort to achieve financial viability, it would need to generate an estimated $110 million in gross revenue which is comparable to the Atlantis casino, which reported revenue of $133 million, with a similar room count.

However, based on estimated operating expenses and debt service obligations, even at this revenue level, the J Resort might run at a $7 million annual loss, which would require Jacobs to distribute the debt service company-wide across of JEI’s entire casino portfolio in which case the J Resort might have a +23% operating margin.

JEI appears to be betting on achieving Atlantis-level revenue, but current conditions do not support such optimism. From the reviews and observations J Resort might be half empty. It’s hard to tell.

It looks like JEI is counting on the festival plaza at 2nd and Arlington to take up the shortfall but this event space is unlikely to generate the necessary revenues, given that it will be difficult for them to put on 10 or more shows will ticket sales over 10,000 units. The maximum capacity is 15,000 attendees.

Jacobs would have to outdo the Golden Center in Sacramento and Shoreline Center in Mountain View to reach their goals.

Looming Risk for Jacobs

JEI’s $500 million in bonds mature in 2029, and its ability to refinance is uncertain. Other casinos typically issue bonds with 7-10 year terms, allowing more time to accumulate cash reserves. JEI's five-year bond term suggests refinancing risk.

The company has not developed any of the 100+ lots it acquired, meaning it cannot generate revenue from them or use them as collateral for refinancing. If the company cannot secure additional funds or attract development partners, insolvency by 2029 is possible.

Requests for Public Assistance

JEI has requested significant financial support from the City of Reno, including $20 million in tax-increment financing (TIF) which is pending, 40% (up to $20 million) of new tax revenue, $4.6 million in infrastructure improvement reimbursements, and $1.57 million in sewer fee abatement which has been granted and building permit and sewer connection fee deferrals with a 5-year payment schedule.

(Note: recently Jacobs revised their TIF down to $20 million and the city of Reno extended their sewer connection deferral indefinitely.)

These requests from Jacobs place a burden on Reno’s already strained finances. Reno is facing a $25 million budget deficit in 2026. The city’s redevelopment fund has been depleted due to under performance of the Bowling Stadium, Event Center, and Ballroom, which were financed with approximately $100 million in tax incentive bonds in the 1990s.

Reno has already lost approximately $2.5 million in room tax revenue over the last five years due to JEI’s demolition of 18 motels. Property tax revenue has declined as demolished properties reduce taxable value but the amount is difficult to determine.

Risks for The City of Reno

Jeff Jacobs, the company’s CEO, is known for high-risk, high-debt investments. He has publicly stated that the Neon Line development will be the capstone of his career. However, his financial decisions suggest a speculative rather than strategically sustainable approach.

Despite receiving significant concessions from the Reno City Council, JEI has failed to present a concrete development timeline. Hundreds of residents were displaced, and citizen objections were ignored. Jacobs’ political connections, including campaign contributions and advisory roles, have influenced city decision-making. The city has allowed JEI to bypass sign and billboard regulations, leading to legal action from Scenic Nevada. Former city council member and Mayor Schieve’s campaign manager, Jessica Sferrazza is an advisor to Jacobs.

(Note: The Nevada Supreme Court just ruled that Jacobs can erect the signs.)

If JEI fails with the Neon Line vision, Reno will be left with vacant lots and lost tax revenue. The city must exercise caution before approving any further financial benefits for Jacobs. Given this situation, further financial support for JEI should be reconsidered by the Reno City Council until the company demonstrates a viable path forward with development of their properties.

Conclusion

JEI should provide transparent development plans and execution strategies and be held to them. The Reno City Council should seek public input before granting further financial assistance. JEI must find ways to monetize its vacant lots, even if through discounted sales or joint ventures with developers. JEI should not be granted any tax incentive bond financing.

Envisioning West Reno’s Transformation

Reno needs a vision for west downtown

Reno has a long and tumultuous history with mega-projects promising to redefine downtown, filled with ambitious visions from charismatic developers. Unfortunately, these grandiose ventures rarely fulfill their lofty promises, often leaving taxpayers burdened and the cityscape dotted with unfinished dreams. The Neon District, the latest in a long line of these projects, is no different.

Consider the West 2nd Street District. It was pitched as a transformative development that would double the size of Reno’s downtown, complete with artistic renderings of beautiful tall buildings. The proposal promised vibrant public spaces, and innovative infrastructures including for residential and business. Yet despite its grand vision, the project never got off the ground.

Who could forget the Reno Expo Center? Proposed as a colossal mall, convention center, and hotel complex at the CitiCenter bus station site, also known as Partnership Plaza, that never materialized. The CitiCenter location has been the subject of numerous pie-in-the-sky redevelopment schemes, none of which have succeeded.

While RED Development eventually succeeded in transforming the site of the old Park Lane Mall, that project fell far short of its original scale. They didn’t build all of the apartments and people complain that rents are too high. RED serves as a reminder that initial promises often become heavily scaled-down realities, as they don’t match the economic situation.

The latest development is Jacobs Entertainment and its Neon Line vision. They started acquiring properties in Reno west of downtown in 2015 starting with the Gold Dust West. They promised redevelopment including apartments. They got permits to knock down many weekly rental motels and displaced hundreds of low-income residents. After acquiring 100 properties Jacobs has only built one property and renovated one property and has not delivered on promises to develop the area.

Jacobs has cited the high cost of construction and some people say that Jacobs overpaid for the properties. This process of relying on one developer to come in with a mega-project has not worked out. There has to be a better way to redevelop the area. If developers can’t afford to build low-income housing maybe we need to focus on job growth and higher-paying jobs.

Office Space and Job Growth

Earlier this year an article on NNBW talked about the low vacancy and strong state of the office space market in Reno after two small office buildings were sold. The article states that downtown Reno has 1.4 million sq. ft. of office space.

Let's put that in perspective. The Sales Force Tower in San Francisco has 1.4 million sq. ft. One building equals all of the office space in downtown Reno. Reno has low vacancy because we have low inventory, not because of a strong market.

People talk about the need for affordable housing and the problem doesn’t get solved. Rentals in Reno are about 40% lower than in the Bay Area. I see hundreds of ads for apartment rentals but no one can afford them. Maybe the problem is a lack of good-paying jobs due to the lack of office space. Maybe we can fix wages.

Recently I attended Reno Startup Week. It was an inspiring event. There are many people that want to start businesses that would have good-paying jobs but there is no office space for them. There are smaller Bay Area tech companies that might move to Reno given the lower cost of doing business and the short commutes if there was more office space.

The campus in Palo Alto where I worked is about 120 acres and has over 1 million sq. ft. of office space. It was beautiful, park-like. A pleasure to visit. The Jacobs Neon Line zone is also about 120 acres. There are many empty lots in this area that combined are enough to build over 500,000 sq. ft. of office space even with smaller buildings, and could add over 50% to the downtown office space.

The problem seems to be that the City Council gave Jacobs incentives to buy over 100 lots, knock down motels and build parking lots without a committed development plan for much else and without a good look at how Jacob’s was going to finance the project.

(Note: I will be posting an article on the latest promises from Jacobs)

Reno Needs a Plan

What if the City could motivate Jacobs to sell to builders or joint venture with them on some of the empty lots and Reno could develop a plan to attract office space developers and Bay Area startup companies and bring higher-paying jobs to Reno?

It would take a coordinated effort. Jacobs could provide land at a discount or provide lease subsidies for startups and growing tech firms and deliver on their promise to redevelop the area.

Reno could incentivize the development of office space & tech hubs by offering reduced business license fees for developers who build office space and to companies that relocate.

Reno could fast-track permitting by implementing expedited approval processes for commercial developments that align with economic growth objectives.

Reno could collaborate with developers and permit mixed-use development through zoning that allows for tech parks, co-working spaces, and residential areas near commercial hubs.

Reno can promote the lack of state income tax, and opportunity zone benefits, and promote Reno as an Emerging Tech Hub with a good quality of life, lower costs, and business-friendly policies.

What if West Reno could realize the vision of the West 2nd Street District plan, https://cathexes.com/projects/west-2nd-district/.

Maybe this is just another case of wishful thinking but as I go through the area on my way from home to downtown and see the disaster that the neighborhood has become I see that something needs to get done.

(Note: This article was first published 2/11/2025)