Nevada legislators are in a rush, so can't be bothered with niggling concerns about whether their tax credit scheme is designed primarily to create a new industry or coddle a long-standing and very powerful one. (Screengrab of Summerlin from "A Strategic Overview of Howard Hughes Communities" video presentation to investors)
"The investment."
That's what authors of and apologists for the film subsidy scheme keep saying to defend giving public money to private corporations.
No state tax credits will be handed out to film companies to sell to Nevada corporations -- who can use the credits to pay taxes, thus diverting tax revenue to the film companies -- unless hundreds of millions of dollars is spent building ... something.
Therefore, the tax credit scheme now being debated in a "special" legislative session will generate hundreds of millions of dollars of "investment," assert the scheme's backers.
As was brought to the fore in the Current over the weekend, the geographical district in which such qualifying spending occurs includes Downtown Summerlin (Howard Hughes Holdings, proprietor), a couple miles away from the site of Sony Pictures Entertainment's proposed studio complex.
Office space and restaurants and hotels and retail and whatever else gets built in the Downtown Summerlin area could count toward the spending requirements -- "the investment" -- that trigger the tax credits to the movie corporations.
So presumably every time Howard Hughes Holdings develops ... anything ... or sells/leases land to a company that does, in the general vicinity of where some studio-related infrastructure might be constructed, that would count toward the investment prerequisite forcing the state to give tax credits to film companies.
"We need to prove" to the Governor's Office of Economic Development (GOED) "that there is a concrete nexus between that development at Downtown Summerlin and the studios," Matt Walker with Howard Hughes Holdings, who has been shepherding the bill through the special session, assured lawmakers. "It's not as if we just build a new office building and call it connected."
Given the inclination of Nevada economic development officials to side with companies whenever possible, and brag about it, one can be excused for presuming GOED will interpret "nexus" very generously.
And then the millions diverted from state revenues to the film companies will be used by the companies to lease land from Howard Hughes, as well as pay Howard Hughes, a developer after all, to get stuff built on it?
The Assembly (barely) passed the scheme Sunday, and a Senate committee has already advanced it to the Senate floor.
If it's enacted, it will be of a piece with Nevada economic policy generally, which is anchored by an almost spiritual dedication to providing public subsidies to big business.
But at least it will be interesting to track how much of the revenue that film companies make selling $1.65 billion in tax credits will ultimately end up as entries among Howard Hughes Holdings' accounts receivables.
Alas, we will likely never know how much of that development would have happened anyway, even without diverting tax revenue to Howard Hughes, er, film companies.
Probably a lot.
As HHH CEO David O'Reilly boasted in a recent video to shareholders, the company has "tens of thousands of undeveloped acres" nationwide, "both residential and commercial, that we'll be building on, unlocking the value into great income producing assets."
But Nevada legislators can't be bothered with niggling concerns about whether their tax credit scheme is designed primarily to create a new industry or coddle a long-standing and very powerful one. There's a "special" session to rush through. Hurry, hurry, hurry. Mustn't delay.
Of the bits and pieces of the session I watched over the weekend, probably the best short summation of the Legislature's film tax folly process, and the best explanation of why legislators were even there, was delivered by Republican Assemblymember Jill Dickman. Lawmakers are speeding through the scheme during a special session "not because it's urgent, but because someone wants it rushed."
Someone like the self-described "country's leading developer of large-scale master planned communities."