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Rod Smith

Nevada Economy: Casino Companies Still Top Tax List

16 February 2004

NEVADA -- The tax man cometh, but his bite is not quite the same for everybody.

The current taxable value of Clark County's top casino companies actually dropped slightly from last year, an annual list released by the Clark County assessor's office showed.

The major taxpayers also shifted position with MGM Mirage retaining its No. 1 spot on the taxable value list for Southern Nevada business, despite dropping $300 million in value, but Mandalay Resort Group moved into the No. 2 spot, pushing Caesars Entertainment to No. 3.

"The tax roll is really a moving target. It changes every day," said County Assessor Mark Schofield. Where taxpayers ultimately end up is still subject to change with the appeals process.

By comparison, noncasino companies among Clark County's top 15 property owners are facing an 8 percent increase in appraised values, and taxpayers overall are facing a 9 percent increase in their appraisals.

The taxable appraised values, and how they are adjusted from year to year, largely determine the real estate taxes property owners will pay, he said.

Schofield said there are many complex reasons for the divergent trends between the taxable value for hotel-casinos compared with other major land owners.

"A lot of it has to do with capitalized values and a lot has to do with the depreciation of personal property," he said.

Jeremy Aguero, principal analyst for Applied Analysis, a Las Vegas financial consulting company, said the decrease in taxable values for hotel-casinos was mainly caused by the devastating local effects of the terrorist attacks which hit the county's largest taxpayers hardest.

University of Nevada, Las Vegas professor and casino industry expert Bill Thompson said casino company profit rates "were pushing 10 percent before 9-11 and dropped overnight to 2 percent. That certainly explains the change in (taxable) values. The decline was a lot less than the drop in profits."

Furthermore, Thompson and Aguero both said gaming operators were exempt from the rapidly increasing land values elsewhere in the county because prices for real estate along the Strip already had been discounted for being in short supply.

"We're seeing the rest of the market being impacted by the perception of a land supply shortage. That premium was already placed on the Strip and is reflected in the (historically higher) taxable values," Aguero said.

By comparison, home builders were posting record profits over the past three years, and shopping centers, especially Fashion Show Mall, which is owned by The Rouse Co., the No. 5 taxpayer, have been in a major growth mode.

Schofield explained that income-generating properties are adjusted for their average earnings over three-year periods, which dropped dramatically for casino operators following Sept. 11, 2001, and the following leisure-travel tailspin.

He said the income adjustments are required by law and that the income approach is actually the most accurate procedure for establishing the true value of real estate.

By comparison, values have soared for major developers because of perceived land shortages and construction which has been booming, especially in Summerlin.

Rouse Co., whose holdings appreciated the most last year, is stillappealing its real estate appraisals.

Schofield said that if the economic recovery continues, he doubts the divergence between the taxable values of gaming properties and nongaming companies will continue.

This is the second straight year in which the value of casinos owned by the county's 10 biggest property owners have been flat, but he said it'll be a different story next year as major casino construction projects open up.

"There'll be a remarkable change (in taxable values) next year. MGM (Mirage) will remain on top. But with the merger of Coast Resorts and Boyd (Gaming Corp.), you'll see them click up a couple of notches on the list," Schofield said. "They'll likely succeed Station (Casinos). But next year, all the construction will set the pace."


Clark County's largest property taxpayers

2002-03 rank 2003-04 rank Property owner Taxable appraised* Percent change

1 1 MGM Mirage $4.16 bil -6.94

3 2 Mandalay Resort Group 2.70 5.88

2 3 Caesars Entertainment 2.38 -10.53

4 4 Nevada Power Co. 1.98 0.00

6 5 Rouse Co. 1.39 31.13

5 6 The Venetian 1.22 7.96

8 7 Station Casinos 915 mil. 5.90

7 8 Harrah's Entertainment 828 -8.51

12 9 Coast Resorts 682 32.94

14 10 Pulte Homes 525 25.90

9 11 Central Telephone Co. 516 -6.69

11 12 Aladdin Gaming Co. 509 -5.21

10 13 Sierra-Nevada Multifamily 499 -8.94


13 14 Boyd Gaming Corp. 390 -11.76

15 15 Victoria Partners 382 0.00

Total 19.1 bil. 0.35

Total gaming 14.2 -1.97

Total nongaming 4.9 7.69

GRAND TOTAL 126.44 9.31