Las Vegas Business Press: Las Vegas fund wins $55 million in federal New Market Tax Credits

By CHRIS SIEROTY
SPECIAL TO LAS VEGAS BUSINESS PRESS

Real estate projects in downtown Las Vegas and other traditionally underserved areas could benefit from millions of dollars in tax credits awarded through a federal program aimed at enticing private investment in low-income areas.

The U.S. Department of Treasury allocated $55 million in New Markets Tax Credits to the Las Vegas Community Investment Corp., a community development entity formed by the city of Las Vegas in 2012 to attract investment.

“This adds to our package of incentives we can use to attract more development to the urban core downtown and older, more distressed areas,” said Scott Adams, deputy city manager for the city of Las Vegas.

With this announcement, LVCIC has won $83 million in federal New Market Tax Credits during the program’s lifetime. Adams told the Business Press the LVCIC’s first attempt to receive the credits in 2013 failed, but the entity received $28 million in 2014.

Adams said most of the tax credits from 2014 went to support a $15 million face-lift of West Las Vegas’ Westside Grammar School, the first public school built in Las Vegas in 1923 at Washington Avenue and D Street.

The tax credits also went to support construction of the Nevada Supreme and Appellate Courts building on the southwest corner of Clark Avenue and Fourth Street, adjacent to the federal court building in downtown Las Vegas.

Adams said LVCIC still has $6.8 million in tax credits left from the first round. Those tax credits will be added to the new credits LVCIC received Monday.

Potential contenders for New Markets allocations include charter schools, food banks, hotels, manufacturing plants, solar farms, performing arts centers, medical clinics and mixed-use developments, which include a mix of multifamily and some retail.

Adams said a typical project cost would be between $5 million and $15 million.

“We’ve had a lot of interest from charter schools in the area,” Adams said. “We will only select a project that is construction-ready or shovel-ready.”

Bill Arent, director of economics and urban development with Las Vegas, said at this point he is looking for new projects.

The nonprofit LVCIC works by selling these tax credits to investors, using that money to make below-market-rate loans for job-generating projects in qualified low-income communities.

Arent said this program would help attract additional investments in and around the Las Vegas Medical District.

The medical district was formed by the city in 1997 with the intention of creating a medical education, research and clinical care center in an area near University Medical Center.

The district is also home to the UNLV School of Medicine, which is scheduled to welcome its first students in fall 2017. The district is anchored by facilities such as the Cleveland Clinic Lou Ruvo Center for Brain Health and the UNLV School of Dental Medicine.

“It will be very helpful” in attracting additional investment to the area, Arent said of the New Market Tax Credits.

New Market Tax Credit benefits to qualified developers are numerous, according to the LVCIC.

They assist with approximately 20 percent of a project’s expense and enable a developer to receive low-cost, flexible financing. To qualify, a project must be located in and benefit a low-income community.

A New Mart Tax Credit Loan is typically forgiven after a seven-year compliance period and reduces dependency on other funding sources.

The developer must have direct ownership or investment in the project and have sufficient financing to be augmented by the tax credits.

Altogether, the treasury department made allocations to 120 organizations nationwide for a total of $7 billion in New Market Tax Credits. It was the largest round of awards since the program’s inception in 2001.

Over the past 15 years, the agency has awarded $50.5 billion in tax credits. The federal government estimates that every dollar of tax credits supports $8 in private investment.

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PaymentsCompliance: NetSpend Denies Deceptive Marketing Charges In FTC Lawsuit

14TH NOV 2016 | WRITTEN BY: CHRIS SIEROTY

The Federal Trade Commission (FTC) has charged reloadable prepaid card company NetSpend with deceiving customers about access to funds deposited on their debit cards, an allegation the company intends to “vigorously contest.”

In a 28-page complaint filed on Thursday in federal court in Atlanta, the FTC charged that NetSpend told consumers in its marketing materials that its reloadable prepaid debit cards offer an alternative way to store and immediately access their funds.

But the FTC alleges that once customers loaded funds onto their cards, many of them found they could not access their money, either because NetSpend denied or delayed activation of the card, or because it blocked consumers from using it.

“Innovative financial products can offer many benefits to consumers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.

“However, when companies promise consumers ‘immediate access’ to their funds, they need to honor those promises.”

Rich reminded payment companies that the FTC was committed to protecting consumers, especially those who are financially strapped, from deceptive practices.

TSYS, or Total System Services, a payment services company based in Columbus, Georgia, acquired Austin, Texas-based NetSpend in 2013 for about $1.4bn.

NetSpend accounted for 20 percent of TSYS’ revenues in the third quarter of 2016.

According to a quarterly earnings report released October 25, NetSpend posted third-quarter net revenue of $155.3m, an 11.2 percent increase from $139.6m in the same period last year.

NetSpend also claims consumers are “guaranteed approval” for a card. In fact, the FTC alleges many consumers did not receive access to their funds as promised.

According to the complaint, consumers must go through an identity verification process as required by law before the prepaid debit card can be activated, and many people have difficulty satisfying this requirement.

The FTC alleges many consumers who could not access their funds for weeks, or at all, suffered severe financial hardship such as evictions, car repossession, and late fees on bills.

In a statement, NetSpend denied the FTC’s allegations and said it has “substantial defenses” to fight the complaint.

The prepaid card provider said the issue in the complaint is whether consumers were deceived because of the company’s compliance with federal mandates under the USA PATRIOT Act.

NetSpend said it has to confirm the identity of those acquiring prepaid cards.

“NetSpend takes seriously and carefully adheres to these legal mandates to fight identity theft, money laundering and terrorist financing and believes that no one was deceived or harmed by the company’s compliance with these legal obligations,” the company said.

NetSpend said the complaint also relates to the company’s fraud control, which is required by federal law to monitor accounts for account takeover and possible fraud to protect consumer funds.

“These processes are not deceptive, but instead comply with the law and protect consumers,” the company said.

In addition, the FTC’s complaint alleges that consumers who closed accounts and requested refunds waited several weeks for their money. In other cases, consumers’ funds were allegedly depleted by company fees.

The FTC also alleges that NetSpend misrepresents that when customers dispute charges on their cards, it will grant provisional credit so they can access their funds while the error is resolved.

In many cases, however, NetSpend has failed to grant provisional credit as promised.

NetSpend’s statement did not address the additional charges in the FTC’s complaint.

The FTC seeks to return consumers’ funds and ensure NetSpend provides them with promised access to their funds in the future, the agency said in a statement.

 

GamblingCompliance: Adelson Tipped To Lobby Trump For RAWA

21ST NOV 2016 | WRITTEN BY: CHRIS SIEROTY

With the United States preparing to inaugurate its first former casino owner as president, at least one Washington, D.C. lobbyist believes Donald Trump’s administration will have to consider supporting legislation to reinstate the federal ban on online gambling.

“Donald Trump will have to pay some attention to internet gaming [next] year,” predicted Shanti Stanton, a principal with Subject Matter.

“You can’t overlook that one of his biggest donors is a casino owner,” Stanton said of Las Vegas Sands chairman Sheldon Adelson. “I think he goes to Trump” asking for him to support a federal ban of internet gaming.

Adelson, a prominent Republican donor, has been an ardent supporter of implementing a federal ban, even donating money to establish the Coalition to Stop Internet Gambling.

An email seeking comment from Las Vegas Sands was referred to the Washington, D.C.-based advocacy group.

“We look forward to working with the new administration and a strong bipartisan group of lawmakers to stop predatory online gambling,” John Ashbrook, a spokesman for the Coalition to Stop Internet Gambling, told GamblingCompliance Friday.

The casino owner has also supported Republican Senator Lindsey Graham of South Carolina, who authored the Restoration of America’s Wire Act (RAWA), which would ban all internet gambling.

Adelson believes online poker, table games and slots cannot be effectively regulated and threaten the integrity of the gaming industry at large.

Four states — Illinois, Georgia, Michigan and Kentucky — currently allow online lottery sales, while Nevada has legalized online poker and Delaware and New Jersey have full online casino gambling.

The modest growth of online gambling was the result of the U.S. Department of Justice issuing its interpretation of the Wire Act in 2011, saying it only applies to sports betting. That ruling opened the door to states legalizing other forms of online gaming.

Legislation to extend the scope of the Wire Act to all forms of online gambling — the Restoration of America’s Wire Act (RAWA) — remains pending in both the U.S. House and Senate.

Stanton’s comments were made Thursday near the end of an hour-long discussion titled “Emerging Leaders of Gaming — Decision 2016.” The webinar was sponsored by the American Gaming Association (AGA) and the Innovation Group.

Joining Stanton for the bipartisan event was Whitaker Askew, the AGA’s vice president of government affairs, Kirk Blalock, co-founder and principal at Fierce Government Relations, and Aurene Martin, managing partner with Spirit Rock Consulting.

Askew began the discussion by asking each of the panelists for their reaction to Donald Trump being elected president on November 8.

“This is an election that will be written and talked about for years,” Martin said. “You can’t account for the emotional [ties] that people have for a candidate.”

Blalock agreed, but acknowledged that a lot of people were shocked by the results.

“It’s clear the American voter made a choice for a new direction,” Blalock said. “They were looking for something different.”

He said American voters are now looking for results quickly.

“Obviously this was a change election,” Stanton said. “It didn’t matter that Hillary Clinton painted him as unfit … people wanted something new.”

According to the AGA, the U.S. casino industry is now a $240bn business, which supports 1.7m jobs in 40 states.

Blalock said it is clear that gaming is not just a one-city or a two-state industry anymore. He said people understand that and see it.

“They understand what it means for economic growth and job creation,” the Republican lobbyist said. “We are part of the economy getting back on track.”

When asked about the AGA’s strategy now that powerful Democratic Senator Harry Reid of Nevada is retiring, Askew said the AGA was working with Republican Senator Dean Heller of Nevada and Democrat Congresswoman Dina Titus from Nevada.

Askew said building out from there “is something that we are working on.”

Stanton acknowledged that Reid protected Nevada, but reminded people that he was not a supporter of online gambling. She said her organization has reached out to every new member of Congress.

“It was almost a perfect time for Reid to step aside,” Stanton said. “Gaming has moved from Nevada to a nationwide issue.”

In terms of how Trump’s economic policies will affect the gaming industry, Blalock said that remains unclear.

“He ran on other issues,” Blalock said. “What we can do is speculate … his policies are pro economic growth, less regulation, and job creation. He comes to the table with a knowledge of the industry.”

Nevada Treasurer continues ties with Wells Fargo

By CHRIS SIEROTY
SPECIAL TO THE LAS VEGAS BUSINESS PRESS

Nevada’s treasurer said the state will maintain its business ties with Wells Fargo, but will continue to “closely monitor this situation,” amid the controversy over employees creating phony accounts.

State Treasurer Dan Schwartz said that “while many questions remain unanswered … we have spoken with a representative of the bank.”

“Wells Fargo has had a presence in Nevada for well over a century,” Schwartz said in a statement. “Punishing thousands of hard-working Nevadans who work at Wells Fargo for the actions of considerably fewer bad apples would not be fair.”

The major bank has been dealing with the fallout from the fake-account scandal that forced its CEO John Stumpf to retire.

Schwartz’s statement was a direct comment on California state Treasurer John Chiang’s announcement that the state would “suspend business ties with Wells Fargo for a year.”

“The treasurer’s office will continue to closely monitor the situation and take any further actions once the bank has had an opportunity to respond to its mistakes,” Schwartz said.

Nevada credit unions, community banks battle over lending rules

Nevada credit unions continue to post increases in business loans, hitting $6.4 billion in outstanding loans as of June 30, a figure not seen since 2010, according to the Nevada Credit Union League.

Depending on the outcome of a lawsuit against the National Credit Union Administration, that figure could rise even higher.

NCUA is the federal regulator for credit unions, including some familiar names in Southern Nevada. In February, the NCUA approved new rules that allow credit unions to lend more money through commercial loans.

Under federal law, credit unions enjoy tax-exempt status but have restrictions on their activities and membership, while banks pay taxes but have more flexibility in lending.

Federal law allows credit unions to make loans worth up to 12.25 percent of the credit union’s total assets.

Community bankers argue the new rules add to the existing advantage credit unions have in not paying income tax.

“This means that they could possibly purchase loans for one another in excess of their lending cap, which in turn would give them a greater capacity to expand into the commercial lending market and compete with community banks,” said James York, president and CEO of Valley Bank of Nevada.

York told the Las Vegas Business Press the competition for small-to-medium commercial loans is already very high from the larger national and regional banks due to their excess liquidity. He added that “this would just add more competition to a market that has lackluster demand as it is.”

The new rules also lift limits on construction and development loans and make credit unions with less than $250 million in assets exempt from certain commercial lending requirements.

The agency said the “increased flexibility” would give credit unions, including those in Nevada, “greater autonomy to develop and maintain member-business lending programs that best fit their members’ needs and strategic goals,” according to the NCUA’s rule announcement.

To block the NCUA’s changes, the Independent Community Bankers of America has sued the NCUA in federal court in Virginia.

In its lawsuit, the ICBA said by eliminating the restriction on commercial lending activities of insured credit unions in violation of the Administrative Procedure Act, the NCUA “exacerbates the unfair competitive harm that tax-exempt credit unions are able to inflict on community banks, which do not benefit from the tax advantages enjoyed by credit unions.”

“The harm is real,” the ICBA’s lawsuit said.

Besides Valley Bank of Nevada, other Las Vegas-based community banks listed on the ICBA website are Town &Country Bank, Kirkwood Bank of Nevada and First Security Bank of Nevada.

ICBA’s lawsuit notes that the NCUA rule puts consumers, taxpayers and the financial system at risk by jeopardizing the safety and soundness of federally insured credit unions.

“The ICBA claims are baseless, and we are certain the courts will rule in favor of credit unions,” Diana Dykstra, president and CEO of the Nevada and California Credit Union Leagues, told the Las Vegas Business Press.

Dykstra said the regulatory change by the NCUA that is being challenged by the ICBA “could increase small business lending by all credit unions in Nevada, thus making more capital available to businesses, put more people to work and result in the continued improvement of the Nevada economy.”

Meanwhile, the Nevada Credit Union League has released some business lending figures. Twelve of the 17 credit unions in Nevada had a total of 684 business loans on their books as of June 30.