In a press release announcing the Neon Line District six years ago, after several years of buying off and razing down multiple downtown motels, while accumulating City of Reno deferrals and credits with promises but no deadlines, it was indicated this would be a $1 billion “mixed-use development” in downtown Reno “encompassing 20 city blocks.”
CEO Jeffrey Jacobs gloated, saying this was the bookend to his illustrious business career, perhaps trying to rival his late father, the former owner of the Cleveland Indians.
Headlines such as one on the Mansion Global website played on the same iteration: “Developer Bets $1 Billion on Reno.”
One reader who has been combing through the numbers closely feels that it could be a losing bet. They point to financial shortfalls, huge bond interest owed starting in 2029, worsening reviews of the J Resort, the threat of a class action lawsuit due to a recent data breach, and sliding gaming revenues, all detailed in extensive emails sent to Our Town Reno.
Already, residents are bemoaning the lack of new accessible housing as part of this expensive project, accentuating a crisis for locals on fixed income, with low wages or bad credit.
The subheadline to the Mansion Global piece indicated Jacobs Entertainment was planning 2,000 new units, mostly apartments, for the Biggest Little City.
So far, it has converted the former Crest Inn motel into the 46 units at Renova Flats, with its rocket in the front, and it just completed building the 245 North Arlington Luxury Apartments, with just 60 units.
There’s also a deal in the works with the Reno Housing Authority to swap the Sarrazin Arms Apartments on Third Street for a housing development on Second Street.
However you cut it, that’s a far cry from 2,000 units. Lots of the former motels which were bought and destroyed for this project were a first or last resort out of homelessness for the credit underclass. Most are dirt now or usually empty, sprawling parking lots, occasionally used for Hot August Nights, motorcycle gatherings and a few other events.
Late in 2024, the latest cheerleading headlines in local media had Jacobs Entertainment announcing a $130 million expansion for the J Resort, the rebranded and cleaned up former Sands Regency, which Jacobs bought in 2017. These are usually just repackaged updates of previously stated goals.
This spending would be for festival grounds, over 10 acres between North Arlington and Ralston, to go with its already existing nearby Glow Plaza. It’s promising over 40 events every summer and a sculpture by Richard Erdman.
Other planned additions include several large banquet halls with an area dedicated to Jacobs’ own collection of costly European sports cars.
The reader combing through the numbers said it seems Jacobs is burning through money though, having paid $200,000 per unit to create the Renova by their estimation and then $300,000 per unit at 245 N Arlington.
The reader added they will be interested to see if the new Arlington units get rented out at currently listed prices, from studios at $1,500 to two bedrooms at $2,400 with downtown still seen as unsafe, and the neighboring festival grounds, undoubtedly a bother to some. Still, these initially listed prices are above Reno averages for similar sizes.
According to documents found on Cbonds.com, in recent years, Jacobs Entertainment has cycled through multiple bond financing activities, with the most recent a $500 million 6.75% bond issue from 2024 due on February 15, 2029. This amounts to over $33 million in annual interest, no chump change.
This makes the reader who wished to remain anonymous feel a bankruptcy could be a possibility, unless there is major refinancing.
Lining up financial details into columns including comparisons with other casinos, they don’t see the company’s other gaming properties in Nevada and elsewhere, or its small waterfront district in Cleveland, making up for all the Neon Line spending.
“It is unusual for such bonds to have a 5 year term as Casinos usually need more time to build cash reserves to pay them off. Other casinos issued 7 - 10 year terms. Jacobs will need to build cash to pay off the bonds, or try to refinance,” the reader wrote to us.
According to media reports, last year, S&P Global Ratings affirmed Jacobs Entertainment's credit rating at "B" for both local currency and foreign currency long-term, while Moody's Investors Service revised its outlook on Jacobs Entertainment to negative and affirmed its credit rating at "B2" for long-term local currency.
The reader indicated that according to their tabulations Jacobs spent $100 million to buy or option more than 90 properties including the Sands Regency, while spending $300 million on the casino’s renovation.
Since then, pricing has been going up at the J Resort, which could, according to the reader, price out the more working class customer base that used to frequent the Sands Regency. The fancy looking J Resort website calls itself Reno’s hottest new resort, casino and hotel.
We looked at a random room with a one king bed for a weekend in early February which came up as $110 per night.
“I had breakfast once at the new Hanna's Table and while it was clean and the food was decent it was expensive and boring,” the reader wrote. A menu on their website has Steak and Eggs going for $26 and an omelet for $16.
The reader said many locals who are price sensitive for rooms and food inside casinos including themselves miss the “old funky place.”
Negative reviews on Yelp and elsewhere have been piling up in recent months such as this one from July: “I'm sure it's a nice hotel but the deceptive billing practices are unethical. The $47 special looked perfect when I got off a plane with a head cold, until I hit submit and got charged $132. I called within 3 minutes and said I wanted to reverse the charge, and was told the fees and no cancellation policy was clear "in a dropdown" - which is difficult to spot when you're busy being congratulated for getting a great rate.
I will NEVER make the mistake of booking at the J or any of its associated properties again and will not be staying there. Even the so called customer service made the aggressive pitch that they could give me a small discount or I could cancel and get nothing.”
Other recent reviews have complained about rude staff, dirty rooms, unavailable amenities, missing room essentials, broken elevators, limited dining options, noise from ongoing construction, concerns about safety, misleading promotions, errors in reservations and a lack of rewards for frequent players, among many such gripes.
Adding to all these concerns, Jacobs Entertainment was recently victimized by a cybersecurity data breach in September 2024 that compromised thousands of individuals, with an unauthorized individual gaining access to their network, social security numbers and other sensitive information. Multiple law firms are investigating the matter, meaning a money sucking class-action lawsuit could be forthcoming.
This is all comes as Nevada gaming had a downward slide at the end of 2024.
“I assess that Jacobs is speculative and risk-taking and I doubt that they have the money to finish the J Resort and certainly not the rest of the properties with the cash that they have,” the reader wrote to us in their note attached to their numbers crunching. “They will need to issue more bonds or get joint venture investors and/or take the revenue from the other properties. In any case, they are highly leveraged and counting on future revenue that is uncertain.”
In earlier media reports, Jacobs hinted he wanted to create a “district” so appealing that other developers would like to build on the land he had bought. The reader doesn’t see any partners though.
“If Jacobs fails Reno will be left with empty lots to clean up and a financial disaster due to the future tax revenue not being realized,” the reader wrote to us in one of their alarming emails in recent weeks.
Our Town Reno, Citizen’s Forum, January 2025