mining through uncertainty · 30/06/2019 · mining & logging other services government...
TRANSCRIPT
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MINING THROUGH UNCERTAINTY
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The Importance of Minerals in Our Lives
MINING THROUGH UNCERTAINTY 2
Source: Minerals Education Coalition, National Mining Association, the U.S. Geological Survey and the U.S. Energy Information Administration
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The Importance of Minerals in Our Lives
MINING THROUGH UNCERTAINTY 3
Source: Minerals Education Coalition, National Mining Association, the U.S. Geological Survey and the U.S. Energy Information Administration
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How Stable is Mining Production in Nevada?
MINING THROUGH UNCERTAINTY 4
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Nevada Mining Operations
MINING THROUGH UNCERTAINTY 5
Source: Nevada Department of Taxation
103Active Operations
in 2018
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Nevada Mining Operations
$7.7BGross Proceeds of
Minerals in 2018
MINING THROUGH UNCERTAINTY 6
Source: Nevada Department of Taxation
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Nevada Mining Operations
MINING THROUGH UNCERTAINTY 7
-4.1%Annual Gross Proceeds
Loss from 2017 to 2018
Source: Nevada Department of Taxation
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Nevada GDP Growth by Sector2008-2018 Compound Annual Growth Rate
MINING THROUGH UNCERTAINTY 8
Source: United States Bureau of Economic Analysis
-2.4%
-2.3%
-2.1%
1.4%
1.5%
1.9%
2.0%
2.2%
2.7%
2.9%
3.1%
3.1%
3.4%
4.2%
4.4%
4.4%
4.5%
4.8%
5.3%
5.6%
7.3%
Mining
Construction
Agriculture
Utilities
Accommodation/Food
Prof/Scientific/Tech Services
Real Estate/Rental/Leasing
Durable Goods
Government
Wholesale Trade
Other
Retail Trade
Arts/Entertainment/Recreation
Finance/Insurance
Admin/Waste Management
Nondurable Goods
Management of Companies
Health Care/Social Assistance
Education
Transportation/Warehousing
Information
All Industries Total:
+2.5%
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Mineral ProductionPast 12 Months
Increased10.0%
Remained About the Same40.0%
Decreased40.0%
Refused/NA10.0%
Increased Remained About the Same Decreased Refused/NA
MINING THROUGH UNCERTAINTY 9
Source: NvMA 2019 Survey
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Nevada GDP Growth by Sector2017-2018 Compound Annual Growth Rate
MINING THROUGH UNCERTAINTY 10
Source: United States Bureau of Economic Analysis
-18.1%
-7.3%
0.8%
1.3%
2.6%
4.9%
5.8%
5.9%
6.4%
6.8%
7.3%
7.3%
7.5%
7.7%
8.3%
9.1%
9.6%
9.7%
12.8%
14.1%
23.9%
Mining
Agriculture
Accommodation/Food
Government
Utilities
Retail Trade
Other
Real Estate/Rental/Leasing
Finance/Insurance
Prof/Scientific/Tech Services
Health Care/Social Assistance
Wholesale Trade
Information
Transportation/Warehousing
Arts/Entertainment/Recreation
Admin/Waste Management
Education
Management of Companies
Construction
Nondurable Goods
Durable Goods
All Industries Total:
+5.6%
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Mining Gross Domestic Product (In Billions)Nevada
$3.5
$4.1 $3.9
$5.1
$6.3
$5.7
$4.4
$3.4
$2.7
$3.3
$3.9
$3.2
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
MINING THROUGH UNCERTAINTY 11
Source: United States Bureau of Economic Analysis
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Mining GDP Share of All Industry TotalNevada
2.6%
3.1% 3.3%
4.2%
5.0%
4.5%
3.4%
2.5%
1.9%2.2%
2.5%
1.9%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
MINING THROUGH UNCERTAINTY 12
Source: United States Bureau of Economic Analysis
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Mineral ProductionNext 12 Months
Increase40.0%
Remain About the Same30.0%
Decrease20.0%
Refused/NA10.0%
Increase Remain About the Same Decrease Refused/NA
MINING THROUGH UNCERTAINTY 13
Source: NvMA 2019 Survey
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Business Revenues or SalesPast 12 Months
Increased42.9%
Remained About the Same28.6%
Decreased16.3%
Refused/NA12.2%
Increased Remained About the Same Decreased Refused/NA
MINING THROUGH UNCERTAINTY 14
Source: NvMA 2019 Survey
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Business Revenues or SalesNext 12 Months
Increase53.2%
Remain About the Same21.3%
Decrease17.0%
Refused/NA8.5%
Increase Remain About the Same Decrease Refused/NA
MINING THROUGH UNCERTAINTY 15
Source: NvMA 2019 Survey
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Business ProfitabilityPast 12 Months
Increased36.7%
Remained About the Same28.6%
Decreased20.4%
Refused/NA14.3%
Increased Remained About the Same Decreased Refused/NA
MINING THROUGH UNCERTAINTY 16
Source: NvMA 2019 Survey
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Are Commodity PricesGoing to Increase?
MINING THROUGH UNCERTAINTY 17
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Commodity PriceNext 12 Months
48.9%
56.5%
63.8%
40.4%
39.1%
31.9%
10.6%
4.3%
4.3%
Copper
Silver
Gold
Increase Stay About the Same Decrease
MINING THROUGH UNCERTAINTY 18
Source: NvMA 2019 Survey
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Price Change Over the Past Year
MINING THROUGH UNCERTAINTY 19
Source: NvMA 2019 Survey
OVER THE PAST YEAR (ACTUAL) PROJECTED IN NEXT 12 MONTHS
COMMODITY AUGUST 2018 AUGUST 2019 INCREASE DECREASE
Gold (per Troy Oz.) $1,180 $1,515 63.8% 4.3%
Silver (per Troy Oz.) $14.61 $16.93 56.5% 4.3%
Copper (per Pound) $2.72 $2.59 48.9% 10.6%
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Price of GoldUSD per Troy Ounce
$1,515
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
MINING THROUGH UNCERTAINTY 20
Source: London Bullion Market Association
Peak to Present:
-$380 (-20.0%)
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Price of GoldUSD per Troy Ounce
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
MINING THROUGH UNCERTAINTY 21
Source: London Bullion Market Association; NvMA 2019 Survey
64%
32%
4%
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Price of SilverUSD per Troy Ounce
$16.93
$0
$10
$20
$30
$40
$50
$60
MINING THROUGH UNCERTAINTY 22
Source: London Bullion Market Association
Peak to Present:
-$31.78 (-65.2%)
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Price of SilverUSD per Troy Ounce
$0
$10
$20
$30
$40
$50
$60
MINING THROUGH UNCERTAINTY 23
Source: London Bullion Market Association; NvMA 2019 Survey
57%
4%
39%
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Price of CopperUSD per Pound
$2.59
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
MINING THROUGH UNCERTAINTY 24
Source: London Metal Exchange
Peak to Present:
-$1.34 (-34.0%)
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Price of CopperNext 12 Months
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
MINING THROUGH UNCERTAINTY 25
Source: London Metal Exchange; NvMA 2019 Survey
49%
40%
11%
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What is the Outlook for theMining Industry in Nevada?
MINING THROUGH UNCERTAINTY 26
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Nevada’s Economy
Right Direction
75.5%
Wrong Direction
12.2%
Refused/No Answer12.2%
2019 Annual Survey
92.9%
75.5%
2018 2019
“Right Direction” Prior Year Comparison
MINING THROUGH UNCERTAINTY 27
Source: NvMA 2019 Survey
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Business Environment in NevadaPast 12 Months
8.2%
36.7%
40.8%
10.2%
4.1%
Much Better Somewhat Better About the Same Somewhat Worse Refused/No Answer
MINING THROUGH UNCERTAINTY 28
Source: NvMA 2019 Survey
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State Business Tax Climate
MINING THROUGH UNCERTAINTY 29
Source: Tax Foundation
Best Tax Climate
Worst Tax Climate
Nevada has the
9th
Best Business Tax Climate in the U.S.
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Business Environment in NevadaNext 12 Months
4.1%
36.7%
46.9%
8.2%
4.1%
Much Better Somewhat Better About the Same Somewhat Worse Refused/No Answer
MINING THROUGH UNCERTAINTY 30
Source: NvMA 2019 Survey
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Elements of Nevada Mining that Most Encourage Investment
40.4%
41.2%
42.3%
53.7%
54.9%
Quality of Infrastructure
Availability of Labor/Skills
Political Stability
Certainty Concerning the Administration, Interpretation andEnforcement of Existing Regulations
Security
MINING THROUGH UNCERTAINTY 31
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
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What is the Outlook for Mining Employment in Nevada?
MINING THROUGH UNCERTAINTY 32
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Nevada EmployeesNext 12 Months
Increase57.1%
Stay About the Same30.6%
Decrease6.1%
Refused/NA6.1%
Increase Stay About the Same Decrease Refused/NA
MINING THROUGH UNCERTAINTY 33
Source: NvMA 2019 Survey
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Nevada Employment
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD
Annual Employment
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD
Year-over-Year Growth
MINING THROUGH UNCERTAINTY 34
Source: United States Bureau of Labor Statistics
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Employment Growth by StateUnited States
3.3%
1.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
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MINING THROUGH UNCERTAINTY 35
Source: United States Bureau of Labor Statistics
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Employment Growth by SectorNevada | Prior Year vs. Present
-125
25
792
1,458
2,683
5,092
5,300
5,450
6,583
9,733
12,225
Information
Mining & Logging
Other Services
Government
Financial Activities
Education & Health Services
Trade, Transportation & Utilities
Leisure & Hospitality
Manufacturing
Construction
Professional & Business Services
MINING THROUGH UNCERTAINTY 36
Net Growth:
+49,217
Source: United States Bureau of Labor Statistics
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Employment Growth by SectorNevada | Prior Year vs. Present
-0.8%
0.2%
0.9%
1.6%
1.9%
2.1%
3.7%
4.0%
6.6%
11.3%
12.6%
Information
Mining & Logging
Government
Leisure & Hospitality
Other Services
Trade, Transportation & Utilities
Education & Health Services
Financial Activities
Professional & Business Services
Construction
Manufacturing
MINING THROUGH UNCERTAINTY 37
Net Growth Rate:
+3.6%
Source: United States Bureau of Labor Statistics
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Mining EmployeesNext 12 Months
Increase30.6%
Stay About the Same38.8%
Decrease26.5%
Refused/NA4.1%
Increase Stay About the Same Decrease Refused/NA
MINING THROUGH UNCERTAINTY 38
Source: NvMA 2019 Survey
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Nevada Mining Employment
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD
Annual Employment
-15%
-10%
-5%
0%
5%
10%
15%
20%
'01 '03 '05 '07 '09 '11 '13 '15 '17 '19YTD
Year-over-Year Growth
MINING THROUGH UNCERTAINTY 39
Source: United States Bureau of Labor Statistics
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Mining Company Employment GrowthNext 12 Months
Increase46.9%
Stay About the Same38.8%
Decrease4.1%
Refused/NA10.2%
Increase Stay About the Same Decrease Refused/NA
MINING THROUGH UNCERTAINTY 40
Source: NvMA 2019 Survey
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How Much Does the Mining Industry Pay in Taxes to Nevada?
MINING THROUGH UNCERTAINTY 41
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Ten Highest Assessed Taxpayers2018-2019
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RANK TAXPAYER NAME TOTAL (IN MILLIONS)
1 MGM Resorts International $4,499
2 NV Energy (1,4) $2,425
3 Caesars Entertainment Corporation $2,223
4 Wynn Resorts Limited $1,113
5 Las Vegas Sands Corporation $1,037
6 Station Casinos Incorporated $857
7 NEWMONT MINING $662
8 Station Casinos Incorporated $522
9 BARRICK MINING $504
10 Ruby Pipeline LLC $439
TOTAL $14,281
Source: Nevada Department of Taxation
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Other96.9%
Mining-Related3.1%
Roll Assessed Value by Class2017-2018
MINING THROUGH UNCERTAINTY 43
Source: Nevada Department of Taxation
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Net Proceeds of Minerals Taxes Paid By Nevada Mining Industry, Including Royalty Recipients (In Millions)
$62.6$75.7
$91.8 $97.6
$163.0
$216.7
$255.6
$171.0
$103.2 $101.6
$136.6
$155.1
$125.9
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
MINING THROUGH UNCERTAINTY 44
Source: Nevada Department of Taxation
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Share of Net Proceeds Tax Generated by Specific Minerals2018
Gold/Silver91.9%
Copper2.7%
Geothermal1.3%
Gypsum0.05%
Oil0.3%
Other3.8%
MINING THROUGH UNCERTAINTY 45
Source: Nevada Department of Taxation (Operators and Royalties Combined)
$126 MTotal Net Proceeds
Tax Generated
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Share of Net Proceeds Tax Generated by Specific Minerals2018
Gold/Silver91.9%
Other8.1%
MINING THROUGH UNCERTAINTY 46
Source: Nevada Department of Taxation (Operators and Royalties Combined)
$116 MNet Proceeds Tax Generated
by Gold/Silver
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Net Proceeds Tax Generated by County2018 | In Millions
$892.9
$367.9 $343.5
$232.7 $218.6$157.2
$44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0
MINING THROUGH UNCERTAINTY 47
Source: Nevada Department of Taxation
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Net Proceeds Tax Generated by County2018 | In Millions
$892.9
$367.9 $343.5
$232.7 $218.6$157.2
$44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0
MINING THROUGH UNCERTAINTY 48
Source: Nevada Department of Taxation
78.3%Of Total Net Proceeds Tax
Generated by Top 4 Counties
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Total Estimated Major Taxes Paid by Nevada Mining
$91.8 $97.6$163.0
$216.7$255.6
$171.0$103.2 $101.6
$136.6 $155.1 $125.9
$223.6$203.7
$314.0
$388.1
$431.4
$349.5
$245.8 $235.5
$292.3$312.2
$278.9
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
Net Proceeds Sales/Use Tax Property Tax Modified Business Tax
MINING THROUGH UNCERTAINTY 49
Source: Nevada Department of Taxation, NvMA Member Survey, Natural Resource Industry Institute (2008 – 2010), Industry Surveys
Note: Historical figures may be adjusted to reflect the latest available information.
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What Do Education Funding Formula Changes Mean for Mining?
MINING THROUGH UNCERTAINTY 50
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Education Funding Under the
Nevada Plan
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Education Funding Under the
Nevada Plan
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How Much is Nevada Spending on K12
Education?
▪ Is it the $1.6 billion reported as total Distributive School Account resources in
the executive budget?
▪ Is it the $2.2 billion reported in the Nevada Comprehensive Annual Financial
Report, State Spending Analysis?
▪ Is it the $2.3 billion reported as the legislatively approved total Department of
Education budget in the Fiscal Appropriations Report?
▪ Is it the $2.9 billion reported as total regular support in the Distributive School
Account?
▪ Is it the $3.2 billion reported as total required state support in Distributed School
Account?
▪ Is it the $3.9 billion reported as total operating expenditures in the state’s
Nevada Plan summary?
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There are more than 80 state, local and federal revenue resources that have been dedicated to
education programs; they are expected to generate approximately $5.0B in FY2020 and $5.1B in FY2021
$5.0BHow Much is Nevada
Spending on K12 Education?
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$6,052
$10,197
Basic Per Pupil Support(Gov Rec FY2020)
Total Education Resources Per Pupil(FY2020)
The differences are significant, limiting transparency and creating confusionHow Much is Nevada
Spending on K12 Education?
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Douglas5,840
Clark324,000
Elko9,840
Humboldt3,480
Washoe64,500
Pershing690
Churchill3,250
Lander1,000
Eureka270
White Pine2,230
Lincoln980
Nye5,240
Esmeralda70
Mineral550
Lyon8,680
Storey440
Carson City
7,760
Student EnrollmentNevada School Districts
Nevada is home to one of the nation’s largest school districts (i.e., the Clark County School
District) and some of its smallest school districts
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TransparencyHow much is being spent on education, where the funding is coming from and where is it spent
SB 543Guiding Principles
Student-CenteredRecognize the differences in cost per student, allocate funding accordingly
Geographic DiversityRecognize the differences in each school district, allocate funding accordingly
Hold HarmlessFocus on allocation of incremental revenue, minimizing reallocation at student expense
Classroom-focusedSupport classroom instruction and programming that directly improves student achievement
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2Creation of the Nevada
Education Fund
1 3 4
The Core Elements of SB543
5Creation of
the Education Stabilization
Account
Replace the Nevada Plan with
the Pupil-Centered Funding Plan
Creation of the Commission
on School Funding
Enhanced Reporting and Accountability
at All Levels
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STEP 1Identify all non-federal resources available to fund
education programs (see, Element 1)
State Admin. and Oversight Programs
STEP 2Allocate resources necessary to fund state
administration, oversight and non-district programs (i.e., funds not allocated to districts)
Base Funding(Inflation +
Enrollment Growth)
STEP 3Ensure that base funding is made whole such that
allocations made to all students are not diminished to increase allocations to selected students
Weighted Funding(Allocation of All Other
Funds)
STEP 4Additional funds are directed to weighted categories
in proportion to the gap between their current funding and targets under full adequacy
Excess Allocation(Distribution of
Funds After Parity)
STEP 5At the point where there is parity in funding relative to full adequacy, funds are proportionally allocated
Pupil-Centered Funding Model
State of NevadaEducation Fund
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NDE/APA K12 Base Funding Allocation Recommendation“Successful Schools” Base Equity Allocation Adjustments
Small School District Adjustment
Necessarily Small Schools Adjustment
Comparable Wage Index
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Weighted Funding Classifications
1 Special Education Students
2 English Language Learners
3 At-Risk Students (those living at or near the poverty level)
4 Gifted and Talented Students
Base FundingFunds Allocated to Every Student in the State
+Existing Categorical FundingAll Funds Currently Allocated to Programs Targeting Weighted Students Remain with
Weighted Students
+Incremental Funding
All Funds After Base Funding is Increased by Inflation are Allocated to Weighted Student
Programs Until Those Programs are Fully Funded
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District-Level Impacts and Hold Harmless/True-Up Approach
Hold Harmless.All school districts will be frozen at
FY2020 funding levels, ensuring that
any school district that would receive
less funding under the student-
centered funding model does not
receive any less money that it did in
the current school year.
True-Up. Incremental K12 education funds will be
allocated to school districts that are
currently receiving less funding than
they would under the student-centered
funding model before any other
allocations are made, allowing them to
be made whole as additional K12
education funding is made available.
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Impacts for Mining
MINING THROUGH UNCERTAINTY 63
▪ Nevada’s Constitutional Conflict
▪ Mining Tax Dollars are the First Education Dollars Distributed Under the New Formula, Must be Returned to the County of Origin
▪ If Mining Tax Dollars are Greater than the Total Amount of Funds that Would Otherwise be Allocated Under the Formula, Those Funds are “Authorized for Expenditure as a Continuing Appropriation for the Purpose of Mitigating the Adverse Effects of the Cyclical Nature of the Industry of Extracting and Processing Minerals on the Ability of the County School District to Offer its Pupils a Reasonably Equal Educational Opportunity.”
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Where Do We Go From Here?▪ Implementation and Execution
▪ July 1, 2019 Effective Date
▪ July 1, 2021 Effective Date
▪ Communication and Messaging
▪ Public Sector
▪ Private Sector
▪ Commission on Education Funding
▪ Funding Adequacy
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What are the Impacts of Mining in Nevada?
MINING THROUGH UNCERTAINTY 65
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Employment Impacts for Nevada Mining Industry Operations2018
11,200
8,081
10,112
Direct Indirect Induced
MINING THROUGH UNCERTAINTY 66
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
29,393Total Jobs Supported by Nevada Mining
Industry Operations
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Employment Impacts for Nevada Mining Industry Operations2018
32,234
34,495
32,904
30,162
29,35029,754
30,462
29,393
2011 2012 2013 2014 2015 2016 2017 2018
MINING THROUGH UNCERTAINTY 67
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
29,393Total Jobs Supported by Nevada Mining
Industry Operations
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Wage/Salary Impacts for Nevada Mining Industry Operations2018
$1.3 B
$0.7 B
$0.5 B
Direct Indirect Induced
$2.4 BTotal Labor Income Supported by Nevada
Mining Industry Operations
MINING THROUGH UNCERTAINTY 68
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
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Wage/Salary Impacts for Nevada Mining Industry Operations2018
$2.58 B
$2.76 B
$2.64 B
$2.43 B
$2.36 B$2.40 B
$2.49 B
$2.41 B
2011 2012 2013 2014 2015 2016 2017 2018
$2.4 BTotal Labor Income Supported by Nevada
Mining Industry Operations
MINING THROUGH UNCERTAINTY 69
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
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Value-Added Impacts for Nevada Mining Industry Operations2018
$4.2 B
$1.2 B
$0.9 B
Direct Indirect Induced
$6.3 BTotal GDP Supported by Nevada Mining
Industry Operations
MINING THROUGH UNCERTAINTY 70
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
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Value-Added Impacts for Nevada Mining Industry Operations2018
$6.8 B$7.3 B
$6.9 B
$6.0 B $5.9 B $6.1 B
$6.6 B$6.3 B
2011 2012 2013 2014 2015 2016 2017 2018
$6.3 BTotal GDP Supported by Nevada Mining
Industry Operations
MINING THROUGH UNCERTAINTY 71
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
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Economic Output for Nevada Mining Industry Operations2018
$7.9 B
$2.0 B$1.5 B
Direct Indirect Induced
$11.4 BTotal Economic Output Generated by Nevada
Mining Industry Operations
MINING THROUGH UNCERTAINTY 72
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
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Economic Output for Nevada Mining Industry Operations2018
$13.0 B$14.0 B
$13.0 B
$11.1 B $10.9 B$11.3 B
$12.1 B$11.4 B
2011 2012 2013 2014 2015 2016 2017 2018
$11.4 BTotal Economic Output Generated by Nevada
Mining Industry Operations
MINING THROUGH UNCERTAINTY 73
Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis
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What is the Outlook for theMining Industry Nationally?
MINING THROUGH UNCERTAINTY 74
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National Economy
Right Direction
79.6%
Wrong Direction
10.2%
Refused/No Answer10.2%
2019 Annual Survey
75.0%
79.6%
2018 2019
“Right Direction” Prior Year Comparison
MINING THROUGH UNCERTAINTY 75
Source: NvMA 2019 Survey
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Investment Attractiveness IndexUnited States
52.956.6
69.3 70.4 70.7 72.5 74.0 74.579.9
83.9 84.3 86.193.0
MINING THROUGH UNCERTAINTY 76
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
Median: 74.0
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Investment Attractiveness Index GrowthUnited States
-6.6%
-2.9%-0.4%
2.2%3.5%
6.1% 6.6%7.8% 8.8%
10.0%11.4%
13.9%
27.6%
MINING THROUGH UNCERTAINTY 77
Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis
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Policy Perception IndexUnited States
69.677.8
81.285.2 85.5
90.2 90.3 91.7 93.8 93.9 94.7 96.3 99.3
MINING THROUGH UNCERTAINTY 78
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
Median: 90.3
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Policy Perception Index GrowthUnited States
1.1%
7.2% 7.5%
9.7%11.0% 11.2% 11.6% 12.1%
13.6% 13.7%
16.8%17.6%
23.0%
MINING THROUGH UNCERTAINTY 79
Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis
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Best Practices Mineral Potential IndexUnited States
36.4
47.9
57.1 57.7 58.7 60.7 61.566.7
70.076.3 78.8
86.5 88.8
MINING THROUGH UNCERTAINTY 80
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
Median: 61.5
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Best Practices Mineral Potential Index GrowthUnited States
-15.0% -13.5% -12.9%-10.2%
-0.8%
0.6% 1.3% 3.8% 5.3%8.2% 9.3%
15.6%
58.2%
MINING THROUGH UNCERTAINTY 81
Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis
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What is the Outlook for the Mining Industry Internationally?
MINING THROUGH UNCERTAINTY 82
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Investment Attractiveness Index
MINING THROUGH UNCERTAINTY 83
2018
RankLocation
2017
Rank
2018
Score
Index
Score
1 NEVADA (US) 3 93.3
2 Western Australia 5 91.5
3 Saskatchewan (CA) 2 90.0
4 Quebec (CA) 6 88.4
5 Alaska (US) 10 86.1Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
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Policy Perception Index
MINING THROUGH UNCERTAINTY 84
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
2018
RankLocation
2017
Rank
2018
Score
Index
Score
1 Saskatchewan (CA) 3 100.0
2 NEVADA (US) 5 99.3
3 Finland 2 99.2
4 Rep. of Ireland 1 97.7
5 Western Australia 17 96.7
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Best Practices Mineral Potential Index
MINING THROUGH UNCERTAINTY 85
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
2018
RankLocation
2017
Rank
2018
Score
Index
Score
1 NEVADA (US) 8 88.8
2 Western Australia 4 88.0
3 Alaska (US) 5 86.5
4 NW Territories (CA) 19 86.0
5 Nunavut (CA) 10 84.6
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Regional Median Investment Attractiveness
54.156.6
59.8
66.3 68.3
74.0 75.5
81.2
Argentina Africa Latin Americaand Caribbean
Oceania Europe United States Australia Canada
MINING THROUGH UNCERTAINTY 86
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
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Regional Median Investment Attractiveness Growth
-7.6%
0.5%1.5%
3.8%5.5%
7.1%
9.3%
16.5%
Argentina Africa Europe Oceania United States Australia Canada Latin Americaand Caribbean
MINING THROUGH UNCERTAINTY 87
Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis
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Regional Median Policy Perception Index
56.560.8 61.1
64.3
84.1 85.489.9 90.3
Argentina Oceania Africa Latin Americaand Caribbean
Australia Europe Canada United States
MINING THROUGH UNCERTAINTY 88
Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis
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Regional Median Policy Perception Index Growth
-7.9%
2.4%
7.5% 8.5% 9.3%11.2%
15.5%
28.6%
Argentina Europe Africa Canada United States Australia Latin Americaand Caribbean
Oceania
MINING THROUGH UNCERTAINTY 89
Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis
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Trade Wars: What Do They Mean for Us?
MINING THROUGH UNCERTAINTY 90
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China’s Dominance of the Rare Earth Market▪ Seventy percent of rare earths are mined in the
People’s Republic of China, and processes a greater percentage of the rare earths annually
▪ Eighty percent of U.S. imports of usable rare earths also come from China
▪ Earlier this year, the Chinese government suggested it would lower the amount of rare earths supplied to the U.S. as retaliation for increased tariffs on Chinese goods
MINING THROUGH UNCERTAINTY 91
Source: South China Morning Post
People's Republic of
China70%
Others30%
Rare Earth Extraction in 2018
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Revitalizing the Rare Earth Market in the U.S.▪ The Mountain Pass mine, located an hour away
from Las Vegas, is a potential part of the answer to a reduced supply of rare earth minerals
▪ From the 1960s to the 1980s, the United States was a leader in extracting these minerals, and Mountain Pass was a big part of that
▪ Despite not being mined since 2015, Mountain Pass is still the largest source of rare earths in the country
▪ MP Materials, based in Las Vegas, is seeking to reestablish rare earth mining and help reduce dependency on imported rare earths
MINING THROUGH UNCERTAINTY 92
Source: South China Morning Post; Financial World; News 3 Las Vegas
People's Republic of
China70%
Others30%
Rare Earth Extraction in 2018
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MINING THROUGH UNCERTAINTY 93
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MINING THROUGH UNCERTAINTY 94
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What About Electric Vehicles and Batteries?
MINING THROUGH UNCERTAINTY 95
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Electric Vehicle Sales Rise Dramatically▪ 64% increase in EV sales 2017 to 2018
▪ 79% in the U.S.
▪ 78% in China
▪ 34% in Europe
▪ More than 1.27 million EVs are on the road in the U.S. as of June 30, 2019
▪ In Q2 2019, approximately 85,000 EVs were sold in the U.S.
▪ Q2 2019 sales increased 23% over Q2 2018 sales
MINING THROUGH UNCERTAINTY 96
Source: Edison Electric Institute and EV-Volumes.com
56,000
52,000
200,000
306,000
663,000
53,000
97,000
358,000
409,000
1,182,000
Japan
Others
United States
Europe
China
Global EV Sales
2018 2017
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Electrifying Global Transportation
MINING THROUGH UNCERTAINTY 97
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Copper and Electric Vehicles
49
85
132
183
196
814
Conventional Cars
Hybrid EVs
Plug-in Hybrid EVs
Battery Electric Vehicles (EVs)
Hybrid Electric Bus
Battery Electric Bus
Pounds of Copper Required ▪ Demand for copper in vehicles expected to increase by 1,700 kilotons by 2027
▪ 56% of all light commercial vehicles and 31%of all medium commercial vehicles will be electric by 2040
MINING THROUGH UNCERTAINTY 98
Source: Edison Electric Institute and the Institute for Electric Innovation
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Exponential Energy Storage Growth Lithium, Cobalt, Nickel and other minerals needed
MINING THROUGH UNCERTAINTY 99
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MINING THROUGH UNCERTAINTY 100
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Purchasing Managers Index
0
10
20
30
40
50
60
70
'01 '03 '05 '07 '09 '11 '13 '15 '17 '19
MINING THROUGH UNCERTAINTY 101
Source: Institute for Supply Management
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How Might the State Budget Be Impacted by a Recession?
MINING THROUGH UNCERTAINTY 102
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Nevada General Fund Revenue TrendsIn Billions
$1.7 $1.8 $1.8
$2.4$2.7
$3.1 $3.1 $3.1$2.7
$3.0$3.2 $3.1 $3.1 $3.1
$3.3
$3.7$4.0
$4.2
FY'01
FY'02
FY'03
FY'04
FY'05
FY'06
FY'07
FY'08
FY'09
FY'10
FY'11
FY'12
FY'13
FY'14
FY'15
FY'16
FY'17
FY'18
Sales Tax Gaming Taxes Mod. Business Tax Other
MINING THROUGH UNCERTAINTY 103
Source: Nevada Economic Forum
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Public School EnrollmentNevada
467,527
498,616
'16 '17 '18 '19
31,089Increase in enrollment in Nevada
public schools between the 2015-2016 and the 2018-2019 school years
MINING THROUGH UNCERTAINTY 104
Source: Nevada Department of Education
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Medicaid Eligible Recipients
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
Eligible Recipients
MINING THROUGH UNCERTAINTY 105
-10%
0%
10%
20%
30%
40%
50%
60%
70%
'05 '07 '09 '11 '13 '15 '17 '19LTM
Annual Growth
Source: Nevada Department of Welfare and Supportive Services
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Nevada Modified Business TaxIn Millions
$0
$100
$200
$300
$400
$500
$600
$700
FY'09
FY'10
FY'11
FY'12
FY'13
FY'14
FY'15
FY'16
FY'17
FY'18
▪ Modified Business Tax rate was scheduled to decrease this year
▪ Rate decrease eliminated in 2019 Nevada Legislature
▪ Estimated that this extension will generate $98 million of additional revenue over the biennia
▪ Pending lawsuit alleges that taxes were raised without the two-thirds majority as required by the Nevada Constitution
MINING THROUGH UNCERTAINTY 106
Source: Nevada Governor’s Finance Office; Las Vegas Review-Journal
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Nevada Modified Business TaxIn Millions
$0
$100
$200
$300
$400
$500
$600
$700
FY'09
FY'10
FY'11
FY'12
FY'13
FY'14
FY'15
FY'16
FY'17
FY'18
Share of General Fund Revenue
MINING THROUGH UNCERTAINTY 107
Source: Nevada Governor’s Finance Office
14.5%Mod.
Business Tax
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Nevada General Fund RevenueActual vs Forecasted - In Millions
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
FY'01
FY'02
FY'03
FY'04
FY'05
FY'06
FY'07
FY'08
FY'09
FY'10
FY'11
FY'12
FY'13
FY'14
FY'15
FY'16
FY'17
FY'18
Actual Forecasted
MINING THROUGH UNCERTAINTY 108
Source: Nevada Governor’s Finance Office; Nevada Economic Forum
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How is Nevada’s Economy Different Today than During the Last Recession?
MINING THROUGH UNCERTAINTY 109
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Foreclosure InventoryNevada
56,028
0
10,000
20,000
30,000
40,000
50,000
60,000
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
MINING THROUGH UNCERTAINTY 110
Source: Mortgage Bankers’ Association
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Foreclosure InventoryNevada
56,028
3,781
0
10,000
20,000
30,000
40,000
50,000
60,000
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
MINING THROUGH UNCERTAINTY 111
Source: Mortgage Bankers’ Association
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Negative EquityNevada
Q1 2010 Q1 2019
MINING THROUGH UNCERTAINTY 112
Source: CoreLogic
72.7%Negative
Equity
4.2%Negative
Equity
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Building PermitsNevada
0
5,000
10,000
15,000
20,000
25,000
30,000
'07 '09 '11 '13 '15 '17 '19LTM
Building Permits
Single-Unit Multi-Unit
MINING THROUGH UNCERTAINTY 113
Source: United States Census Bureau
-60%
-40%
-20%
0%
20%
40%
60%
'07 '09 '11 '13 '15 '17 '19LTM
Total Permits Annual Growth
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Building PermitsNevada
0
5,000
10,000
15,000
20,000
25,000
30,000
'07 '09 '11 '13 '15 '17 '19LTM
Building Permits
Single-Unit Multi-Unit
MINING THROUGH UNCERTAINTY 114
Source: United States Census Bureau
-60%
-40%
-20%
0%
20%
40%
60%
'07 '09 '11 '13 '15 '17 '19LTM
Total Permits Annual Growth
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Median Housing PricesWashoe County
$467,191
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
'07 '09 '11 '13 '15 '17 '19
New Homes
$374,500
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
'07 '09 '11 '13 '15 '17 '19
Existing Homes
MINING THROUGH UNCERTAINTY 115
Source: SalesTraq
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Home ClosingsWashoe County
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
New Homes
MINING THROUGH UNCERTAINTY 116
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
Existing Homes
Source: SalesTraq; NNRMLS
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Home ClosingsWashoe County
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
New Homes
MINING THROUGH UNCERTAINTY 117
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
Existing Homes
Source: SalesTraq; NNRMLS
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Median Housing PricesLas Vegas Area
$395,664
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
'07 '09 '11 '13 '15 '17 '19
New Homes
$272,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
'06 '08 '10 '12 '14 '16 '18
Existing Homes
MINING THROUGH UNCERTAINTY 118
Source: SalesTraq
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Home ClosingsLas Vegas Area
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
New Homes
MINING THROUGH UNCERTAINTY 119
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
Existing Homes
Source: SalesTraq
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Home ClosingsLas Vegas Area
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
New Homes
MINING THROUGH UNCERTAINTY 120
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
'05 '07 '09 '11 '13 '15 '17 '19LTM
Existing Homes
Source: SalesTraq
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Peak-to-Trough Employment MovementNevada
-84,200
-27,900
-23,800
-16,200
-12,300
-11,800
-2,300
-2,000
600
7,800
12,800
Construction
Leisure & Hospitality
Professional & Business Services
Trade, Transportation & Utilities
Financial Activities
Manufacturing
Information
Other Services
Mining & Logging
Government
Education & Health Services
MINING THROUGH UNCERTAINTY 121
Source: United States Bureau of Labor Statistics
Net Job Loss:
-159,300 (-12.6%)
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Trough-to-Present Employment MovementNevada
-2,400
2,800
3,100
10,100
18,800
22,900
40,900
42,800
51,900
60,100
66,600
Government
Mining & Logging
Information
Other Services
Financial Activities
Manufacturing
Construction
Education & Health Services
Trade, Transportation & Utilities
Leisure & Hospitality
Professional & Business Services
MINING THROUGH UNCERTAINTY 122
Source: United States Bureau of Labor Statistics
Net Job Gain:
+317,600 (28.6%)
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Las Vegas Strip Trends
MINING THROUGH UNCERTAINTY 123
$0
$1
$2
$3
$4
$5
$6
$7
$8
'07 '09 '11 '13 '15 '17 '19LTM
Bill
ions
Gross Gaming Revenue
Source: Nevada Gaming Control Board; Las Vegas Convention and Visitors Authority
$105
$110
$115
$120
$125
$130
$135
$140
$145
'13 '14 '15 '16 '17 '18 '19LTM
Average Daily Room Rate
84%
85%
86%
87%
88%
89%
90%
91%
'13 '14 '15 '16 '17 '18 '19LTM
Hotel Occupancy Rate
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Las Vegas Strip Trends
MINING THROUGH UNCERTAINTY 124
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
'07 '09 '11 '13 '15 '17 '19LTM
Gross Gaming Revenue
Source: Nevada Gaming Control Board; Las Vegas Convention and Visitors Authority
0%
1%
2%
3%
4%
5%
6%
'13 '14 '15 '16 '17 '18 '19LTM
Average Daily Room Rate
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
'13 '14 '15 '16 '17 '18 '19LTM
Hotel Occupancy Rate
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Annual GDP Growth and Financial Events
0
10
20
30
40
50
60
70
80
90
100
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
'71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 '16 '19
Recession Annual GDP Growth
’74 Franklin Nat’l BK
’82 LatAm Debt
’87 Stock Market Crash
’90 S&L Crisis’00 Tech Bubble
’07 Subprime Crisis
Source: United States Bureau of Economic Analysis
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Comparative Analysis of Periods of Expansion and Real GDP Growth
Recent expansion has been the
second longest period of economic
growth in history
MINING THROUGH UNCERTAINTY 126
Source: United States Bureau of Economic Analysis; Applied Analysis
Trough PeakDuration
(Qtrs.)
Real GDP Compound
Annual Growth Rate
Q1 1991 Q1 2001 41 3.6%
Q2 2009 To Date 40 2.3%
Q1 1961 Q4 1969 36 4.9%
Q4 1982 Q3 1990 32 4.3%
Q4 2001 Q4 2007 25 2.9%
Q1 1975 Q1 1980 21 4.3%
Q4 1949 Q2 1953 15 7.6%
Q2 1954 Q3 1957 14 4.0%
Q4 1970 Q4 1973 13 5.1%
Q2 1958 Q2 1960 9 5.5%
Q3 1980 Q3 1981 5 4.3%
AVERAGE 22 4.4%
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In-Migration by StateCalifornia to Nevada
0
10,000
20,000
30,000
40,000
50,000
60,000
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Total In-Migration
MINING THROUGH UNCERTAINTY 127
Source: United States Census Bureau
-20%
-10%
0%
10%
20%
30%
40%
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Annual Change
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MINING THROUGH UNCERTAINTY 128
How Californians moving to Nevada are
changing the state’s politics
“But the net flow from the Golden State has swelled in recent years, as sky-high housing prices in the Bay Area and Southern California sent residents searching for drastically cheaper deals a few hours drive away in the expanding Reno or Las Vegas metropolitan areas…”
Date: August 12, 2019
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MINING THROUGH UNCERTAINTY 129
As California loses people, a las vegas
suburb grows
“For Karina Nasir, leaving California for this booming Las Vegas suburb was the chance to escape commutes up to three hours. For Bill Clune, it is saving $5,000 a year on his water bill…”
Date: February 26, 2019
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MINING THROUGH UNCERTAINTY 130
Nevada among top states for inbound moves,
study finds
“A large share of mostly younger, middle-aged people are looking to move to Nevada from California to escape the high housing costs…”
Date: January 2, 2019
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MINING THROUGH UNCERTAINTY 131
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U-Haul Prices in Northern Nevada
$1,187Price for a Truck and Tow from
San Francisco to Reno
$241Price for a Truck and Tow from
Reno to San Francisco
MINING THROUGH UNCERTAINTY 132
Source: U-Haul
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U-Haul Prices in Southern Nevada
$1,063Price for a Truck and Tow from
Los Angeles to Las Vegas
$203Price for a Truck and Tow from
Las Vegas to Los Angeles
MINING THROUGH UNCERTAINTY 133
Source: U-Haul
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Hachman Diversity IndexNevada
50
55
60
65
70
75
80
85
90
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
MINING THROUGH UNCERTAINTY 134
Source: United States Bureau of Labor Statistics; Applied Analysis
More D
iverse
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Hachman Diversity IndexNevada
50
55
60
65
70
75
80
85
90
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
MINING THROUGH UNCERTAINTY 135
Source: United States Bureau of Labor Statistics; Applied Analysis
More D
iverse
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Investments in Nevada
$41.2 BTotal Planned and Under Construction
Investments in Nevada
$15.2 BNorthern Nevada
$26.0 BSouthern Nevada
MINING THROUGH UNCERTAINTY 136
Source: Applied Analysis
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MINING THROUGH UNCERTAINTY 137
Reno-Tahoe International Airport Expansion▪ Planned, $1.6 billion expansion of Reno-Tahoe International Airport
▪ The expansion will include a new concourse, new rental car facility and renovations to the existing baggage claim and concourses
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MINING THROUGH UNCERTAINTY 138
Park Lane▪ Under Construction, $500 million mixed-use development
▪ Phase one will add in a large apartment complex, phase two will add retail/hotel space, and phase three will add more residential space
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MINING THROUGH UNCERTAINTY 139
Resorts World Las Vegas▪ $4.2 billion casino resort to be owned and operated by the Genting Group
▪ Under Construction and expected to complete in 2021
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MINING THROUGH UNCERTAINTY 140
Allegiant Stadium▪ $1.9 billion, 65,000-seat stadium located near the Las Vegas Strip to be home of the Las Vegas Raiders
▪ Under Construction and expected to complete in 2020
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Consumer Confidence IndexUnited States
112.2
170.9
0
20
40
60
80
100
120
140
160
180
200
'80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 '16 '19
Recession Future Expectations Present Situation
MINING THROUGH UNCERTAINTY 141
Source: The Conference Board
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Consumer Sentiment Index
0
20
40
60
80
100
120
'01 '03 '05 '07 '09 '11 '13 '15 '17 '19
MINING THROUGH UNCERTAINTY 142
Source: University of Michigan
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MINING THROUGH UNCERTAINTY