What a difference a year makes in comparing this year’s City of Reno Special Report with last year’s. Although the economy was certainly in the doldrums a year ago, these past 12 months have taken an even greater toll on business and economic development in Reno. As the city continues to grapple with significant shortfalls in basic revenues, it expects to cut around $35 million from the 2010-2011 budget in coming months, which could result in as many as 300 more staff being laid off. “The economy is just ugly now,” laments Mayor Bob Cashell.
The affects of the recession are especially noticeable in downtown Reno where several flagship developments are mired in financial problems. Although Cashell says West Street Market will be viable, the project isn’t making enough money to cover its lease. Considered a redevelopment jewel just a year ago, the city spent around $1 million to turn three 1920s brick buildings on West Street into a funky hangout of shops, eateries and entertainment. The project has struggled since opening last year, however, with just a small percentage of spaces having been fully leased. Further complicating the situation is a $350,000 grant that may have to be returned if not enough jobs are created along with lease payments that would need to be paid if the city shuts it down. “Redevelopment doesn’t have a lot of money at all,” Cashell says. As the city mulls over its options, at the time of this writing the fate of the project was still not known.
On hold also for lack of funding and demand is 30,000 square feet of retail development planned for the Retrac Cover which overlays the sunken Union Pacific Railroad tracks for several blocks downtown. Aside from covering the open trench full of trains rolling by, the cover was lauded for adding useable space and beautifying what could otherwise be an eyesore. Not far from the Retrac Cover, the elephant in the living room continues to be The Montage, with its 22 stories of glass and concrete promising a chic, urban lifestyle to purchasers of its 380 condominiums. As the largest vertical residence in downtown, its size alone commands attention. With less than half the units sold, however, it has teetered through several financial crises and seems unlikely to be able to offer in the near future some of its planned amenities, which include a Ruth’s Chris Steak House on the property. On the other hand, the residential rising star in downtown is the Palladio which has managed to navigate choppy financial waters to within just several units of full occupancy.
Reno Aces
Although Reno had been a revolving door for semi-professional sports teams for years, the Reno Aces changed all that when they arrived in town last year. Formerly the Tucson Sidewinders, the Triple-A team quickly took up residence in its new state-of-the-art stadium just several blocks from the casino action on South Virginia Street. Team owners SK Baseball borrowed all the best ideas from other stadiums around the country to build a mini major league park fans have fallen in love with. Emphasizing that a trip to the ballpark is a total entertainment experience, SK has carefully crafted a winning combination that has been enthusiastically embraced by locals and tourists alike. “We’re constantly taking feedback from our fans and we’re continually focused on improving our product,” says T.J. Lasita, vice president, baseball operations/communications. “We never get complacent. We’re always looking to be a premier source of affordable entertainment.”
Considered a cornerstone in downtown development, the Aces unquestionably earned its gold stars the first year by attracting 466,000 fans to the downtown area. The economic impact is much larger than that, however, as hundreds of full-time, seasonal and construction jobs have also been created. The project continues to evolve with the opening in April of three new restaurants and the 250 Lounge in the surrounding Freight House District. “We’re dedicated to providing Reno with a great source of fun, affordable entertainment,” Lasita emphasizes.
Gaming
Considered the goose that lays the golden eggs, gaming for many years was the principal economic driver of the Reno economy. Beginning with the legalization of casinos in Atlantic City three decades ago, however, the longstanding gaming monopoly that Nevada had enjoyed for years started to slide economically in the face of competition from not only New Jersey, but Indian gaming, riverboats and lotteries. With gaming revenues ever shrinking, economic movers and shakers continue to wrestle with how to improve them while seeking new sources of money.
Although the Peppermill Hotel Casino Reno, Atlantis Casino Resort & Spa and John Ascuaga’s Nugget (all outside the downtown Reno core) have recently spent millions in renovations and improvements, Cashell says the downtown properties are in need of upgrading. To better meet competition, he also suggests joining forces across the area. “Hotel casinos need to look at this place as a region. They need to work together. It’s no longer just Sparks, Reno or Washoe County,” he explains. Because beefing up gaming still may not do the job, many economic developers emphasize the need for finding new sources of revenue.
“We’ve got to diversify,” says Chuck Alvey, CEcD, president and CEO of the Economic Development Authority of Western Nevada (EDAWN). In recognition of its efforts to diversify, Reno has been saluted by the Geothermal Energy Association (GEA) for its potential and success in marketing the city as a geothermal center.
Bearing the heavy burden of still providing services to residents of Reno despite falling tax revenues, Cashell insists that other sources of taxation need to be found. “Gaming has been ridden pretty hard,” he says. With gaming unable to fill the glass as full as in the past, it seems that government entities will soon have no choice but to change tax structures. “Our city and state need to re-address how we raise our money. Sales and property taxes need to go up a bit,” Cashell says. “We have to stabilize our tax situation and define what local government should be doing.” To more efficiently use resources, Cashell also says that government entities can make greater use of consolidation, citing examples of having regional instead of neighborhood park responsibilities along with combining IT, personnel and animal control departments.
Recruiting
Meanwhile EDAWN continues to go about its job of recruiting new business to the area. Despite the recession, the advantages of living and doing business in Northern Nevada haven’t gone away. Its abundance of outdoor recreation, cultural offerings, access to markets and business-friendly tax structure still make it an attractive location. “The best advantage is its market location,” Alvey says. “Twenty-two out of 25 companies look at our proximity to California.” It also helps that because of its quality of life, Reno was named among the top 25 best places to live in the April issue of Men’s Journal magazine. The Aces ballpark, Riverwalk District, Artown and outdoor recreation were listed as some of the specific reasons why the city was singled out. Alvey also says that the area’s jobless rate could actually be a selling point in attracting prospective businesses. “Our high unemployment rate gives us an available workforce. It’s an opportunity,” he explains.
Although the number of inquiries has slowed, EDAWN has simply renewed its efforts in spreading its message. “Companies are still distressed over what’s happening at the state and federal level,” Alvey says. Any of those distressed businesses could be a candidate for relocation to the Reno area. In ramping up their efforts, EDAWN has conducted campaigns with e-mail blasts, such as “We’re Serious About Manufacturing” and “We’re Serious About Clean Energy.” While a single e-mail won’t immediately lure a new business, it’s part of a continuing process to educate candidates about the advantages of the Reno area. “It’s a slow process, but there’s a lot of positive support here,” Alvey explains.
So far this year, Intechra, a national electronics recycler is the only company to have relocated to Reno. Its processing center will bring 60 jobs and have an economic impact of $4.4 million in tax revenues and employment. At the end of last year, SK Food Group and Secure Storage Technologies LLC arrived in Reno bringing around 85 jobs and having approximately a $30-million economic impact. EDAWN is busily working the street, however, with around 155 contacts in various stages of process, as they reach out to clients that represent manufacturing, clean energy, business financials and logistics.
As education suffers cuts along with everything else, Cashell and Alvey worry about the affect those cuts can have on economic development. With a looming threat to the supply chain management program at the University of Nevada, Reno (UNR), Alvey says efforts are underway to find private sources of funding to save this important logistics program. “Major cuts in education have discouraged some people,” Cashell says. Some comfort might be taken from the fact that Nevada is hardly the only state to have had to cut services, however.
Much like war veterans who’ve been through it all, Alvey and Cashell have fallen back and regrouped to do their jobs based upon the cards that have been dealt them. “Did you ever look the alligator in the eye?” Cashell asks. They still believe passionately in the economic future of the Reno area, but approach current problems with the wisdom that perhaps things may have to be done a little bit differently from now on. “We talk ourselves into being sicker than we are. Too many people are being negative,” Alvey says. “The attitude needs to be that we can get through this.”
