Economic development continues to be an important priority for the Silver State. Many factors go into diversification including incentives for businesses, education and workforce training. And, while strides have been made in attracting new industries to the state, there is still a long way to go. Recently, leaders of economic development met at the Las Vegas office of City National Bank to discuss both challenges and opportunities facing Nevada.
Connie Brennan, publisher of Nevada Business Magazine, served as moderator for the event. These monthly meetings are designed to bring leaders together to discuss issues relevant to their industries. Following is a condensed version of the roundtable discussion.
Are companies moving to Nevada?
ROBERT HOOPER: We’re seeing one or two companies per month moving into our region. The Tesla and the Switch deal were nice big rocks thrown in the pool, but we’ve been filling buildings up for many years now. We’ve become a really good place for the Bay Area and Central Valley companies to expand into. It’s a capacity issue. We’re simply out of buildings right now. We went from a 26 percent industrial vacancy rate in 2010 to about 5 percent right now, and what’s left is fairly unusable for the demand that’s there.
TERRI SHERIDAN: The obvious ones are Faraday and Hyperloop with what’s going on at Apex. There are other companies going out there, medical marijuana establishments that are taking advantage of the green zone and opportunities and a petroleum company going out towards Apex. There’s also existing businesses that are expanding. The majority of buildings and spec products being built are leased before they’re finished.
BARBRA COFFEE: OnTrac came into Henderson and filled the space that FedEx Ground left vacant when they consolidated. They’re a third-party logistics provider and filling 130,000 square feet. We’re seeing, as others are, a lot of activity on both distribution and manufacturing sides. We, too, finally have some spec industrial development happening, almost 1 million square feet. It’s good to have because now we’re competitive for those that are trying to make the quicker decisions to locate. Toronto Baking Company is a Chicago-based baking manufacturer that is in the business of making premium bread products. They are looking at city owned property in Henderson.
MARK HUTCHINSON: I would just mention a company called Machine Zone. It’s the first time that a major Internet-based company has moved out of the traditional Bay Area and close to Silicon Valley into Las Vegas, specifically, to be close to Switch. I don’t know that we can really overstate the importance of what Switch has brought to Nevada. We are the most connected state in the entire country now in terms of the speed of data processing and data storage.
What industries are you targeting?
SHERIDAN: Advanced manufacturing. We’re all talking about that. Then it’s the supply chain, their vendors and those who need to come in to work with them. We’re already beginning to have those conversations as well. There is also health and wellness and life sciences. That’s going to be key for all of us.
BILL ARENT: I think of IT. I think of healthcare. I think of advanced manufacturing. All three of those industries are undergoing changes. We worked with a company that is taking over the Citi Bank campus. They do business with all Fortune 500 companies. IT is definitely different and we have these great assets like Switch. Healthcare and the business of healthcare is changing. We see tele-medicine growing and we’re getting the UNLV School of Medicine. How do we leverage those assets?
ZACHARY MILES: To piggyback on the School of Medicine, there’s certainly a lot of bio companies who will be interested in that. Also, throw in autonomous systems. That would be another one we’d like to attract and there’s certainly initiatives that are going on that are trying to attract all the autonomous vehicles, unmanned aerial systems. There are a lot of add-ons to that as well, like sensors. There’s a lot of industries that will be attracted.
HOOPER: There’s an article about what cities are attracting the tech geeks. You open it up and see Boise, Olympia, San Diego and Carson City. How did we get on that list? That’s what we’re seeing happening to us. We already have over 700 manufacturers just around Carson City, so the supply chain is very well developed. Because it was aerospace and it’s all very refined, precise manufacturing, it adapts itself very quickly to healthcare. We already have that in place. Then you throw in this place where techie geeks like to hang out because there’s skiing and a lake. You can buy an apartment-sized condo in San Jose for $1.5 million or for $400,000 you can live in a three bedroom home on a golf course in Carson City. We’re seeing expansions coming in that area. With telemedicine it’s the same thing.
What role does state financing play in economic development?
PAUL STOWELL: We’re seeing a lot of activity out there, a lot of pent up demand and a lot of businesses getting off the sidelines. That’s a good thing. We see balance sheets improving. We’re able to get out there and lend. The thing that we’ve told our clients and prospects is we don’t like to say no. We say this is what “yes” looks like. We work to help businesses get to that point to where we can partner with them and help them along that path of economic development and growth.
MARY KERNER: We are a non-traditional lender. Eight years ago when the market crashed and the economy just went stagnant, we got really busy because when they can’t get financing at a traditional lender, then they come to us. Capacity was always our issue for a very long time. Now that we have a lot of loans on the books in rural Nevada, all business loans for people that couldn’t get bank financing, right now we’re trying to graduate them into the banking product. The banks are starting to thaw a little bit now and take those from us.
What incentives does the state offer?
HUTCHISON: The tax foundation has recently listed Nevada as the fifth most friendly tax environment in the country for business, even after this last legislative session. When we ask businesses why they’re moving here, that still is a prime reason why they’re coming here. We may not offer everything that every state does, but we offer enough. We offer modified business tax relief, payroll tax, property tax, sales tax. We have to offer these incentives for Nevada to be in the game with these other states.
HOOPER: There are other states that offer much more robust incentives. On the other hand, they charge a lot more in taxes. If you do a spreadsheet on it over time, the companies actually end up losing by taking the high level of incentives.
BRAD MILLER: The I-11 will have a huge impact if we can pull the manufacturing out of Mexico, the Phoenix market, and become more of a crossroads than we are now. This is an ideal place to distribute out of for the west. There’s I-5 and I-10, which are a two day trip to get from Southern California to Northern California because you go 25 miles per hour. With I-11, they can actually start here, go through Nevada, which is very rural, up into Northern Nevada and cut back over into California and save themselves a lot of time and money.
What improvements are you making to encourage development?
HOOPER: The place that we need to focus our attention on is the regulatory environment at the local level. We’re looking at the certified site programs that are available in other states. We really don’t have one in this state, so we were challenged to do it. We assigned a committee to put that together, went out and looked at 35 other states and how they did it and came up with the Nevada Certified Site Program. They will now take a site, certify that it has all the infrastructure for certain sectors. It expedites it and gives us a product to sell in the marketplace.
SHERIDAN: We shortened the plan review time. If you’re going into a properly zoned area for an industrial sized building, for example, you need not take that project to the planning commission anymore. It’s basically just an over-the-counter review. Are we at a point where you can start building in 30 days as other counties are? We’re trying to find our way to “yes” for the businesses.
COFFEE: We consistently post a 98 percent customer satisfaction rate in our development services center. Time is money, we recognize that. We meet those turnaround times on plan reviews and we get folks to permit and construct as quickly as we can. We’re not against bringing them in ahead of time and ahead of formal applications and have a concept review. Even during the prospecting phase, we bring a team together to talk about what is going to be proposed and try to head off any of the big issues that might later arise. The answer is getting that information to the clients quickly so those projects can be delivered on time successfully.
MILLER: It used to be you get in this window to get in this one, then you go down to this window, then you’re over here. You’re frustrated as can be by the time you’re done. Henderson’s done a good job of you coming up to one window, let’s get all of it done and put it together in one package so you know what you need and can go get it done.
ARENT: When residential and commercial construction fell off the map, every city had to lay off staff and we can’t ramp up quickly enough. What that forces us to be is strategic and opportunistic. If we have a bottom up new construction, major project or new business coming in that needs fast service, we do the same thing. We’ll have our building director there with the business on day one. It’s realizing that maybe not every permit has to get out of the system in a day, a week or a month, but how do we meet the needs of business? As we scale back up, eventually all the wait times will go down, but we really want to be strategic and opportunistic in making sure that we support business, particularly new business.
How does education affect economic development?
STOWELL: We’re tired of hearing about all the negative things in education. We know that they’re not all negative. There are positives. What the bank and the advisory board decided to do was to take on an initiative with Clark County School District to try and change public perception from all the negative to the positives. Southern Nevada lost its “Tesla”, a Southern Korean company that was going to move here, and it all boiled down to education. If they would drill down into the education system in this state, I truly believe that we would attract more non-gaming related companies because there’s bright spots out there.
HUTCHISON: There are some great stories that come out of our public schools. There are several students that have gone on to Harvard and been at the top of their class, and they graduated from our public schools. You would never, in your wildest dreams, think that was possible based on the publicity. We have tons of success stories like that and many others that have gone on to great academic achievements and professional achievements coming our of our public school systems that no one ever hears about.
COFFEE: The city is taking advantage of state programs such as the Governor’s Office of Science, Innovation and Technology and the STEM Workforce Challenge Grant. It looks like we’ll be participating in a program that’s going to allow us to create an IT bootcamp curriculum that we can train those skills gaps in computer occupations, connected directly to what our employers need. It’s important to train those skill sets and mentor, in an externship fashion, the students of those programs into those employer environments, and really start addressing the skills gap from that perspective. In a non-traditional manner outside of just community colleges, I think the cities are able to take advantage of that and create some change ourselves.
HOOPER: We’re all competing for that top 20 percent. There’s that middle 60 percent that no one really addresses. That’s where the workforce is. That’s who shows up at the manufacturer’s door. We need to reengage with that middle group and lead them back into a career. This is something we are addressing through the community college system right now. Don’t try to get kids to make a decision on what career they want before they first decide they need a career. Guide them into that.
How Competitive is economic development?
HUTCHISON: We’re doing pretty well right now with our competitors. It’s the western states, Texas and Utah, Arizona, California. California is still very, very competitive because of their workforce, education and facilities there. Those are the four states that we see over and over again.
ARENT: If you look at infrastructure of older cities across the county, it’s aging. It is so expensive to replace those legacy systems. By and large, we don’t have those legacy systems. That is a huge strategic advantage as we embrace the industries of the future.In certain industries, I think you’re seeing city to city competition. We had a company that came here and they were looking at two possibilities: San Francisco and Las Vegas. It was a start-up. As we look industry to industry, there’s different sets of competition. Whether it’s Northern Nevada, the rurals, Reno, Washoe or Las Vegas Valley, you’re starting to see some natural competition emerge among cities. I think that’s healthy and a good thing.
How do the agencies work together?
MILES: All of you probably don’t know to engage UNLV. What does it have to offer? What is the research that’s going on on campus? What are the classes that could be workforce development? To me, how does what we currently have align so I know where and when to engage individuals or groups, and by doing so, where am I going to fill certain gaps or identify those gaps? How do I plug in everyone else to either have things handed off to me or that I can hand off to the next entity or group.
HOOPER: Over the last few months we passed over nine deals that have closed to EDAWN, and are happy to do it. We’ve collaborated with LVGEA and handed deals back and forth. Same thing going out to Elko. The idea is to get them in the state. Even above that is doing the right thing for the client. Where are they going to fit the best? If you take that approach, they’ll love you.
KERNER: Every different community out there has their own little niche with what they’re good at and what they need help with.
ARENT: We’ve gone from being competitive to now collaborative, and I think we’re moving towards additive where we’re all looking at our unique assets that every city and county has. We are a diverse state and we have a lot of different assets across the entire state. How do we build up the university system? How do we focus on manufacturing? What we’re doing with Apex, not just through the governor’s leadership and certainly North Las Vegas, but the entire region and the entire state was cheering for that to happen. That’s really a fundamental shift in how economic development is being done.
HUTCHISON: It started when the governor first came into office and he said, “I’m going to take responsibility for economic development in our state. It used to be under the office of lieutenant governor. [Governor Sandoval] has been the leader, without question, on economic development. He’s been the champion and put together an outstanding team; serious professionals who are absolutely committed and dedicated to diversifying our economy and bring more jobs in. You think about where we were at when Brian Sandoval came into office. Unemployment was over 14 percent. The goal of GOED, when it was first created, was if we could get 50,000 jobs back into the state, we’ll be successful. We’re coming up on 150,000 jobs soon.