Zappos would pay less for City Hall building under amended agreement

By Joe Schoenmann

Thursday, June 9, 2011 | 12:28 p.m.

The deal to transform City Hall into the headquarters for Zappos.com is going to cost less than originally planned.

Because of renovations expected to cost $65 million versus the original estimate of $43 million, the city and Resort Gaming Group — which will purchase the building and surrounding downtown Las Vegas acreage, and then lease it to Zappos — have amended an agreement signed in December, which the City Council will consider next week. The new agreement calls for the city to sell the building for $18 million instead of $25 million.

The new deal would require Zappos to pay off a remodeling debt to the city, which will be the noteholder, in 15 years instead of 30 years. Hopes were that the sale of City Hall would help Las Vegas offset the cost of building another City Hall, which is being financed with $185 million in bonds. Las Vegas City Manager Betsy Fretwell said the new agreement means Zappos/Amazon will end up paying about 25 percent of the debt for the new City Hall.

Yearly payments for the building will be $11 million to $13 million.

Fretwell said city staff are “very excited” about what the Zappos move will mean for downtown redevelopment. Zappos’ staff is planning renovations to the old City Hall, and to make downtown and Fremont Street East a mecca for music, food, affordable housing and other cultural amenities.

Demonstrating Zappos’ commitment, CEO Tony Hsieh and other employees are leasing all apartments and condos on a single floor of the Ogden, a high rise one block from the current City Hall.

When the move happens, the company expects to bring 1,200 employees downtown, with the number expected to grow to 2,000.

CORRECTION: The original version of the story incorrectly stated that Zappos would purchase City Hall from the city of Las Vegas. Rather, Resort Gaming Group will buy the building and lease it to the online shoe retailer. | (January 5, 2012)