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City Council approves Zappos downtown deal changes, gets ‘flash mobbed’

Updated Wednesday, June 15, 2011 | 5:56 p.m.

Zappos employees 'flash mob' city council

The Las Vegas City Council voted unanimously today to roll back the sale price of the Las Vegas City Hall property at Fourth and Stewart streets by $7 million to help bring Zappos.com’s headquarters to downtown Las Vegas.

And dozens of Zappos' employees surprised the city council with a flash mob, streaming into the city council chamber and doing a dance before the surprised council members.

"That's why we're doing what we're doing," Mayor Oscar Goodman said after the dancers had finished.

The council approved a change in the terms of the deal signed on Dec. 1, 2010, between the city and the Resort Gaming Group for the downtown site from $25 million to $18 million.

City officials see bringing Zappos downtown as creating a renaissance in the downtown area, spurring additional investments and bringing more retail and service businesses to accommodate Zappos employees.

According to information supplied by city staff, the cost adjustment is due to four factors:

-- The number of workers to be relocated has been increased to 1,200 employees;

-- Zappos now plans to be able to accommodate 2,000 employees in the city hall building, with additional plans to build a downtown campus on adjacent property;

-- The projected cost of the project, including renovations to the city hall facilities, has risen from $43 million to $65 million since negotiations began;

-- The city and RGG would agree to reduce the city's risk by requiring that the senior loan for the building improvements be paid off at the end of Zappos' initial 15-year lease term, leaving the city in a first-mortgage position at year 15 as opposed to year 30 in the original deal.

Under the new deal, RGG will pay an initial $3 million down for the property and the $15 million balance will be structured as seller financing through the city.

Amazon.com, which owns Zappos, will guarantee payment of Zappos' 15-year-lease, assuring the city of repayment, the council was told.

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