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May 28, 2017

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Mayor: Zappos move will make it easier to market downtown Las Vegas

Zappos’ national stature could help lure other major firms to city’s inner core, Goodman says

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Justin M. Bowen

Zappos CEO Tony Hsieh is shown at a Las Vegas City Council meeting Dec. 1, 2010, when it was officially announced the existing City Hall building would be used as the headquarters for Zappos.

Zappos at City Council (12-1-2010)

Zappos CEO Tony Hsieh speaks Wednesday, Dec. 1, 2010, at the Las Vegas City Council meeting, when it was officially announced the existing City Hall building would be used as the corporate headquarters for online retailer Zappos.com. Launch slideshow »

Tony Hsieh may not realize it yet.

But if Mayor Oscar Goodman has anything to say about it, the CEO of Zappos.com is likely to become the new marketing face to lure other national companies to Las Vegas.

"Zappos could have gone any place — they could have gone any place in the world. But they chose to come to downtown Las Vegas," Goodman told reporters today at his weekly press conference at City Hall.

On Wednesday, the Las Vegas City Council approved a deal for Zappos.com, which sells clothing and footwear online, to move its corporate campus and 1,000 employees from Henderson to the existing City Hall site at Stewart and Las Vegas Boulevard.

The Zappos move will take place when the city moves by April 2012 to the new City Hall being built a few blocks to the southwest.

"I am going to use that, in order to make phone calls," Goodman said. "And when I go back to the conference of mayors and tell them, 'Look, if Zappos, which is a subsidiary of Amazon, chose Las Vegas over any place in the world they could have gone to, there must be a reason."

Goodman currently sits on the U.S. Conference of Mayors advisory board and is chairman of the USMC Mayors Business Council.

Las Vegas' mayor said that so far, he hasn't really tried to use his position on the council as a way to market downtown.

"Major companies throughout the United States are members of that business council," Goodman said. "I have never tried to entice those companies to come here because I needed one to be here to validate us, as I said yesterday, to show that Las Vegas is a wonderful place to do business."

Part of the reason is that the tax structure is friendly to business, he said.

"We don't have any corporate tax to speak of," he said. "We're just an ideal place to do business. Our climate's great, our work force is willing and able at this point in time."

And the city can also use its lower-priced homes, caused by the massive amount of foreclosures, as a way to market the city, he said.

"That could be turned around and that could be made into a positive," he said.

Goodman noted that during the city council's meeting Wednesday, the Zappos deal was referred to twice as a "tipping point" for downtown.

"We'll see new companies come here. We'll see corporate buildings built here," he said. "I think you'll see the condos fill up that have sat virtually empty."

Goodman said the Zappos culture, which emphasizes employee happiness, will put its mark on downtown.

"I can't call it a cult or a sect, but it's like that," the mayor said. "It's different."

He said Hsieh's book, Delivering Happiness, outlines a philosophy that a person should feel just as good about themselves and be as happy at work as they are at home, when they're playing.

"He actually has accomplished that," Goodman said. The work environment is something you don't normally see anywhere except for "a very happy college fraternity," he said.

Hsieh brought his employees downtown in several buses to give them a taste of East Fremont Street, Goodman said.

"They frequented all the lounges, all the clubs, all the venues. It was overflowing. They had a wonderful time," he said.

Goodman said he expects the employees to bring a tremendous energy downtown when they move the campus to the area.

Zappos deal

The Zappos deal involves the sale of roughly 18 acres of city-owned property that includes the existing City Hall, the city parking garage and KLVC offices.

Resort Gaming Group, a Las Vegas-based developer involved in other downtown projects, including the Lady Luck renovation, will buy the property for $25 million and lease it to Zappos. The lease commitment is guaranteed by Amazon.com, which owns Zappos.

Part of the purchase price, $22 million, is being paid over time through a promissory note, with $17 million of that paid over a 30-year term at 5.125 percent interest and $5 million with a "balloon" payment due in the 30th year.

The city's note is subordinated to a senior loan, not to exceed $18 million, to handle capital and tenant improvements for Zappos to move in. RGG is responsible for all Zappos improvement costs.

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