Las Vegas Sun

August 18, 2018

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The resurrection of North Las Vegas

How a recession-ravaged city is clawing its way back, one idea at a time

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Steve Marcus

A water truck wets down an area being prepared for a medical marijuana complex in the in the Apex Industrial Park near Interstate 15 and Highway 93, north of Las Vegas Wednesday, Feb. 17, 2016. Electric car start-up Faraday Future plans to build a $1 billion auto plant in the park.

Click to enlarge photo

North Las Vegas Mayor John Lee speaks during a Nevada Department of Transportation (NDOT) news conference at the Las Vegas Motor Speedway Monday, Sept. 19, 2016. NDOT announced the groundbreaking of a $33.8 million widening of I-15 between Craig Road and the Speedway.

Dead on the operating table.

John Lee and North Las Vegas once presented as patients alive in spirit only — a proud man down to a fingernail’s grip in a battle with terminal cancer and his battered hometown tilted toward a financial abyss.

Doctors restarted Lee’s heart during surgery for Stage IV nasal cavity cancer eight years ago. With his improbable new life, Lee wants to do the same for North Las Vegas.

How North Las Vegas is digging out: Budget improvements

Long-term debt can be a strong indicator of a municipality’s health. Through difficult negotiations with employee groups, finding efficiencies in City Hall and securing new businesses to bolster the local economy, current city leaders have whittled North Las Vegas’ long-term deficit to a more manageable level:

• 2013: $152 million

• 2014: $72 million

• Current: Less than $23 million

How North Las Vegas is digging out: Bond rating improvements

Bond ratings, issued by private, independent services, represent the creditworthiness of organizations; in other words, how likely an entity is to pay back its bonds. North Las Vegas’ rating fell to junk-bond level during the recession but has improved consistently since 2014. Bond ratings are important because they influence interest rates, investment appetite and bond pricing.

How North Las Vegas is digging out: Business permit improvements

Business and industry have increased exponentially in North Las Vegas over the past few years, in part because the city streamlined its licensing and permitting processes, making it quicker, cheaper and easier for companies, developers and investors to do business in the city. Valuation of business permits issued in North Las Vegas:

• 2012: $181 million

• 2015: $369 million

Paving the way for long-term projects: Apex Industrial Park

• What is it?: The linchpin of North Las Vegas’ economic plans, this once-dormant complex could generate significant jobs and tax revenue if fully occupied.

• $670 million: Estimated annual tax revenue a fully developed Apex would generate

• 57,960: Estimated number of jobs a fully developed Apex would create

Paving the way for long-term projects: Faraday Future

• What is it?: Lured to Apex with a huge incentive package, this Chinese startup hopes to build the electric car of the future, but questions exist about its finances.

• $85 billion: Estimated economic impact of Faraday Future over 20 years

• 4,500: Number of jobs Faraday Future is expected to create on-site (with an average wage of $22+/hour)

Paving the way for long-term projects: Hyperloop One

• What is it?: Elon Musk wants to get you from one California metropolis to the other at warp speed, and the model for it will be tested in the Nevada desert.

• 760: Miles per hour Hyperloop One’s high-speed transportation pod is expected to travel

• 36 minutes: Estimated travel time from Los Angeles to San Francisco

A look at North Las Vegas residents

• 234,807: residents (compared with 285,667 in Henderson and 623,747 in Las Vegas)

• $53,105: median household income (compared with $63,830 in Henderson and $50,903 in Las Vegas)

• 77.7%: residents who have a high school diploma (compared with 92.6% in Henderson and 83% in Las Vegas)

• 15.2%: residents who have a bachelor’s degree (compared with 30.7% in Henderson and 21.6% in Las Vegas)

“I realized this was going to be like a Peace Corps assignment,” the 61-year-old mayor said. “We could take this third-world government called North Las Vegas and rise it up to the second or first tier.”

During Lee’s first term, the valley’s second-chance, second-thought community has cast itself as a model of economic diversification in a state starved for business devoid of glitz, to the point that these first-tier facts about North Las Vegas in 2016 might read as fiction to those who witnessed the beginnings of a state takeover in 2012:

Chinese electric-car manufacturer Faraday Future and Elon Musk-backed transportation startup Hyperloop One lay foundations alongside medical marijuana operations at the massive Apex Industrial Park 18 miles from City Hall. Owners of long-rumored developments Park Highlands West and The Villages at Tule Springs plan to build 10,000 homes starting next year, hoping to house some of Faraday’s anticipated 4,500 employees in homes from $200,000 up into the millions. City officials said multiple Fortune 500 companies would expand into the North Beltway Industrial Park.

“I know we have a lot of encouraging news, and I’m very proud of what we have done,” City Manager Qiong Liu said. “We are not really totally out of it.”

Acres of graded Apex desert represent only a down payment on future jobs for future residents who would live in future houses and send kids to future schools. They don’t yet fill a $24 million budget hole looming because the state determined that the city’s historical reliance on enterprise funds in its general fund had to end by 2021. They won’t repair decades of blight in the downtown corridor or draw down the second-highest rate of violent crime in Nevada. They can’t heal wounds from a brusque City Hall overhaul headed by Lee and his right-hand man, Assistant City Manager Ryann Juden.

Compared with 2011, though, hope can come off the list of four-letter words. Back then, North Las Vegas led the nation with a third of its homes in foreclosure, and city officials finished cutting more than 1,000 jobs simply to remain a city.

Largely a bedroom community of people working in other parts of the valley, North Las Vegas had come into new money in the mid-2000s as growth demanded open land, which it could offer in substantial quantities. City leadership added jobs rapidly to keep up with demand for services, though many of those positions would be eliminated beginning in 2009 as the recession took root. With little business or industry of its own, North Las Vegas fell harder than other local municipalities, leading the current administration to get creative.

“It’s a city very much on the mend, and it’s in a better position than ever because it’s diversified its economy,” said Robert Lang, executive director of Brookings Mountain West and a UNLV public policy professor who has counseled Lee’s administration since his 2013 campaign.

Lang helped Lee and Juden sketch a 60-page plan to save North Las Vegas, moored on securing business to induce more infrastructure development at Apex. The concept of Apex as savior shattered no molds; similar goals floated in the city’s ether for the prior 20 years, from pre-boom days of the ’90s to insolvency nights just before Lee handily won the mayor’s office from Shari Buck.

As Mike Tyson famously said, “Everybody has a plan until they get punched in the mouth.” Along with a recalcitrant staff and tension with labor unions over protracted settlement negotiations, the new mayor contended with a $152 million long-term structural deficit and a $17 million deficit for the next fiscal year. Just a few months into Lee's term, city leaders discovered a $7 million budget hole in the supposedly balanced budget that passed weeks before he took office.

“I felt naïve when I finally got here,” Lee said. “I had a lot of friends say to me, ‘John, you’ve got a great reputation; why would you ruin it? ... This is how you’ll be remembered after 14 years in the Legislature.’ If it was your church or your Boy Scout troop or something that was dear to you, you couldn’t let it fail without at least trying. My little heart was 100 percent into this.”

A five-minute drive connects the mayor’s ninth-floor office to the low-slung houses of Dogwood Avenue, where Lee’s family moved when he was 6 years old. An Air Force transfer sent his father from Middlesex, England, to the desert, where Lee graduated from Rancho High School, started plumbing and tile businesses and raised seven children with his wife, Marilyn.

Lee’s voice turned wistful as he pointed to the “Mayberry” block of his 1960s youth, though it exists only in his memory. A rope ladder ascending to a treehouse in front of a faded white house whispers a quaint reminder, but the broken red convertible Geo Metro beached in its grassless yard fits the vision of “Northtown” derided in more affluent areas of the valley.

A three-bedroom house sold this year for $60,000 on the block Lee’s family shared with doctors and Nevada Test Site scientists two generations ago. “We went from being the Mayberry of the valley to gangs, drugs, ‘Nasty Boys,’” Lee said. “And it just made us look mean, tough. People were scared. We all live here, we live together, but the reputation just was a bad one.

“And then we went from the fastest-growing city in the nation (in 2003) to the worst ZIP codes in the country. So we’ve had this reputation that’s never been stable.”

Stability for Southern Nevada’s municipalities stands at the mercy of tourism’s fluctuations and Carson City’s machinations, but under Lee, North Las Vegas leadership set out to establish more local control. They created parallel tracks for attracting major business and revamping the permitting process. They targeted logistics, light manufacturing, health and defense, growth areas flagged by the Governor’s Office of Economic Development (GOED). Juden and Liu streamlined regulations to become more desirable to companies.

“Municipal governments can no longer wait on distant capitals for their salvation,” Juden said, echoing an insight Lang lent the campaign. “You have to do it yourself. And that really was a big shift in thinking as we constructed this plan. You can’t rely on D.C.; it was gridlocked. We just so happen to also have a distant state capital. That gave us more of a focused approach.”

The focus sharpened: Create in 10 to 15 years a North Las Vegas in which residents can live, work, learn and play without having to leave the city, by inducing economic growth capable of weathering the next recession.

“The objective here is to never be that vulnerable again,” Lang said.

Even the best sales pitch fizzles without something to sell. Still recognized locally and beyond as the recession’s poster child, North Las Vegas couldn’t entice businesses to choose the city while questions lingered about its ability to remain one.

“When I went out and spoke to people about what I’d uncovered here and how valuable this asset was to the whole community, people looked at me like, ‘Ennh, it’s North Las Vegas,’ ” said Lee, who saw its vast supply of open land for residential and commercial development and set out to take advantage.

Today, his administration is planning tours for real estate agents across the valley, in an effort to end misconceptions that might keep them from presenting the city to prospective buyers. “I can only change the reputation to the people that sell the community,” Lee said. “You’ll just have to watch it happen. Those big institutional builders and developers will help me change the reputation of North Las Vegas to, ‘that’s a town that’s got a lot of things happening.’ ”

• • •

Realtor Jane Armstrong encounters the bad reputation both in her job and as an 11-year resident of North Las Vegas.

“It infuriates me, the things I hear said,” Armstrong said. “I’ll be sitting in a room and they just completely diss us. They just think that we’re crime-ridden, which we’re not, that our schools aren’t good, which they are.”

Armstrong lived in Henderson for eight years before moving to Aliante in the 2005 heyday of North Las Vegas. The median price for a new home in Aliante was more than $320,000, up from just $137,000 five years prior. City leaders planned for the gleaming City Hall that became the embodiment of the city’s overheated growth.

Soon after her move, Armstrong noticed stretches of rundown houses when showing homes in newer communities.

Faraday Future Sparks Interest in Apex

A sign advertises industrial land near Interstate 15 and Highway 93, north of Las Vegas Wednesday, Feb. 17, 2016. Electric car start-up Faraday Future plans to build a $1 billion auto plant in the Apex Industrial Park. Launch slideshow »

Focus areas in North Las Vegas: Apex Industrial Park

The crown jewel in the city’s economic revitalization plans, Apex is home to Faraday Future and Hyperloop One, as well as medical marijuana facilities. Dormant for most of the past two decades, Apex is undergoing major infrastructure upgrades, notably the extension of water to the area northeast of the main part of the city. Roughly 8,000 acres remain available for development. Faraday’s 3-million-square-foot facility anchors current work.

Focus areas in North Las Vegas: Medical Research Hub

While North Las Vegas will not be home to the new UNLV School of Medicine, city leadership hopes to develop two large parcels of land designated for job creation. Of particular note is the 150-acre area adjacent to the VA Hospital, envisioned as a location for medical services complementary to the hospital. Another 495 acres north of the 215 Beltway could be used for manufacturing and research.

Focus areas in North Las Vegas: Park Highlands West / Villages at Tule Springs

A decade ago, Aliante appeared to be the master-planned community North Las Vegas could tout to rival Summerlin in Las Vegas and Anthem in Henderson. The multiple owners involved in this long-stalled project appear ready to move forward with as many as 10,000 new homes ranging from starters to mansions. Parks, schools and commercial centers are planned as well. Model homes at the Villages development could be ready by early 2017.

Focus areas in North Las Vegas: North Beltway Industrial Park

Meadow Gold and Sysco already operate in this 1,100-acre area at the intersection of Interstate 15 and the 215 Beltway. Infrastructure needs have slowed expansion, but the city is bringing a $24 million sewer system and making almost $9 million in road improvements to alleviate traffic-flow issues. About 90 percent of the park is available.

Focus areas in North Las Vegas: Lake Mead Village West / downtown gateway

Unlike Las Vegas and Henderson, North Las Vegas does not have a traditional downtown corridor. City officials want to redevelop areas blighted by crime and economic struggles. The targeted land includes approximately 160 acres bound by Interstate 15, Las Vegas Boulevard, East Tonopah Avenue and East Judson Avenue. Potential features include a cultural center, library, monument, parks, shops, restaurants, transit hub and new housing options.

“I didn’t know what I was seeing, but I knew something that was not right was going on,” Armstrong said.

She said she voiced her concerns to then-Mayor Mike Montandon and felt he brushed them aside. By 2009, the sinking real estate market prompted her to retrain herself in short sales, as lenders filed more than 1,000 default notices a month on North Las Vegas homes. “It was heartbreaking,” Armstrong said. “They would put an American family on the curb, lower the price and sell it to a foreign investor or a hedge fund.”

The pain Armstrong felt outside the halls of government paralleled that of a City Hall insider, an accomplished woman from China with a Ph.D. in civil engineering. Then a deputy director in the public works department, Liu faced the responsibility of laying off dozens of North Las Vegas staffers as the recession squeezed the city. Liu recalled waking up at 2 a.m. on multiple occasions, wrapped in thought on how to cut a mandated 10 percent from her budget. Her department shrank from 287 to 66 employees, and Liu considered leaving her job after four years with North Las Vegas.

“Not because of the challenges, but more because of the emotional impact,” Liu said. “That was a highly traumatic experience. I personally had to hand those pink slips to each of those individuals. They all have a personal story.”

• • •

Tightness in his neck and allergy symptoms prompted Lee to see a doctor in 2007. About to seek re-election to a second term in the state Senate after six years in the Assembly and a failed run for state controller, Lee was diagnosed with cancer.

He underwent an intensive 100-day chemotherapy and radiation treatment, and nearly died in surgery to remove some of the growth. According to the American Cancer Society, only 35 percent of people with his type of cancer survive five years after diagnosis. Lee is nine years past that day.

Juden met him while consulting on higher-education policy with state legislators after moving to North Las Vegas in 2005, following stints on Capitol Hill and in the George W. Bush White House as state liaison for the Office of Faith-Based and Community Initiatives. He noticed an immediate change in Lee’s attitude following his health scare.

“He was always very intense and, as he would like to say, purpose-driven, but he had a different appreciation for time after that,” Juden said. “He started to see that, listen, let’s do it now because you don’t know what’s going to be tomorrow.”

The mental road map Lee followed to beat cancer informed his approach to fixing North Las Vegas.

“If you look at all the things that aren’t right first, it makes it harder to believe,” Lee said. “But if you look at all the things that are right first and then you see some of the bad that would have you doubt it, you might be more apt to think that the doubting side is probably correct. So dwell on the good.”

Shavon McLean sees plenty that is right in North Las Vegas. She moved across town to what was the northern edge of the valley in 1991 as an eighth-grader when her mother paid $159,000 for a brand-new house at 1640 Desert Ridge Ave., complete with a gazebo, spa and unobstructed view of the mountains. Scoundrels Pub was a short walk down Camino Al Norte. Dirt and the beginnings of the Eldorado subdivision surrounded the home. McLean recalled, “There was nothing but untouched desert.”

They eventually moved to North Carolina. As the recession hit in 2008, mother and daughter went online to real estate site Zillow and checked on their old house. It was worth $30,000. “We wanted to vomit,” McLean said.

Now a leisure sales manager at Downtown Grand, McLean brought her three kids back to Southern Nevada in 2013 and bought a house in North Las Vegas last year — not for nostalgia, but because but because the area where she grew up had blossomed into the kind of all-inclusive living space envisioned by Lee. “There’s something about the north side," McLean said. "Everything is convenient, my children go to school there, there’s a Wal-Mart. I prefer to be in an area where I don’t have to come inland, more rural, easy breezy.”

The city's far-flung edges maintain an open and removed feel like McLean remembers from North Carolina. Farther south, the familiar scent of RC Farms soon won’t blow onto the soccer field at Mojave High School, as the pig farm is moving out. And while the downtown core still has a gritty edge, it's marked for redevelopment.

“To see what (North Las Vegas) is today is completely jaw-dropping,” McLean said. “It just feels kind of like I’m in a different location.”

Not long ago, such a turnaround seemed improbable. The city declared fiscal emergency in 2012 and trashed its bond rating, sparking two years of speculation and battles about whether it might enter state receivership. State law allows the Department of Taxation to take over local government finances in cases of “severe financial emergency,” forcing cuts or tax increases. North Las Vegas avoided that in 2014 when Gov. Brian Sandoval intervened in a contentious settlement negotiation between the city and its labor unions.

Before committing to run for mayor, Lee asked Juden to take his concepts and draft a plan to save the city.

“He wasn’t going to run if it wasn’t going to be saveable,” said Juden, who delivered Lee a 30-page plan. Ever the dreamer, Lee handed Juden back a document double the size.

Lang helped whittle down their more outlandish thoughts (Juden said they scrapped “some plays” involving bankruptcy and defaulting on bond payments, for example) and introduced the scaffolding of self-reliance. John J. Lee for Mayor began in earnest.

His decisive ouster of Buck, a fellow child of North Las Vegas, proved to be Lee’s peak for quite some time.

• • •

Nevada’s most famous politician is a conservative Democrat of Mormon faith with deep roots in his community and little filter from brain to mouth, and Lee definitely has a streak of Harry Reid in him.

“I remember coming to this office and thinking, I’ve got a problem,” Lee said. “No one has an idea of the finances. No one can grapple with the challenge. It’s just too big for the city manager or the directors to handle. The city council didn’t know what to do. I just kind of put my hand in the air and said, I could do something.

“I realized I needed to get a team around me that could work like I do and think like I do and put the passion into it, not do it just for the money.”

Lee’s team included Juden and Liu, who was elevated to interim city manager in 2013 before being appointed city manager a year later. Darren Adair left data company Switch to run the city’s finances. New faces swept in atop Lee’s force of personality with a mandate from the mayor to shun traditional methods and an absence of fear of making mistakes.

“It was tremendously liberating to be able to come into a situation knowing you couldn’t make it any worse,” Juden said. “It was actually one of the things that attracted me to coming here, being able to take a plan and implement it, knowing that for all intents and purposes there was a blank slate in North Las Vegas.”

Despite efforts to gather employee input and assurances of minimized risk of future layoffs, Lee’s team created waves at City Hall. Headlines followed about ethics complaints and special treatment over child-porn allegations against the mayor — which Juden said were threats made good by disgruntled employees and which ultimately were dismissed. He said he was prepared for resistance to needed changes to a culture of “entitlement.”

“We came in and we drained the swamp,” Juden said. “And when you drain the swamp, you’re going to have to wrestle the crocodiles. ... We have the scars to prove we wrestled the crocodiles.”

Just six months after Lee took office, Montandon and Buck penned a scathing open letter entitled “Learn to lead, Mayor Lee,” featuring eight bullet points on his perceived shortcomings. Some employees left with separation agreements including non-disparage clauses. Others found their jobs cut or repurposed as Liu executed a redesign of the city’s internal structure.

“I think there were a lot of people that really didn’t realize the severity of North Las Vegas and how close it was to just teetering over,” Juden said. “And if they didn’t understand that, then they would have no appreciation for the force with which we came in to change things.”

Yet the breaks North Las Vegas desperately needed proved closer than imagined, as the state economy inched toward recovery that materialized around the same time Lee took office. Painful financial decisions made under Buck coupled with Lee’s reforms positioned the city to capitalize on opportunity as conditions turned.

“They’re coming out of a deeper hole than maybe the rest of the valley was in,” said Stephen Miller, a UNLV economics professor and director of the school’s Center for Business and Economic Research. “We’ve recovered almost entirely from the recession. What that overlooks is that we’ve had eight years of basically no additions.”

It took a deal designed to boost Northern Nevada for North Las Vegas to find its crucial addition.

• • •

In late October, GOED director Steve Hill visited Apex and left impressed with the progress made by the wonder twins of North Las Vegas’ future economic growth. But infrastructure for Faraday’s plant and Hyperloop’s test track is still largely in planning and design stages, and Automotive News just reported that Faraday was late on a $21 million payment to a contractor working on the $1 billion, 3 million-square-foot manufacturing plant. A joint statement from the contractor, AECOM, and Faraday later emphasized their continued commitment to “building our factory of the future in North Las Vegas.”

Hyperloop One Sled Test

A Hyperloop One sled test has a successful run and is slowed by sand in the end at their facility in North Las Vegas on Wednesday, May 11, 2016. Launch slideshow »

Hill praised the city’s aggressiveness in chasing such a significant business opportunity, noting that the circumstances probably couldn’t be duplicated. “It’s not quite a needle in a haystack, but it’s close.”

Instrumental in acquiring Tesla’s Reno battery plant and pushing through the Raiders Las Vegas stadium deal, Hill helped craft the package of $215 million in tax breaks and $120 million in road, rail and water improvements approved by the Nevada Legislature in December that enticed Faraday to choose North Las Vegas.

Tesla won approval for its $1.3 billion tax-incentive package on Sept. 11, 2014 — “the biggest day North Las Vegas has experienced in its history,” Lee said.

Working in Carson City a day earlier, Juden opened a thin white binder and underlined key passages of the Tesla deal in blue ink. He called Lee late that night when he realized North Las Vegas could use the bill’s terms to craft a scaled-down version to finally jump-start Apex. “There would be no Faraday if it weren’t for Tesla," Juden said.

Tax-abated Faraday offers little directly to the city’s coffers for the next 15 years, though the company must meet goals in order to qualify for the best incentives in its deal. Faraday needs suppliers, though. Each of its cars requires more than 2,000 parts. Juden views convincing the companies that make those parts to choose Apex as the crux of securing the city’s future stability.

“As much as I love Faraday," Juden said, "I really love their suppliers because they’re taxpayers.”

Taxpayers who could fill that enormous budget hole in 2021, or fund the transformation of the decaying downtown gateway through the Lake Mead Village West project seeking to redevelop approximately 160 acres bound by Interstate 15, Las Vegas Boulevard, East Tonopah Avenue and East Judson Avenue. Taxpayers, employees, residents — hopefully the keys to forever avoiding a return to the brink.

A collapse on that scale appears unlikely for North Las Vegas, as its aggressive approach to economic diversification dovetails with that of the state creating a more stable tax base. Efficiencies like cross-training employees to do jobs once spread among multiple people can help keep city staffing at a level that won't dissolve like it did in the growth spike that set the city up to fall so hard.

“My goal is to see that the reputation of North Las Vegas is one of manufacturing, industry, job creation, profitability, more a community built on a stronger economy than just gaming and tourism,” Lee said. “And I’ll make it happen.”

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