Las Vegas Sun

August 19, 2022

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Brookings Mountain West:

Southern Nevada’s economy ‘playing catch-up,’ report says

Henderson Hospital at Union Village

Courtesy

Henderson Hospital anchors the 155-acre Union Village, an “integrated health care village” in Henderson.

Miles from the bright lights, jangling slot machines and crush of tourists on the Las Vegas Strip, a project is under construction that some economists believe represents the future of the region.

It has nothing to do with casinos or nightclubs, big-time shows, shopping or restaurants — the elements that for decades have been the mainstay of a tourist-based economy.

Haas Automation, which is building a massive industrial tool manufacturing plant in Henderson, is emblematic of a long-discussed shift toward economic diversity.

While gaming and tourism have come back strongly since tanking early in the coronavirus pandemic, Nevada — especially the Las Vegas area — remains “highly vulnerable to macroeconomic shocks,” according to a just-released report by Brookings Mountain West and the Lincy Institute, a public policy think tank, at UNLV.

The report notes that the Las Vegas economy crashed during the pandemic and the 2007-2009 recession “due to the region’s over-reliance on tourism, gaming and entertainment.”

The 121-page report is a call to action and a blueprint for how public policy can fuel economic development in Nevada for the next five years and beyond.

“I hope people take away the idea that we’re still very vulnerable,” said David Damore, interim executive director of the Lincy Institute and Brookings Mountain West.

“We’re always just playing catch-up,” said Damore, who is also a UNLV political science professor and one of the report’s authors.

Henderson Mayor Debra March said city leaders in recent years had developed a strategy that focused on the expansion of industries like health care, technology, manufacturing and finance.

“We recognized that we could not be dependent on one or two industries,” March said. “Our vision is to build a brighter and more diverse economy.”

Haas Automation is just one example of that strategy.

The California-based company is building its 2.5 million-square-foot plant just south of the Henderson Executive Airport on the city’s booming west side.

Within five years of opening — first-phase construction is expected to be finished this year — the company expects to employ nearly 1,400 people in Henderson.

Haas is set to receive $10.5 million in tax abatements from the state, as long as it creates at least 500 jobs with an average hourly wage of about $24.

Shani Coleman, director of economic development for Clark County, said she generally agreed with the report’s finding that the region needed to step up its diversification efforts.

It largely coincides with the county’s strategic development plan released last year, but “there is still a lot of work to do,” Coleman said.

The county is looking at ways to address “the expansion of manufacturing exports by identifying land that can be prepared and made available for buildout of new manufacturing facilities,” she said.

Kevin Orrock, a former chairman of the Vegas Chamber, said he was encouraged by the progress being made in the way of economic diversification in Southern Nevada.

“We’re all behind this,” said Orrock, who oversees the Summerlin master-planned community for the Howard Hughes Corporation. “I’m probably more optimistic than I’ve ever been. Southern Nevada affords a lot of opportunities for people.”

Damore said opportunities existed for Southern Nevada to expand significantly in the areas of health care, transportation and manufacturing.

Logistics-type jobs — think Amazon and its numerous warehouse facilities in the Las Vegas Valley — help but don’t move the needle much, Damore said. The region needs to go after more higher-paying jobs, he said.

“We’re not getting engineering jobs; we’re getting more warehousing jobs. We’re getting logistics, not tech. That’s a long-term concern,” Damore said.

A “fragmented tech environment” is finally coming together, but it’s 10 to 20 years too late, he said.

The report also notes a lack of investment capital into startups in Nevada.

Click to enlarge photo

Terbine CEO David Knight poses for a photo on Friday, June 21, 2019.

David Knight, founder and CEO of the local tech firm Terbine, said certain tech industry areas are “ripe” for growth in Las Vegas. They include autonomous land and air vehicles, e-sports, biotech and renewable energy, he said.

Legislation passed last year in Nevada to entice venture capital investments was a positive step, he said.

“Venture capitalists are vital to the creation and expansion of tech firms,” Knight said. “And tech firms are not the same as small businesses. Put plainly, tech startups all want to become large players, which is different than the relatively constrained growth opportunities presented by the majority of small businesses.”

State and local leaders, Damore said, have a unique opportunity to change Nevada’s economic landscape.

Some of those opportunities revolve around obtaining federal funds to help communities in the wake of the pandemic-induced economic downturn.

Last year, the Las Vegas Global Economic Alliance, a public-private economic development engine for Southern Nevada, and a collective of regional partners announced they were a finalist for up to $77 million in grants through the American Rescue Plan, the federal government’s $1.9 trillion COVID-19 stimulus package.

The money would largely be used to develop Southern Nevada’s manufacturing sector, said Tina Quigley, CEO of the alliance.

Officials from North Las Vegas, Clark County, Henderson, Las Vegas, Mesquite, the College of Southern Nevada, and UNLV worked together on the grant proposal.

“The federal government, when they have competitive grants, prefer to have regions come together as opposed to multiple entities competing for the same pot of money,” Quigley said. “The more we come together as a region to collaborate on who is applying for what, the more we can support each other.”

In the report, the authors note the power struggle between the northern part of the state and the more populous Southern Nevada region. The regions often end up fighting over resources, and Las Vegas sometimes gets shortchanged.

By 2050, Nevada is projected to have about 5 million residents, about 3.8 million of them in the Las Vegas region, according to the research firm Woods & Poole Economics.

“We easily get divided along partisan lines and geographic lines,” said Damore, who noted the state’s seat of government is in Carson City. “We’re just such a mismatch with this distant state government trying to essentially dictate what happens down here.”

In the report, the authors refer to the “Three Nevadas” —the Las Vegas metro area, the Reno/Carson City metro area and the rest of the state.

They also refer to the state’s “historical underinvestment in Southern Nevada’s infrastructure and services,” which leaves the region “without key assets needed for economic diversification.”

That’s because much of the way the state was set up to govern was instituted when Nevada was mining-oriented and sparsely populated, the report says.

Damore also questions why Nevada Legislature still only convenes once every two years, one of only a handful of U.S. state legislatures to meet biennially.

For a fast-growing state, it’s not optimal to have to wait so long for measures to pass through the lawmaking machinery, he said.

Regarding public education, the report notes that Nevada’s schools are governed at the county level, which leads to limited local control.

The authors say school boards should be reformed and sized to “incorporate localities into K-12 governance.”

Damore said he was also worried about how Nevada would deal with escalating climate change issues. And he’s concerned the state is aging faster than researchers had expected, which will likely put additional strain on what is already a limited health care network.

The report calls for Southern Nevada to better organize to compete for resources at the state and federal levels.

“Our neighbors are far ahead of us,” Damore said. “In Southern Nevada, we’ve been so poor at integrating economic development and workforce. We’re so far behind. The governance barriers that we deal with just don’t seem to exist in the Arizonas and Utahs. They’re much better at the nuts and bolts of economic development.”

Despite the challenges outlined in the report, there’s also a distinctive air of optimism.

“We can catch up,” Damore said. “We’re the 28th biggest metro in the country, so we can’t just be that one-horse town anymore.”