Southern Nevada’s economy is booming back from the Great Recession and now is not the time and alter course and cut incentives and other programs contributing to job growth, according to two economic development leaders.
More than 400 business leaders attended the Las Vegas Global Economic Alliance’s 2018 State of Economic Development breakfast at Green Valley ranch on Jan. 23 and heard one of the most optimistic and enthusiastic outlooks on the Southern Nevada economy in years.
LVGEA President and CEO Jonas Peterson told the audience that there are more than 100 projects moving forward in Southern Nevada and described how the top 10 that are either under construction or planned are valued at more than $13 billion.
That includes (ranking from 10 to 1) the Park MGM renovation at $450 million, Palms renovation at $485 million, Extreme Sports Park at $700 million, Project Neon transportation project at $1 billion, Switch investment of $1 billion, Union Village medical center where Henderson Hospital is located at $1.2 billion, Las Vegas Convention Center expansion at $1.4 billion, Wynn Resorts Paradise Park at $1.5 billion, the Las Vegas Raiders/UNLV domed stadium at $1.9 billion, and the Resorts World Las Vegas casino project on the north end of the Strip at $4 billion.
That’s quite a change since development came to a standstill during the recession, but no one is suggesting there’s another overdevelopment trend that contributed to the boom and bust cycle a decade ago.
“Are we healthy this time around,” Peterson asked? “We are. We’re building new homes, building offices and industrial projects and major developments are betting billions on Southern Nevada again.”
Since the LVGEA was founded six years ago, Peterson said it has helped more than 170 companies create more than 19,000 jobs. In 2017, the LVGEA and its regional partners added a record of more than 5,600 jobs that will have $917 million in economic impact in 2018, he said.
With that backdrop, Peterson cited that 2018 is an election year with seats contested in November in the Nevada Legislature and the governor’s race up for grabs with the departure of Gov. Brian Sandoval. He said it was vital for the state to keep its incentives, which include tax abatements, as a strategy to lure and growth businesses and thus add jobs.
“We’re done yet, and we just getting started,” Peterson said. “If we stay the course, we have the ability to unlock a ton of economic growth going forward. How do we do that? It continues a push for the pro-jobs policy. It’s an election year and a lot of decisions are to be made. The system is working, and it’s not the time to change course.”
Candidates for governor have talked about using fewer incentives in their early campaigning thus far.
Some public critics call incentives as a waste of taxpayer money, but Peterson said no money is paid up front that can be lost and employers get tax and other incentives when they create jobs with high wages and make a capital investment. The state is not picking winners and losers and companies from in state and out of state can participate, Peterson said.
“Incentives get a bad rap,” Peterson said. “I want to debunk a few of the myths. It generates new tax revenue that would not be possible. The truth is incentives in Nevada are leveling the playing field and generating a high return for our stakeholders.”
More than 100 companies have received abatements over the last two fiscal years and one estimate said tax credit programs would cost the cast $79.6 million in the next two fiscal years.
Peterson said there’s nothing wrong with reviewing incentive programs to see what’s working, but the state needs to “be more innovative to stay ahead of other states going forward.” He said Nevada needs to be a leader in combining workforce and economic development by creating apprenticeships, internships and job training.
Peterson also cited the need for the region to continue spending to upgrade its transportation system. The area’s population will increase from 2.1 million to 2.7 million by 2025 and tourism will go from 43 million visitors a year to 53 million in 2025, Peterson said.
“There’s a need to plan for transportation to stay ahead of the curve if we’re going to unlock the value of those new jobs,” Peterson said.
Peterson cited how Nevada has moved from 50th in the nation in producing jobs in the aftermath of the recession to No. 1 today. Education, health care and professional services are leading the way in job creation, and the state is 56,000 jobs higher from the peak prior to the recession, he said.
A state needs to be driven by job creation because it’s a “powerful chain reaction” that generates spending, more job creation and taxes paid, Peterson said. When employment rises, property values rise, crime goes down and spending increases for education and the arts.
“I believe job creation is the single most powerful strategy we have to build vibrant communities together,” Peterson said.
A manufacturing firm that has 100 employees who average $60,000 per employee, which totals $6 million in pay. There are an additional 81 jobs that result from that and $38 million in value created after incentives, he said.
“Even if this manufacturing firm was able to qualify for every incentive available, they would still generate this powerful impact for our state,” Peterson said. “Should we be willing to do more to go after high-value jobs and should we be sending more teams to recruit these companies. Should we take a look at our incentives that are doing well now and delivering a high return on investment and see if we can do more to deliver this value back to taxpayers?”
Steve Hill, who recently left his position as executive director of the Nevada Governor’s Office of Economic Development, said a key to remain successful is to respond to the needs to businesses, which has helped overcome the devastation of the recession. He said the next governor and Legislature need to stay on the same path to continue with job creation, he said.
“We are in a great place right now and remarkably different than the first time I was on this stage,” Hill said. “We were hopeful and we were cheerleaders and we all thought things would get better, but a lot of things have happened over the last four and five years that are pretty remarkable. Things that really weren’t in our lexicon six or seven years ago are in it now.”
That lexicon includes unmanned aerial vehicles, autonomous vehicles and Hyperloop high-speed transit, Hill said.
“Those advanced transportation opportunities are the real advantage for Southern Nevada. We are on the cutting edge of one of the five leading industries in the world. And, if we could just punch above our weight a little bit in that particular area it could make a real difference in our economy. It could provide another pillar that serves a foundation of the economy moving forward and is a terrific opportunity. You will see additional progress in those areas over the next years and months.”
Water technology, genomics, personalized medicine are growing and renewable energy will also continue to be an important part of the economy, Hill said. Gaming and hospitality are the foundation, of course, but he said sports and sports medicine will be vital to the local economy as well.
“We are turning ourselves into one of the sports capitals of the world,” Hill said. “We have been the home for boxing worldwide for decades. We have NASCAR. We have the rodeo. We have soccer coming now. We have the Golden Knights. They have made a remarkable debut on the scene and have best opening franchise expansion of any sport. They are going to set records of all talks. And they are the talk of the sports world nationwide. It’s a thrill to see the community come together. They have done a fantastic job and have a model for those coming after. We’re going to have NFL (when the Oakland Raiders relocate in 2020) here, which is a remarkable opportunity from a branding standpoint. That the biggest franchise in the sports world is willing to be here just opens the gate for every other opportunity out there.”
