The mixed-use container complex at Fremont and Seventh street is being built by the Downtown Project, a $350 million revitalization downtown Las Vegas revitalization effort bankrolled by Zappos CEO Tony Hsieh.
The problem plagued Neonopolis has struggled since opening in 2002. The $100 million retail and entertainment center was subsidized by $32 million of taxpayer money.
The $146 million, 31,000-square-foot City Hall was built as a replacement for the aging city government building, that is now the headquarters for Zappos.
A recently refurbished hotel-casino could soon inject new vitality and excitement into downtown Las Vegas, drawing more visitors and redevelopment dollars. The 634-room Downtown Grand made its official ribbon-cutting debut Tuesday, with political speeches and marching band beats from Valley High School.
L.A.-based CIM Group’s $100 million makeover of the former Lady Luck hotel casino at 206 N. 3rd Street marks a new chapter for downtown, which has struggled to reinvent itself for decades with hit and miss projects.
“Downtown Grand is poised to emerge as downtown Las Vegas’ new center of urban cool, while still retaining the charm, intrigue and appeal of the area’s rich history,” said Seth Schorr, CEO of Downtown Grand. “We anticipate a strong response.”
Downtown Grand consists of a 17-story and 25-story hotel tower connected by an elevated walkway with a rooftop pool and entertainment area. The resort, on 6.27 acres, has a 25,000-square-foot casino with 600 slot machines and 300 table games, plus 17 bars and restaurants. The project additionally erases a nagging eyesore while adding 800 jobs. (The 49-year-old Lady Luck had sat dormant since February 2006).
“For the past several years I have seen a rotting corpse,” said former Las Vegas Mayor Oscar Goodman. “The Lady Luck structure has been a blight.”
Schorr and partner Jeffrey Fine plan to erase more downtown blight with a three-building, 80,000-square-foot retail center at the corner of Stewart Avenue and Casino Center Boulevard, adjacent to the Mob Museum. Plans call for shops and restaurants, convention space and a parking garage. There will also be a picnic-themed rooftop pool area with cabanas and grassy areas. However, the unnamed project is still two years away from breaking ground.
“For decades, the Strip resort has been designed to keep everybody in the building,” Schorr said. “We want to encourage people to explore the area by creating a holistically better experience.”
Indeed, it seems more people are checking-out downtown these days. The area’s transformation from tired relic to hipster haven is finally gathering steam. Downtown Grand, for example, comes on the heels of last year’s opening of the 34-story, 638-room D Las Vegas, which is the reincarnation of the fading Fitzgeralds hotel-casino at 301 Fremont St. The aging Golden Gate Casino similarly received a $12 million facelift in 2012, with a 7,000-square-foot casino expansion, new hotel lobby, and a five-story hotel tower addition. And the Golden Nugget upgraded 74 rooms inside its 25-story Rush Tower in December.
Zappos, however, has arguably had a greater impact upon downtown than anyone else in recent history.
The Internet giant’s new headquarters debuted on Sept. 9 inside the former City Hall at 400 E. Stewart Ave. The 11-story, 276,500-square-foot building underwent a $63 million makeover when the city vacated the 41-year-old facility for swanky new space-age digs around the corner. The $146 million, 310,000-square-foot replacement City Hall serves as home for 600 municipal employees. More importantly, the glass monolith replaces the sleazy Queen of Hearts Hotel at 19 E. Lewis Ave.
Zappos has made downtown chic again, with infectious optimism and quirky irreverent fun. The company’s move to downtown means 1,300 employees for a $336.6 million economic impact. The new headquarters alone will generate $126.3 million in wages and benefits, plus nearly $400,000 in annual property taxes, says John Restrepo, principal of RCG Economics, which performed an impact study for the city.
“We want employees to be interacting with each other, building those personal relationships and relationships outside of work as well,” said Zappos CEO Tony Hsieh in a statement. “Our downtown location will be a great urban environment that will help grow the cultures of both Zappos and Las Vegas.”
Hsieh is growing that culture, and investing in real estate, through a $350 million revitalization initiative called “Downtown Project,” which is aimed at creating a hip-cool live-work-play wonderland. The program has earmarked $200 million for real estate acquisitions, plus $50 million for small businesses and another $50 million for education. The remainder goes toward planned tech startups.
Downtown Project is currently building a mixed-use shipping container complex at Fremont and Seventh streets that combines 30 to 40 shops, restaurants and taverns. There will be a children’s courtyard with a climbing wall, sand play area and water features, plus an “immersion dome” similar to a planetarium.
A 35-foot fire-breathing praying mantis once used for the Burning Man countercultural festival will greet visitors. The three-story-tall development, aimed at drawing more people to a formerly neglected city block, should finish by year’s end about the same time “Slotzilla” opens.
The $11 million zip line will run under the Fremont Street canopy between Third Street and Casino Center Boulevard. A faux 12-story slot machine will serve as a launch platform for two tiers of four zip lines with top speeds of 35 miles per hour. It joins other recent downtown cultural additions such as last month’s inaugural “Live is Beautiful” festival and the three-story, 54,000-square-foot Discovery Children’s Museum.
The $55 million museum inside The Smith Center debuted in March, with nine exhibition areas including Water World, Toddler Town, and Fantasy Festival, among others. There is also an eight-level atrium tower called “The Summit” that allows children to climb through the roof to an observation point overlooking the city.
Downtown’s nongaming redevelopment triumphs and disasters all share something in common: city involvement.
Problem plagued Neonopolis was built with $32 million of taxpayer money. The $100 million, 250,000- square-foot entertainment complex at 450 Fremont St. has struggled to attract tenants and visitors since opening in 2002. The anchor tenant, Mann Theatres, for instance, filed for bankruptcy protection prior to completion, delaying the project’s debut by two years. Neonopolis, which sold for pennies on the dollar in 2006, recently saw Krave nightclub and Drink & Drag close.
Meanwhile, the city-backed Juhl mid-rise development at 255 E. Bonneville Ave. finished 14 months late in 2009 amid construction delays. The complex consists of six interlocking buildings with 341 residences. San Diego-based CityMark Development won a request-for-proposal to develop the 2.38-acre city-owned site. The firm paid $5.2 million for the property in 2005. Under a development agreement, however, the company only coughed-up $2 million in cash; the city financed the rest. CityMark wasn’t required to repay the loan until 220 units were sold, which never occurred. Instead, the property fell into default. Starwood Capital Group, known locally as ST Residential, acquired ownership through the U.S. Federal Deposit Insurance Corp.’s asset auction of lender Corus Bank. As a result, the city only recouped $2 million of the $3.2 million owed.
The city additionally spearheaded a $50 million conversion of the historic U.S. Post Office and Courthouse into the Mob Museum, which has struggled financially since opening last February, say numerous sources. The nonprofit should file their tax returns later this month. The city approved a pre-operating and development agreement and an accompanying 30-year lease with 300 Stewart Avenue Corp., which manages the three-level, 41,000-square-foot museum at 300 Stewart Ave.
But a pair of public-private partnerships with the Molasky Group of Companies proved successful. The four-story 92,277-square-foot IRS Building opened at 110 City Parkway in 2005. The $15 million development ratchets the taxable value of the 5-acre city-owned parcel. The hit project prompted a sequel across the street, with the $96 million Molasky Corporate Center II at 100 N. City Parkway. The 17-story 852,000-square-foot tower, anchored by Southern Nevada Water Authority, opened in 2007. The two buildings bring an estimated 1,100 employees and 200 visitors daily to downtown.
“Public private partnerships are growing due to a challenging lending climate,” Las Vegas-based economic analyst John Restrepo said. “It’s a very effective way to get projects started. These are the wave of the future.”
The city gets a new building with little initial capital outlay, while minimizing the chance of construction cost overruns, delays and lawsuits since a private partner assumes those risks. It’s essentially paying for a project by layaway; the arrangements often come with a long-term lease and balloon payment.
Such arrangements are in place with Forest City Enterprises and developer Mark Fine for the new City Hall and Metro Police headquarters, respectively. It allows a cash-strapped municipality to get custom-built new facilities without exhausting revenues or lending capacity.
“A private party can sometimes do it at a lower cost,” said Las Vegas chief urban redevelopment officer Scott Adams. “We can use exactly what we need. As a result, the taxpayer gets an equal benefit at lower cost, which is what we are trying to achieve.” CL