Nevada focused on economic diversification

Nevada is making strides when it comes to economic diversification, but there is plenty more to do, according to Steve Hill, executive director of the Governor’s Office of Economic Development.

The Great Recession helped focus the efforts of Gov. Brian Sandoval and the Legislature to redesign economic development in the state and put resources behind the effort it hadn’t done in the past, Hill said.

“We hadn’t needed it until the recession hit,” Hill said. “The gaming industry here and mining industry in Northeastern Nevada had driven a lot of the state, and there hadn’t been a recognition that economic development was something the state should focus on. That changed, obviously, with the recession. A lot of good work has been done by a lot of people. We’ve made progress, but if you’re looking at a fully diversified economy, we still have work to do.”

Q: How long will it take you to do?

A: Economic development is not like a project. It’s an ongoing effort. Depending on how we define what a desired level of diversification is, we certainly don’t want to diversify the economy at the expense of the gaming and hospitality industry. It will take a quite a while to have other industries that are equal or, just in a contributory way, rival the gaming industry’s influence in Nevada.

Q: What sectors are you targeting in your plan?

A: We had seven sectors: Aerospace and defense, renewable energy, manufacturing, logistics, gaming and hospitality, mining and health care.

Q: Where have you made the most advances?

A: The highest-profile signature accomplishments don’t fit necessarily in a sector. We had opportunities that came along that we didn’t necessarily anticipate in 2012. The Tesla (battery) factory in Northern Nevada. We talked about it being transformational three years ago. It’s actually transformed that region. That continues to grow. We continue to have hope for the Faraday (Future electric car plant at the Apex Industrial Park in North Las Vegas). That has gotten off to a slower start than they would like. Those are pretty significant events in our economic development activities.

Q: What else?

A: The state was designated as one of the test sites by the FAA (Federal Aviation Administration) for unmanned aerial vehicles. That is really getting ready to expand. We know we will have a couple of announcements in the next few months that will broaden that work in the state. We’re getting closer to where UAVs have significant commercial application — package deliveries and a broad number of applications in the state. We have done quite a bit in the workforce. We created the WINN fund, which is Workforce Innovations For the New Nevada. We have started programs in that area to train Nevadans for these jobs in these cutting-edge areas. We helped to keep Switch in Nevada and help them to grow. We’re seeing more interest in more locations of data centers here in the state, which not only brings the data center but technology infrastructure that comes along with it. We had Apple as one of our early successes. Rackspace has committed to come to Nevada (with a data center in Reno). You saw recently that Google purchased land in Northern Nevada, so there are a number of opportunities for the development of that property.

Q: What’s happening with drones?

A:There are jobs in the actual use of the drones, and we’re seeing that grow. We’re looking at putting together a training program so that those who are operating drownes for commercial uses have a certificate, know how to do it right and understand what the rules are. Then there is the development of the industry that builds the drones or (develops) the software and sensors and things like that. As this industry starts to gain traction for commercial use, I think you will see that part of the industry grow as well. There needs to be the demand in order for the manufacturing and supply chain to really materialize.

Q: So what is the latest on Faraday Future amid some concerns the project would not go forward?

A: We said all along that we wanted to make sure Nevada had this opportunity, but to do so in a way that minimized any downside risk if it didn’t work. We were fully aware that Faraday is a startup company and had the potential to have difficulties. They have told us recently that they’re going through a fundraising round, and that they plan to start construction on the first phase of their facility sometime in the third quarter. We’re hopeful that it happens. It would be great if it did, but we structured the agreement with Faraday so that there’s no downside for Nevada if it happens not to work. The tax abatement and transferable tax credit for jobs they create are only available to them if they invest $1 billion or more on the site.

Q: Is getting the infrastructure to Apex important to the future development of that industrial park?

A: It is. We introduced a bill to change the way we’re going to put the infrastructure in at Apex. A portion of what we had in mind already would have the landowners making the payments on those bonds. This would broaden that effort to Faraday as well to the extent the tax revenue that Faraday generates is actually in place that would offset their payment. It’s important for Southern Nevada that the infrastructure is put in place at Apex. We don’t have many, if any, large-scale tracts of land that are developable when companies are interested. In Southern Nevada, if they’re looking for a really big parcel, they’re probably going to have look elsewhere right now, and we certainly want to change that.

Q: How would you pay for that?

A: The core method for paying the bonds back would be through a special improvement district where the landowners themselves are responsible for making those payments. There would be an extra amount added to their property tax bill. This happens on a regular basis in housing developments and commercial developments. The landowners would be making those bond payments to the state.

Q: What lessons have you learned from Faraday and Tesla for next time?

A: I think we have done a pretty good job of structuring these agreements. The governor and I talked as we went into the conversation with Faraday, and the parameters that we set are even more important after we have gone through a few of these. We need to understand what we’re trying to do and be willing to say no if it’s not a good deal for Nevadans. Certainly, one of the things we tried to implement all along is the understanding that every deal does not make sense to have in Nevada, and if you get sucked into trying to buy the deal, that’s when you start to make mistakes. The willingness to say no and lose the deal. It’s important to say that.

Q: Anything in the works?

A: Since we have started having success, companies across the country and globe have really taken notice, and we’re dealing with a few of those pretty much all of the time. We’re working on three to four projects right now that would potentially rival those (that we have already landed) and be significant projects if they happen to pan out. But if you ask me six months from now, those three might be gone, and three more might take their place.

Q: How are we competing against Utah?

A: When we go about our work, we don’t think about heads-up competition with other states and regions. Utah has done a great job with their economic development efforts and developing their economy. In some ways, that can be very beneficial for Nevada, but we don’t try and find a way to force someone from another state here. We try to make the best business case we can for each of these individual companies for Nevada, so they have a good picture of what the opportunities are here. At times, it will make more sense for them to be elsewhere. When it does make sense for them to be in Nevada, and we think that’s often the case, we make them aware of why we think that and what those opportunities are for them.

Q: How important is California to our diversification efforts?

A: That will be a part of it. There will be some movement between California and Nevada. One of the things I have said, publicly, several times is that Nevada is very well-positioned to manufacture what California invents and develops. It’s just a much easier environment to manufacture in this state. It’s an area we have significant interest in, and now we have some proven success. That has real potential. That may come from California. That may come from other places.

Q: Where is the workforce going to come from for those jobs?

A: I think they will come from a variety of different sources. It’s the reason we started the WINN program. Over the last couple of years, we have developed a pretty strong relationship with the university system, including the community colleges. We have integrated the Department of Employment, Training and Rehabilitation there to help attract those interested in those jobs to these opportunities for focusing on developing that workforce. We would like to see these opportunities come for Nevadans, but certainly, for others from the West and across the country there are a lot of opportunity in the state that will draw some outside workforce.

Q: What about the state’s educational system?

A: The No. 1 question I get, other than what’s the next great thing that’s coming our way, is what we’re going to do about K-12 education. The governor made a significant investment in a number of new programs in the last legislative session that will take time for those to work. This is a scenario we will have to obviously keep focusing on. We talk about workforce development, but we have to start that in the K-12 system, and the students have to be ready to go through the workforce development programs in a seamless way. We have a lot of talented kids, but we need to broaden that number and help them be ready for what’s going to be a lot of cutting-edge jobs in Nevada. About 25 percent of our K-12 graduates have a higher-education degree. The projection is that you are going to need some type of post-high school training in order to be ready for the jobs that are going to be here in 10 or 20 years. We’re going to need to continue working on that.

Q: You’ve been working with the Latin Chamber of Commerce and their partnership with Mexican companies. What other chambers are you working with?

A: We have worked with the Asian Chamber on similar initiatives in Asia, and a group from our office and the Urban Chamber just got back from a smaller trade mission to Africa. It was an initial discovery session for what we hope is a trade mission next year.

Q: How important is international business to Nevada?

A: From a tourism and hospitality standpoint, the LVCVA (Las Vegas Convention and Visitors Authority) has a goal of reaching 30 percent international visitors to Las Vegas. We’re in the high teens now, and there’s a real opportunity there, and to some extent, it’s an untapped market. International business is certainly important on the mining side. (For) other aspects of what we do in Nevada, we have not done a great job of reaching out in the past, so it has made international business smaller in those other sectors. We see it as a place where there is a lot of opportunity. Companies that export tend to be healthier in a number of ways. They can weather the ups and downs better, and they have a much broader market available. They pay their employees more because they’re more profitable, and so we’re working at that. There’s quite a bit of work to do there, but we’re starting to make progress.

Q: Any sectors that stand out?

A: One of the areas we have seen a real benefit is (being a) founding sponsor of WaterStart, which is trying to build a water technology cluster in Southern Nevada. They’ve had success. They’ve brought a number of companies over the last several years to Southern Nevada, and most of them are international companies. Most of them have come because we have made that initial connection on a trade mission. That is of interest everywhere we go. They want to talk about what we’re doing. They think it’s an innovative way to go about it. It makes it pretty easy for companies that are not already here in the U.S to plug into the water industry.

Q: What sector are you trying to grow the most?

A: It depends on the region in the state. In Southern Nevada, we want to do what we can to help the gaming industry retain its place as the world leader in tourism and hospitality. We have done a number of things there, especially with the expansion of the convention center and building of a stadium (for the Raiders and UNLV).

Q: What else?

A: Health care continues to be the biggest job growth opportunity for Nevada. The graduate medical education committee provided grants to grow the residency program in Nevada along with the UNLV Medical School and Roseman (University’s planned) medical school. There’s continued growth at Touro (University). If you keep those doctors in Southern Nevada for their residency, there’s a 72 percent chance they stay here to practice. When they do that, that whole supply chain of people that supports them grows. There are 30,000 jobs in the medical community that we have room to create in Southern Nevada.

Q: Any other sectors?

A: Aerospace, defense and drones are important. What Hyperloop One (high-speed transportation in tubes under development at Apex) is doing is cool, but that whole research and development aspect, we think Southern Nevada is well set up to do that. Our push into autonomous vehicles is a push into huge industry moving forward. It’s in the infancy now, but growing up quickly.

Q: What happening with that?

A: We have a bill in the session now that autonomous vehicles can be tested and operated in the state for all types of industries that are interested in that. We need to get the policy right. We’re partnered with UNLV and RTC (Regional Transportation Commission) and NDOT (Nevada Department of Transportation) and formed the Nevada Center for Advanced Mobility, which is an effort to create a living landscape on the streets where we can test new products and help companies develop their products and that we can match those opportunities that are already here. Not only do we have autonomous vehicles, but synchronized mobility in which vehicles can talk to each other and the infrastructure traffic lights can talk to the vehicles and can sense pedestrians and traffic congestion.

Q: What impact will a new football stadium have on economic diversification?

A: We don’t want to diversify the economy at the expense of the tourism and hospitality industry. The economy of the state, particular in Southern Nevada, is driven by that industry. We want to do everything we can to make that healthy while we are helping to grow other parts of the economy. It’s driving diversity in that industry, which provides a broader footprint and foundation. It’s certainly going to create a lot of jobs. We do think it will increase tourism. The stadium will be about 1 percent and a little more than that at the convention center. That helps strengthen the whole economy here.