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November 27, 2014

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Meeting cancellations prompting suits; economic diversification vs. growth

Las Vegas hotel-casinos seem to be increasingly suing companies and groups for failing to pay fees related to convention and meeting cancellations.

With so many meetings canceled after the recession struck the nation, and casino resorts fighting for every available dollar of revenue, these suits are regularly showing up in Clark County District Court in Las Vegas.

Among the latest to be sued is Trump University LLC, which teaches gaming industry player Donald Trump's fundamentals of investing to would-be real estate moguls.

The MGM Grand hotel-casino charges in an October lawsuit that in May 2007, the university entered into a group contract for a block of rooms, convention services and meeting space for an event to be held July 19-22 of that year.

The university canceled the contract but failed to pay required damages of $12,359, charges the suit filed by attorneys for the MGM Mirage resort.

Court records indicate Trump University has been served with the suit, but hasn't yet filed a response to the allegations.

Donald Trump, in the meantime, says in his blog on the university Web site that the recession facing the real estate industry will pass.

"It will take awhile, it really took a hit, but it will turn around. Real estate is cyclical, as are many things, and it needs time to even out. There are still real estate investment opportunities out there," Trump says in his blog.

A similar suit over meeting fees was filed recently by Las Vegas Sands Corp.'s Venetian resort against Wall Street Reporter Magazine Inc.

The company has not yet responded to the suit.

Las Vegas Sands, in the meantime, continues to tap world credit and equity markets on Wall Street -- with no indication it's been covered by the online magazine.

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Las Vegas economic forecaster John Restrepo continues to argue that the deep recession in Southern Nevada illustrates why the local economy must be diversified.

In his latest Economic INsight newsletter, Restrepo highlights the difference between economic development/diversification and economic growth.

When it comes to economic activity, development involves quality economic activity while diversification involves broadening the economic base -- as opposed to overall growth.

"For example, an economy that largely produces low value-added products and services, and low-wage jobs, is not an economy that is developing or 'evolving,' even though it is growing," Restrepo writes. "We are not suggesting that this reflects the Southern Nevada economy, but these are important concepts as we develop a vision for our community.

"Additionally, as we have learned, there is a certain fragility to an economy that is largely based on discretionary spending," he says.

Everyone, it seems, wants quality growth and a more diversified economy in Southern Nevada.

But as Restrepo points out, the Nevada Development Authority received just $1.1 million from the state for the current fiscal year to market Southern Nevada.

Restrepo says that compares to the $86.5 million Las Vegas Convention and Visitors Authority advertising budget, which is on top of private money spent by casino resorts and airlines to promote the destination.

"In essence, the NDA allocation equaled 1.3 percent of the LVCVA amount. Suppose for a moment, that the NDA had been allocated an amount equivalent to 10 percent of the LVCVA amount, not just for this one year, but for each of the last 20 years. What would have been the impact to our economy?" Restrepo asks.

A good question.

But before we get carried away with spending more money promoting the community to businesses looking for a place to relocate to, let's ask ourselves what kind of community we have to sell.

Plenty has been written about shortcomings in our public and higher education systems and in social services.

On top of that, imagine an executive in town, checking out the city with his or her family as potentially a place to relocate a company. The executive probably is also looking at places like Denver, Phoenix, Tucson, Albuquerque and Salt Lake City.

Only in Las Vegas may the family run into this and similar situations.

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With unemployment running at 13.9 percent, it's going to be difficult for many Southern Nevadans to enjoy the upcoming holidays this year.

Here are a few examples of companies and organizations doing what they can to help those in need and to give back to the community:

-- City National Bank kicked off its annual food drive benefiting homeless and needy families in Las Vegas, North Las Vegas and Northern Nevada. In Southern Nevada, the bank has teamed up with the Las Vegas Rescue Mission to help feed the growing population of low-income families and individuals.

Through Dec. 21, the bank will collect canned and dried food items from its employees and customers at its eight branches statewide.

-- The Nevada Department of Business & Industry is holding a Thanksgiving food drive to help needy families during the Thanksgiving holiday.

"There are many people in Nevada who are struggling to get by," said Director Dianne Cornwall. "As the holidays approach, we hope to help fill the cupboards of people in need and show our support of communities throughout the state."

Canned and boxed food is being collected at the director's office in the Sawyer Building, 555 E. Washington Ave., Suite 4900; and at the agency's Real Estate Division in the Bradley Building, 2501 E. Sahara Ave., Suite 100.

Click to enlarge photo

Second grade teacher Fred Koopmann and volunteer Ellen Guise, an IT business analyst for Harrah's Entertainment, work to make an edible garden for George E. Harris Elementary School students. The event was part of Nevada's Make a Difference Day.

-- More than 60 Harrah's Entertainment Inc. volunteers and George E. Harris Elementary School employees worked on a recent Saturday to make an edible garden for the Harris students. The garden will help students learn where food comes from and the growing process.

The Oct. 24 event for Nevada’s Make a Difference Day involved H.E.R.O (Harrah's Entertainment Reaching Out) volunteers from eight Harrah's resorts and the corporate office.

Harrah's has been a leader in promoting environmental sustainability.

"Holistic approaches to healthy living and environmental stewardship are very important to Harrah's," said Jan Jones, Harrah's senior vice president, communications & government relations. "We must leave our community and our planet in the most responsible hands. Educating children on the ideals of conservation is the best way to ensure future success."

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