Bank CEO rips Reno gaming attitudes

Gary Thompson

Tuesday, July 9, 1996 | 11:59 a.m.

Northern Nevada faces economic stagnation unless it changes its political climate, a prominent Reno banker said.

Until they acknowledge gaming as the state's most important industry and develop investment incentives for it, Northern politicians pose the "single biggest threat" to the region's economic growth, according to Comstock Bank Chairman Robert Barone.

He said if political attitudes don't change, "Reno runs the risk of becoming only one of many similar gaming towns with a very limited regional draw."

That suits Northern Nevadans eager to maintain their provincial lifestyles just fine.

"It's a very different way of life from Southern Nevada," said one gaming executive who asked not to be identified. "It's easy to get around town without even seeing a casino. It's a whole different set of values.

"But he's right: Gaming is the state's most important industry and the politicians don't recognize that."

"I'm sure Barone is talking about our eminent-domain policy, which some downtown casino operators feel is limited," said Reno Councilwoman Candice Pearce. "We won't use eminent domain to take over a property and give it to someone else."

The Reno City Council met this week with California attorneys to consider revisions to the policy, though no formal action is expected until later this month.

"I believe we clearly have to diversify our economy," Pearce said. "Reno gaming has been drastically hurt by what's happened in Las Vegas, where the community and the gaming industry act together.

"That's not true here. Reno is totally divided. There's the downtown gaming industry and the rest of the community, which doesn't embrace gaming.

"We have to make some decisions, to decide what we want to be. We can't be a second-rate Las Vegas. We have to be a first-rate Reno."

"Because we don't educate children on how the economy really works," Barone said, "politicians can get away with pitting classes against each other. Instead of making it rich against poor, business against labor, they should acknowledge that the system really can work.

"This is a great environment in which to live, but you can't enjoy the mountains and rivers and trees if you don't have a job and have to move away. And you won't have a job unless gaming flourishes in the north."

Barone said the gaming industry directly accounted for 26.6 percent of Las Vegas jobs in the first quarter.

"Considering the spillover effects those jobs had on other industry sectors, gaming probably accounted for closer to 50 percent of all the jobs in the Las Vegas economy," he said.

"In the north, gaming directly accounted for 19.6 percent of all jobs and probably close to 40 percent when the indirect effects are concluded.

"As long as gaming so dominates the economy and so long as the state's tax structure is so dependent on gaming and its spillover effects, then economic diversification won't provide either the business cycle insulation or the desired fiscal stability.

Economic diversification has been a disaster because the tax structure is gaming-oriented, he said. As a result, other businesses don't generate sufficient tax revenues to pay for the services they use.

"Despite the fact that diversification has been a theme up here for 15 years, the tax structure has made it so that every nongaming business that comes here fails to pay its way. As a result, we have fewer police than we did 10 years ago, and other services are impacted as well. Those problems will become more severe if we don't have gaming growth."

Northern political leaders should "aid in the development or redevelopment process" in a manner similar to what's occurred in the south, he said.

"The Las Vegas Strip developed because government provided a political environment which was receptive to private investment so that others would build things.

"Such an environment is not present in the north and is the biggest threat to future economic growth."

He said Southern Nevada "has recognized its dependence on gaming and has built its infrastructure to such an extent that it no longer has serious competitors.

"The only real limits to growth in Las Vegas appear to be from infrastructure, i.e., airport and interstate highway capacity, arterial roads and, perhaps, water.

"One thing that should be clearly noted about the southern economy -- there is no dearth of investment capital. Major projects just keep on rolling."

Such is not the case in Northern Nevada, he said.

"There still appears to be little ability of the region to attract the necessary investment capital" because of political stagnation.

"What takes weeks or months to get approval in the south may take years in the north. Investment in feasibility in the south is almost always recovered, while in the north such recovery is iffy," Barone said.

"The Reno City Council worries about whether one little business will survive rather than understanding that if there's development, little businesses will flourish. Developers will make big profits because they take big risks, but the little guys will benefit also."

Reno Mayor Jeff Griffin was on vacation and couldn't be reached for comment. City Manager Charles McNeely hadn't seen the Comstock Bank report and had no comment.

The bank's latest report on Nevada business and economic trends also said the statewide economy continued its sharp expansion during the first quarter.

"Absent a national economic disaster," it said, "rapid growth will continue to the turn of the century."