Vegas lands high-tech ‘whale’

Erin Neff

Thursday, Sept. 21, 2000 | 11:23 a.m.

Two of the new economy's biggest players, Cisco Systems Inc. and AT&T Corp., agreed Wednesday to purchase 10.64 acres of Union Pacific Railroad land in downtown Las Vegas to establish a high-tech campus complete with a dot-com incubator.

A dot-com incubator is an organization that helps Internet companies get off the ground.

The massive deal, which also includes Worldwide Wireless Networks Inc., has been in the works for months with Las Vegas Mayor Oscar Goodman leading the charge to "land a whale" for downtown redevelopment.

The agreement was to be announced publicly late this morning with executives from the three companies joining Goodman at his weekly press conference.

Goodman traveled to Cisco headquarters in San Jose, Calif., on Monday to meet with company Chief Executive John Chambers and help finalize the high-tech giant's commitment to Las Vegas.

The deal is complex, with the city, Union Pacific Railroad and a limited liability company joining together to make it happen.

On Wednesday Union Pacific signed a letter of intent to sell the city the acreage at the northernmost portion of its undeveloped downtown site.

The city will pay $9.25 per square foot and will then immediately sell the land to LVDT Redevelopment LLC for the same amount, according to mayoral aide Stephanie Boixo, who has been instrumental in working on the deal.

"It was just easier to facilitate with Union Pacific by having us (the city) involved," Boixo said.

The planned campus includes an incubator with both private and public sector involvement. The city of Las Vegas will essentially earn revenue from half of the start-up businesses.

"Cisco is considering a seat on the advisory board for the incubator," Boixo said.

Cisco's involvement is the type the city needs to attract companies to the desert.

The company reported $5.7 billion in revenue in its most recent quarterly report for the period that ended July 31.

Since going public in 1990, Cisco has grown from $69 million in revenue per year to $12.2 billion -- a number it achieved in fiscal year 1999. Cisco is one of the world's largest Internet commerce providers, selling products in 115 countries and is known as the worldwide leader in networking for the Internet.

Cisco has 34,617 employees worldwide, including 13,700 in the San Francisco Bay Area.

In addition to Cisco's assistance with the incubator, AT&T has reportedly committed to investing "tens of millions of dollars" in additional fiber optic infrastructure downtown, Boixo said.

AT&T is among the world's leading voice and data communications companies with 80 million customers, 151,000 employees and $64 billion in annual revenues.

The third player, Worldwide Wireless of Orange, Calif., is an integrated wireless communications company specializing in high-speed Internet access using its own wireless network.

Company Chairman and CEO Jack Tortorice, who was expected to be at today's announcement, is the former general manager for Frontier Communications.

The Nevada Development Authority has been courting high-tech companies for several years in an effort to diversify the gaming-led economy. Earlier this year, the authority announced an agreement for a similar downtown incubator, but that project is on hold because of a lack of private sector investment.

Boixo said the deal with LVDT Redevelopment is different because the limited liability company has secured a lender.

Goodman said recently it would take only one legitimate business to spark high-tech growth here. The San Francisco Bay Area is ripe for losing smaller high-tech companies because of the exorbitant cost of living and the saturation of dot-com start-ups in the area.

In Las Vegas those companies could benefit from a cheaper cost of living, no taxes and a city begging them to come.

Christine McKiernan of the Nevada Development Authority said high-tech companies breathe new life into whatever area they inhabit. The downtown campus could spark coffee shops, cafes and boutiques, she said.

The biggest obstacle standing in the way of high-tech progress here is the relatively untrained workforce and a lack of resources at UNLV. But the industry's traditionally high-paying jobs could lure people from other parts of the country to Las Vegas, officials say.