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November 28, 2014

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Leaders get call to diversify economy

Southern Nevada leaders know the economy here can no longer rely on gaming, growth and tourism, but pursuing options is costly proposition.

In trying to hash out the lessons learned from the collapse of the economy, 70 of Southern Nevada’s business leaders, academics and politicians returned to a suggestion that has been around for years: Diversify the local economy.

It was nowhere near a revelation. But during good times, it was easy to let the status quo continue, so the region relied heavily on gaming, tourism and growth-fueled industries such as construction and real estate. Having all the local economy’s eggs in one basket is the main reason Southern Nevada is in a deeper hole than the rest of the nation — and is expected to take longer to climb out.

So when the Lied Institute of Real Estate Studies at UNLV gathered the opinions and observations of community leaders for its “What Happened? What’s Next? Can We Hit the Reset Button?” report, one consensus was a hope that maybe things got bad enough this time that everyone would finally recognize that economic diversification is crucial.

The problem is that it will take more spending to get there. For one thing, economic diversification will require a greater investment in K-12 and higher education, says John Restrepo, principal of Restrepo Consulting Group, who gave presentations on the economy during the series of round-table discussions that were the basis for the report.

Why education? Because Las Vegas must do more to improve the quality of the workforce to get more businesses — and a greater variety of businesses — to set up shop here, Restrepo said.

Click to enlarge photo

Debra March

Henderson Councilwoman Debra March, who put together the round-table panel when she was executive director of the Lied Institute, says this is a crucial time and potential turning point in the region’s future when it comes to creating a diverse economy.

“We can and we must hit the reset button — not to recreate what we’ve had in the past, but to create something much better — a vibrant and sustainable community with a diverse economy, and a top-notch educational system that attracts new business for its ability to educate its workforce,” March said.

It’s striking that the Las Vegas Convention and Visitors Authority spends $90 million a year promoting the resort industry around the world, but the Nevada Economic Development Commission has only a $6 million budget to attract businesses, she said.

John Vorsheck, chairman of the group that produced the report, said Las Vegas is a household name similar to Coca-Cola, Apple or Nike. The region has a lot to offer businesses and needs to get that word out.

Somer Hollingsworth, president of the Nevada Development Authority, a nonprofit group that helps lure businesses to the region, agrees that more needs to be done to diversify the economy.

He said there has been little money to compete against states that provide incentives to lure companies and pay for marketing campaigns, thus getting the word out about advantages of moving to the state. Nevada could take advantage of tax woes in states such as California and New Jersey and possibly hire someone based in California to help lure companies, he said.

“You have got to put that message out there and let people know about it,” Hollingsworth said. “We have never put an emphasis on diversification (as a state).”

The Nevada Development Authority has a $1.3 million budget in addition to $1 million from the state for marketing, Hollingsworth said. Similar organizations in Arizona have more funding, he said.

“We hope this is a wake-up call to the more thoughtful members of our community — leaders both in business and elected officials — that once we get through this recession, we can’t go back to the old ways,” Restrepo said. “That is the hope. We shall see.”

A version of this story appears in this week’s In Business Las Vegas, a sister publication of the Sun.

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