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October 23, 2014

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Goodman defends lowering price of City Hall to bring Zappos downtown

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Justin M. Bowen

Zappos CEO Tony Hsieh and Las Vegas Mayor Oscar Goodman answer questions Wednesday, Dec. 1, 2010, at the Las Vegas City Council meeting, when it was officially announced the existing City Hall building would be used as the corporate headquarters for online retailer Zappos.com.

A new deal that lowers the sale price on the 38-year-old Las Vegas City Hall property by $7 million might be upsetting to some people, but it will help bring Zappos.com and 2,000 of its employees to downtown, Mayor Oscar Goodman said today.

“This is something a lot of people, even in the city, don’t understand,” Goodman told reporters at his weekly press conference at City Hall.

“Government isn’t in the business of competing with the private sector,” the mayor said. “The government’s bottom line isn’t to make a buck. Government’s bottom line is to make the city a better place for people to live and have quality of life.”

On Wednesday, the Las Vegas City council approved a change in the terms of the deal signed on Dec. 1, 2010, between the city and the Resort Gaming Group for the downtown site from $25 million to $18 million. RGG will then lease the building to Zappos.

The costs of renovating the property to accommodate 2,000 employees has risen from $43 million to $65 million since negotiations began with the city six months ago.

Goodman didn’t mention him by name, but also seemed to be taking a swipe at Sun columnist Jon Ralston, who wrote Wednesday in his Ralston Flash blog about a letter that Zappos officials sent to the city manager that indicated the deal they had signed in December was off unless the city lowered the sale price.

Ralston also covered the issue on his “Face to Face With Jon Ralston” program on TV cable Channel 3 Wednesday night, pointing out that city officials don't know if Zappos still won’t ask for more concessions at a later date. Ralston has also pointed out the letter from Zappos was dated June 7, the date that Goodman’s wife, Carolyn, was elected mayor.

Goodman, whose wife becomes mayor on July 7, didn't like the critical comments of the new Zappos deal.

“If we wanted to have been like some miscreant, some misanthropic miscreant, would like us to be in his comments we could have told Zappos they had a deal with us and we’re not going to change it,” Goodman told reporters. “And you know what would have happened? They would have gone to Austin or they would have gone to Seattle. They wouldn’t come into downtown Las Vegas.”

Goodman said everything was on a “rush basis.”

“Decisions are being made and you have to be malleable,” Goodman said.

“You have to be able to be creative and you have to do what’s best for everybody because they are now going to be our partner. It’s a public-private partnership as far as I’m concerned and each side had to give. And the bottom line is economically we’re better off, the terms are better off. We’re paying a little more money in the beginning. But the bottom line is we’re going to get not 750 people here, we’re getting 2,000 people in this building here.”

Goodman said Zappos would bring energy downtown by employees frequenting downtown restaurants and businesses, and increasing sales tax revenue.

“I think it’s going to be great for Las Vegas,” he said. “If I didn’t think it was great, I wouldn’t have done it. I think it’s the best thing that has happened to this town. And it wouldn’t have happened but for all the other development that has enticed them to come down here. So I think it’s wonderful."

One reporter pointed out that City Councilwoman Lois Tarkanian expressed some doubts about the new deal with RGG and was concerned about guaranteeing that the deal wouldn't be changed again.

"Yeah, well, as one of the other councilmen said, there are no guarantees in life," Goodman said. "It's not as though we're rolling the dice here. If everything isn't in place, the escrow doesn't close, there's no deal. And all of our expectations will go into the toilet. That's why I felt her comments weren't necessarily well placed, because there's no problem, other than not having Zappos here. That's the only problem. And to get Zappos downtown, to me, is giant."

Asked if he felt disappointed that Zappos was changing the deal, Goodman said he could understand their position.

"Originally, they were going to bring 750 people into the building. Now they're talking about 2,000 people into the building. Certainly, it changed," he said.

Goodman said that City Hall, which was built in 1973, is an old building.

"I don't want to chase Zappos away, but go into the basement and take a whiff," he said. "I'm happy they're buying the building. Basically, they're paying for a new city hall, we're getting all this energy here, it's a win-win, win-win."

Goodman also said that Zappos CEO Tony Hsieh has made a commitment to help improve the downtown.

"I didn't even know what he was doing. Over at the Bean, on the second floor, he's bringing in these high tech companies from Silicon Valley. He's soliciting his friends to bring their businesses down here. That's great," Goodman said.

"He gave $2 million out of his pocket to the Smith Center for the Performing Arts. This doesn't happen every day. This is a guy who is a genius. He's an icon. This is a man that has developed a company that is second to none. He has a guarantee on this deal from Amazon.com. You can't have a better guarantee than that."

Goodman said he wasn't worried about the deal hurting the city — "I sleep very nicely."

The mayor said he didn't think Zappos would be back to ask for another change.

"I put it on the record that they said they're not going to come back," he said. "I don't think they're liars."

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  1. Spoken like a true politician. Why not "rush" into a deal that puts only the taxpayers at risk? It's not "Mighty Mouth's" money he's giving away. As for government not being in business, it also should not be in the position of playing favorites as to which enterprise is "rewarded" with tax dollars and which is not - in effect choosing winners & losers. Either the location is right for Zappos or it is not. Let it be a business decision not one that smacks of corporate welfare.

  2. I sure would like to know who "Resorts Gaming Group" are. The Nevada Secretary of State has no record of their existence.

    And of course, Zappos is merely a division of Amazon, so it's the developer and Amazon who are really receiving the $7Million discount, not Zappos.

  3. Who or what is the "Resort Gaming Group"? Is this company from Nevada? Who are the members or owners? And how many people are in the Resort Gaming Group? What kind of investment does the Resort Gaming Group have in this project, if any? And did Resort Gaming Group become the landlord of this project? Was there a bidding process? Who made the decision to include the Resort Gaming Group?

    Resort Gaming Group? Just to spectalate, it sound like a Fertitas born company or people from their company or associations? This is based on Oscar's past associates. Would this be a conflict of interest? Either way, this Zappos deal sounds good for downtown Las Vegas. It'all about jobs! If this deal brings in jobs for Nevada and Las Vegas residence, this is a very good deal. We all expect immediate result, but we should be patient and let Zappos work through the details.

    Still would like to know about this Resort Gaming Group?

  4. Resort Gaming Group has been in the local news since 2003. Been a Nevada corp. since 2002. They own the Lady Luck and other things in Vegas.

    want to know more? Google is your friend and so is this newspaper. Lots of atricles about them over the years.

    This is jobs within the city. Jobs we would not have had. It is a good thing.