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4 October 2007

people trying to exercise their right toget on the ballot.

Assembly Bill 606 would have re-quired each person or group advocat-ing passage or defeat of a constitu-tional amendment to submit to theSecretary of State the names, ad-dresses and phone numbers of all of-ficers, employees and volunteers.The bill also prohibited petition or-ganizers from paying people for eachsignature they collect, which hasproven to be the most efficient wayto run a petition campaign, and con-tained several other burdensome re-quirements. The bill passed the As-sembly 42 to 0, but was stopped inthe Senate.

The original version of Senate Bill(SB) 549 would have required a peti-tion to contain signatures from regis-tered voters in each of the state’s 42

C O M M E N T A R Y

The Initiative ProcessThe Voice of the People

L Y L E E . B R E N N A NPublisher

he recently concludedlegislative session sawseveral efforts to changethe initiative process.

Some passed, some failed, andmany were modified almost beyondrecognition. For a complete list ofthe proposed measures and theiroutcomes, go to the Web site main-tained by the Nevada Families EagleForum: nevadafamilies.org. It is in-teresting to look for the motives be-hind some of these bills, and towonder why legislators are so deter-mined to erect barriers to keep peo-ple as far away as possible from thegovernmental process.

For example, mining interests arefearful of Nevada voters becauseMontana voters passed an initiativeforcing mine owners to clean up pol-luted sites. It’s no coincidence thattwo of the bills that would have made

it extremely difficult to conduct aninitiative campaign were sponsoredby Sen. Dean Rhoads, whose ruraldistrict depends heavily on mining.Union organizers harassed signaturegatherers for the TASC petition in2006, and it seems likely they put po-litical pressure on politicians to op-pose future efforts to control taxesand spending.

The powerful education lobby op-poses any efforts to reduce thegrowth of the property taxes that funda significant portion of their budget.They knew before the session startedthat former Assemblywoman SharronAngle intended to put another proper-ty tax restraint petition together thisyear, and they wanted to undermineher efforts before she could get start-ed. All these forces, and many more,were behind efforts to throw as manyobstacles as possible in front of

The initiative process provided by the Nevada Constitution gives the state’s citizensthe right to force a public vote on an issue if they gather a minimum number of sig-natures. It is democracy in its purest form. Over the last few years, many measureshave been proposed through this process, from legalizing the sale of marijuana, to rais-ing the minimum wage, to regulating smoking in public places. TASC (Tax andSpending Control for Nevada) and PISTOL (Property Owner’s Bill of Rights), whichwere proposed in 2006, were developed by people concerned with controlling govern-ment spending and protecting property rights.

Continued on Page 8

T

6 October 2007

Nevada Business Journal is a division of Business Link, LLC. 375 N. StephanieSt.,Bldg. 23, Suite 2311, Henderson, NV 89014. It is listed in Standard Rates andData, #20A-Business-Metro, State and Regional. TopRank Nevada – AnnualStatewide Book of Lists is a publication of Nevada Business Journal.Advertisers should contact Sales at (702) 735-7003, or write to: Nevada BusinessJournal, 375 N. Stephanie St., Bldg. 23, Suite 2311, Henderson, NV 89014. Demo-graphic information available upon request. Month-to-month circulation may vary.Nevada Business Journal is published monthly with one additional issue each year.Subscription rate is $44.00 per year. Special order single-copy price is $7.50. TopRankNevada – Annual Statewide Book of Lists, a compilation of lists which have ap-peared in Nevada Business Journal over the past 12 months, is published on an an-nual basis.All contents ©2007 copyright, and reproduction of material appearing in NevadaBusiness Journal and TopRank Nevada – Annual Statewide Book of Lists is pro-hibited unless so authorized by the publisher.CHANGE OF ADDRESS: POSTMASTER: Send address changes to Nevada BusinessJournal, 375 N. Stephanie St., Bldg. 23, Suite 2311, Henderson, NV 89014. Sub-scribers please include previous address or mailing label. Allow six weeks.EDITORIAL SUBMISSIONS: Address all submissions to the attention of April McCoy.Unsolicited manuscripts must be accompanied by a SASE. Nevada Business Jour-nal assumes no responsibility for unsolicited materials.DISCLAIMER: Editorial views expressed in this magazine, as well as thoseappearing in area focus and industry focus supplements are not necessarilythose of the publisher or its boards.

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Web Site: nbj.com • nevadabusiness.com

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C O V E R : Bob Cooper, manager of the City ofHenderson's Economic Develop-ment Department and Tim Rubald,executive director of Nevada Com-mission on Economic Developmentcheck out the assembly line atOcean Spray Cranberry, one of theplants located in Southern Nevada.Read what the economic develop-ment experts have to say about eco-nomic development and retentionin the Silver State.

Photo: Opulence Studios

B U I L D I N G N E VA D A :Bill Oakley, president of First Na-tional Bank of Nevada, is amongthose interviewed about the game ofinvesting in real estate. Find outwhat the experts have to say aboutNevada's market. (Story pg 142)

Photo: Opulence Studios

S P E C I A L R E P O R T : This month’s special report is theSouthern Nevada NAIOP (Nation-al Association of Industrial andOffice Properties) Chapter BusTour Guide Book.

October 2007 • Volume 22 • No. 10

October 2007 7

B U I L D I N G N E V A D A

4 CommentaryLYLE BRENNAN

The Initiative ProcessThe Voice of the People

10 Business Up Front• IRS Regulations Effect Compensation Plans• SBA Scorecards for Federal Agencies• Holding off on the Golden Years• Telecommuting Gaining Ground

11 Face to FaceJames Bennett, Chicago Title of NevadaKathy L. Phillips, Nevada Commerce bank

150 Speaking for NevadaATTORNEY GENERAL CATHERINE CORTEZ MASTO

Should Nevadans Be Threatened by Modern-Aged Bandits?Protecting Nevadans Pockets

151 Expert AdviceJIMMY LEE

Baby Boomer MistakesRetirement Preparation

152 Nevada Briefs• Deposit Alternative Company Established In Nevada• Prudential CRES and IPG Commercial Merge• Lundahl and Associates Rebrands• Nevada Companies Create New Jobs• Bank of George Receives Permission to Organize

153 Power of AttoneryANN LYTER THOMAS

Electronic Document Retention Policies A Business Necessity

154 Free Market Watch CommentaryCHARLES F. BARR

Federal Land PolicyCreating Economic Hardship in Clark County

155 Inside PoliticsMIKE SULLIVAN

The Petition ProcessVoter Beware

157 People FirstMARK KEAYS

Improving Performance StandardsMotivation is Key

158 Business IndicatorsR. KEITH SCHWER

142 The Real Estate MarketAn Investment or Bust?

DORESA BANNING

148 Building Nevada News in Brief• Second Phase of Tahoe-Reno Industrial Center Opened

• Parkway Pointe Office Building Welcomes First Tennants

• Crisci Builders Completes Bank of America at Blue Diamond Crossing

• Nevada Cancer Institute Expansion

• LaPour “LEED’s” the Way with New Suburban Office Development

• Olympia Gaming Closes on Land for New Resort

149 Venture CorporationProvides Office Ownership Opportunities

156 Commercial Real Estate Market ReportSecond Quarter 2007 – Retail

F E A T U R E S

12 Economic Development’s Can-Do AttitudeAdapting to Changing Conditions

KATHLEEN FOLEY

18 Dealing with Staffing IssuesNevada Employers Struggle with Labor Shortage

JEANNE LAUF WALPOLE

29 Industry Focus: Residential Brokers

C O N T E N T SD E P A R T M E N T S

29

8 October 2007

Assembly Districts. It also wouldhave required petition gatherers tocarry around registration lists andverify that each person who wantedto sign the petition was a registeredvoter. The 42-district provision waseventually eliminated, and replacedby a formula that requires an initia-tive petition be signed by registeredvoters equaling at least 10 percentof the total number of voters ineach county.

Senate Bill 78, which passed,makes it a felony to sign someoneelse’s name to a petition, or to will-fully alter personal information ona petition with the intent to falsify.It makes each individual alterationa separate felony offense. At firstglance, it sounds harmless – the ini-tiative process wouldn’t have muchcredibility if petitions were full offorgeries. However, if an opponentdecides to challenge a petition, thefear of being accused of a felony (ormultiple felonies) could be a pow-erful tool for harassing signaturegatherers.

Assembly Bill 604 includes manymore financial reporting require-ments, increasing the burden of pa-perwork for campaigners and mak-ing them spend time and moneyfilling out forms instead of doingtheir political activities.

Despite the best efforts of biglabor, Big Education, Big Mining,and just plain big government, thepeople of Nevada made it throughthe session with their rights intact.We can still sign a petition and get aproposal in front of the voters. Nowit’s up to each of us to investigate themeasures that will be proposed thisyear and to do our best to make surethat the ones we support make it pastall the obstacles and become law.

COMMENTS email: [email protected]

Continued From Page 4

376 E. Warm Springs Road, Suite 160Las Vegas, NV 89119

www.oakviewconst.com

(702) 873-6399 Fax: (702) 873-6690

“BUILDING ON SOLID GROUND SINCE 1960”

Southern Highlands Marketplace Venture Professional Center

http://TheProtectorNetwork.com/nv14

10 October 2007

The proliferation of wirelesstechnologies and Internet ap-plications is making it easier

for information technology (IT) pro-fessionals to work outside the office,according to a recent study. It includesresponses from more than 1,400 CIOsfrom a random sample of U.S. compa-nies with 100 or more employees.Nearly half of chief information offi-cers surveyed said their companies’ ITworkforce is telecommuting at a ratethat is the same or higher than fiveyears ago. For CIOs whose companiesallow telecommuting 34 percent citedimproved retention and moralethrough enhanced worklife. Increasedproductivity due to reduced commutetime was cited by 28 percent of re-spondents. However, nearly half of allCIOs surveyed felt that quality of worksuffers due to diminished in-personcontact with colleagues. Whiletelecommuting can benefit employersand employees alike, it’s importantthat companies have the appropriateinfrastructure in place to facilitate staffwho work on a remote basis.

For many workers, retirementwill not mean an end to their ca-reers. Only one in three workers

polled said they plan to quit work en-tirely once they are already to retirefrom full-time employment, accordingto a recent survey developed by RobertHalf Management Resources. The sur-vey was conducted by an independentresearch firm and includes responsesfrom 492 full- or part-time adult work-ers employed in office environments.Workers were asked, “When you areready to retire, do you see yourselfquitting work entirely, or taking one ofthe following options?” Their respons-es were as follows: 34 percent saidthey would quit work entirely; 24 per-cent would change fields; 14 percent

would work as consultants; another 14percent would work fewer hours forthe same company; 2 percent wouldtake a part-time job; 2 percent wouldnot plan to retire; 1 percent would vol-unteer; and the other 9 percent re-sponded other/unknown.

In an effort to increase the trans-parency and accountability insmall business contracting, the

U.S. Small Business Administration(SBA) released its first-ever SmallBusiness Procurement Scorecard. The

Scorecard will help agencies measuretheir achievements and progress inmaking contracting opportunitiesavailable to small businesses, improvethe accuracy of contracting date re-garding small businesses, and providethe public the opportunity to assessagencies’ performance in meetingthese goals. Seven federal agenciesmet their small business contractinggoals. SBA rates 24 agencies green,yellow or red, both on whether theyreached their annual small businesscontracting goals and on theirprogress on efforts to make contract-ing opportunities available to smallbusinesses. To achieve a green ratinga federal agency has to meet its over-all small business contracting goal, aswell as the goals for at least three orfour subcategories. Currently, sevenagencies were rated green, five yel-low, and 12 were red.

The final IRS Section 409A reg-ulations, which will becomeeffective Jan.1, 2008, will im-

pact hedge fund managers’ nonquali-fied compensation plans. The finalregulations clarify several issues im-pacting fund managers, but subse-quent guidance is still pending withrespect to many issues. David Simon-etti, senior manager in Grant Thorn-ton’s compensation and benefitsgroup, explained the issues addressedunder the final regulations. Below is abrief overview of the final regulations:• The impacts on partnerships werenot addressed, but limited guidanceprovides that the grants of profits in-terests would be excluded from Sec-tion 409A.• Back-to-back arrangements are per-mitted, assuming certain require-ments are met.• Management fees associated with“side pockets” or unredeemable andilliquid investments must be struc-tured to avoid violating Section 409A.• Specific timing of initial deferralselections for newly established fundsis required.• Amendment dates for deferredcompensation plans are required byDec. 31, 2007.

IRS Regulations Affect Compensation Plans

Holding Off on the Golden Years

SBA Scorecards for Federal Agencies

BUSINESS UP FRONT

Telecommuting Gaining Ground

October 2007 11

FACE TO FACE

President

Chicago Title of Nevada

Las Vegas

Biggest business challenge:Managing the company as the real estate industry expands and contracts. There is a re-sponsibility to all employees to do the best possible job.

What do you like best about your job? The company management’s main responsibility is to keep the staff in a position where they can be successful in representing our name and ethical approach.

If you could start over and choose a different profession, what would it be?My passion has always been acting. I fig-ured out a while ago that these were notthe best career choices when consideringmy future and my family. The title busi-ness suits me fine.

How do you spend your time when you’re not working?My lovely wife Monica and four children

have kept me focused for years. Whenthere is a moment, you will find me play-ing and recording music in my studio.

Little-known fact about yourself: I was named “actor of the year” in the RJ(2005) for my performance as Horton inSeussical.

Best Business Advice:There is no substitute for hard workwhen given the opportunity. The light-ning rod is timing.

How do you recruit and retain qualified employees? We largely promote from within whichcreates avenues of growth for our cur-rent, loyal employees. On occasion wewill focus on a geographic location, or abusiness type and identify a person whomight be able to contribute immediatelyto that need.

Years in Nevada: 41

Years with Firm: 20

Type of business:Title and Escrow Company

James Bennett

President/CEONevada Commerce Bank

Las Vegas

Years in Nevada: Native Nevadan

Years with Firm: 7

Type of business:Commercial Banking

Biggest Business Challenge: To avoid falling into the trap of pricewars. We could easily market interestrates, deposit products, or online bankingbut our niche wants more than that.

What do you like best about your job? I enjoy the ability to instill confidence inour team, and our clients.

If you could start over and choose a differentprofession, what would it be? My early college years were focused oneducation, however, I found an interest inbanking early on and knew that I couldachieve many of the same rewards.

Best Business Advice: My best business advice would be to findsomething that really interests you, do your

best and let nobody tell you “no”. Findwhat sets you apart from the competition,whether it’s the product, the price or the service, and capitalize on your niche.

Little-known fact about yourself? I am absolutely the worst golfer ever.The only thing coordinated is my outfit.

Do you offer training and schooling for yourteam members?Absolutely, we take great pride in thefact that the bank offers educational opportunities and/or training to each and every employee.

Kathy L. Phillips

Fiscal year 2006-2007 was not the rosiest for Nevada’s

economic development agencies, with statistics showing

mixed success in attracting new companies and their

jobs to the Silver State. However, officials at state, re-

gional and local levels are optimistic that Nevada will

continue to entice companies seeking a business-friendly

climate, low taxes, convenient location and superior

quality of life.

During the fiscal year ending June30, 2007, the Nevada Commis-sion on Economic Development

(NCED) approved incentives for 41new and expanding businesses. Col-lectively, these companies investedmore than $572 million in the state a57 percent increase over the previousyear-- and created 1,486 new jobs,with an average hourly wage of$19.86. This good news was balancedby the bad news that the new job cre-ation decreased by 21 percent overthe previous year. NCED estimatesthese companies will infuse morethan $61.4 million in new wages intothe economy each year for at leastfive years, a figure down 24 percentfrom 2005-2006.

Similar mixed results were reportedby local economic agencies. TheNevada Development Authority(NDA), charged with economic de-velopment in Clark County, broughtin fewer companies this fiscal year(43 compared to 61). The number ofjobs increased from 1,961 to 2,725,but the estimated economic impactfell from $400 million to $352 mil-lion. In Washoe County, the Econom-ic Development Authority of WesternNevada (EDAWN) also assisted fewerbusinesses during fiscal year 2006-2007 (37 compared to 46). Due tohigh average wages, however, theeconomic impact actually increasedfrom $330 million for 2005-2006 to$402 million.

Tim Rubald, executive director ofNCED, said Nevada numbers are inline with the national economic slow-down. “It’s all cyclical,” he stated.“Job growth has slowed down both na-tionally and statewide. The housingslump has also undermined other in-dustries, because companies that man-ufacture products used in constructionare less willing right now to expand inthis market.” Nevada’s inflated landprices and the resulting spike in hous-ing costs have also hurt recruiting ef-forts, since industrial and distributioncompanies need large parcels of landto accommodate their facilities, andall types of businesses considering re-location have to factor in the cost ofhousing for their employees.

October 2007 13

Cover Story: Economic Development’s Can-Do Attitude

NCED Aids Nevada Businesses

NCED has several divisions, in-cluding the Nevada Film Office,which provides assistance to produc-tion companies shooting featurefilms, television shows and commer-cials in Nevada. More than 600 pro-jects film in Nevada each year, infus-ing more than $100 million into thestate’s economy. NCED’s GlobalTrade and Investment Program helpsNevada companies begin or expandactivities in the international market-place, while also attracting foreign in-vestment to the state. Exports fromNevada reached a record $5.49 billionin 2006, a 39.5 percent increase overthe previous year, and the fifth con-secutive year of record export growthfor the Silver State. Precious metals,primarily gold, comprise the leadingcategory of export products, followedby electric machinery, toys, gamesand sporting equipment, industrialmachinery and ores. “Nevada is thesecond-fastest-growing state in theU.S. for exports. It’s exciting – glob-alization is where the economy isgoing,” said Rubald.

Other NCED programs include theProcurement Technical AssistanceCenter, which helps Nevada compa-nies obtain government contracts, theMade in Nevada Program, to raiseconsumer awareness of goods manu-factured in the Silver State, and theCommunity Development BlockGrant Program, which administersfederal funds to build infrastructure inNevada’s rural counties.

Economic development agenciesare primarily funded via corporatemember dues, and through the Neva-da Legislature. The 2007 legislativesession dealt NCED a large budgetcut that will hurt significantly, accord-ing to Rubald. “I don’t think the Leg-islature was trying to send a message

or target us in particular. It was just amatter of shortages, and not enoughmoney to go around,” he said.

The portion of NCED’s budget thatpasses through to Washoe and ClarkCounty agencies totaled around $9million in 2005, but in this legislativesession, it was cut to $4.5 million.Rubald said the sections of the budgetfor overhead, advertising, the NevadaFilm Office, Rural Community Devel-opment and the Procurement OutreachProgram remained about the same, ex-cept for cost-of-living adjustments.

Although Nevada taxpayers fundpart of the expenses for the state’s eco-nomic development agencies, as wellas foregoing tax revenues when busi-nesses receive incentives, Rubald andthe heads of other agencies said eco-nomic development pays for itself.“Because of the way we do economicdevelopment, it absolutely pays for it-self,” Rubald said. “Some states aim forretail or low-paying jobs, but it’s hardto make that kind of program pay. Weonly consider primary jobs that payhourly wages above the state average,which is currently $18.72. Last year,incentivized jobs [those at companiesreceiving funds from NCED] averagedmore than $22 per hour.” In order to at-tract high-paying jobs, economic de-velopment agencies have concentratedin the last several years on industriessuch as biotechnology, high-tech andmanufacturing. Rubald pointed out thatNevada is the only state in the Union topost gains in manufacturing jobs overthe last two years.

Economic diversification of Nevadais one of the major goals of the state’seconomic developers. Urban areas ofthe state are dependent on gaming andtourism, while many rural areas de-pend heavily on mining. “NCED’scharge is to diversify from gamingand mining,” said Rubald. “Althoughthe percentage of people employed in

the casino industry has gone down, itstill employs tens of thousands. Be-cause businesses are always cyclical,it’s good to have variety. When oneindustry is up, another will be downand balance things out.”

Western Nevada Takes a Two-Pronged Approach

In 2005, EDAWN sponsored acomprehensive economic develop-ment plan called Target2010, North-ern Nevada’s New Economy. The$250,000 project started with assess-ing the area’s needs and assets bygathering research from focus groupsand surveys, and moved on to aplanned approach to future economicgrowth. The study concluded that theregion would be best served by target-ing six specific industries: businessand financial services, software, cleanenergy, advanced manufacturing, ad-vanced logistics and life sciences. Allthese industries would provide thehigh-wage, highly skilled jobsEDAWN wants to attract.

As a result of the study, the agencydeveloped an action plan with a two-pronged approach, aiming not only tobring new companies to the Reno-Tahoe-Sparks area, but also to attractthe workers those companies need.According to Chuck Alvey, presidentand CEO of EDAWN, workforce de-velopment is an important componentof the agency’s plan. In addition tohelping local companies recruit em-ployees from other states, the planwill take advantage of the numerousvisitors who come to Northern Neva-da. Billboards at Reno-Tahoe Interna-tional Airport encourage visitors toconsider working in a place wherethey already come to play, andEDAWN has set up a Web site,MyNevadaDreamJob.com, to provideinformation aimed at members of a

14 October 2007


young demographic who might wantto work near areas where they canenjoy mountain biking, skiing andother outdoor activities. Alvey saidEDAWN is also investigating ways toprovide employment opportunities forthe large baby boomer populationwho already live in Northern Nevada.“Some of these people may havetaken early retirement or are workingas consultants. They could be a valu-able resource for companies whoneed experienced help on a part-timebasis,” he explained.

NNDA Helps Both Urban and Rural Areas

Northern Nevada Development Au-thority (NNDA) includes not only theCarson City area, but also Douglas,Lyon and Storey counties, which con-tain rural towns with substantially dif-ferent needs than their urban neigh-bors. In 2006, NNDA sponsoredNorthernNVision, a strategic planninginitiative for Northern Nevada aimedat getting rural areas to work togetheras a region for economic develop-ment. The initiative included surveysof individuals and businesses in thefour counties within NNDA’s servicearea, as well as Churchill, Mineraland Pershing counties.

The industries targeted in the pro-ject’s report are similar to those de-tailed by EDAWN: light advancedmanufacturing, clean energy andbioagriculture, business and technolo-gy services, logisitics and distribu-tion, as well as regional health ser-vices. Unlike EDAWN, however, italso aims to attract tourism and hospi-tality to rural areas. As RonWeisinger, executive director ofNNDA, pointed out, tourism plays animportant part in economic develop-ment in rural counties. Rather than di-versifying away from tourism intoother industries, rural Nevada is

diversifying away from mining orfarming and into tourism.

NNDA joined EDAWN and otherlocal partners in developing a newbrand that will be used to promote theentire region. “Greater Reno-Tahoe:Welcome to Can Do,” announced inApril 2007, will advertise in key met-ropolitan cities to inspire businesses,as well as skilled professionals, to con-sider relocating to the Reno-Tahoe-Carson area. This represents just oneway economic development agenciescooperate to share resources. Anotheris the Chamber of Commerce Coordi-nating Council, which NNDA and oth-ers formed to bring together chambersin seven rural counties to share successstories and exchange ideas. The groupproved so successful that it has sincebeen joined by local developmentagencies, and even by the chambers ofcommerce from Reno and Sparks.

Economic Gold Rush Planned for Elko County

Elko County, like many rural partsof Nevada, is trying to expand beyondits historical dependence on the min-ing industry. Elaine Barkdull Spencer,executive director of the Elko CountyEconomic Diversification Authority(ECEDA), said her agency recentlybegan a two-year marketing programto attract businesses and workers. The“New Economic Gold Rush” cam-paign builds on the area’s past as acenter of gold mining, but points outthe advantages in Elko County todayfor developers of retail, residentialand industrial projects. It also toutsinvestment opportunities and pro-motes workforce development.

Barkdull Spencer reported that sev-eral sites within Elko County arebeing developed as industrial parks,since the county is located at thecrossroads of major east-west andnorth-south highways, has good rail

access, available geothermal powerand inexpensive land – an increasing-ly rare commodity in the urban areasof the West. “We’re starting to get se-rious inquiries from builders, devel-opers and manufacturers from South-ern Nevada,” she said. “They’re justpriced out of the market down there.”

Construction will begin this monthon the 60-acre Northeastern NevadaRegional Railport Industrial Park, acounty-owned facility located just 4.5miles from the city of Elko. Comple-tion is scheduled for March 2008.Smaller industrial sites within the citylimits are attractive to industrial de-velopers because workers will have ashorter commute, said BarkdullSpencer. Also within Elko city limitsis abandoned railroad land; currently,plans are being drafted to transfer thisland to the city so it can be developed,as well. The small towns of Carlin,Wells and West Wendover also haveacreage set aside for industrial parks.

Nevada Development AuthorityTargets Specific Industries

NDA is charged with attracting newbusinesses and helping existing busi-nesses in Clark County. SomerHollingsworth, NDA’s president andCEO, said Southern Nevada has real-ized an economic impact of $5.2 bil-lion from more than 22,000 jobs creat-ed through NDA’s efforts in the lastfive years. Even though last year’snumbers indicate a slowdown in activ-ity, Hollingsworth said it was still ahealthy year, and he pointed to the di-verse types of companies moving toSouthern Nevada as an indicator of thearea’s overall attractiveness. Seventeenof the new companies brought in dur-ing the last fiscal year were involved inmanufacturing, seven were corporateheadquarters and four were back-of-fice operations, with the remainder di-vided among other categories.

October 2007 15

NDA’s annual budget ranges from$1.3 million to $1.6 million, chieflyfrom membership dues and fundrais-ing. The 2005 Legislature grantedNDA a windfall of $5.5 million, butthe 2007 session cut that in half, withNDA due to receive only $2.75 mil-lion this biennium. “We’re elated thatwe received what we did,” saidHollingsworth. “The previous sessionwas the first time we’d ever receivedthat kind of funding.”

Some of the state funding will un-doubtedly be used for a new public rela-tions campaign, but the theme has beenkept secret pending its rollout. One ofNDA’s recent efforts targeted life sci-ence and biotech companies on the EastCoast. Promotional materials includedinformation about Southern Nevada’shealthcare and technology institutions,including the Nevada Cancer Institute,Lou Ruvo Brain Institute, SunriseHealth System, Harry Reid ResearchPark and UNLV’s supercomputing facil-ity. “Research and development compa-nies find Nevada’s business-friendly at-mosphere especially appealing,”Hollingsworth said. Other campaignswere aimed at attracting California com-panies to move to Southern Nevada. Ac-cording to Hollingsworth, 25 percent ofthe companies relocating here last yearcame from the Golden State.

Henderson AssistsLocal Businesses

Nevada’s second-largest city pro-motes itself as “The Las Vegas Valleyaddress for business success.” BobCooper, manager of Henderson’s Eco-nomic Development Division, said histeam has been working on attractingnew businesses in the following fields:colleges, medical, financial and back-office, traditional manufacturing andhigh-tech. Toward this goal, the cityhas already achieved significant ac-complishments; it is now home to 12

private colleges, more than any othercity in the state. The Southern NevadaMedical Industry Coalition, put to-gether by Henderson officials, hasunited stakeholders who not only ex-change information about their indus-try, but also help Cooper’s team un-derstand its unique needs, which inturn assists efforts to recruit othermedical businesses to the city.

“We not only attract businesses fromoutside, but also help existing compa-nies grow and succeed,” said Cooper.The city’s BusinessStar program wasdeveloped last year to provide free pro-fessional coaching services to localbusinesses with growth potential. Inthe small-business incubator programoperated by the Henderson Chamberof Commerce, small businesses paynominal fees to lease office space, andalso receive access to financial coun-seling and advice from business pro-fessionals. The city’s One-on-One Vis-itation Program was developed to openthe lines of communication betweenHenderson businesses and city repre-sentatives. “Every week for more thanseven years, we’ve gone out to visitlocal businesses and discuss their chal-lenges and their plans for the future,”said Cooper. “We ask if they need helpor training. When we’re done, theyknow they have a new friend, and theycan us for help or advice. The founda-tion of our success is communication.”

North Las VegasMaintaining Relationships

North Las Vegas has a similar pro-gram to visit existing businesses,called the Business Retention and Ex-pansion Program. Mike Majewski, di-rector of economic development forthe city, said, “Companies consider-ing a move will almost always contactlocal businesses in their industry toget feedback. So, maintaining a goodrelationship with local companies not

http://www.crockettandmeyers.com

16 October 2007


DEVELOPMENT AUTHORITY

Churchill Economic Development Authority

Economic Development Authority of Western Nevada

Economic Development Authority of Esmeralda/Nye

Elko County Economic Diversification Authority

Eureka County Economic Development Program

Humboldt Development Authority

Lander Economic Development Authority

Lincoln County Regional Development Authority

Mineral County Economic Development Authority

Nevada Development Authority

Northern Nevada Development Authority

Pershing County Economic Development Authority

White Pine Economic Diversification Council

INITIALS

CEDA

EDAWN

EDEN

ECEDA

ECEDP

HDA

LEDA

LCRDA

MCEDA

NDA

NNDA

PCEDA

WPEDC

REGIONAL AUTHORITIES*

AREA SERVED

Churchill County

Washoe County

Esmeralda and Nye counties

Elko County

Eureka County

Humboldt County

Lander County

Lincoln County

Mineral County

Clark County

Carson City, Douglas, Lyon and Storey counties

Pershing County

White Pine County

only benefits them, it also helps oureconomic development efforts.”

Because it offers available land atreasonable prices, North Las Vegashas a history of success in attractingindustrial and distribution companies.However, Majewski said in recentyears, the city has been branching outinto other fields. Its Cheyenne Tech-nology Corridor project has been sosuccessful that land along the corridorhas been almost totally absorbed bycompanies taking advantage of fiberaccess, proximity to government in-stallations and access to major north-south freeways. Other projects under-way in the city include a technologycampus for UNLV and an acute-carehospital for the Veterans Administra-tion, slated to open in 2011.

North Las Vegas also has an aggres-sive retail program aimed at keepingup with the city’s rapid populationgrowth. “North Las Vegas’ growthrate is No. 1 in the U.S. for cities withpopulations above 100,000,” Majews-ki said. “Through our retail program,we get the word out that there’s a lotof potential here.” One retail center,slated to open in the first quarter of2008, a Hispanic-themed marketplacelocated in the older part of the city, isexpected to attract customers fromthroughout the Las Vegas Valley.

Optimistic Outlook PrevailsAcross The State

Economic development agencieslooking to recruit companies from

other regions are naturally affected bythe economies in those regions, aswell as by national conditions. How-ever, Nevada has traditionally weath-ered economic downturns better thanmost states, and its remarkably highgrowth rate provides a buffer againstslowdowns. Economic developmentagencies across the state are planningnew recruiting programs tailored toconstantly changing circumstances,and will continue to assist local com-panies wanting to expand. AsHollingsworth of NDA recently in-sisted, “I refuse to use the nationaleconomy as an excuse. Great thingsare happening here.”

Kathleen Foley is a freelance writerbased in Southern Nevada.

*Does not include individual city economic development departments.

http://embarq.com

18 October 2007

When you ask movers andshakers in Nevada what theirgreatest challenges are, virtu-

ally all of them say that staffing andemployment issues continue to causetheir biggest headaches. Despite thestate’s steady growth in population(6,000 new residents claim ClarkCounty as their home every month),the pool of potential employees is ei-ther inadequate in number or qualifi-cation to fill all the available jobs.

Some years ago, many businessesenjoyed an employers’ labor marketwith more employees in the field thanjobs. The reverse is true today, how-ever, as employers find it’s an em-ployees’ market with a scarcity ofqualified applicants almost across theboard. “In Las Vegas – in general forall industries – it’s much more chal-lenging to find qualified employees,”explained Doug Beckley, CEO of TheBeckley Group, a management con-sulting and business training compa-ny based in Las Vegas. CorneliusEason, president and owner of Priori-ty Staffing in Las Vegas, agrees. “Thebiggest challenge is finding peoplewho are capable candidates,” he said.

One of the hardest hit industries ishealthcare, which suffers critical short-ages nationwide in licensed professional

staffing, such as nurses, radiology tech-nicians and pharmacists. This scarcity isexpected to intensify in the comingyears as baby boomers age and the de-mand for services increases.

Nevada’s need is an especially acuteneed, according to Stuart Thompson,vice president of human resources atSunrise Hospital & Medical Center.“Nevada is 47 out of the 50 states incounting nurses per capita,” he said.Thompson finds it extremely difficult torecruit locally for a staffing requirementof around 3,000 employees. “There’ssuch a huge demand but not enough re-sources for the education system tokeep up,” he explained. Because localschools are unable to provide enoughqualified job applicants, Thompson isforced to look elsewhere for potentialemployees. “We really try to reach outto California and to the East Coast,” hesaid. “About 60 percent [of applicants]come from places other than LasVegas.” Relocation packages help tosweeten the pot although the high costof housing (compared to many loca-tions), along with noncompetitivewages, makes recruiting even harder.

Attracting a pharmacist to work in ahospital is especially difficult, accord-ing to Thompson. “We’re competingwith retail employers so a lot of them

[pharmacists] will apply for positionsthere because it’s more money,” he said.

Demand for Nurses Likely to Continue

The result of a multiplicity of fac-tors, the shortage of nurses is likely tobe an issue for some time to come, ac-cording to the American Associationof Colleges of Nursing (AACN).These factors include:• Insufficient enrollment in nursing schools.• Shortage of nursing school faculty.• Slow growing RN population.• Increased demand for nursing ser-vices.• Job burnout and high turnover.

Although nursing school enroll-ment increased more than 7 percentfrom 2005 to 2006, the number ofnurses graduating each year falls farshort of the number needed to meetthe demand in the labor market. TheAACN estimates that schools need toturn out 90 percent more RNs in eachgraduating class to even make a dentin the demand for their services. Oneof the biggest reasons enrollment isnot increasing is the shortage of qual-ified personnel in the schools. Ac-cording to the AACN, U.S. nursing

Dealing withStaffing Issues

Nevada Employers Struggle with Labor Shortage

October 2007 19

schools rejected more than 40,000qualified applicants to degree pro-grams last year because the schoolslacked the resources to include them.With school enrollments stagnating,the growth in the total population ofRNs in the country has slowed. In the1990s the nursing population grew ataround 14 percent per year, but by the2000s, the growth had dipped to about8 percent annually.

As the country’s population ages, thedearth of qualified healthcare profes-sionals will become ever more critical.The ratio of caregivers to the elderly inneed of care is expected to decrease by40 percent between 2010 and 2030.Rounding out the shortage factors is thechallenge of retaining nurses currentlyemployed in the field, particularly inhospitals, who are suffering burnout be-cause of staff shortages and high stress.More than 40 percent of hospital nursessay they are dissatisfied with their jobs,according to a study reported in HealthAffairs magazine.

The most obvious solution to theshortage is to increase the accessibili-ty to training, according to Thomp-son. “I’d like to see more educationalopportunities for anyone seeking a ca-reer in the health care profession,” hesaid. Under the right circumstances hebelieves that most healthcare jobsprovide great career opportunitieswith meaningful responsibilities andgood financial compensation alongwith respect from peers and the com-munity at large.

To increase educational opportuni-ties and to attract more students, thesestrategies have been found to be pro-ductive:• Professionally promote and adver-tise nursing programs.• Improve financial aid.• Increase and improve distance-learning programs accessible throughthe Internet.• Educate young people about the re-wards and benefits possible through a

wide range of healthcare careers.• Develop strategic partnerships withlocal businesses and non-profit orga-nizations.

Banking Industry Struggles with Staffing Issues

As a customer service-oriented busi-ness, the banking industry is also hav-ing a tough time filling its ranks withthe right people, according to StanWilmoth, president and CEO of Her-itage Bank in Reno. Although he saidhe can’t control the economy, Wilmothmaintains he can control the quality ofservice his customer experiences at thebank’s five Reno branches.

Because experience has taughtmany young bank customers to lowertheir expectations for the quality andoutcome of any banking interaction,selecting the right employees andtraining them to properly interact withclientele is even more critical. “We’relooking for a certain type of individualwho can to be trained to help ourclients make important banking deci-sions,” he explained. “Unfortunately,attrition is high.”

Nevertheless, training is paramountbecause not even college graduates canbe assumed to have the general knowl-edge and skills for entry-level positions;neither-do they possess the dedicationto provide the expected degree of cus-tomer service. Consequently, smallbanks such as Heritage now rely uponinternal training programs to bring newhires up to speed. In the not so distantpast, large corporate banks routinelyschooled new recruits through highlysophisticated and costly training pro-grams. Small banks reaped the benefitsof this policy whenever a pre-trainedcorporate bank employee joined thestaff of a smaller institution.

However, in today’s fiercely com-petitive banking environment, manyof those corporate training programshave fallen by the wayside as large

financial institutions reorganized andstreamlined their operations. “Thecentralization of decision-making inbig banks removes the option for localstaff to make those decisions on behalfof their clients, or in response to localmarket conditions,” Wilmoth ex-plained, “As a result, big banks are be-coming more impersonal and less re-sponsive, especially with regards tosmall clients and businesses targetedby niche banks.”

Recently aware that many “personalbankers” are merely an 800 number inthe telephone book, Heritage goes outon a limb to be accessible to its cus-tomers. “If you treat people the wayyou expect to be treated, you can’t gotoo far astray,” Wilmoth explained.Keeping employees happy paves theway to customer satisfaction. For ex-ample, at Heritage, corporate stockoptions are offered to all of its work-ers. “When you allow people to be anowner, they act like an owner,”Wilmoth said. Although it’s difficult tofind potential employees with just theright stuff, Heritage rises to the chal-lenge with fastidious recruiting, dili-gent training and consistent measuresto retain those who make the grade.

Employment Woes Ripple Through the Construction Industry

In accommodating the frenetic paceset by statewide growth, Nevada’scontractors are repeatedly compelledto find creative ways to resolve peren-nial staffing deficits, according to ErinRiccio, director of development salesand leasing for The Ribeiro Compa-nies in Reno. “During the last threeyears, so much construction activitywas in progress across the board, thatpotential recruits who showed up at ajob site were often hired on the spot,”she said. Even with the current declinein construction activity, which the 45-year-old company expects to last foranother 24 months, a reciprocal

Feature Story: Dealing with Staffing Issues

20 October 2007

increase in the availability of qualifiedworkers has yet to occur. “Quality la-borers are hard to come by, eventhough we’re seeing a plethora of ré-sumé submissions,” she said. The con-struction slump has rippled from theresidential to the commercial, originat-ing with the sub-prime mortgage melt-down, and magnified by the fact thatfewer businesses are electing to relo-cate to Northern Nevada. “Our coreproblem exists in our inability to guar-

antee access to a qualified labor poolfor companies seeking to establish apresence in Nevada,” Riccio explained.

Moreover, the labor pool suffers fur-ther evaporation when, as a conse-quence of Nevada’s skyrocket housingcost, fewer potential employees canafford to live here. “For those making$10 to $18 an hour, where are theygoing to live?” she asked. One poten-tial solution, according to Riccio,might include offering state-funded

subsidies or tax incentives to residen-tial developers to, perhaps, facilitatethe conception of planned communi-ties comprising.

Because the construction industrypossesses a long history that empha-sizes its ability to successfully weath-er the economic ups and downs, theRibeiro Companies’ executives re-main bullish on the future. “Nevada’sconstruction industry, as well as ourcompany, both remain very strong,”Riccio said. With its current staff ofmore than 120 employees, the RibeiroCompanies emphasized a team envi-ronment and offers a proactive contin-uing-education program, which hasbuilt loyalty and promoted bondingamong members of the workforce.“There’s a constant synergy connect-ing our five companies,” Riccio ex-plained. “We work as a team.”

Although Eason’s temp staffingbusiness is going strong with growthof around 25 percent expected thisyear, he said he finds it increasinglydifficult to find capable candidates forthe administrative, professional, ac-counting and special events positionshe needs to fill for his clients. “Appli-cants today are less skilled and havedifferent attitudes about employmentthan in generations past,” he ex-plained. Like Wilmoth, he finds itnecessary to train newly hired cus-tomer service recruits because so fewof the candidates possess the neces-sary skills.

The tight hiring market is evi-denced by the fact that around 10 per-cent of his corporate clients are nowusing his service to directly recruitpermanent employees. As he con-stantly searches for qualified workers,Eason expresses frustration that theoverpriced housing market repeatedlythwarts his effort to locate suitable jobapplicants. “As a community we stillhave to figure out how to provide af-fordable housing,” he said.

In consulting with his clients whorepresen t bus inesses such as


http://www.yesco.com

22 October 2007

healthcare, manufacturing, gamingand retail, Beckley also confronts theproblem of customer service. “Thebiggest challenge exists in industriesthat need people to deal directly withcustomers. They [employees] mightpossess the technical skills, but lackany interpersonal skills,” he said. Toimprove the hiring process, he adviseshis clients to devote more time and re-sources to attract a larger pool of can-

didates, and to be very selective, evenif it takes more time and money. To in-crease employee retention, he empha-sizes increasing the financial compen-sation, when possible, and improvingthe benefits package. “It’s more im-portant to focus on creating a work en-vironment where people enjoy theirjobs. Employees should be trulyhappy, and feel that they are making acontribution to the company,” he said.

Although the unemployment rate inNevada remained below the nationalaverage for a number of years, it wasequal to it this summer when the rateinched up to 4.6 percent, according tothe Nevada Department of Employ-ment, Training and Rehabilitation(DETR). The up tick was caused, to alarge degree, by the loss of 5,200 con-struction jobs due to the slump in thehousing industry.

Another contributing factor wasthe slowdown in job growth to only1.7 percent over the past year, whichis the lowest growth rate since 2002.Even so, economists point to Neva-da’s steady economic expansion, ahealthy mining industry and futuremajor projects, such as The PalazzoCasino and Resort, Encore at WynnLas Vegas, Project CityCenter andEchelon Place, as indications that thejob market will become stronger inthe coming months.

For employers looking to fill jobopenings, however, the problemstill remains – however, not with-out potential solutions, as businessleaders suggest taking the follow-ing actions:• Improve educational opportunitiesin Nevada for needed job skills.• Concentrate on developing a qualityinternal workforce.• Develop strategies to enable the con-struction of affordable housing.• Market Nevada as a family-friendlystate to attract community-orientedworkers.• Encourage psychologically healthyworkplaces that increase employeeretention.

Employers agree they need to be re-sponsible and proactive in bringingabout the positive changes required toimprove the difficult hiring situation inthe state. “The inability to attract theright people is a symptom of a largeroverall problem,” Beckley said.

Jeanne Lauf Walpole is a freelancewriter based in Northern Nevada.


http://www.capsource.com

FROM LEFT TO RIGHT:

Honey Borla, ERA Town & Country Real EstateSue Naumann, Tsunami Properties, Inc.Fred Trujillo, Turnberry West Realty, Inc.Joan Brooks, Keller Williams Market PlaceMyrna Kingham, Tower Realty Group

Andy Maline, One Cap RealtyRob Jenson, ReMax CentralStephen Redman, Windermere Anthem HillsPaul Bell, III, Prudential Americana Group

24 October 2007

Industry Focus: Residential Brokers

Recently, industry experts satdown at Cili Restaurant in LasVegas to discuss Nevada’s resi-

dential real estate market, includingloans, the housing market, media im-pact, workforce issues and competi-tion. Connie Brennan, publisher ofNevada Business Journal, served asmoderator for the event which as partof the NBJ’s monthly Industry Focusseries, brings industry leaders togeth-er to discuss issues pertinent to theirprofessions. Following is a condensedversion of the roundtable discussion.

Challenges in Residential Real Estate

Andy Maline: One of our biggest chal-lenges is educating the buyer aboutour market because the informationthat’s out there is not accurate.Honey Borla: The information report-ed by the media is my biggest concern– it’s extremely skewed. Many times,this information doesn’t even comeclose to actual fact. We need to teachthe general public – be it buyer orseller – that accurate informationdoesn’t come from a generalized pub-lic Web site. Fred Trujillo: One of the hurdles that Ihave encountered is the process of ed-ucating the buyer. We need to convin-vce the buyer that the sluggish marketcycle will resolve itself in due time.Most of my buyers are very astute andthey understand that when investingin the stock market – there are winsand losses. The same thing takesplace in the real estate industry. Paul Bell: A major concern is the neg-ativity being projected in the media.We have experienced this in the past,when many buyers waited, thinkingprices would go down however, theopposite happened.Myrna Kingham: I think educating thebuyers right now is one of the biggestchallenges. They feel if they wait sixmonths to a year, the market’s going

to be better for them. And, quite hon-estly, the market is really great rightnow for buyers. It used to be, that youcouldn’t get a loan unless you paidpoints, and those ran from six to 12points, depending on your credit. Cur-rently, we’re returning to a normal,stabilized market, where sub-primelenders aren’t out there distortingnumbers. Rob Jensen: I agree, we need to edu-cate the buyers. The market is obvi-ously a little slow, but we have seensome fairly good activity in sales. Ithink there’s going to be a lot of op-portunities. I have clients from LosAngeles who keep buying propertybecause they see this market as thenext Los Angeles. Stephen Redman: If I had to pinpointone problem that is going to grow inthe next 12 months, it is the loss of af-fordable products. We are facing acycle in the midst of a downturn, inaddition to a mortgage industry melt-down. It is going to take a lot of workto get through it. Sue Naumann: I think there’s goodnews and bad news about the LasVegas market. The good news is, thatwe have a lot of inventory, and the badnews, is we have a lot of inventory. Itdepends on which side of the fenceyou’re on – buyer or a seller. With the

Continued on Page 137

sub-prime loans going away, now isthe perfect time for investors to in-crease their rental properties. Theproblem in our industry is the frenzythat the speculators have created.Speculators want to make a quickbuck and move on, but real estate is along-term investment just like thestock market. Joan Brooks: As recently as last year,we were very concerned about afford-able housing in Las Vegas. Today, youcan purchase a nice home for$200,000 to $250,000 that is not inforeclosure. However, the strugglesthat mortgage companies have beengoing through, we have a problemgetting great programs for first-timehome buyers. They’re tightening upon the standards of mortgage lending– which is probably a good thing – butthey’re going to have to rethink it be-cause it seems that the pendulum isswinging in the other direction now.

The Media’s Role

Redman: I don’t believe the media un-derstand how the market cycles work.If they did, they would realize this is anatural thing, and the see glass is half-full. We may be looking at the samenumbers, but they’re putting a nega-tive spin on it.

October 2007 137


Maline: I can’t find where they aregetting their information, but I knowwhere we get our numbers and the re-ports are vastly different than whatthe media are reporting.Redman: The media just don’t under-stand that business has normal cycles.If they focused on that, they would re-alize that this is a prime opportunityto take advantage of reasonable loans. Borla: The market we experienced forthe past two years was not a normalmarket – it was fueled by new homeshortages. We were told that theycould not obtain enough permits, orbuild enough homes to satisfy the im-mediate demand. Buyers were put onwaiting lists, and told they needed tobid competitively on properties. I feelan artificial urgency was created,which also made sellers afraid theywould have no place to live if theysold their homes. Naumann: Well, it resulted in a feed-ing frenzy. When I first came to thismarket, residential development phas-es each comprised about 40 homes.Incrementally, between each phase re-leased, the price would increase.Builders decided to create this marketfrenzy - artificially increasing de-mand by reducing the number of unitsreleased in each phase to about 10homes. The market became so com-petitive that buyers moved into the re-sale market. If someone purchased ahome right before the big resale boom

that we had a couple of years ago,they may have paid $300,000, andwatched the property’s value jump to$500,000 as a result of the unusualmarket conditions. Today, they be-lieve those residential appreciationrates continue, and think their proper-ty should now be worth $700,000,when, in essence, it has not risen past$500,000. Rather than acknowledgingtheir $200,000 gain, they perceive thesituation as a loss.

Housing CostsIs the price of homes

still going down?

Maline: It depends on what informa-tion you read. Statewide – at the endof the first quarter – home sales werestill up 6 percent and Southern Neva-da was up 17 percent –based on medi-an price. These percentages also re-flect more people moving here withstronger and better incomes. Redman: Overall, the Valley’s homeprices are not going down, but certainpockets of the market have decreasingcosts. For example, Aliante andSouthern Highlands have certainareas where prices are declining. Ifyou averaged in the whole Valley, weare close to breaking even. You alsohave to factor in that people are over-pricing their homes so everybody iscomplaining they had to drop theirprice by $100,000. So if the property

Continued From Page 24

http://www.armstrongteasdale.com

138 October 2007

was overpriced to begin with, and wasreduced by $100,000, did the sellerreally lose $100,000? Jensen: I agree with you. GLVAR(Greater Las Vegas Association of Re-altors) statistics show the average saleprice is still about $300,000, give ortake. There were probably half asmany sales, and prices have gonedown, but the market is stabilizing.Borla: The home values are not really


going down. Anything under$300,000 is still turning. That marketis moving comfortably – it’s the in-between market that has lagged.

Mortgage Industry Issues How have issues in the mortgage

industry affected residential sales?

Redman: It’s a tremendous problem.The biggest challenge with the jump

in foreclosures, it often generates newset of comps. We need some type ofreasonability to come into play withunderwriters who won’t use 10 fore-closures or comps on a person’s homewho transferred to another market.Once you have a comp from a fore-closure, it becomes a part of the equa-tion for another person who buys orsells a home. Borla: I recently comped three con-dos. One sold for $146,000 and theother two went back to the bank withloan amounts of $100,000 and$106,000. That’s definitely going toaffect anything else coming into themarket. Redman: And, the secondary marketgaps and closes at $470,000. Any-thing that goes over that, we call ajumbo loan. Wall Street is no longerinterested in jumbo loans, and ifthese types of loans are out there,they’re priced at almost 12 percentinterest on a jumbo loan – with 20percent down. Wall Street right nowis just freezing the credit markets be-cause there’s so many different waysfor the ball to bounce, and that’sgoing to hurt us for awhile.Naumann: Before sub-prime loans be-came the way to buy property forentry-level buyers – if you wanted tobuy a house – you had to have moneydown, good credit, or you weren’t el-igible. So all of a sudden, it’s a crimethat somebody can’t buy a house iftheir credit is trashed or they have nomoney. Eighty/Twenty loans requireda minimum of 20 percent down – any-thing less than that and homebuyers’monthly payments were increasedsignificantly. The market is comingback to normal – where you have tohave funds to qualify to buy a house.Redman: I think it’s good for the com-munities because homebuyers have avested interest in their property. Borla: A number of years ago, the fed-eral government came out and said it

140 October 2007

Maline: Lenders arbitrarily switch theterms on the loans. Then they have amark-up and can’t find a property be-cause it’s percolating so much, butsign the papers because they don’thave much of a choice. They broughtthat upon themselves. Redman: We have to keep in mindthere are several different types oflenders. There are bankers, who areheavily regulated, and brokers, whoare likely to be regulated. But youdon’t want to give them all the work,because they take advantage of it. Brooks: There should be a standardsimilar to the standards that governevery other type of business. Thisbusiness is very important to theAmerican economy and to home-owners. Washington should under-stand the need for regulation. Wedon’t need banks in the real estateindustry. Borla: Washington understands that.The problem seems to be every timeWashington tries to regulate the in-dustry, lenders say if you tie theirhands, there won’t be any money

available to lend. That’s the threatthey have used for years. The bottomline is that any individual can take thetest and be regulated, however bro-kers must be licensed, but their loanofficers do not. Brooks: Loan officers aren’t held re-sponsible at all if anything happens. Borla: They don’t have to pay anytaxes, either.Jensen: Well, the loan problem hap-pened when Silver State Mortgageclosed their doors. In a cash-backdeal, several properties sat on themarket for a year. They were original-ly appraised at $500,000, but sold forjust $400,000. Silver State came ingiving them $500,000, and took$100,000 of it back. Redman: But let’s not put this all onthe lending institutions as totally run-ning amuck, because they have im-proved greatly compared to two orthree years ago. We actually have acommissioner, now, who monitorsmortgages. To say that lenders oper-ate without guidelines or rules isn’tquite accurate. We don’t want to putall our problems onto their shoulders. Maline: But who is enforcing it?Brooks: There are still lenders outthere offering homeowners $100,000for a loan. Bell: We have been seeing a real dif-ference between the investors. Well,for example, at a recent Seven Hillsclosing, a seller paid $10,000 for thebuyer’s closing costs. The loan officerhad to go to the second lender be-cause the first lender had used ap-praisals from prior experiences to cal-culate their decision. Whereas thesecond lender said, as long as thebuyer is putting 20 percent down, andthe seller is contributing $10,000 toclosing, they’re very comfortable withthis type of loan. Investors might havethese loans that will be the key to amarket rebound. Redman: The real need for change is


wanted to see everybody in this coun-try own a home. There were all typesof programs out there to accommo-date the first-time homebuyers. Keepin mind, many of these properties arenow going into foreclosure.

Lending EthicsShould lenders be regulated?

Brooks: The problem is mortgagelenders aren’t regulated. In the best oftimes, when so many homes were onthe market and selling, lenders wereputting loans together for their clientsat much higher rates to get them in ahouse. Now, what do you think hashappened to those people today? Theyhave gone into foreclosure and thoseare the people who couldn’t afford togo into foreclosure. They scraped themoney together to get the loan in thefirst place, and the lenders did as theypleased, charging those clients what-ever they wanted to get the loan done.And they got away with it. Thebiggest crisis across the country isthat lenders are not regulated.

October 2007 141


in the criteria differentiating primaryloans from investment loans. Thereshould be a different set of rules forsomebody that wants 40 investmentproperties – that’s a problem waitingto happen. Borla: But there aren’t enough guide-lines and we’ve all seen it – wherethese investors want to get under sim-ilar guidelines as homebuyers. Maline: The buyers should buy ahouse because they want a house tolive in. When they start looking at it asan investment, an investment risk be-comes involved. If you’re buying asan investment, you need to understandit’s just like playing the stock market.More than 60 percent of sellers whohave closed escrow on their listingshave participated in the buyer’s clos-ing costs. That’s huge.

Broker EducationEducational requirements for resi-

dential real estate brokers

Brooks: The Nevada Real Estate Divi-sion (NRED) has been talking about in-creasing the number of educationalcredits required as well as raising thenumber of training hours needed to be-come licensed. This way, undesirablepeople will be weeded out. Our dueshave also increased, so it’s not inexpen-sive for people to get in and do thispart-time. I think we have made it tooeasy for people to get certified. Weknow when we have an individual withthe potential to be a good Realtor, sowe train him or her in-house. Naumann: The state has now man-dated that licenses for first-time li-censes are only valid for one year,after which, the renewal period oc-curs biannually. Once licensed, youmust also compile 30 hours of con-tinuing education that follows cer-tain modules. There’s new bloodout there and they’re great. Some-times a part-time agent is more

focused and more productive thansomeone who sits and collects cof-fee cups. There are different typesof people now with different mo-tives. It’s a very flexible profession,however, you can’t be a “secretagent” in this business. The educa-tional requirements, as well as con-tinuing education requirements,have increased.

Affordable Housing

Brooks: We have great homes on themarket, as well as great interest ratesright now. Those are two strong pos-itives that people don’t see. If youlook back, interest rates were at 14percent to 15 percent and housingprices were low, people couldn’t af-ford the interest rates. Now we’vegot great interest rates and afford-able homes for sale in the $250,000to $350,000 price range. Moreover,many condos are for sale in the$100,000 to $150,000 price rangebecause people are dropping theirprices. There is attainable housingand great interest rates.Naumann: Well, I would love to livein a $3 million or $4 million house,but I can’t afford that. It should becalled attainable housing or work-force housing, because the Las Vegasarea has a huge workforce. We’reworking on a program specificallyfor workforce housing, and are get-ting employers involved to help withemployee retention programs thatmight offer employee incentives tohelp defray housing costs.Brooks: We definitely have a stronginventory.

Moving Forward

Redman: I think it will be less of abuyer’s market. The cycle is going tostart turning the other way.Maline: In the next year, a number of

homes will be put up for sale. Home-builders are purposely withdrawingand not releasing as many units permonth. They are waiting for the MLSinventory to decline, which meansbuyers are going to have to considerthe resale market – which will im-prove our situation in sales. Jensen: I think it’s still going to be abuyer’s market and buyers will havemany options to choose from. Brooks: Real estate has been around along time, and it’s not going to correctitself in a year. I don’t think we’regoing to see anything dramatic hap-pening in the next year – things willstart to level off. It’s going to take ustwo good years to get back. We have ayear’s worth of new home inventoryout there right now, and it’s growingevery day. It will still be a buyer’smarket, and I think we’ll also havegreat rates. But people are going tocontinue to be cautious because weare still on the downswing. It’s cycli-cal- the market will stay low, like it isnow, for a while.Naumann: I disagree. I think if wearen’t at the bottom, we are prettyclose. It’s just like the stock market,nobody knows how low it’s going togo or for how long. Borla: What will determine how ourmarket will look like in the next twoyears is the percentage of adjustablerate mortgages (ARMs) causing theforeclosures in this industry. That’swhat you have to consider. Trujillo: I think it will be determinedby employment. A healthy economyis driven by an employment-basedeconomy. Fortunately, our employ-ment-based economy is expanding.It’s the growth of certain external in-fluences that can stifle the economy.You can point to builders. You couldpoint to the lenders. You can point toa lot of different people. Regardless,we just have to wait for the cycle tofinish and start over.

Investing In Today’s Real Estate MarketBill Oakley and other industry experts offer advice on the real estate investment game.

October 2007 143

THE REAL ESTATE MARKETAN INVESTMENT OR BUST?

Investing in real estate is one way tofor people to diversify their finan-cial portfolios. Yet, problems

plaguing the mortgage lending indus-try, coupled with the housing marketslowdown, have put big questionmarks on the prospect. “People aremore reluctant to invest becausethey’re nervous about what’s going onwith real estate values,” said DavidGoldwater, founder and president ofGoldwater Capital LLC, a Las Vegas-based private money lender.

In reality, solid opportunities to in-vest in Nevada real estate exist, ex-perts said. The state is predicted to befastest-growing over the next 25 yearsin terms of population, according to aU.S. Census Bureau report entitled“Projected 2030, State Population andChange: 2000 to 2030.” Populationgrowth means more jobs, better de-mographics and greater income lev-els, Goldwater added. “What’s reallyimportant is to be as knowledgeableas you can about the market and un-derstand that every investment isabout risk, return and liquidity, andthat those things have to be balanced,”said Jeremy Aguero, principal analystwith Las Vegas-based Applied Analy-sis, an economic, fiscal and marketresearch firm.

Southern Nevada’s Commercial Market

Southern Nevada’s commercial realestate market is strong overall, ac-cording to industry experts. “If you’re

looking at activity and absorption,you have to be impressed by aboutevery segment of the market,” Aguerosaid. “More office, retail and industri-al is planned or under constructionthan at any time in our history.”

“More people are borrowing moneyfor commercial projects – retail andindustrial in particular – because thatis where the demand is,” Goldwatersaid. “So people want to build to sat-isfy it.” Also, more money is availablefor those types of projects, and fund-ing is easier to obtain at the largerlending institutions, he added.

Goldwater believes retail is also inhigh demand. Two emerging high-de-mand areas, he suggests, are NorthLas Vegas and the southwest LasVegas Valley. “You remember lastyear how everyone wanted to turn re-tail into single-family housing? Nowthey want to go the other wayaround,” Goldwater said.

Experts recommend investing inincome-producing industrial devel-opments and multi-tenant projectsthat have tenants with good credit.“Regarding industrial, if you can findthe land, you need to build it,”Aguero said.

The apartment development marketwill be a solid investment in the nearfuture because so much of the apart-ment inventory was replaced withcondominium conversions, said MarkDaigle, chief executive officer of theNevada region for Colonial Bank,which provides all types of lending.In addition, the proposed 40,000 hotel

rooms for Las Vegas will boost theneed for apartments. “We’re lookingat continued declines in vacancy ratesand significant increases in rentalrates,” Aguero said.

Investing in office products is notrecommended at this time, as vacan-cies were up (33.9 percent), and con-struction and employment in the of-fice sector were down at the secondquarter’s end, according to Colliers.Office condos, a for-sale product, hadflooded the market.

Southern Nevada’s commercialmarket isn’t expected to change dras-tically in the next few years, but couldexperience a lull as residential inven-tory gets absorbed. “There is lots ofspace coming online, and it will bepretty tough to be able to absorb it,”Aguero said. “The vacancy rate willescalate through the end of 2007. Thatwill make things a little softer.”

Northern Nevada’s Commercial Market

The Northern Nevada commercialreal estate market is evenly balanced,with all segments doing well. Indus-trial is steady, with good demand. Thevacancy rate was 7.6 percent at June’send, according to Colliers Interna-tional’s Reno market research.

“We’re seeing some good growth,”said Harvey Fennell, commercial de-partment head for Dickson Realty – aresidential and commercial real estatebrokerage in Northern Nevada. A lotof retail has been built in the past year

Building Nevada: The Real Estate Market

144 October 2007

but not in excess, and customers existfor those new centers. The vacancyrate at the end of 2006 was 8.23 per-cent, Colliers’ statistics showed.

In terms of office products, somepockets of oversupply exist, such asin the South Meadows area, south ofReno, whereas some areas, such asSpanish Springs, north of Sparks, areshort, Fennell said. Vacancies as ofJune’s end were 12.9 percent, ac-cording to Colliers. “It’s not severelyoverbuilt,” he said. “Vacancies canjump up and go back down again asthings absorb.”

Multi-family housing is solid andlikely will remain into 2008 and 2009.People who might have moved intosingle-family units and now can’t af-ford them will be in the apartmentmarket, Fennell said. In addition, thesingle-family houses that have beenup for rent will disappear as people

sell them. “Consequently, we’ll seevacancies in apartments start to de-cline,” Fennell said. “That will be avery strong segment. We’ll probablysee some upward pressures on rentsas apartment vacancies fall.” Thelarge number of condominiums com-ing on the market, however, could af-fect the apartment rental market, de-pending on condo prices. If peoplecan afford to use their rent monies tobuy a condo, apartment vacanciescould increase.

Over the next few years, commer-cial real estate will remain a viable,steady market, Fennell predicted.

Pros and Cons of the Commercial Market

When purchasing a commercialproperty, Fennell recommends mak-ing it a long term investment. The ad-vantages can include a reasonable rateof return in the short-term, apprecia-tion over the long-term, along with atax benefit. “This doesn’t necessarilyhappen with residential investments,”Fennell said. “However, most com-mercial property investors do reallywell if they hold [their investment]long enough – about five to 20 years.”Unlike with residential real estatetransactions, less emotionalism is in-volved in business-to-business com-mercial deals. It isn’t hard to get intothe commercial real estate market, nordoes it require mass quantities of cap-ital. “The market makes a wide selec-tion of reasonably priced, smaller, in-vestment properties available forpurchase,” Fennell said.

To avoid these hazards, view thepurchase of any commercial propertyas a long-term investment, rather thansomething you’re going to flip out ofin a hurry, Aguero advised. “It’s along-term play right now,” he said.“It’s hitting singles and doubles in an-ticipation of a home run, not swingingfor the fences on a big deal.” Avoid

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areas that have poor infrastructure andwhere significant cash flow is re-quired to make them work, Aguerorecommended.

The Land Market

“It’s [Southern Nevada] a little bitrisky at the moment,” Aguero said.“The price of land has escalated from$200,000 an acre to $700,000 an acrein the last two years.”

It’s a difficult time to evaluate pro-jects such as raw land development,Daigle said. If your projected timingis short and you’re carrying debt, theunanticipated money you’re payingquickly eats into your expected pro-ject return.

Currently, land demand is low.Homebuilders are continuing to sell-off acreage they bought over the lasttwo years. “It’s a situation wherethey’re being forced to sell undevel-oped land off their balance sheets,”said Bill Oakley, First National Bankof Nevada’s Southern Nevada region-al market president.

Similarly, demand for raw land inNorthern Nevada is minimal as a re-sult of the downturn in residentialhomebuilding, builders halted all landpurchases. In addition, many of theprojects that were underway have ei-ther been sold or put on hold.

“Certainly there is a long-termshortage of developable property, par-ticularly in the Las Vegas Valley, so atleast for the immediate future, there isprobably an oversupply,” said Fennell.

Southern Nevada’s Residential Market

Residential housing in SouthernNevada is overbuilt, with lots of in-ventory that needs to be consumedand very little is currently under con-struction. Permits are down substan-tially for new homes, Oakley said.The region is experiencing an all-


time high in existing homes. Nearly27,000 units were up for sale as ofmid-August.

“We have too many houses thatwere bought by investors,” Oakleyadded. “If you drive through theneighborhoods, you’ll see houses thathave been owned for two to threeyears and never lived in, with for saleand for rent signs. When the marketgot hot, it became overheated.”

It’s a buyer’s market. People look-ing to purchase a home to live in, notto flip, should move forward. “If youare a qualified buyer, can obtain con-ventional financing and don’t have toover-leverage yourself to get into aproperty, there’s nothing wrong withbuying at this time,” Daigle said.

Experts suggest opting for a moregeneric home, something in the mid-dle of the block and not the most ex-pensive. Purchase a home that’s with-in your means and ensure you canmake payments on it without relyingon lease income. Factor in the addi-tional costs, such as utilities, repairs,maintenance, insurance and propertytaxes, Daigle advised.

Foreclosures on brand new homesin good locations present good oppor-tunities. Nevada had the highest fore-closure rate (1 in every 175 house-holds) in the country as of June 2007,according to RealtyTrac, publisher ofthe “Monthly U.S. Foreclosure Mar-ket Report.” The preponderance ofthose foreclosures was in SouthernNevada. It is important to understandwhat’s going on in the market andneighborhoods around you, in termsof foreclosure activity which can havean impact on the value of your prop-erty the near term.

It likely will be 18 to 24 months be-fore the residential inventory dropsback down to a reasonable, four- tosix-month level, Oakley predicted.The proposed Strip projects – Eche-lon Place Resorts, CityCenter andmore – should bring more workers to

146 October 2007

the area and help absorb the residen-tial inventory.

“They’ll be buying and rentinghouses, and possibly pushing marketsa little further away, like Pahrump andMesquite. Plus a number of new mar-kets, not yet on the drawing board,will likely be established somewherein between the Las Vegas Valley andthe outlying communities,” he said.

Northern Nevada’s Residential Market

In terms of residential real estate,Northern Nevada, too, is experiencinga buyer’s market, with a large quanti-ty of existing inventory currentlyavailable. Paradoxically, as recent as2004, the region sustained a seller’s

market so extreme, fewer than 500properties were available.“In some parts of the market, we sawupwards of a 32 percent apprecia-tion,” said Nancy Fennell, presidentand co-owner of Dickson Realty.

However, with conditions nowfirmly in favor of the buyer, newhomes led the market in terms ofgranting concessions and incentivesto buy. Purchase incentives offered byhomebuilders were diverse and cre-ative, and included instances wherethe seller prepaid up to two years withof the new home’s association dues,or two years worth of mortgage insur-ance premiums. In some cases, sellersabsorbed the lot premiums, while oth-ers offered free upgrades worth up to$70,000.

The market will adjust over aboutthe next 18 months, and inventorywill come down, Fennell predicted. “Ithink people are confused about thegloom and doom of the housingslump,” she said. “It is a short-termproblem. We’re going to go into a re-balancing act. For many years, we hada 3 percent to 5 percent annual appre-ciation. We’ll return to that.” Andlenders are currently leading the waytoward establishing a fair marketvalue as they divest themselves offoreclosed-upon properties.

Pros and Cons of the Residential Market

One advantage to investing in resi-dential real estate is that one can al-ways sell a house. You might not getthe amount you want, but you can al-ways lower the price and sell shouldyou want to get out, Oakley said.

Buying a home ensures that you’llhave more control over what you’llpay and an incredible range of optionsfrom which to select from which toselect. “In the 20 years I’ve been inthis business [in Northern Nevada],


I’ve never seen the kind of variety, di-versity or amount of inventory avail-able for a buyer to choose from,” Fen-nell said. Interest rates remain low –anywhere from 6 percent to 7 percenton a jumbo loan, and lenders stillhave money to lend.

This is not the time, however, topurchase and flip a home. “We’regoing back to where residential realestate represents a component of youroverall portfolio as a minimum three-to five-year investment,” Fennell said.“If you’re looking for a short-term in-vestment, I think you should lookelsewhere. You need to be a littlemore careful and make sure the basicsthat create value are in place – loca-tion, condition, construction and ar-chitectural style,” she said.

Financing Issues

While two years ago, buyers couldchoose from an amazing array of ex-otic loan products that were availablethrough a huge selection of mortgagebrokers that no longer is the case.Today, there is less liquidity andavailable credit, making loans moredifficult to get. This has greatly nar-rowed the margin for error amongborrowers. “What’s different relativeto a year ago was if you were off or ifyou left a little margin for error, thatwas okay because there was alwaysan alternative form of financing or away to buy a little bit of time,” Gold-water said.

The issue of financing will remain aproblem over the next couple of years,Harvey Fennell predicted. “It proba-bly will be the summer of 2008 beforethings calm down,” he added. “And itcould get worse. The markets are real-ly unsettled.”

Consequently, borrowers likely willhave to put more money down and,undoubtedly, have to be much morecautious. “You have to be a prudent

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borrower with an exit strategy, haverealistic assumptions based on timeand know the market conditions whenyou approach a loan,” Goldwateradded. Don’t get optimistic about po-tential rent increases, and be carefulwith variable-rate loans, advised Har-vey Fennell.

Other Investments

Another way to invest in the real es-tate market is to invest in others’ realestate debt - that of developers, for ex-ample. “If you’re nervous about thereal estate market, real estate debt atthis time is something that can takeyour risk profile down while givingyou some exposure to real estate,”Goldwater said. “To ignore real estatedebt [as a potential investment] Ithink is a mistake.”

Real estate debt is available throughdeeds of trust and other instruments,such as private funds and mortgage-backed securities. Deeds of trust aredeal-by-deal investments. You knowwhat specific piece of land it is you’veinvested in. You can secure your in-vestment on the actual real estate, anadvantage in today’s market, Goldwa-ter added. You can charge more inter-est, 13 percent to 14 percent on firsttrustee. “The worst case scenario isyou get a very cheap piece of landback,” he said. “The best case sce-nario: You end up earning 13 percenton the whole transaction.”

REITs (Real Estate InvestmentTrusts) work differently than first-trustee investments, but are anotherway to invest in commercial and resi-dential real estate business. A REIT isa company that owns, and most oftenoperates, income-producing real es-tate such as apartments, shoppingcenters, offices, hotels and warehous-es. Some REITs also engage in fi-nancing real estate. The shares ofmany REITs are freely traded. Hun-

dreds of different types of REITsexist, so do your homework before se-lecting one in which to invest.

REITs are classified in one of threecategories including equity, mortgageor hybrid. Equity REITs are primarilyreal estate operating companies thatengage in a range of real estate activi-ties – they own and operate income-producing real estate. Mortgage

REITs extend credit directly throughthe acquisition of loans or mortgage-backed securities. Hybrid REITs ownsproperties and extends loans to real es-tate owners and operators. IncludingREITs in an investment program helpsbuild a diversified portfolio.

Doresa Banning is a freelance writerbased in Northern Nevada.

148 October 2007

Crisci Builders Completes Bank of America at

Blue Diamond CrossingLas Vegas-based general contrac-

tor Crisci Builders, announced thatconstruction of the new Bank ofAmerica banking center at 4112Blue Diamond Road has been com-pleted. The general contractor pro-vided ground-up, shell constructionand interior build-out for the projectin Blue Diamond Crossing commer-cial center. Blue Diamond Crossingrepresents the 16th Bank of Americacenter Crisci Builders has construct-ed in Nevada since 2003. The pro-ject costs totaled approximately $1.5million. Construction commenced inFebruary 2007, and was finished intime for the banking center’s recentgrand opening.

Olympia Gaming Closes on Land for New Resort

One of Northern Nevada’s mosthighly anticipated resorts will beginconstruction early next year. OlympiaGaming announced that it has acquiredapproximately 14 acres from RED De-velopment for the $800 million Leg-ends Marina Casino-Resort-Spa pro-ject. Having spent the past yeardesigning the lakefront site and meet-ing with the community leaders andcity officials, Olympia Gaming willbegin building a project that will be anintegral part of RED Development’s1.2 million-square-foot Legends atSparks Marina destination retail, enter-tainment center. The development isscheduled to break ground during thefirst quarter of 2008, and open in late2009 or early 2010.

LaPour “LEEDs” the Way with New Suburban Office Development

Lapour, a regional commercialreal estate development firm, re-cently broke ground on a $19 mil-lion, three-story, 70,000-square-foot LEED-registered officebuilding, located at the southwestcorner of Diablo and Interstate 215Frontage Road just north of RussellRoad. LaPour is a member of theUnited States Green BuildingCouncil and is committed to devel-oping LaPour Corporate Center inan environmentally responsiblemanner. Upon completion, the pro-ject will be LEED (Leadership inEnergy and Environment Design)certified – the guideline for con-struction, development and designof “green” buildings. Completion isslated second quarter of 2008.

Parkway Pointe Office BuildingWelcomes First Tenants

Leasing activity is heating up at Park-way Pointe office building, where itsfirst tenants have taken occupancy andlease transactions for several others arebeing finalized. The 52,000-square-foot Class A professional buildingwhich opened in the first quarter of2007, located on the western side ofthe Las Vegas Valley. Four tenants havealready taken residency at ParkwayPointe and additional companies are innegotiation for existing spaces, whichmay measure from 1,200 square feet to26,000 square feet.

Second Phase of Tahoe RenoIndustrial Center Opened

Lance Gilman Commercial RealEstate Services announced the open-ing of the second phase of the TahoeReno Industrial Center, 10 miles eastof Sparks on Interstate 80. Develop-ment Arts, Inc., a Reno real estatedevelopment company, acting asEagle CPT LLC, was the first to pur-chase land in the second phase whenit acquired 100 acres. The companysaid it plans to build a 1.9 million-square-foot industrial park on thesite called the West America Com-merce Center. Situated in Eagle Val-ley, the West America CommerceCenter will be built in three phases,with plans to break ground on thefirst 600,000-square-foot structure inSeptember. The company will buildanother 600,000-square-foot build-ing, and then, pour a pad for a thirdsite designated build-to-suit.

Nevada Cancer Institute Expansion

Nevada Cancer Institute (NVCI) an-nounced construction is currently un-derway on new laboratory space at itsflagship facility at One BreakthroughWay in Las Vegas to accommodateNVCI’s growing patient volume. Theexpansion will create five more patientexam rooms, for a total of 14. The newconfiguration will improve patientflow and allow for a second nurse’sstation. Additionally, 5,000 square feetof new lab space is being constructed.When completed, the project will addthree new labs to NVCI’s facility,bringing the total to 12. The four-storybuilding has two wings for patientcare, research and education.

LaPour Corporate Center

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Chamber Ad

150 October 2007

cies. They laundered money throughonline gambling sites using accountsset up with stolen credit card numbersand victim’s identities – some 350transactions at 43 different online wa-gering sites, using more than 130compromised credit card accounts.They lost some money, but withdrew“cleaner” winnings and transferredthem to online bank accounts theycontrolled.

Often, money is indistinguishablefrom electronic information that pro-vides the cyber-key to money trans-fers. Electronic monetary transactionsare predicated on information-basedcredentials. Those credentials might(falsely) identify a city treasurer or anindividual applying for a credit card.We have labeled crimes based onelectronic lies identity theft, but weare really dealing with a variety offrauds based on impersonation – im-personation that has been made easierin an electronic world where nobodycan see who you are.

As a society, we have tended toconcentrate on making personal dataharder to steal. We have becomemore educated about phishing at-tacks and the perils of disclosing per-sonal information online. We nowlimit the use of our social securitynumbers and other personal identi-fiers. We appropriately condemn asscandalous personal informationstolen from companies, banks, uni-versities and government data bases.

We also focus on clean up anddamage limitation. We have passed

laws dealing with disclosing datacompromises. A number of states,including Nevada, allow actual orpotential victims of identity theftfraud to freeze their credit reportswith the three major credit reportingagencies, thereby preventing anyonefrom opening any form of credit inthe victim’s name. This is importantbecause it does not take much per-sonal information to apply for acredit card in someone else’s name.Also, Nevada and a few other stateshave some type of identity theftpassport – programs that officiallyrecognize victims of identity theftfrauds in order to assist them in re-establishing credit and in defendingagainst the claims of merchants whohave been swindled by the identitythief. The key step in obtaining anidentity theft passport is for the vic-tim to produce documentation togovernment officials to prove thatperson’s identity.

Fraudulent transactions threatenus all, not only financially, butphysically, if they are used to fundterrorist schemes. We not onlyneed to continue what we aredoing to combat financial crimes,but we also need to think hardabout additional steps that willfundamentally alter the incentivesand opportunities relating tofraudulent transactions.

Money is no longer just a physicalcommodity. We have not yet identi-fied the complete set of strategies nec-essary for its safekeeping.

ccomplished bank robberWillie Sutton is famouslyknown for answering whyhe robbed banks by say-

ing, “Because that’s where the moneyis.” Where is the money today? Inearly June of 2007, thieves were ableto shift nearly $450,000 from a city’sgeneral fund by using a spyware pro-gram to mimic the computer strokesmade by the financial officer of asmall California city. The thieves ob-tained bank passwords in this mannerand first wired $90,000 to a bank ac-count in North Carolina. The follow-ing day, emboldened by their success,they wired an additional $358,000from the city’s bank account to a bankin Michigan.

A month later, in early July, a courtin London sentenced three “cyber-ji-hadis” to sentences between six-and-a-half to 10 years for inciting Mus-lims to wage holy war onnon-believers. According to washing-tonpost.com, the men made more than$3.5 million in fraudulent chargesusing credit card accounts stolen on-line – some from the United States viathe Internet black market for stolenidentities. They then compiled shop-ping lists for items that fellow ji-hadists might need for their battleagainst the American and allied forcesin Iraq, including GPS devices, nightvision goggles, and survival gear.They purchased hundreds of prepaidcell phones and more than 250 airlinetickets using 110 different creditcards at 46 airlines and travel agen-

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Should Nevadans be threatenedby modern-age bandits?Protecting Nevadans Pockets

S P E A K I N G F O R N E V A D A

Attorney General Catherine Cortez Masto

October 2007 151

annuities. CDs typically offer interestrates not much higher than the rate ofinflation. Once taxes are calculated, theCD often loses its purchasing power.While CDs can be a part of an invest-ment strategy in retirement, most re-tirees will need the long-term growthpotential offered by stocks. The propor-tion of a portfolio that should be instocks depends on age, risk toleranceand growth needs.

Jimmy Lee, CFS, is the managing part-ner and CEO of The Wealth ConsultingGroup.

significant dent in a baby boomer’s re-tirement nest egg.

The longer a person lives, the more heor she will benefit from delaying the startof Social Security pay. Although one canstart receiving checks as early as age 62,the amount of the checks increase thelonger one waits, up until age 70.

Assuming You'll Be Able to Work As Long As You Want

Baby boomers are famous for pro-claiming that they'll work past retire-ment age. A recent AARP study found79 percent of potential retirees predict-ed they would continue working atleast part of the time during their retire-ment years. How they'll actually feelonce they're in their 60s and 70s,though, is an open question. Right now,the typical retirement age is 62, accord-ing to the Employee Benefit ResearchInstitute, and 40 percent of retirees saythey left the workplace earlier thanthey'd planned, often because of illness,disability or layoffs. In fact, 42 percentof women over the age 65 and 38 per-cent of men in the same age group havedisabilities, according to the U.S. Cen-sus Bureau. Only 12 percent of peopleover the age 65 are still in the work-force. Many people find that even with-out chronic health problems, their ener-gy begins declining in their late 60s and70s, although a few are able to workinto their 80s or even 90s.

Locking in Poor ReturnsRetirees do this in a number of ways,

but the two most common are certifi-cates of deposit (CDs) and immediate

s baby boomers near retire-ment, they're discoveringthe pitfall that previous re-tirees have been complain-

ing about for years – insufficient retire-ment preparation.

Although a wealth of information isavailable on the subject of retirementplanning when the time is near, little hasbeen written about the fundamental im-portance of planning for retirement earlyin life. Errors made in the years ap-proaching retirement can haunt a personfor life as the stakes are often very high.A retiree can easily end up with lessmoney, or less retirement, than planned.Or can face big tax bills that could havebeen avoided had he or she been betterprepared. Here are some of the mostcommon mistakes made in retirementplanning and how to avoid them.

Underestimating Life ExpectancyFinancial planners used to routinely

create retirement plans that stopped atage 85, because the chances seemedpretty good that clients would be deadby then. The average life expectancy atage 65 is 10.3 years for men, 12.4 yearsfor women. But averages don't alwaystell the truth. You may be in betterhealth than the average person, take bet-ter care of yourself or have better DNA.

Another topic among baby boomersis the cost of long-term care facilities.Surveys have shown that one out of twopeople will require some extended stayin a long-term care facility. With thecost of a long-term care averaging$64,000 per year as an average acrossthe United States, that would make a

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Baby Boomer MistakesRetirement Preparation

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planning, urban design and interiorservices in commercial, government,educational, resort and hospitalityand residential settings.

Nevada Companies Create New Jobs

The Nevada Commission on Eco-nomic Development (NCED) reportedthe number of new jobs created by ex-panding Nevada companies during thepast fiscal year has increased. In 2007,Nevada’s expanding companies report-ed 1,744 new jobs companies comparedto 1,196 in 2006. The three largestNevada company expansions were: Mi-crosoft Licensing, providing 300 newjobs; Zappos.com, providing 280 newjobs; and PetsMart, providing 200 newjobs. Although the housing market rep-resents a major economic stimulus-both national and local- the fact that thisindicator was extremely sluggish for theU.S. and Nevada did not appear to ad-versely affect Nevada’s long-runningexpansion. The state is still growing,and people are still moving here and ab-sorbing housing vacancies.

Bank of George Receives Permission to Organize

Bank of George received permissionfrom the State of Nevada Financial In-stitutions Division to organize. It alsoobtained the approval of its applicationfrom the Federal Deposit Insurance Cor-poration (FDIC). Bank of George wasfounded by Chairman Edward M.Nigro; the bank is organized and direct-ed by Antonio T. Alamo, M.D., DipakDesai, M.D., Timothy Herbst, WilliamHornbuckle, Gary Johnson, Rudy A.Manthei, D.O., Troy Nelson, MichaelNigro, Todd Nigro,Alan Sklar, JonathanSchwartz and Diane Fearon. Bank ofGeorge will be located in Desert CanyonBusiness Park, at Russell Road and theI-215 Beltway, and is scheduled to openin the fall of 2007.

Deposit Alternative CompanyEstablished in Nevada

The founder of one of Australia’s de-posit bonding companies expanded itsinternational reach by opening the firstdeposit bond firm, Deposit Alternative,in Las Vegas – the first of its kind in theUnited States. A deposit bond is a sub-stitute for the cash deposit requiredwhen purchasing property, and can beissued for up to 20 percent of the totalpurchase price. Deposit Alternative canissue deposit bonds for property pur-chases and can also provide depositbonds for all or part of the propertytransaction’s deposit requirement for pe-riods of three to 36 months.

Prudential CRES and IPG Commercial Merge

Prudential CRES announced it hasacquired IPG Commercial Real Es-tate, forming a partnership that willcreate synergy between two firms inSouthern Nevada’s commercial realestate market. Prudentials PresidentArt Carll said the companies will nowbe branded Prudential CRES | IPGCommercial Real Estate. The acquisi-tion brings the newly re-branded orga-nization to a staff of 24, including 17licensed brokers. Prudential CRES |IPG offers advisory assistance andconsultation for investments, site se-lection, leasing, opinion of value, ac-quisition and disposition services.Combined, the two companies havefacilitated more than $200 million intransactions this past year.

Lundahl and Associates RebrandsCollaborative Design Studio is the

new name for Lundahl and Associ-ates, which has worked out of theReno-Tahoe region for more than 30years. The firm was founded in 1976by Jeff Lundahl in Incline Village.The newly restructured firm will con-tinue to provide architecture, master-

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October 2007 153

he news is full of storiesof suspicion and liabilitydue to missing electronicfiles: Missing e-mails

from Karl Rove; deleted e-mailsfrom Arthur Anderson; $29.2 mil-lion awarded in a discriminationcase after jury was instructed to“infer that [missing e-mails] wouldhave been unfavorable.”

As a result of recent changes tothe federal court rules, lawyers rec-ommend that all companies have awritten electronic document reten-tion policy. At some point, mostbusinesses can expect to be askedto produce electronic documents.Failure to do so can result in sanc-tions or an instruction to the juryagainst the company. Under thenew rules, all parties must disclosetheir electronic documents or infor-mation about those documents – in-cluding where they are kept – earlyin a case.

The new rules contain a safe harborif electronic information was “lost asa result of the routine, good-faith op-eration of an electronic informationsystem.” A company is protected fromadverse instructions, or even a pre-sumption of wrongdoing, if docu-ments were destroyed in accordancewith a written policy. Because of this,all companies should have a policy re-garding the retention and destructionof electronic information, includinge-mails.

Even companies not guilty ofwrongdoing need to be concernedabout favorable evidence that could

be lost or selectively disclosed. Thecompany that deletes its e-mail orother files too quickly may leave it-self without the proof necessary tofend off a suit. An employee suingabout harassment, for example, canbe expected to copy incriminating e-mails, like sexual jokes from a co-worker, but not exculpatory e-mails,such as the employee’s response of“LOL” (“laughing out loud”) or sug-gestive e-mails he or she initiated.Without an accurate e-mail record, ifan employee claims to have been ha-rassed by e-mail or to have reportedharassment by e-mail and the com-pany would not have the means todisprove the claim.

To avoid presumption, an elec-tronic document retention policymust require keeping all relevantrecords until the possible statute oflimitations has expired. But thattime frame depends upon the con-tent of the documents. A meaning-ful policy must provide a means ofsorting the documents, a filter thatwill screen for any sensitive elec-tronic files, including e-mails, filesand retain the relevant ones. Thepolicy must cover all electronic de-vices, including PDAs, laptop com-puters, and even home computers,if company business is conductedon them. The policy needs to becrafted with the assistance of coun-sel and IT experts. Then, it must befaithfully implemented, includingsystematic auditing to ensure com-pliance. Failure to do so could leavea company in the worst of all

positions, without the evidence itneeds to defend itself and yet, sub-ject to an adverse inference for fail-ing to retain required records.

A good company need not fear itselectronic records. Rather, it needs toplan what records to keep, how andwhere to keep them, and how therecords can be accessed if litigationdoes arise.

Ann Lyter Thomas is an attorney withKolesar & Leatham and practices pri-marily in business litigation andlabor and employment law.

T

Electronic Document Retention PoliciesA Business Necessity

P O W E R O F A T T O R N E Y

154 October 2007

Creating Economic Hardship in Clark County

plexes has been severely reduced,causing rents for existing apartmentsto rise sharply.

Increases in industrial and commer-cial rents have been passed on to localconsumers in the form of higherprices. As a result, the cost of living inLas Vegas now exceeds that of othermajor western cities such as Phoenix,Denver, Salt Lake City and Portland.

Escalating costs are having an in-creasingly negative impact on ClarkCounty’s ability to attract and retainthe new businesses needed to supportand diversify its growing economy.Until recently, Southern Nevada was amagnet for companies trying to escapehigh-cost environments in Californiaand elsewhere. This advantage hasnow disappeared.

“Big corporations look at our landprices and they just turn away,” said alocal business leader. “Our land pricesmake any deal out of the question, nomatter what incentives we offer.”

Some of the most serious effects ofthe federal land policy are being feltby a demographic group that is criti-cal to the continuing success ofClark County’s economy: low- andmoderate-income workers, includingschool teachers and many hotel/casi-no employees.

Living costs for workers in ClarkCounty’s all-important hospitality sec-tor are increasing much faster thanearnings. The county’s median homeprice has surged more than 75 percentin the past five years, overwhelming

wage increases during that time. In-creased living costs will ultimatelyforce hotel/casinos to offer higherwages to attract new workers and re-tain existing staff, reducing profits andmaking new growth-oriented projectsmore difficult.

Higher living costs are also a majorcontributor to teacher shortages, nega-tively impacting the education of thou-sands of children in the county’s pri-mary and secondary schools. Once,Clark County’s relatively low cost ofliving was a major selling point forteacher recruitment.

“However, with dramatically esca-lating housing costs and with newteachers more interested in purchas-ing-power than retirement benefits, re-cruiting teachers is becoming increas-ingly difficult,” statewide schoolofficials recently reported.

In the last seven years, the Bureauof Land Management auctioned only20 square miles of public land inClark County, far short of the 29square miles of suitable land per yearneeded to maintain the area’s currentpopulation density. If this policy con-tinues, overcrowding and escalatingcosts will make Clark County a pro-gressively less desirable place to liveand work.

Charles F. Barr is a research analystspecializing in economic and demo-graphic modeling and a policy fel-low of the Nevada Policy ResearchInstitute.

ver since Nevada achievedstatehood in 1864, federalagencies have controlledmost of the state’s land, re-

fusing to release more than tokenamounts for construction of homes,schools, parks and businesses.

Currently, about 89 percent ofClark County’s surface area is man-aged by the federal government. Untilrecently, this situation had little im-pact on day-to-day living for mostcounty residents. Now, however, it iscausing economic harm and, in manycases, genuine hardship to local de-velopers, workers, renters and would-be homeowners.

That is the subject of a recent studyI conducted for the Nevada Policy Re-search Institute titled, “The FederalLand Stranglehold – and What NevadaCan Do About It.”

The study details how government-induced scarcity of buildable land —in an area surrounded by miles ofwide-open spaces — has triggeredmassive increases in the prices of anyremaining privately-owned land.

Today, average families can nolonger afford mortgage payments formedian-priced homes. Numerousmulti-million-dollar residential andcommercial projects have been can-celled or put on hold, resulting inthousands of lost construction jobs,simply because the high land priceshave made such projects too costly tobuild. Construction of affordabletwo- and three-story apartment com-

by Michelle Danks

E

Federal Land Policy

F R E E M A R K E T W A T C H C O M M E N T A R Y

October 2007 155

easily confused and may sign a petitionthat they would normally oppose ifthey had more information.

If the same issue were brought be-fore a committee in the Nevada Legis-lature, for instance, our elected repre-sentatives would ask numerousquestions and get to the bottom of whatentities are really behind the legisla-tion. The entire issue would be com-pletely vetted, in the open, and if itwent forward, it would do so with a se-rious light being shined upon it.

This process is not perfect. Lobbyistswith special interests will attempt to in-fluence an outcome and can havetremendous sway with governmentalbodies. However, they will be forced toanswer specific questions about thelegislation, its effect on the people ofNevada and any consequences its pas-sage may have on residents.

Next year, there will undoubtedly beseveral ballot questions that voters willhave to deal with. For example, billion-aire Venetian Hotel owner SheldonAdelson has been talking about fund-ing an initiative to change the waytransportation is funded in SouthernNevada. Is he really that interested inour roads and highways? Or is he moreinterested in taking room tax moneyaway from one of his hotel’s biggestconvention competitors, the Las VegasConvention and Visitor’s Authority?

In addition, the teacher’s unionwants to raise gaming taxes to payfor education. Of course, they wouldlove to see more money spent on our

schools. However, they really wantto see more money spent on theirmember’s salaries.

The safest bet is to be very carefulwhat you petition’s you sign this year.That petition seeking to help our kidsor ease our road congestion might notbe that simple.

Michael Sullivan is president of KnightConsulting, a local government affairsfirm.

n recent years, ballots inNevada have grown expo-nentially with the prolifer-ation of ballot initiatives,

constitutional amendments and refer-endums. These questions – whichseek to do everything from banningsmoking in restaurants to attemptingto legalize marijuana – circumventthe representative process of govern-ment by going directly to the votersfor approval.

Proponents would argue that this isthe purist form of democracy. By col-lecting signatures and putting thequestion on the ballot, the votersthemselves make decisions on impor-tant issues – what could be more de-mocratic than that?

The problem with this scenario isthat the voters who are making thesedecisions are actually getting very littleinformation about what the question re-ally means and the effect it will honest-ly have on the future of Nevada.

Voters are asked to sign a petitionpresented by someone who was hiredby a particular side and is being paidto get as many signatures as possible.These solicitors are obviously vagueabout the exact reason for the ques-tion and who is really behind the peti-tion’s campaign.

Recent changes to Nevada law re-quire the signature collectors to havewritten explanations on hand, should apotential signer ask for more informa-tion. Often, however, the initial pitch isso vague and one-sided that voters are

by Michelle Danks

I

The Petition Process

I N S I D E P O L I T I C S

Voter Beware

Reno/Sparks The Reno/Sparks retail sector contin-

ues to show healthy growth despite a de-cidedly more downbeat housing market.Modest job creation, above trend wagegrowth and in-migration from Californiahas helped to sustain consumer spending.

Retailers continue to expand toNorthern Nevada not only in addingto existing stores, but also in launch-ing new concepts as they continue toride the momentum of five consecu-tive years of solid residential growth.Construction in the retail sector is ro-bust with second quarter completionof 283,000 square feet; 709,000square feet under construction; and 3million square feet planned.

Vacancy rates have remained stablewith second quarter overall vacancy in-creasing slightly to 7.8 percent, up fromfirst quarter’s number of 7.121 percent.Low vacancy rates and new tenant ac-tivity coupled with the high cost of landhave driven rental rates for multi-tenantspace in new developments up to $3.25per square foot per month. However,tenant push-back in rents has recentlybeen noted in submarkets with excessstanding inventory.

Significant new tenants entering themarket include a 225,000 square feetScheel’s All Sports (opening 2008), a150,000 square feet Cabella’s (openingfall 2007) and Whole Foods (openingfall 2007). Summit Sierra and Legendsat Sparks Marina, the area’s firstlifestyle centers, are bringing newbrands and restaurants to the trade area(more than 30 in Summit Sierra alone)catering to evolving demographics andconsumer tastes. Additionally, secondphases of Sparks Galleria, SparksCrossing, Ridgeview Plaza and Sum-mit Sierra are nearing completion.

156 October 2007

Southern Nevada statistics compiled by Colliers International and Restrepo Consulting

Northern Nevada statistics compiled by Colliers International Reno

ABBREVIATION KEY

MGFS: Modified Gross Full-Service

SF/MO: Square Foot Per Month

NNN: Net Net Net

TOTAL MARKET Las Vegas Reno

Total Square Feet

Vacant Square Feet

Percent Vacant

New Construction

Net Absorption

Average Lease sf/mo (nnn)

Under Construction

Planned

POWER CENTERS

Total Square Feet

Vacant Square Feet

Percent Vacant

New Construction

Net Absorption


Under Construction

Planned

COMMUNITY CENTERS

Total Square Feet

Vacant Square Feet

Percent Vacant

New Construction

Net Absorption


Under Construction

Planned

NEIGHBORHOOD CENTERS

Total Square Feet

Vacant Square Feet

Percent Vacant

New Construction

Net Absorption


Under Construction

Planned

39,341,395

1,210,657

3.10%

934227.0%

763,920

$2.03

1,651,114

2,210,409

7,657,863

104,380

1.40%

0.0%

-8,269

$2.10

944,314

750,000

16,701,730

629,832

3.80%

465,425

292,911

$1.92

706,800

290,700

14,981,802

476,445

3.2%

468,802

479,278

$2.16

0

$1,169,709.

RETAIL– 2nd Quarter 2007

Next Month: INDUSTRIAL

13,785,274

1,075,354

7.80%

283,701

422,204

$1.76

708,894

3,144,857

4,378,054

172,053

3.9%

98,015

355,491

$1.98

281,610

1,991,479

2,739,618

349,114

12.7%

73,217

112,851

$2.34

27,017

14,500

2,818,249

76,004

2.7%

0

13,958

$1.80

67,564

147,758

Las VegasJune 2007 retail employment was up

3.1 percent (3,000 jobs) from June2006, according to the Nevada Depart-ment of Employment, Training and Re-habilitation. The largest contributioncame from the General Merchandise &Clothing sector, with 1,100 jobs addedfollowed by Health & Personal CareStores sector, with 300 new jobs andFood & Beverage Stores sector, withanother 200 jobs.

In second quarter 2007, the Las VegasValley’s anchored retail vacancy rate in-creased from 2.7 percent in first quarterto 3.1 percent. This increase was accom-panied by a rise in the average monthlyasking rent, from $1.95 price per squarefoot to $2.03 per square foot NNN. Thelargest increase in average asking rentwas in Community Centers ($0.17).

The Valley’s retail market was ac-tive because both direct absorptionand completions were closely bal-anced. Direct net absorption keptpace at 763,920 square feet, resultingin an absorption-to-completion ratioof .81 feet of demand for every foot ofnew supply. As a result, the Valley’sinventory rose by 2.3 percent to39,341,395 square feet.

The amount of retail-space underconstruction in second quarteramounted to 1,651,114 square feet,up 13 percent from first quarter,while planned space fell .76 percentto 2,210,409 square feet. If all of theanchored retail space presentlyunder-construction or planned iscompleted (which is not likely), itwould represent a 9.8 percent in-crease in the Valley’s retail inventory.RCG estimates it will take 6.8 quar-ters (1.7 years) to absorb all existingand forward-supply.

Retail Market Summary2nd Quarter 2007

C O M M E R C I A L R E R E P O R T

October 2007 157

Motivation is Key

hen supervisors and man-agers are unable to meetdeadlines or productionstandards, the call often

goes out to hire more people. If youwere to poll the employees in mostorganizations, whether or not theycould do more, the vast majoritywould tell you they could, but aren’tmotivated to do so. In many cases,performance standards are out ofdate with what could actually beachieved, with the technology inplace, by motivated employees.There are always reasons why some-thing can’t be done, and in manycases, that is where change stops.

Prior to May 6, 1954, it was be-lieved to be impossible that anyonecould run a mile in less than fourminutes. Then Roger Bannister didjust that, and since that time, therecord continues to be broken. Ban-nister was very motivated and did-n’t perceive the sub-four-minutemile an insurmountable goal. As aresult, through motivation, hardwork and dedication, he ran arecord-setting mile in three minutesand 54 seconds. The parallel here isthat people are often capable of ex-ceeding the minimum expectationsset as acceptable performance orproduction standards.

Another negative influence thatinterferes with attempts to improveperformance standards is the im-pact of peer pressure. New employ-ees often realize that performance

standards can be exceeded and pro-vide opportunity to move ahead inthe organization. However, peerpressure often rises to influence thenew employee to not “rock theboat,” and they typically adapt tomeeting the minimums in order toget along with coworkers.

The real challenge is to identifyrealistic performance and productiv-ity measures, and create an environ-ment where employees are continu-ally motivated to reach higher levelsof performance and productivity.Time and motion studies can ana-lyze work flow and determine theamount of work or number of func-tions to perform under optimal con-ditions. Reviewing current perfor-mance against the revised standardscan identify the incremental im-provements that need to be made.

Introduce employees to the newstandard and ensure they understandthe importance of adopting it, inorder to meet the new performancegoals. In an effort to motivate peo-ple, organizations can create aworkplace environment where em-ployees motivate themselves. En-lightened leaders who know how toget results out of their people willcommunicate the importance ofmeeting new standards, provide re-inforcement, incentives and sup-port. At times, additional employeesmay need to be hired, but only afterthe organization has carefully stud-ied its current performance and

production standards, and adjustedthem to achieve the maximum real-istic performance possible. The costof hiring new employees is usuallyan expensive undertaking, and notalways the answer when the currentemployees don’t meet the organiza-tion’s needs.

Mark Keays is president of DesertManagement Services, a Las Vegas-based management consulting firm.

W

Improving Performance Standards

P E O P L E F I R S T

http://hutchlegal.com

158 October 2007

t could not last-and, it didnot. The push toward in-creased home ownership, anadmirable objective, camewith a host of relaxed credit

standards; generally referred to as subprimemortgages. Innovative, but relaxed creditstandards, abundant funding augmentedfrom expanding global sources; and a rushfor quick returns triggered by some earlyhighly profitable events set off a real-estateboom environment, often referred to as abubble. As such, successes pushed things “astep too far.” A headlong push for returnswithout prudent assessment in too many in-stances, having generated an unsustainableenvironment, now faces a period of correc-tion. We have now entered a period of risk-and-return rebalancing. A financially stress-ful period with a push to greater liquidityamid higher-than-usual problems of solven-cy is a greater risk environment than whatwe have experienced of late.

We see the pattern of a slowdown in theNevada numbers. Housing activity, as reflect-ed in residential-permitting activity, the firststep in residential construction, is downsharply from year-ago levels. Overall, jobgrowth falls short of the trend. Other indica-tors showing more subdued performance lev-els include gaming revenue and taxable sales,both show decidedly lower levels of perfor-mance than in the past. Moreover, the slow-down is apparent in both Las Vegas and Reno.

Nationally, slower growth is apparent inthe national income accounts. GDP growthis down sharply, coming in at a seasonallyadjusted rate of 0.6 percent. Still, other in-dicators are not as sanguine, suggestingslower growth ahead. If international mone-tary authorities, including the U.S. FederalReserve, are able to keep sufficient liquidityand self-correcting forces work with suffi-cient rapidity and impact, a recession will beavoided. In short, we foresee slower growthahead amid higher risks.

The current jitters follow a pattern of in-creased frequency of financial crises. Most re-cently was the Dot.Com market correction(2000), preceded by Long Term Capital Man-agement crisis (1998), the Asian financial crisis(1997-1998), the stock market crash (1987),and the Savings and Loan Crisis (1985). Thus,looking back we offer one take away for for-ward thinking-the quickening pace of financialinnovation is seeding increased financialvolatility and that there is difficulty in detectingand limiting the spread of problems before theyhave broader consequences.

R. Keith SchwerUNLV Center for Business and Economic Research

units previous comments

GROWTHDATAlatestdates year ago recent year ago

(%)(%)

(%) (%)

(%) (%)

(%) (%)

SOURCES: Nevada Department of Taxation; Nevada Department of Employment, Training and Rehabilitation; UNR Bureau ofBusiness and Economic Research; UNLV Center for Business and Economic Research; McCarran International Airport; Reno/TahoeInternational Airport; Las Vegas Convention and Visitors Authority; Reno-Sparks Convention and Visitors Authority; U.S. Department of Commerce, U.S. Bureau of Labor Statistics, U.S. Census Bureau; U.S. Federal Reserve Bank.

1,000 employees

%, nsa

$ billion

$ million

passengers

million gallons

million visitors

1,000 employees

%, nsa

$ billion

$ million

units permitted

permits

million persons

million gallons

million visitors

1,000 employees

%, nsa

$ billion

$ million

units permitted

permits

million persons

million gallons

million visitors

million, sa

%, sa

82-84=100, nsa

82-84=100, nsa

89.06=100, sa

92=100, sa

$ billion, sa

million, sa

million, sa

$ billion, sa

97.01=100

$ billion, sa

monthly close

%, nsa

%, nsa

NEVADA

Employment

Unemployment Rate

Taxable Sales

Gaming Revenue

Passengers

Gasoline Sales

Visitor Volume

CLARK COUNTY

Employment

Unemployment Rate

Taxable Sales

Gaming Revenue

Residential Permits

Commercial Permits

Passengers

Gasoline Sales

Visitor Volume

WASHOE COUNTY

Employment

Unemployment Rate

Taxable Sales

Gaming Revenue

Residential Permits

Commercial Permits

Passengers

Gasoline Sales

Visitor Volume

UNITED STATES

Employment

Unemployment Rate

Consumer Price Index

Core CPI

Employment Cost Index

Productivity Index

Retail Sales Growth

Auto and Truck Sales

Housing Starts

GDP Growth

U.S. Dollar

Trade Balance

S&P 500

Real Short-Term Rates

Treasury Yield Spread

07/07

07/07

05/07

06/07

06/07

06/07

06/07

07/07

07/07

05/07

06/07

07/07

07/07

06/07

06/07

06/07

07/07

07/07

05/07

06/07

07/07

07/07

06/07

06/07

06/07

07/07

07/07

07/07

07/07

2q07

2q07

07/07

07/07

07/07

2q07

07/07

06/07

07/07

07/07

07/07

1,300.7 1,312.4 1,279.1 -0.9 1.7

5.1 4.7 4.5 8.5 13.3

4.112 3.907 4.265 5.2 -3.6

959.82 1,143.68 907.71 -16.1 5.7

4.660 4.643 4.399 0.4 5.9

99.91 99.25 98.32 0.7 1.6

4.344 4.418 4.254 -1.7 2.1

932.5 941.3 915.5 -0.9 1.9

5.1 4.7 4.5 8.5 13.3

3.048 2.909 3.168 4.8 -3.8

789.66 968.44 744.30 -18.5 6.1

925 1,729 2,232 -46.5 -58.6

102 80 92 27.5 10.9

4.157 4.170 3.889 -0.3 6.9

67.81 69.22 65.99 -2.0 2.7

3.677 3.770 3.574 -2.5 2.9

227.3 228.7 223.3 -0.6 1.8

4.6 4.4 4.1 4.5 12.2

0.591 0.555 0.617 6.4 -4.2

92.79 91.76 88.90 1.1 4.4

181 176 380 2.8 -52.4

29 28 45 3.6 -35.6

0.458 0.421 0.445 8.8 3.0

16.17 14.77 15.72 9.5 2.9

0.460 0.438 0.477 5.0 -3.6

138.122 138.030 136.252 0.1 1.4

4.6 4.5 4.8 2.2 -4.2

208.3 208.4 203.5 0.0 2.4

210.8 210.5 206.2 0.2 2.2

105.1 104.3 101.6 0.8 3.4

137.5 136.6 136.6 0.7 0.6

376.051 374.957 363.968 0.3 3.3

15.23 15.63 16.89 -2.5 -9.8

1.381 1.470 1.746 -6.1 -20.9

11,507.9 11,412.6 11,306.7 0.8 1.8

102.770 104.120 108.370 -1.3 -5.2

-58.135 -59.157 -64.527 -1.7 -9.9

1,455.27 1,503.35 1,276.66 -3.2 14.0

4.85 4.42 4.65 9.8 4.2

0.04 0.36 0.01 -88.9 300.0

Weak

Up

Trend Down

Off Recent

Up

Flat

Weak

Weak

Up

Trend Down

Off Recent

Down

Up

Trend up

Down Recent

Down Recent

Weak

Up

Trend Down

Up

Trend Down

Trend Down

Up

Up

Up Recent

Holding

Up Slightly

Steady

Steady

Up

Declining

Flat

Down

Down

Slow Growth

Weak

Down

Off

Up

Down

B U S I N E S S I N D I C A T O R S

I

http://prarchitects.com

http://www.nsbank.com

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