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Utahns win in Sin City.

It is ironic that the state with likely the most wholesome image in the United States is next to the state with the most notorious image. Yet despite stark contrasts in lifestyles, economies, and tax structures, many Utah business have played a pivotal role in the growth of Las Vegas, the fastest-growing city in the nation according to the United States Census Bureau at the end of 1991.

A 24-hour city like Las Vegas spells ACTION with all capital letters, and national, international, and Utah businesses alike continue to go into the city to get their piece of it.

National news stories of plentiful employment in Las Vegas have been enticing people to flee economically stalled states in search of jobs in a city with an unemployment rate fluctuating between 5 and 6 percent, well below the national average.

A study conducted from May to July 1991 by the Las Vegas Chamber of Commerce estimated that 5,000 new residents were moving into the city every month, said Chamber Vice President Punam Mathur. Though that pace has decreased significantly since the study, Mathur said even half that figure still means 2,500 new people are moving into the city monthly.

Population has doubled every five years for the last 10 years, bringing the 1991 count to about 850,000, said Stephen Allen, media director of the Las Vegas News Bureau. The population is expected to hit 1 million by the year 2000, but Allen said it likely will happen sooner.

A State without Taxes

"There is no corporate income tax in Nevada, and that, obviously, is attractive to a lot of business," said Harris Simmons, chief executive officer of Zions Bancorp.

Simmons would know. In 1985, Zions Bancorp. purchased Nevada State Bank and presently operates 17 branches throughout the state, with most of the branches in Las Vegas.

Aside from having no corporate tax, Nevada has no personal income tax, no franchise tax, no admissions tax, no inventory tax, no inheritance tax, and no capital stock tax. All tolled, the Nevada tax climate spells out a favorable business climate, and the state's proximity to Utah makes it even more attractive.

"We see the Las Vegas market as being integral to Utah. We have a lot of customers who do business in Las Vegas and vice versa, so it;s a natural extension of what we perceive our trade to be.

"[The purchase of Nevada State Bank] has been good for both states," Simmons added. "We brought additional capital strength to what was a small bank in Nevada, and at the same time, their performance has been beneficial to our corporation as a whole."

Mike Chaney, senior vice president of leasing services for First Security Leasing, agreed that the Las Vegas economy is not as vibrant as it was when the Salt Lake subsidiary of First Security Corp. went there in 1988.

The firm leases out anything that is depreciable property, from computers, to trailers, to backhoes and trenching machines. The bulk of First Security Leasing's Las Vegas business has been in the construction industry, despite the cooled-off development market, Chaney said. Leasing activity in Las Vegas has accounted for about 10 percent of the company's overall business activity.

"[Las Vegas business] has not been a windfall for us, but then again we're not a big player down there either," Chaney said. "But the tax structure has convinced us that we still stay there."

Las Vegas versus the Recession

A stagnant national economy had its effect on the Las Vegas economy in 1991, but only to the extent it has slowed the acceleration of growth, said Dennis Smith, president of Las Vegas Home Builders Research Inc.

According to Smith, Las Vegas still was at the top of U.S. Housing Markets' "Hotness" index with a rating of 21.6, nearly doubling the second-closest contender, Orlando, Fla., with a rating of 11.4 (the index measures the number of housing permits issued per 1,000 population).

Leading the housing developers in 1991 was Woodside Homes of Nevada, owned by Salt Lake City-based Woodside Homes Corp. Increasing its market share by 246 percent over the previous year, Woodside Homes of Nevada was named by Home Builders Research Inc. as the city's No. 1 fastest-growing developer, and No. 9 in terms of volume of homes closed, with 308 in 1991.

"When you say there's been a slowdown in the Las Vegas [housing market] it's deceiving because it;s the increase that's decreasing, not the sheer volume," said Chip Nelson, controller for Woodside Homes of Nevada.

Woodside Homes went into Las Vegas in 1988, because, according to Nelson, "It was the hottest market in the nation at the time. There was land available to purchase, and there were people willing to purchase new homes."

With the median price of a new home in Las Vegas at $113,000, Nelson said that "there are a lot of first-time homebuyers who can step in and buy a house."

Leavitt Insurance Group has had a presence in Las Vegas since 1958, six years after the company was founded in Cedar City by Dixie Leavitt, now Senator Leavitt, R-Cedar City.

"Vegas has gone through a remarkable growth in that time, and we've been part of it every step of the way," said executive vice president Dane Leavitt, the senator's son.

The vast majority of the insurer's client in Las Vegas have been in commercial property and casualty business, different from the breakdown in Utah, which is about half commercially oriented and half personal lines of insurance for households. Still, the Nevada offices account for just less than one-third of the firm's overall business, Leavitt said.

"Nevada has been a vibrant market for us over the last five years, but it certainly has its ups and downs like an any other economy," Leavitt said. "We sense a slight downturn there, and the city will go through a short-term adjustment. We've noticed contractors going out of business there, but in the long run development [in Las Vegas] will bounce back."

Bankers Old and New

Not surprisingly, Nevada's largest state-chartered bank, Valley Bank of Nevada, has Utah roots. Ogden-born University of Utah graduate E. Parry Thomas moved to Las Vegas in the 1950s and worked with Nate Mack to establish the Bank of Las Vegas, which evolved into Valley Bank of Nevada (Valley Bank of Nevada is presently involved in a merger with California-based Bank of America).

The importance of Thomas's involvement in the city's growth is emblazoned on the side of the 19,000-seat home of the 1990 NCAA Basketball Champion University of Nevada Las Vegas Runnin' Rebels, the Thomas & Mack Center. Thomas and Valley Bank of Nevada vice chairman Jerry Mack were the chief benefactors of the arena opened in 1983. Thomas still serves as the chairman of the board of Valley Capital Corp., Valley bank of Nevada's holding company.

Las Vegas more recently saw the opening of its first new bank in 10 years when Nevada Community Bank opened for business in July 1989. At the helm were former First Security Bank senior vice president of lending Ed Jamison and former Zions First National Bank executive vice president Noel Bennett.

"When someone said |Let's start a bank in Vegas,' people laughed," Jamison said. "People still have a perception of Las Vegas as being full of gamblers and so-so business ventures. But the economy was robust; it was a fast-growing city; and the jobs were there. Even now, with the economy in a slight downturn, Las Vegas's day-to-day economy is what Salt Lake's is in a boom time."

Las Vegas is still a wide open market for banking, with only 18 federal and state chartered banks, said Jamison, whose bank has accrued assets of about $27.2 million through 1991. Utah is comparatively "overbanked" with 33 state-chartered and eight nationally chartered institutions.

The city's banking customers are also different as a whole, being "more concerned with the accumulation of cash," Jamison said. "Las Vegas are generally conservative businesswise. Savings are more predominant, and people don't necessarily need venture capital. They have the cash. It's not as leveraged a community as Salt Lake."

The Las Vegas Shopping Experience

Smith's Food & drug is in its 20th year of operating in Nevada, and it now has 16 stores statewide, 13 in Las Vegas. The Utah-based superstore chain has 35 percent of the market share in Nevada.

The Nevada stores also feature the "21 departments under one roof" motto, which has separated Smith's from its competitors. But Smith's Vice President of Public Affairs Shelley Thomas wonders whether their stores in Sin City should advertise "23 departments under one roof," with 15 slot machines per store and wine liquor departments that operate 24 hours a day.

"Because of the gaming industry, people are more geared to shop during the night hours," Thomas said. "Our peak shopping hours are p.m. to early a.m., so our stores in Nevada are staffed more heavily at night. People have to buy food, but our stores are quite unique down there."

Nevada's LDS population of approximately 110,000, the majority of whom live in Las Vegas, makes it a little easier for a Utahn to assimilate. But Jamison agreed with Thomas, saying there are some things that take some time getting used to.

"It's quite a culture shock to live in Las Vegas after you've lived in Salt Lake City. But if you can get past the slot machines in the grocery stores and women shopping in their cocktail waitress outfits, [Las Vegas] is just like any other city," he said.

City of Lights

Las Vegas's most characteristic trait, the trait which epitomizes the Las Vegas mystique, is the barrage of neon on the Strip and Fremont Street downtown. Neon is found outlining the sides of tall hotel buildings, or marching up and down and from side to side on some of the world's tallest free-standing signs. Huge lighted marquees line the Strip sidewalks and advertise everything from $4.95 buffets to $45 rooms to dinner and cocktail shows, with names like Sinatra, Cosby, Sigfied and Roy. Even the McDonald's sign at the heart of the Strip has flashing golden arches.

"The gaming industry is the most spectacular use of our product," said Mike Young, president of Young Electric Sign Co. (YESCO). "But gaming is not our largest customer."

Vegas-style projects are outnumbered by more type of projects that need electric signs, such as financial institutions, car dealers and retail stores.

YESCO designs, manufactures, and services every one of its projects. Still, the firm's market has allowed it to carve a significant niche in Las Vegas's visual character as well in the city's business sector.

In Las Vegas YESCO has designed and built, among others, the 222-foot-tall Sahara Hotel/Casino sign, the world's tallest free-standing sign, at the south end of the Strip; the enormous portacashier in front of Caesar's Palace; the large clown sign in front of the Circus Circus Hotel/Casino; "Vegas Vic," the tall neon cowboy thumbing customers into the Pioneer Club, a long-standing symbol of downtown Las Vegas.

Recently, YESCO designed and built the 82-foot-tall guitar-shaped sign for the Hard Rock Cafe Las Vegas and the sign for The Rio Hotel/Casino (featured on this month's cover), for which YESCO won an award from the Las Vegas Review Journal as the best sign in 1991.

"The business climate has been stronger in Nevada than in Utah over the last five years, but in the last two years, Utah has been stronger," Young said.

"In Las Vegas there is no such thing as a typical sign. But signs here tend to be bigger and more showy, pretty much the kinds of signs that are illegal in Salt lake City," joked YESCO's Las Vegas Assistant Division Manager Steve Weeks.

Salt Lake City's most Vegas-like sign would be the Trolley Square water tower sign with its red and blue flashing neon. Yet Weeks estimated that it would take 10 Trolley Square signs to equal the worth of one Circus Circus clown sign in Las Vegas.

"The main difference between the signs we make in Las Vegas and the ones we make in Salt Lake City is the number of zeros in the cost." UB
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Title Annotation:Utah residents attracted to Las Vegas, Nevada for business opportunities, taking advantage of lenient corporate tax laws, tremendous economic and population growth, low housing prices, good banking market and generally good business climate
Author:Garcia, Vic
Publication:Utah Business
Date:Apr 1, 1992
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