2005 nbj september · 4 september 2005 nevada business journal is a division of business link,llc....
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4 September 2005
Nevada Business Journal is a division of Business Link, LLC. 4386 S. EasternAve., Ste. B, Las Vegas, NV 89119. It is listed in Standard Rates and Data, #20A-Business-Metro, State and Regional. TopRank Nevada – Annual Statewide Bookof Lists is a publication of Nevada Business Journal.Advertisers should contact Sales at (702) 735-7003, or write to: Nevada BusinessJournal, 4386 S. Eastern Ave., Ste. B, Las Vegas, NV 89119. Demographic informa-tion 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 ©2005 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, 4386 S. Eastern Ave., Ste. B, Las Vegas, NV 89119. Subscribers please in-clude previous address or mailing label. Allow six weeks.EDITORIAL SUBMISSIONS: Address all submissions to the attention of KathleenFoley. Unsolicited manuscripts must be accompanied by a SASE. Nevada BusinessJournal 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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September 2005 5
C O M M E N T A R Y
Business Success Requires Accountability & Competition –What about Public Education?
LYLE E. BRENNANPublisher
The Nevada Department of Educationrecently reported that more than halfthe schools in the state (53 percent)
failed to meet the “adequate yearlyprogress” standards of the federal NoChild Left Behind Act for the 2004-2005school year. Out of the 608 schools evalu-ated, only five were named “exemplary”and only 52 received a “high achieving”ranking. More than 27 percent were placedon a “Watch List” for failing to meet oneor more components of the standards andanother 30 percent were labeled “in needof improvement.”
Accountability:The Missing Element
The only school in Clark County to re-ceive the “exemplary” designation was acharter school – the middle school operatedby Agassi College Preparatory Academy.The Academy opened four years ago toserve mainly inner-city students. It hassome advantages not enjoyed by other mid-dle schools: small size (only 150 students,versus 1,000 or more in some middleschools); small class sizes; an eight-hourday versus a six-hour day; and more moneyper pupil, thanks to grants and donations.
But how’s this for an advantage? Agassiteachers work on one-year contracts, andlast year the board renewed the contracts ofonly six of its 18 teachers. In other words,teachers are judged on the results they pro-duce. What a concept! In the union-con-trolled Clark County School District, teach-ers are considered “permanent employees”and are guaranteed a position for life, unlessthey really screw up. Even if they are firedfor cause, they can appeal through theteachers’ union.
At Agassi, students sign contractspromising good behavior and parentsmust promise to involve themselves intheir children’s education. If studentsmisbehave or parents refuse to take need-ed action, the students can be expelled. Inother words, Agassi demands account-ability – from teachers, from students andfrom parents.
The Value of CompetitionMark Harrison, an economic consultant
from Australia, wrote in a recent syndicat-ed column: “The key to improving the ed-ucation system is to move away from apoliticized, government-operated systemto a decentralized, competitive market.Schools that compete and are directly ac-countable to parents simply work betterthan the bureaucratic alternative.” Hepoints out that the current system is theU.S. does not reward efficiency or produc-tivity and may actually reward inefficien-cy. “Poor performance often leads to addi-tional resources,” he says, as governmentthrows money at a struggling school to tryto fix its problems.
His solution, and one shared by manyU.S. citizens, is to let the free market oper-ate through the use of school vouchers, giv-ing parents the option of where to placetheir children for school. This will encour-age all schools, both public and private, tobecome better and therefore improve edu-cation and test scores across the board.
The Search for a SuperstarThis summer, University Chancellor
Jim Rogers sent $55,000 in checks fromwealthy donors to the Clark County Pub-lic Education Foundation as a down pay-
ment on a fund to pay for a national searchfor a new CCSD superintendent. Rogershas said he also wants to raise funds tohelp subsidize the next superintendent’ssalary, upping it to between $400,000 and$600,000 a year.
If we hire an entrepreneurial “superstar”administrator who will be willing to firepeople, decentralize the bloated district andcut waste, he or she could be worth 10 timesthat salary.
Although I compliment Jim Rogers forthinking out of the box, I fear the problemis not the leader of the system – it’s the sys-tem itself. Without accountability or com-petition, there’s no incentive for publicschools to improve, and we can’t expect thenext report card for Nevada’s educationalsystem to show many A’s and B’s.
Folks, it is up to us change the system.We can continue to do nothing and allowthe public school system and the result-ing effects on our culture and society toslip into the abyss or we can make ourvoices heard. Contact your local schoolboard members and your state legislatorsand tell them you expect accountabilityand competition in the public school sys-tem; and that you are going to personal-ly hold them responsible for their ac-tions… then do it!
Clark County Public School Board Con-tact Info: http://ccsd.net/directory/trustees/board/index.phtml Washoe County Public School Board Con-tact Info: http://www.washoe.k12.nv.us/dis-trict/board/meet/Nevada State Legislators Contact info:http://leg.state.nv.us/
COMMENTS? email: [email protected]
6 September 2005
The leaders in Nevada’suniversity system pre-pare to meet the chal-
lenges of growth as the new school year begins. Shown on our cover are:standing (left to right) Dr. Richard Carpenter, CCSN; James Rogers,Chancellor; seated: Dr. John Lilley, UNR; and Dr. Carol Harter, UNLV.
Photo: Opulence Studios
64 Compassionate CapitalismThe Shade Tree ShelterHelping Women and Children in Crisis
65 Vital SignsCINDIE GEDDES
Saint Mary’s Health NetworkStill Growing After All These Years
66 People First A new regular featureMARK KEAYS
Where Did All My People Go?Contingency Planning for Your Company
67 Power of AttorneyJAY YOUNG
Saving Money on Attorney’s FeesA Guide for Clients
70 Business IndicatorsR. KEITH SCHWER
C O N T E N T S September 2005 • Volume 20 • No. 9
Building Nevada
5 CommentaryLYLE BRENNAN
Accountability & CompetitionWhat About Public Education?
12 Business Up FrontWe All Pay for Healthcare for Uninsured How Little Guys Fight BackWomen Business Owners Are Risk Takers
13 Face to FaceJeff Eigenman, Voit Development CompanySylvia Samano, SBC Nevada
59 Nevada Briefs BankWest Inks Monorail Deal Nevada’s China Campaign Wins AwardMetl-Span Opens Manufacturing Facility Nevada Companies Recognized for Safety
60 STATE the IssuesJACOB SNOW AND W. LESLIE SULLY, JR.Should a light rail line be built from
Henderson to North Las Vegas?
61 Inside PoliticsMIKE SULLIVAN
Campaigning for 2006 SeatsHow Early is Too Early?
62 Money ManagementNEVADA SOCIETY OF CPAS
Setting Up a 401(K) Plan for EmployeesWhere Do You Begin?
63 Speaking for NevadaCAROLE VILARDO, NEVADA TAXPAYERS ASSOCIATION
The 2005 Legislative Session:Some Property Tax Relief Accomplished
54 Real Estate Investment TrustsWhat’s Right with REITs?TOM DYE
56 Silverwing DevelopmentRight at Home in Northern NevadaJESSICA GROACH-SANTINA
56 Commercial Real Estate Market ReportSecond Quarter 2005 – Office Market
Features
Departments
Real estate investment trusts control many im-portant properties in Nevada. This article ex-plores REITs – what they do and their role inour economy.
Photo: Opulence Studios
58 Building Nevada News in Brief• Condo Development Planned for Queensridge• Carina Corporation To Sell Residential Assets To Lennar• Panattoni Breaks Ground on Business Center• PENTA Opens Reno Office • Korte To Complete Beltway Corporate Center
7 Higher Education OutlookWhat’s Next for Nevada’s Colleges?TINA ALLEN
14 The Franchising SolutionIn Business for Yourself, but Not by Yourself RUTH FURMAN
21 Commercial Real Estate BrokersChasing Deals in a Volatile MarketKATHLEEN FOLEY
INDUSTRYFOCUS
7
SPECIAL SUPPLEMENT :
City of Sparks2006 Editorial Calendar
who offered some insight about theirschools and how they are keeping pacewith such rapid growth.
University of Nevada, Las VegasIn the past 10 years, the University of
Nevada, Las Vegas has added 103 academ-ic programs. The latest program is a Ph.D.in nursing, which was recently approvedand funded by the Legislature. However, itsmission isn’t to create more nurses to fill asevere shortage in the state, but rather tocreate more faculty members who can trainmore nurses to fill the shortage.
“We are never short on ideas for newprograms,” said UNLV president CarolHarter. Nor is the university short on itslist of long-term improvements. Amongthem is a facelift of sorts for the outsideof the campus that would revitalize thearea on both sides of Maryland Parkway.The project, called Midtown, is a jointeffort with developer Mike Saltman,who owns the Promenade shopping cen-ter on Maryland Parkway across thestreet from UNLV.
“We want to narrow Maryland Parkwayto two lanes to make it a much safer placeto walk back and forth, expand the side-walks, have sidewalk cafés, a couple ofperformance areas, interesting shops and awhole group of things that will attractpeople to the university,” Harter said.
Another item in the works is a proposed640-acre campus – nearly twice the size ofthe existing campus – which would be lo-cated north of the Las Vegas Beltway, be-tween Pecos Road and Lamb Boulevard.
In Nevada, unprecedented growth haskept just about every entity, from thehousing market to government agen-
cies, hustling to keep up with demand.Higher education is no different, leavingthe state’s public institutions searching forways to accommodate more and more col-lege students each year.
In the past 12 years, Nevada’s publichigher education system has gone from35,000 students to 105,000, and Chancel-lor James Rogers said he doesn’t see itslowing down anytime soon. “I think thatin the next year, you are going to see thewhole system ratchet itself up,” Rogerssaid. “The growth line is going to slopeupward, and then all at once it’s going togo straight up.”
To pay for the increased services need-ed, the state allocated $250 million in thepast legislative session to help fund con-struction for more buildings and class-rooms, in addition to nearly $1 billion foroperating costs. “They gave us two to two-and-a-half times what we would usuallyget,” Rogers said.
However, he said it will still take pri-vate dollars to give the schools an edgeon the competition. “Fortunately, LasVegas is literally awash with privatewealth,” Rogers said. “You get $100,000here and $100,000 there, and pretty soonyou’ve made a hell of a difference in a lotof programs.”
In addition to Rogers, the Nevada Busi-ness Journal recently talked with the col-lege and university presidents in the uni-versity and community college system,
In July, Harter said they were negotiatingwith the Bureau of Land Management toacquire the land. Although it’s still in thepreliminary phases, Harter said the cam-pus would be a joint venture with theCommunity College of Southern Nevadaand Nevada State College to create an in-novative teaching center, offering a rangeof associate, bachelor and graduate degreeprograms.
Harter is also working toward raisingthe admission criteria for incoming fresh-men. The reason, she said, is not to keepstudents out of the university, but rather toslow down growth. Enrollment is expect-ed to surpass the 29,000 mark for the2005-2006 academic year. “Our growth inthe last four years is just under 5,000 full-time equivalent students, which is the sizeof more than half the campuses in theUnited States,” Harter said.
The current standards allow admissionto students with a 2.5 grade point average.“We are already going to a 2.75 GPA inthe fall of 2006 and we are scheduled togo to 3.0 in the fall of 2010,” Harter said,“but we may accelerate the pace of gettingto that point.”
Generating funding is another top prior-ity for Harter. This month, she is scheduledto announce the goal of UNLV’s first majorcapital campaign. “The state provides verygood, basic funding for the core courses,and we are very grateful, but it cannot pro-vide the dollars to get a law school rankedin the top 50 percent of all law schools or ahotel college ranked as number one or twoin the country,” Harter said.
Higher Education OutlookWhat’s Next for
Nevada’s Colleges?
by Tina Allen
September 2005 7
Nevada State CollegeThe fact that Nevada State College’s
current campus is a converted vitaminwarehouse hasn’t inhibited enrollment inthe state’s newest college. The projectedfull-time equivalent enrollment for lastspring was 500 students, but at registra-tion time, that figure nearly doubled to940 full-time students seeking bachelordegrees ranging from elementary educa-tion to law enforcement.
Nonetheless, President Fred Maryanskiis looking forward to filling in a vacant550-acre site in Henderson with a perma-nent campus that integrates the surround-ing community. Meetings were held thissummer to develop a master plan.
Rogers said he anticipates the collegewill continue to expand in new areas oncethe main campus is built. “In the next 10 to15 years you may have five or six campus-es of the Nevada State College throughoutthe state,” he said. “I can see three branch-es of the Nevada State College in SouthernNevada, one certainly in Reno and maybeone in the eastern part of the state.”
Maryanski said he would like to see thenew campus include facilities that providestudents with opportunities for internshipsand real-life experiences, while benefitingthe community, including a medical clinicfor its nursing students.
“We are talking with the [Clark County]school district about potentially having apublic school, like a middle school, here inthe future,” Maryanski said. “We are talkingwith the city about having a joint library. Itwould be a branch of the Henderson publiclibrary and also the college library.”
The college has graduated 100 studentssince it opened in 2002. Its largest pro-
grams are in nursing and education.“Clearly there is an enormous demand forstudents in those areas,” Maryanski said.“We are doing our best to turn them out.”
The college is also establishing two-plus-two programs with Western Nevada Com-munity College and Truckee MeadowsCommunity College, in which students taketheir first two years of courses at the com-munity college and the remaining two atNevada State College. It implemented thesetypes of programs early on with the Com-munity College of Southern Nevada.
“Our vision is to develop a college thatreally is responsive to the needs of the busi-ness and civic sectors of the economy,”Maryanski said. “We need to educate pro-fessionals and really become players in thestate’s economic development.”
Community College of Southern Nevada
The Community College of SouthernNevada (CCSN) has had its share of chal-lenges in recent years. Perhaps its mostdifficult task was overcoming a rapid
Fred Maryanski
10 September 2005
semester. Both projects are being fundedwith money appropriated from this year’slegislative session and private donations.
Carpenter is also aggressively trying todecrease CCSN’s dropout rate, particular-ly among minority students. Half of allNevada’s minority students enrolled inhigher education attend CCSN. “Notenough of them are succeeding,” he said.“We have 26 counselors at the college.Academic advising is done exclusively bycounselors. You have 26 counselors and35,000 students. How much advising doyou think students are getting?”
Part of the strategy is to put a formalstudent retention plan into place that willinclude early warning signals for studentswho may be on the verge of dropping out.By January, the college also plans to re-cruit additional staff solely dedicated toacademic advising.
“We grew very quickly, and while wewere growing very quickly we were turn-ing over leadership, so our policies andprocedures just didn’t keep pace with ourgrowth,” Carpenter said.
Great Basin CollegeGreat Basin College has come a long
way since it first started holding classes inElko residents’ garages and dining roomsin the 1950s. After several unsuccessfulattempts to prove to the state that a collegewas needed in the small, rural community,Howard Hughes came to the rescue andwrote a check for $250,000 to jump-startNevada’s first community college. Itopened in 1957.
Ever since, Great Basin has been a pio-neer of sorts. It was the first two-year col-
turnover of administrative leadership inthe last decade. “I’m the seventh presidentin 10 years,” said Richard Carpenter, whowas hired in August 2004.
One of his goals is to establish stabilityin what is the nation’s fourth largest com-munity college. Already, Carpenter andhis team have managed to trim $1 millionper year off administrative overhead costs.“We are putting every bit of that back inthe classroom and student services to in-crease student success,” Carpenter said.
Another difficulty has been keeping upwith growth. The college’s student popula-tion has soared to an unprecedented 35,000students, a figure that could reach 50,000soon, according to Chancellor Rogers.
Carpenter estimates CCSN turns awayabout 3,000 students every semester dueto lack of space. A $25 million generalpurpose classroom building planned forthe Charleston campus should offer somerelief. CCSN is also preparing to constructa new $22 million automotive technologycenter on its Cheyenne campus. The auto-motive program is the largest of its kind inthe world, and currently enrolls 800 stu-dents, with another 400 turned away each
lege in the state to offer bachelor degrees –five in all. In the fall of 1999, it began its el-ementary education program. Danny Gon-zales, deputy to the president, said it was acall to train and retain its residents, since 93percent of the teachers in rural areas at thetime came from out-of-state programs.
In 2001, Great Basin started a bachelorof applied science program, which targetsminers in the area who want to pursue su-pervisory roles. Mining is Elko’s primarysource of revenue. In 2002 it added a lib-eral arts degree. This academic year, thecollege opened with bachelor programs innursing and secondary education.
President Paul Killpatrick said it’s im-portant to pursue economic diversity inElko, so it is not completely dependent onmining. He said community support isstrong. In the past 20 years, the GreatBasin College Foundation has raisedabout $20 million. “That puts us in the top5 percent of any two-year college in thecountry, based on the length of time ourfoundation has existed and the size of thecollege,” Killpatrick said.
Next year, the college is expected tobreak ground on a $14 million electricaltechnical building, which will be used forprograms in industrial plant mechanics,electrical technology and instrumentation.In addition, it will house the school’s aca-demic success center.
University of Nevada, RenoGrowth may not be happening as quick-
ly at the University of Nevada, Reno(UNR) as it is at the Southern Nevadaschools. However, President John Lilleysaid the university is looking ahead with amaster plan that will eventually take thecampus from 275 acres to nearly 700 acres.
“It’s a long look at what we need to do toget ready in 20, 30, 40 years out when weexpect to be at 30,000 students,” Lilleysaid. The student population is now at16,000. The university is currently buyingsurrounding properties as they becomeavailable. Excavation began in July for anew student union and a library. The165,000-square-foot student union is ex-pected to be completed by 2007. The li-brary, named the Mathewson-IGT Knowl-edge Center, will feature state-of-the-artdigital access to about 20,000 scholarlyjournals, as well as digital workrooms forstudents to prepare presentations, a Basque
Paul Killpatrick
Continued on Page 68
12 September 2005
Small retail owners say stocking unique items, providing personalized customer service and pric-ing competitively help them compete against big-box retailers such as Wal-Mart, Target, K-Mart
and others, according to survey results released by DollarDays International, an Internet-basedwholesaler to small businesses and local distributors. According to survey results, 99 percent of thesmall businesses have big-box retailers located near their stores. About 72 percent opened theirstores after the chain stores arrived in town, while 26 percent were already in business. Of thosealready in business, 52 percent say they implemented new strategies to compete, including cuttingprices (25 percent), increasing inventory (23 percent) and increasing marketing and advertising (22percent). The survey shows that implementing these strategies resulted in 42 percent of the smallretailers maintaining their market share, while 35 percent reported an increase in business and lessthen 1 percent said business decreased.
“Small retailers need to understand when a big-box retailer opens in their community, it’s not adeath sentence, and this survey underscores that,” said Marc Joseph, president of DollarDays andauthor of The Secrets of Retailing Or How to Beat Wal-Mart. Joseph said many retailers who havebeen driven out by big-box stores were capitalizing on their local monopoly by selling ordinary mer-chandise at inflated prices. When Wal-Mart came in, these small retailers were undersold.
WE ALL PAY FOR HEALTHCARE FOR UNINSURED
HOW LITTLE GUYS FIGHT BACK
Many women business owners –now numbering 10.6 million na-
tionwide – are willing to take substantialfinancial risks to ensure the success oftheir businesses, says a new study fromthe Center for Women’s Business Re-search underwritten by Wells Fargo.The report, titled “Women EntrepreneursSavvy About Risk,” also says womenbusiness owners are much more willingto take risks in running their businessesthan in their personal finances.
The more than 400 women businessowners surveyed were asked to deter-mine whether they would take substan-tial or above-average risks in regards totheir business. Almost one of every foursurveyed (21 percent) said they werewilling to take substantial financial risksexpecting substantial returns when sav-ing or investing for their business, while
45 percent were willing to take above-average financial risks expecting above-average returns.“This report shows that, contrary to common belief, women business owners are indeed willing
to take financial risks in order to expand their businesses,” said Marjorie Alfus, chair of the Center forWomen’s Business Research. “In fact, two-thirds of the women in this study were willing to takeabove-average or substantial risks to achieve their growth goals. The success of their risk-taking isdocumented in the dynamic growth rates – employment by women-owned businesses expanding attwice the rate of all businesses (24 percent vs. 12 percent) and revenues growing 17 percent fasterthan all businesses.”
Risk-taking was consistent among all types of women-owned businesses in the study, regard-less of company size, age of business, or personal characteristics of the business owner (age, educa-tion, ethnicity, etc.).
WOMEN BUSINESS OWNERS ARE RISK TAKERS
Premiums for employer-provided familyhealth insurance will cost, on average, an
extra $922 in 2005 to cover the unpaid ex-penses of healthcare for the uninsured, ac-cording to a recent report issued by FamiliesUSA, a health consumer organization. Theseadded costs account for $1 out of every $12spent for employer-provided health insurance.By 2010, the figure is estimated to exceed$1,502 per family. “The large and increasingnumber of uninsured Americans is no longersimply an altruistic concern on behalf of thosewithout health coverage, but a matter of self-interest for everyone,” said Ron Pollack, exec-utive director of Families USA. “The stakes arehigh both for businesses and for workers whodo have health insurance, because they bearthe brunt of costs for the uninsured.”
The Families USA report found that only 35percent of healthcare costs incurred by unin-sured people are paid by the uninsured them-selves. The remaining costs are generally con-s i d e r e d “ u n c o m p e n s a t e d c a r e . ” O funcompensated-care costs, a portion ispicked up by federal, state and local govern-ment sources. The remaining costs are shiftedand added on to the insurance premiums forpeople who have health coverage. These un-compensated costs will exceed $43 billion na-tionally in 2005.
September 2005 13
Years in Nevada: 39
Years with Firm: 3
Type of businessCommercial real estate development
Biggest business challengeOur biggest challenge is locating new de-velopment opportunities in theReno/Sparks market. The market is tight,land is scarce and the competition in themarket is fierce.
Project Manager
Voit Development Company
Reno
credited professional alpine race coachwith the United States Ski Association andCanadian Ski Coaches Association. I enjoycoaching junior athletes.
Favorite Business Book Capitalist Fools: Tales of American Busi-ness, From Carnegie to Forbes to theMilken Gang, by Nicholas Von Hoffman.
Best Business Advice:Listen, listen and then listen some more, es-pecially before you speak. One must alsobe humble and able to take criticism inorder to learn.
With land prices rising in Northern Nevada,where will new commercial developmenttake place? The Reno Tahoe Industrial Park in StoreyCounty is going so successfully that manydevelopers are looking to expand into thatmarket. Northeast Sparks, Stead andNorth Reno are markets that are experi-encing an increase in development be-cause prices are affordable and land isavailable. In addition to raw land, thereare opportunities for redevelopment of un-derutilized properties in infill locations.
What do you like best about your job? The creativity required in the developmentbusiness and the autonomy of being theproject manager are the largest benefits.There is an endless amount to learn, manybridges to build and doors to unlock. Thechallenge of creating something that willimprove the area allows each day to be oneof discovery and growth.
How do you spend your time when you’renot working?I enjoy traveling, spending quality timewith friends and family and participating inrecreational activities, including beach vol-leyball and alpine ski racing. I am an ac-
Jeff Eigenman
Years in Nevada: 3
Years with Firm: 27
Type of businessFull-service telecommunications company
Biggest business challengeSBC has evolved from a basic telephoneprovider into a full-service communica-tions company offering state-of-the-arttechnology and services for its customers.I want to make sure current and futurecustomers understand the comprehensivesuite of products and services the compa-ny offers, and the tremendous expertise ofthe SBC team.
President
SBC Nevada
Reno
Lake Tahoe area. During the week, Iwork out as often as I can and try to findsome quiet time to read a good book.
Favorite Business Book I just finished Personal History, the auto-
biography of Katharine Graham.
Best Business Advice:Work at something you enjoy and knowthat change is inevitable, so be flexible.
SBC has provided phone service for manyyears, but what new products and servicesis it offering now? Long distance, Wi-Fi communicationsand DSL are some of the leading productsSBC offers. The company has launched anumber of Wi-Fi hotspots around the statein coffee shops, restaurants, hotels and re-cently at the Reno-Tahoe InternationalAirport. We are always adding new tech-nologies to our services and we nowmake available television, Internet andwireless bundles of services over ad-vanced broadband IP networks.
What do you like best about your job? I’ve worked for SBC for nearly 30 yearsand I love every aspect of my job. Work-ing in Nevada has been one of the high-lights of my career. The community wel-comed me when I arrived, and thatfriendliness, along with beautiful scenery,has made Nevada a wonderful place tolive and work.
How do you spend your time when you’renot working?I travel to visit my family or spend quali-ty time with my husband. We love the
Sylvia Samano
14 September 2005
Northern Nevada business owner Mau-rice Dussaq purchased a franchisebecause he could not find a business
for sale that he had an interest in, and hedid not want to start one from scratch.“Franchising seemed like a viable option,and I knew I wanted a business-to-businessfranchise that was profitable,” said theowner of two FASTSIGNS franchises, onein Carson City and one in Reno.
When Dussaq signed on with FAST-SIGNS, the high-tech sign and graphicbusiness was new at the time and in-trigued him. “It's nice to be able to say,after 15 years, that I don't regret my deci-
sion,” he stated. However, he warned theentrepreneurial in spirit, “They offer you asystem that works and if you’re not goingto use it, do something else.”
Traci Roberts launched a Dream Din-ners franchise in Las Vegas with her hus-band and sister-in-law in 2004. “We orig-inally found out about Dream Dinnersfrom family in Washington state. Thethree of us began talking with thefounders of Dream Dinners and expressedour excitement and passion about bring-ing this to Las Vegas. Since Dream Din-ners was in its infancy stage, we really hadto rely on our gut feeling. We believed in
the mission of the company, the womenwho started it and those who knew them.”
Dussaq and Roberts are two of manyNevada business owners who have em-braced the concept of franchising. In fact,Nevada is a top state for franchises, whichhave significantly impacted economic de-velopment here. One growing franchise,Port of Subs, is based in Reno. Nevada isthe leading state in the country as far asjobs and economic output created thoughfranchised businesses.
Tami Lord, vice president, sales andleasing for Territory Incorporated, agreedthat Nevada is a good market for entrepre-
The Franchising SolutionIn Business for Yourself,
but Not by Yourselfby Ruth Furman
September 2005 15
neurs and new franchisees. “A state wherethe pull of the slot machine can changeyour future encourages the entrepreneur-ial spirit,” Lord said. “Many have movedto Nevada for a new start, a new futureand a chance to own a piece of the Amer-ican dream. Franchises give them thestructure and market recognition to start anew business without all the guesswork.”Her company, based in Las Vegas, leasesspace in retail centers to franchise busi-nesses of all kinds, both large and small.
Donna Curry lived in a town of 50,000people before moving to Las Vegas in1979. Her hometown had three thrivingSubway restaurants. “I thought, if thissmall town can do well with three, whatwould the Las Vegas market be able tohandle?” Curry purchased her first Sub-way franchise and attended Subway train-ing in 1983. She is known as a pioneer ofthe Subway franchise system; the storenumber of her first location was 283, andthere are now over 23,000 locationsworldwide. “Individuals are turning to thefranchise industry because it has a proventrack record,” said Curry, who is now the
Subway Development Agent for SouthernNevada. “This organization allows us tohave a lower food cost than an individualowner could achieve. Advertising fundingis another example of the positive aspectof franchising.”
Greg Roquet is an advisor with theSmall Business Administration’s ServiceCorps of Retired Executives (SCORE)and also president of The Franchise Net-work (FranNet) of Northern Californiaand Nevada, which helps individualsmatch their goals with selected nationalfranchise companies. He cited a study byPriceWaterhouseCoopers about the eco-nomic impact of franchising. Franchisingprovides $1.53 trillion in economic outputin the United States, representing 9.7 per-cent of the U.S. economy. Franchisingalso provides 14 percent of the jobs in theprivate sector workforce. Roquet stated,“A new franchise business opens someplace in the United States every eight min-utes.” The PriceWaterhouseCoopers re-search showed that jobs filled because offranchises represent 20 percent of Neva-da’s private-sector workforce.
Roquet said franchises have been re-ferred to as the “halfway house” of entre-preneurship, since they provide the oppor-tunity to “work for yourself but not byyourself.” The franchisees pay the fran-chisor a monthly royalty fee. Roquet saidthe amount of the fee is usually deter-mined as a percentage of sales and coversthe use of the franchisor’s name and trade-marks, the right to use its business model,and access to products and ongoing sup-port. “The franchisor is your business part-ner, providing you with ‘back end’ sup-port, which then allows you time to run the‘front end’ of your business. A good fran-chise concept creates a win-win scenariofor all,” he said. “You don’t want to judgea franchise based on the size of the royalty– you want to judge it by what it can pro-vide to you after the royalty is paid.”
Erwin J. Keup, author of FranchiseBible: How to Buy a Franchise or Fran-chise Your Own Business, suggests refer-ring to The Ultimate Book of Franchisesto help select a franchise. The book con-tains more than 1,000 franchise listings.“You’re really buying a job when you buy
16 September 2005
a franchise,” Keup said. “So before youstart calling the franchises, you shouldfind one that fits your abilities. Get the of-fering circular and have qualified peopleadvise you.” The offering circular con-tains a certified audit, which should beless than 10 months old and should in-clude information about lawsuits that havebeen filed against the company.
Keup suggested potential franchiseeshave a professional walk them throughfranchise fees and how to evaluate them,royalties and why they should pay them,what to expect in terms of training and on-going support, advertising, site selectionand franchisee relations.
Mike Micone opened a Reno office ofAccountants Inc. in 1996 and a Las Vegasoffice in 1998. Micone researched morethan 20 franchises before settling upon Ac-countants Inc, a staffing service for finan-cial professionals. “After three months, Iknew this was the perfect match, so I eval-uated the start-up costs and sold my house,car and boat to start a new life.” Miconesaid the positives of owning a franchise in-clude proven processes that the corpora-tion has already taken the time to workthrough, along with financing, marketingitems, the accounting-specific databaseand software systems. “The IT supportwas a tremendous advantage,” he added. “Idon’t have to manage these areas, whichcan take time away from developing thebusiness. The most important part of de-termining which franchise to buy is howmuch ongoing support the company willprovide and what it will cost.”
Ken Hollowell, president of California-based National Franchise Services, Inc.,encouraged buyers to insist on receivingthe UFOC (uniform franchise offering cir-cular) at the first face-to-face meeting or10 business days before the buyer is re-quired to provide any funds or sign anyagreement. “The actual franchise agree-ment is part of that document,” he said. “Ifthe buyer cannot agree to the terms andconditions of the franchise agreement, thebuyer would be wasting his or her time in-vestigating the franchise.”
The best way to investigate whether acompany is reputable, Keup suggested, isto contact several franchisees. “See if youcan get ahold of them in person. If they’renot happy, you’ll find out, even just overthe phone. But in person is better. ”
September 2005 17
Michael Solomon owns 11 Great Amer-ican Cookies franchises, including three inSouthern Nevada. He likened interviewingexisting franchises to calling references ona job application. “Call as many as you can– and not just those the company sug-gests.” Solomon recommends that fran-chisees carefully check into preciselywhich services the franchise offers. “Dothey have their own administrative sys-tem? Will they handle your small businessaccounting? Will they negotiate with land-lords to help you find new locations? Willthey help develop new products?”Solomon warned that a lot of people fall inlove with the idea of owning their ownbusiness. “While working for yourself canbe very rewarding, it’s also a lot of work.You can’t romanticize what you are get-ting into.” Solomon recalls having to workover many holidays and working when hisemployees didn’t show up.
Luther Mack, who owns nine McDon-alds restaurants in the Reno-Sparks areaand one in Fernley, has been involved withMcDonalds since 1968. Mack said thepositives of running a franchise revolve
around support. “McDonalds helps youfind the best insurance, the best legal sup-port, the best accountants. They are also abig help with marketing, training, publicrelations and political action,” he said. Hesuggested franchisees think twice beforehiring family members. “Always look tohire on the outside before hiring familymembers, and make sure you have disci-pline and procedures in place.”
Mack is also on the community boardfor Wells Fargo, and he sees many fran-
chisees and entrepreneurs fail due tounder-capitalizing. “Make sure you knowyour business inside and out and that youare hands-on until you get your businessrunning the way you want it. Double-check your bank deposits and have cashcontrols in your business. Plan for thebusy times and the slow times so you haveenough cash for the slow seasons. ”
Mack also suggested prospective fran-chisees take a close look at franchise fees.“All that glitters is not gold. Unlike inde-pendent businesses, with franchises, extraexpenses can be incurred,” he warned.
When financing a franchise, franchiseesshould look for a lender who has experi-ence in their industry, said Diane Cooper,president and CEO, GE Franchise Finance(GEFF). “We work with customers such asClaim Jumper to tailor their restaurant fi-nancing and provide innovative solutionsthat help maintain the long-term viabilityof their business,” Cooper said. “ClaimJumper was able to amortize its debt dur-ing a longer timeframe, realizing cash flowsavings. That additional cash flow willhelp fuel the company’s long-term
“When you pick a franchise to investigate,
the product or service is the last thing
you should consider.”
18 September 2005
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growth.” Scottsdale, Ariz.- based GEFFworks with franchisees and franchisors inNevada and across the United States.
Steve Synnott, president of the Denver-based wholesale group PRO Group, Inc.,said positives of franchises include namerecognition and branding, expertise inmarketing, promotions, operational effi-ciencies, customer service support andtraining. Negatives include forfeiture ofindependence, fees and service chargesand reporting requirements.
Territory Incorporated’s Lord said com-petition between various franchises is par-ticularly interesting in Las Vegas, due inpart to increasing land costs. “Users likeSubway, Port of Subs and Quiznos, orPostNet and the UPS Store are not onlycompeting for the exact same space, butoften are offering more than the askingrate, or accepting terms as proposed bythe landlord just to secure the location be-fore their competition does,” she reported.Lord sees Nevada as a hot area for fran-chises. When asked if franchises are dis-placing independents, Lord said it de-pends on the type of business. “Forsandwich shops, mailbox stores and cof-
fee shops, franchised branding seems tobe preferred over independence,” she said.“However, for other uses such as drycleaners, nail salons, beauty salons andpizza shops, both are equally competitivein the market. In many instances, the in-dependent can move more quickly and ef-ficiently than the franchise operators.”
George Knauf, a franchise consultantwith Washington, D.C.-based FranChoice,encourages prospective franchisees to dotheir homework. “When you pick a fran-chise to investigate, the product or serviceis the last thing you should consider,”Knauf said. “All too often, we see casessuch as computer programmers buyingWeb design franchises and failing becausethey were not willing to do what a suc-cessful owner in that business has to do –namely sell the services of the business.”Knauf warned prospective franchisees notto select franchises to investigate purelybecause they like the product or service.He joked, “If you want to eat ice creamand drink coffee, you can save thousandsupon thousands of dollars by doing thaton your own and not being a businessowner at all.”
SELECTED FRANCHISINGRESOURCES
Franchise Bible: How to Buy a Franchise orFranchise Your Own Business,
by Erwin J. Keup
FranNet • The Franchise Connection,www.frannet.com
SCORE • www.score.org
The Ultimate Book of Franchises,by Rieva Lesonsky
Franchise Times • www.franchise.org
Federal Trade Commission’s “ConsumerGuide to Buying A Franchise” (available
through International Franchise Association)
National Franchise Services, Inc.,www.kenhollowell.com
FranChoice • www.franchoice.com
Nevada Business Journal advertorials read like news articles and are the perfect
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D E C E M B E R 2 0 0 5
September 2005 21
Photo: Opulence Studios, Inc.
FRONT ROW (LEFT TO RIGHT):
Daniel Byron Sperry Van Ness, Las Vegas
Judi Woodyard Commercial Associates, Las Vegas
Chuck Witters Lee & Associates, Las Vegas
Lucinda Stanley Shea Commercial, Las Vegas
Suzette LaGrange Colliers International, Las Vegas
Ron McMenemy NAI Horizon, Las Vegas
Tami Lord Territory Inc., Las Vegas
Donna Alderson CB Richard Ellis, Las Vegas
SECOND ROW:
Randy Broadhead CB Richard Ellis, Las Vegas
Ken Stark Stark & Associates, Reno
Soozi Jones Walker Commercial Executives, Las Vegas
Paul Perkins Alliance Commercial R. E. Brokerage, Reno
Dean Willmore Industrial Property Group, Inc., Las Vegas
THIRD ROW:
Pat Marsh Colliers International, Las Vegas
Perry Muscelli Cushman & Wakefield, Las Vegas
Barry Brown Colliers International, Reno
Ron Cobb CB Richard Ellis, Reno
b y K a t h l e e n F o l e y
tion would be tremendous this year com-pared to previous years. Another thingwas that the weighted average lease rateon vacant space went from $1.95 at theend of the first quarter up to $1.99 at theend of the second quarter on a full-ser-vice-gross basis. That shows a firming upof lease rates. Tami Lord: Territory Incorporated primari-ly does big-box development and retailbrokerage. From a retail standpoint, LasVegas has always been relatively low onvacancies. But the issue we’re runninginto now is, between rising land pricesand rising construction costs, can nationalretailers sustain the risk? The developerneeds to make the transaction happen, sothat’s probably our biggest obstacle todayand moving forward.Suzette LaGrange: I’m the vice-presidentof Colliers International’s industrial divi-sion. Certainly land prices are the biggestchallenge for us, but in industrial real es-tate, we need to get the rents up if we’regoing to keep up with the rising landprices and construction costs. Anotherissue is that there are so many delays inthe construction permitting process.
Commercial real estate agents fromthe Las Vegas and Reno areas gath-ered at The Stirling Club recently
to discuss the real estate market in Neva-da and how it is affecting their profes-sion. The gathering was part of NevadaBusiness Journal’s Industry Outlook se-ries. Connie Brennan, publisher of Neva-da Business Journal, served as modera-tor for the roundtable, which includedtopics such as: rising costs and shrinkingavailability of land; prospects for the of-fice, industrial and retail markets; andthe recent trend towards high-rise condoconstruction. Following is a condensedversion of the discussion, which beganwith introductions.
Chuck Witters: I’m an office broker withLee & Associates in Las Vegas. I’ve beenhere for 12 years. I received preliminarysecond-quarter office data numbers today[for Southern Nevada], and they greatlyencouraged me. First of all, we have a lit-tle over 900,000 square feet of net absorp-tion year-to-date. Last year, we ended upabout 1.6 million for the whole year. So ifwe could continue on this trend, absorp-
22 September 2005
INDUSTRY FOCUS • COMMERCIAL REAL ESTATE BROKERS
Donna Alderson: I’ve been with CBRichard Ellis for 19 years, and I agreewith what Suzette said regarding rents. In-dustrial big-box rents have been relativelyflat for a number of years, and the risingcost of land and the availability of land arebig issues for us. Residential developerscan pay more for land than industrial de-velopers, so a lot of rezoning is takingplace, and that is a big sore spot.Daniel Byron: At Sperry Van Ness, mypartner and I specialize in apartments andanything commercial. I can honestly saythat right now we don’t have one listing in
the office. Everything comes in and goesout the door the same day. For land inSouthern Nevada, the prices have doubledand tripled and quadrupled, and there’s awaiting list for it. I think we have anotherthree to five good years ahead of us. Butwe have to keep in mind that if there’s an-other major terrorist attack, it could causea recession that would change our cashflow and our needs and demands. Perry Muscelli: I’m with Cushman &Wakefield and have been in Las Vegas onand off for 49 years. The biggest chal-lenge for the brokerage community is to
change the way they do business, becauseit’s not the Las Vegas we’ve known formany years. We’re basically out of land,so those of us who have been workingwith developers who used to have theirpick of land are not going to be makingmoney that way anymore. The other riskis that we’re in a very speculative marketbecause of some of the things that havehappened in the last year. Randy Broadhead: I have been with CBRichard Ellis for 22 years, specializing inthe office market, which is very healthy,with vacancy rates down around 10.5 per-cent. However, land prices are now sohigh that they are a barrier of entry to of-fice developers. Another big impact onour market right now is tenant improve-ment costs. There’s also the demand forownership. With interest rates being low,that has really eaten into the lease market. Ron Cobb: I run the land services group inNorthern Nevada for CB Richard Ellis. Ilike to tell everybody from Las Vegasthere is no more land left in NorthernNevada, but there actually is. We are stillin pretty good shape and are experiencingsome great growth. I am also the citychairman of the Planning Commission.
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September 2005 23
INDUSTRY FOCUS • COMMERCIAL REAL ESTATE BROKERSBarry Brown: I’m the managing partnerfor Colliers International in Reno. This ismy 33rd year in commercial real estate,and 29 of those years were in senior salesall over the country. As Ron said, the mar-ket’s still very healthy, but we are runninginto some of the obstacles Randy men-tioned. Tenant improvement prices havecaused some deals to fall through. Ofcourse, our real concern is that business ismoving out of town. The office market ismoving to south Reno and industrial isgoing north and east. Of course, retail hasbeen the dominant thing, following theconstruction upswing in residential. Lucinda Stanley: Shea Commercial isgoing to construct about 750,000 squarefeet of office projects this year. Ourbiggest challenge is getting qualified help.Many of the problems people are talkingabout today are caused by a lack of af-fordable housing. People cannot afford tolive in Southern Nevada, so it’s very diffi-cult for us to pull people in from othermarketplaces to provide the labor we’redefinitely lacking. That includes our ownemployees, subcontractors and also peo-ple to staff the planning and building de-partments at government offices.
Soozi Jones Walker: I’m the broker atCommercial Executives, specializing inoffice investment sales. We look at the va-cancy factors and they all look reallyhealthy, but there’s a lot of space that goesunder the radar screen. Most of the largebrokerage firms keep track of numbers foroffice spaces of 5,000 to 10,000 squarefeet or larger, but Shea and many other de-velopers like them are bringing on hun-dreds of thousands of square feet that arenot owner-occupied spaces. In manycases, people plan on occupying only 50percent of their building and leasing out
the rest. Permitting delays are also a prob-lem. If someone doesn’t get on track andfind some additional employees to helpprocess all of these things, our city will behurt and people might start going to a dif-ferent market. Pat Marsh: I specialize in industrial atColliers International. To go back to whatSoozi said about office tenants moving toother markets, I think other markets areseeing the same high prices of land andrents going up, so I’m not sure we’regoing to lose. We just need to be more cre-ative. Our job is just going to change.
24 September 2005
We’re losing industrial land to home-builders, as Donna said, and to high-risedevelopers. But there are locations inSloan or at Apex Industrial Park, wherethere are 10,000 acres of industrial land,which are going to be viable options soon.We’ll have to start exploring those options.Paul Perkins: Alliance Commercial RealEstate is a new company in Reno, but I’vebeen in the business 36 years. In Reno,after years and years of work, all the ef-forts to revitalize downtown are finallybeginning to come to fruition. We’re see-ing high- and mid-rise condominium de-velopments along the river and the traintrench corridor is well along – it will becompleted next spring. There’s a vibrancyand an enthusiasm downtown we’ve neverseen. On the negative side, we have waterproblems, which recur every few years,and I think this time it may actually resultin the completion of an aqueduct fromvalleys north of Reno. The resources fromthe Truckee River and Lake Tahoe justaren’t sufficient to handle the growthwe’re seeing. Judi Woodyard: I’m the owner and brokerfor Commercial Associates, and we spe-cialize only in the tenant and user side ofthe business. So we don’t have some of thedevelopment obstacles you others have. Dean Willmore: I’m with IPG Commer-cial Real Estate Services, and I have neverseen the market this busy. We have allbeen seeing cap rates getting close to 6percent. We went back and tried to studycap rates 20 years back, and these are thelowest rates we’ve ever seen. Small indus-trial buildings are priced at $145 to $150 asquare foot. That’s within 10 or 15 fifteenpercent of the prices for shell office build-ings, which are priced at $165 to $200.Usually office buildings are twice asmuch as industrial, but no more. Witters: They probably should be, right?Willmore: Yes. As far as Las Vegas losingtenants to other markets because of rentalrates, my opinion is that Las Vegas industri-al rental rates have always been higher thanPhoenix, Salt Lake and Reno. They havebeen comparable to Ontario, Calif. They’reusually a little lower than Irvine. The busi-nesses that have come into Las Vegas havemoved here because they have to be in LasVegas, and I think that will continue.Ron McMenemy: I own NAI Horizon inLas Vegas. Building permits and construc-
September 2005 49
tion costs can be a gun to our heads in alot of different scenarios. You think youhave a deal and it changes. We’re alsogoing to face a lot of transportation chal-lenges, which will get worse as we pack inmore mixed-use development projectsthat empty onto a street that has been therefor 20 or 30 years. But I think that, giventhe talent that’s in this room, we’ve beenvery good at adapting to change, and thevelocity of Las Vegas has been unparal-leled in the United States. I’m very confi-dent about what the future holds becausewe’ve been through it before and we’ll getthrough it again.Ken Stark: I am owner and broker forStark Associates Commercial Real Estatein Reno. My experience and expertise hasbeen in the office market. Our vacancy isup, at just under 16 percent, but this yearpretty significant transactions are going todrive vacancy down. Skyrocketing hous-ing costs are an issue in Northern Nevada.However, a report came out recently thatsaid home prices for the under-$300,000market have finally cooled off and aregoing down. Perkins: Reno is on track for a record yearof net absorption in the industrial market,which isn’t great by Las Vegas standards,but we’ll probably do over 3 million feetof net absorption this year. One of theproblems we face on the industrial side isthat we’re down to less than a 6.5 percentvacancy rate in the second quarter, andthat’s dangerously low. We lose opportu-nities when it’s that low. We lost a sizableopportunity not too long ago; a major re-tail distribution center elected to go toPhoenix because they were concernedover our lack of population and low un-employment rate, and they didn’t want torisk not being able to hire employees for amillion-square-foot facility.
Scarce Land Causes ProblemsConnie Brennan (Nevada Business Jour-nal): The first item on the agenda is landavailability. Is anyone aware of newproperty to be released by the BLM, or isthis a problem we’ll be struggling withfor awhile?LaGrange: Another parcel in Aliante inNorth Las Vegas will be released in No-vember. That doesn’t help the industrialmarket at all, but hopefully it will help sa-tiate the homebuilders a little bit. Home-
INDUSTRY FOCUS • COMMERCIAL REAL ESTATE BROKERS
builders are getting much more creative. Italked to an engineer who said she’s doingreally small lots with three-story homeson them, so hopefully that will contributeto affordable housing.Muscelli: In our market today, to make asale, you have to be risky and overly ag-gressive to succeed. I’m not sure how pru-dent it is. To be a good brokerage firm, wehave to advise our clients to take big risks.You have to gamble, because every otherbuyer is doing that to succeed and there islittle property left. Very soon we’re goingto be virtually out of the land that is feasi-ble for most businesses that want to ser-vice the local economy, especially in theindustrial market. I disagree with some ofthe panelists here, because I think we are,in fact, losing companies to other cities.I’ve seen what’s happened in my owncompany. I also say the rents in industrial,especially bulk industrial, are going to goup dramatically. So we may not be mak-ing money doing industrial deals andwe’re not going to make money sellingland to developers like we used to, and theinvestment market is extremely challeng-ing. When the interest rates go up I think
there are going to be a lot more sellersthan there are buyers, so I don’t think theinvestment market makes sense verymuch longer. When the interest rates goup, we’re going to have a challenge for thenext three years selling investment prop-erties as people think, “I thought my pricewas this, why did it go down?”Brennan: Do you think there’s a trend forbrokers to get more involved in the invest-ing end of it? And if so, do you see a con-flict of interest in representing the sellerand then buying the property? Is that acommon practice?Muscelli: It happens, but I don’t think it’sa common practice.Brennan: Do you think it’s a trend formore and more brokers representing theseller to turn around and buy the property? Muscelli: No.Multiple Voices: No. Lord: You hear a lot about brokers gettinga piece of the deal, a little sliver of owner-ship, and that’s another gravy factor forthem. They’re not the out-and-out owner,but they’re in there.McMenemy: A lot of brokers who’ve beenin this marketplace for a long time have a
50 September 2005
INDUSTRY FOCUS • COMMERCIAL REAL ESTATE BROKERS
for $30 a foot. He’s had people fromMiami come in and say, “$30 a foot?That’s a great deal.” So maybe we have tostop looking backward. You need to havea vision of Las Vegas as a unique market,different from any other in the country,and be creative, while at the same timekeeping some fundamentals.Jones Walker: It got to a point where bro-kers were almost order-takers, because inthis market in the last couple of years, youput a sign up and “They will come,” likein Field of Dreams. But realistically, thebrokers who are going to survive and gen-erate the dollars are the ones who give re-ally great service to their clients, and a lotof brokers in the marketplace don’t knowhow to do it or have forgotten how to doit. That involves helping clients do thecorrect pro formas, making sure they’renot just buying a piece of dirt, but that itwill be something they can afford to de-velop. You’re going to have to project therents, but what are they going to be whenyou’re done building in 24 to 36 months?For the brokerage community as a whole,service is going to be the No. 1 thing. Suc-cessful brokers have to make sure theirclients do well in this market.Brown: We have the responsibility as bro-kers to our clients to make sure we don’tjust turn a property into a higher use be-cause it looks good on paper. It actuallyhas to have some serious forethought. Ifwe just advise them to go ahead so wemake some money, it’s not a good thing todo. We have to be careful what we advisethem to do. We use the resources we haveat our disposal in order to advise them asto whether the higher use is really in de-mand in this particular market.Woodyard: The biggest obstacles to help-ing the tenant make the right decision arethe time it takes to do tenant improvementsand also the cost. About 60 percent of my
financial statement that’s strong enough toallow them to get into deals. But, no,they’re not vying for listings. You heardeveryone chime in on that. Byron: I think if everyone sitting at thistable – and I see a lot of power here – isnot investing in Las Vegas real estate,shame on you. By investing when the op-portunities come up, the buys we’re mak-ing as principals are offered to our clientsfirst. For a variety of reasons they may notbuy: they have cash flow problems; theycan’t move quickly enough; or corporateat that time says no; there could be a lot ofreasons. If it’s a good deal, we may buy itourselves, knowing they’re going to buy itin six months or a year to use as an in-vestment themselves, and they’re happywe do this. We always offer it to ourclients first, and I find it hard to believethe people sitting in this room are notdoing it, too. Does that conflict with yourclients? Maybe yes and maybe no.
Role of Brokers ChangingMcMenemy: In order for the brokers in LasVegas to continue to prosper and to be ef-fective, we’ve gone through a transition, asort of a renaissance. It happened inPhoenix, and it’s come over here. As themarket matures and as it gets larger, bro-kers have become more specialized andmore focused; there’s more market seg-mentation. Also, they’re looking back intothe marketplace and looking at redevelop-ment. Whatever the building is now, you’vegot to visualize something else, and it’s notjust mixed-use. It’s taking an office build-ing and turning it into a medical officebuilding or an office condo development. Broadhead: I agree with Perry that wehave to change our way of thinking. Asbrokers we look backward and try to pro-ject forward from historical data. You’retrying to predict the future for your clientin a certain area: “Will this project leaseout? Will it sell? What’s going to happenwith this piece of land?” It’s really hardfor us right now, because you’ve got peo-ple coming from out of the market, fromplaces like Miami and New York, whohave a totally different view of Las Vegasthan we do. I have a piece of office landalong the Beltway with topography prob-lems, drainage problems and all sorts ofissues. It would have sold two years agofor $9 a foot, but the guy’s now listing it
business is with companies whose corpo-rate offices are not located in Las Vegas,and I’m working with one person rightnow who’s doing an office in Denver. It’salmost the same size as the office they’redoing here, and they are building out sec-ond-generation Class A space in both mar-kets. The tenant improvement allowance inDenver is $50 and here it’s $5. So there’s ahuge education process when you’re work-ing with people from other places.Broadhead: Tenants come into our marketfrom outside, and they’re used to beingable to obtain office space for $30 to $40a foot. Costs to build out the space arenow coming in at $50 and even higher,and for smaller tenants, they can’t evenbuild it for $60 a foot. It’s becoming a bigproblem. We need more tenant-improve-ment contractors who are hungry, andright now supply and demand is againstus, because they’re all busy.Jones Walker: Tenant improvements arejust a nightmare right now. I am buildingout three buildings myself, but I’ve beenwaiting 90 days just getting space plan-ning done and sitting dead in the plan-ning department waiting to have myplans checked. Broadhead: Delays with permitting meanit’s taking tenants too long to get into theirspace. It used to take 60 or 90 days, nowit’s 120 days.Jones Walker: Or six months.Stanley: It’s taking us four to six monthsnow to get a building permit. It’s just get-ting insane. All of a sudden the marginsare getting very thin because of the time ittakes to finally complete a project. If wecould get in and out like we used to, theprofit margins would be where theyshould be. Again, if we had more afford-able housing, many it would make it easi-er to find the staff we need at the munici-pal departments. Broadhead: We need to encourage land-lords to build out spec space so people canmove in on time. It will be better for ourmarket than the old traditional way, waitingfor the tenant to come, space-plan it, andthen build it. Plus, you can save money bybuilding it out at the same time you’re build-ing out the other spaces in the building.
High-Rises on the Horizon?Brennan: There’s one item on the agendaI really wanted to touch on, and that’s high-rise construction. Our magazine has been
“In our market today,to make a sale,
you have to be risky and overly aggressive
to succeed.”
September 2005 51
tracking these projects, and they number125 and counting, but some of them havealready pulled back. Does anybody believeall these high-rises will be built?Multiple Voices: No.Cobb: I met with officials at the City ofHenderson and Clark County three or fourmonths ago. They said they anticipatesomewhere between 40 and 45 percentwill actually be built. Who knows whatthe percentage would be today, because ofinterest rates and construction costs? Iknow of about 10 high-rises planned forReno, and probably half of them will bebuilt. We have a lot of closed casinosdowntown, and people are convertingthem into condos. Some of them are doingwell and some of them aren’t.Willmore: It will have a huge effect on theindustrial market if these Las Vegas pro-jects get built. The Ferttita family con-trols at least a couple million square feetof industrial now between IndustrialRoad and Procyon north of Tropicana,and if that whole section from Tropicanato Flamingo and Industrial Road toArville or Wynn goes high-rise condo,which is what’s being talked about, thatcould take 4 or 5 million square feet of in-dustrial out of our inventory. That wouldhave a huge effect.Muscelli: You’re talking about a hugeamount of displacement with these high-riseprojects. Businesses that are currently serv-ing local customers will have nowhere to go.McMenemy: My prediction is that all theseprojects will be built eventually by some-body, but it’s not going to be by the folkswho are proposing them now. Hard moneywill eventually come in and take over thefailed projects. A lot of architects are mak-ing money putting together renderings andplans for projects, and I think, because ofthe affordable housing issue, we’re goingto have to go vertical. It’s just inevitable. Ithappened in Miami. It happened in L.A.It’s happening in Phoenix now. Stanley: Let’s talk about the developerswho collect a deposit from buyers. Nowthey can’t get the product out of theground. Buyers cancel and have to get thebank to refund their deposit.Muscelli: I’m doing a market survey.How many of you know people who areplanning to live in one of these condos? (No hands are raised.)McMenemy: I don’t know any.
Muscelli: How many know people whobought them to speculate?(Several hands are raised.)Jones Walker: They don’t even have aclue how they’re going to close [escrow]on them.Muscelli: When it comes time to close,and they see a $1,500-a-month associationfee and a higher-interest-rate mortgage,they’ll think, “Maybe I don’t want to dothis after all.” And then what happens? Stark: They’re all expecting to flip theproperty.Muscelli: That’s right. They’ll risk$25,000 and take a shot that they’ll catchan appreciation jump of $100,000 for thenext two years. After all, Las Vegas had thefastest-growing real estate prices in thecountry last year. Why not take a shot? IfI’m an investor, I’ll put some money downon condos – maybe three or four of them,and that’s going on all over town. LaGrange: Another fundamental con-cern is construction. Where are all theconstruction workers going to comefrom when we start building all thesehigh-rise condos? And are we going tohave the concrete to build concrete in-
dustrial buildings if it’s all used forhigh-rises? And what will all that de-mand do to prices, both for labor andfor materials?Jones Walker: Another thing to consideris that they still have not completely takencare of construction defect laws in Neva-da to protect developers and contractors,so once high-rises get built and the law-suits come, what are they going to do?And where are we going to get our con-tractors if insurance costs go up again andthey can’t afford insurance?Lord: From a retail standpoint, the bigger-box retailers are having a hard enoughtime paying what we’re asking them inthis market right now. Somebody’s doinga sales job on these tenants, becausethey’re telling them that all these condosare high-density, which the big-box re-tailers need to justify the higher prices.They look to you as their agent, and theysay, “Are these units going to be owner-occupied and how many are going to getbuilt?” There’s just no way, at this pointin time, to quantify what’s going on withthis because so much of it is pie-in-the-sky marketing.
INDUSTRY FOCUS • COMMERCIAL REAL ESTATE BROKERS
54 September 2005
Investing in real estate can be a risky busi-ness. Individual investors who boughtproperty in the wrong place and at the
wrong time, or saw the real estate markettake an unexpected plunge, can attest to thedifficulties of this investment. Developerswho have tried to line up financing for realestate projects are also affected by the un-predictability of the market.
Real estate investment trusts (REITs)provide an alternative that many expertssay is an easier and safer way to invest inproperty. REITs, which have had strongreturns in recent years, are also a valuablesource of financing for developers andhave played a role in Nevada’s growth.
More than $300 billion is invested inthe domestic REIT market, with 25 per-cent in industrial and office buildings anda nearly equal amount in retail stores,market analyst Timothy Middleton said ina recent article in MSN Money. Apart-ments account for 15 percent, with hotelsand other sectors of real estate comprisingthe remainder.
Nearly 90 percent of real estate invest-ment trusts are equity REITs that own prop-erty. Other REITs provide mortgage fund-ing and some are hybrid REITs that do both.
The National Association of Real Es-tate Investor Trusts (NAREIT), the tradegroup for the industry, has 195 membertrusts that trade on the stock exchanges.The industry also includes a large numberof private, nontradable REITs, but theexact number is not available.
Publicly traded REITs “share charac-teristics of both stocks and mutual funds,”authors Rich Mintzer and Annette Racondwrote in The Everything Investing Book.REITs, which were created by Congres-
sional legislation in 1960, trade in shares,but are managed in a way similar to mutu-al funds. REITs do not give investorsownership in property, but are required topay out at least 90 percent of their profitsin dividends. REITs don’t have to pay cor-porate taxes; plus, they get tax breaksfrom depreciation, but investors are taxedon returns. Many mutual funds and retire-ment accounts include REITs. PrivateREITs and those that don’t trade on theexchanges usually have a minimum in-vestment requirement of at least $1,000,but the minimum requirement for otherREITs is one share.
“Look back in time and you’ll discoverthat real estate stocks have outperformedthe S&P 500, the Dow Jones IndustrialAverage and Nasdaq on a compound an-nual total return basis over the past 30years,” said NAREIT Senior Vice Presi-dent Michael Grupe.
Information about specific trusts canbe obtained from brokerage houses orfrom company reports and business pub-lications. The NAREIT.com Web site pro-vides further information, and the organi-zation also publishes indexes that trackthe industry.
Nevada REITsOne of the most aggressive retail REITs
operating in Las Vegas is Pan Pacific Re-tail Properties Inc. It now owns eight retailcenters in Las Vegas totaling 1.8 millionsquare feet after buying the 80,000-square-foot Alamosa Place (Desert Innand Pecos roads) in March.
The Vista, Calif.-based company ownsCheyenne Commons, Sahara PavilionNorth, Sahara Pavilion South, Rainbow
Promenade, Winterwood Pavilion and De-catur Meadows in Las Vegas and the GreenValley Town & Country Center in Hender-son. In Northern Nevada, Pan Pacific ownsretail centers Mira Loma, Caughlin Ranchand North Reno Plaza in Reno, Elko Junc-tion in Elko, West Town in Winnemuccaand Eagle Station in Carson City.
The company is the largest operator ofshopping centers in the West, with 137centers, and plans to add 14 or 15 more.Nevada figures prominently in its expan-sion plans, said President and Chief Exec-utive Officer Stuart Tanz.
“There is an ocean of capital out therewhen it comes to real estate, which willcontinue to drive growth and stock prices,”said Tanz, who foresees a strong marketfor REITs in the long term. “There is verystrong retail tenant demand in Nevada andvery strong rent growth.” Pan Pacific’stotal return on its assets has been 16 per-cent over 10 years, but has risen to 35 per-cent over the past three years, he said.
General Growth Properties, a Chicago-based company listed on the New York StockExchange, owns or has an interest in morethan 200 regional malls in 44 states, makingit the second largest retail mall REIT in theUnited States. In Southern Nevada, it ownsthe Fashion Show, Boulevard and Meadowsmalls and the Grand Canal Shoppes at theVenetian. General Growth Property’s mergerwith The Rouse Co. a year ago added 37 re-gional malls to its portfolio. “Las Vegas isone of General Growth’s most significantmarkets and one of the world’s best retaildestinations,” said Dan Sheridan, executivevie president, General Growth Properties.“Our Las Vegas retail portfolio has nearlydoubled in the past year, and will grow by anadditional 1 million square feet with the de-velopment of a regional shopping center inSummerlin Centre, and another 300,000square feet with the construction of ThePalazzo at the Venetian.”
Crescent Real Estate Equities Co.,based in Fort Worth, Texas, has big plansfor Hughes Center, a complex with 10 of-fice buildings and nine retail outlets in theheart of Las Vegas at a strategic location(Flamingo and Paradise roads) near Mc-Carran International Airport. Because ofthe strength of the Las Vegas economy,the company is adding 250,000 squarefeet office of Class A office space to thecenter, scheduled for completion in No-
by Tom Dye
Real Estate Investment TrustsWhat’s Right with REITs?
September 2005 55
vember 2006. It also has plans for furtherexpansion, said Keira Moody, vice presi-dent of investor relations.
The REIT, which is traded on the NewYork Stock Exchange, has had an annual re-turn of 12.4 percent in the 10 years since itwent public. Its return surged to 16.8 percentlast year. The company has 60 percent of itsassets in the office market in the Southeast,Southwest and on the West Coast, but alsoinvests in the development of vacationhomes and resorts, said Jane Page, manag-ing director of asset management.
Crescent finances East West Partners,which is developing high-end single-familyhomes, condominiums and townhomes inColorado and the Lake Tahoe area for peo-ple who want to buy vacation homes in re-sort areas. It also finances the CanyonRanch resorts and an offshoot of the opera-tion, Canyon Ranch Spa Clubs, which has aspa in the Venetian Hotel. Moody said Cres-cent is impressed with Las Vegas because itis attracting more national companies thatcontinue to need more office space to grow.
Some of the other public REITs withproperty in Nevada include Houston-basedCamden Property Trust, which owns 199Oasis apartment complexes, including 17 inLas Vegas, and Bedford Property InvestorsInc., which owns the Russell CommerceCenter and Northport Business Center inNorth Las Vegas. Bedford, based inLafayette, Calif., operates more the 90 in-dustrial and suburban office buildings inCalifornia and four other western states, in-cluding the U.S. Bank Center in Reno.
Las Vegas-based Vestin Group has a dif-ferent strategy in the real estate trust mar-ket. Vestin is applying to the Securities andExchange Commission to change two ofits investment funds from limited liabilitycompanies into mortgage REITs. The twofunds combined are valued at $430 millionand have about 7,000 investors, said ChiefFinancial Officer John Alderfer.
The change must be approved by 51 per-cent of the funds’ investors. Alderfer saidVestin has received positive feedback fromits investor focus groups, and he is hopingthe conversion can be made by the end ofthe year or sooner. The main reason for thechange is to allow investors more freedomto convert their investments into cash. Lim-ited liability companies allow only 10 per-cent of their funds to be taken out in a givenyear. REITs do not have this restriction.
Vestin has invested heavily in the West,but has mortgages in property in otherareas of the country. Typically, it providesshort-term funding for commercial projectsthat have trouble obtaining financing fromother lenders, Alderfer explained. The de-velopers usually take out longer-term,lower-interest loans after they have cashflow and a balance sheet that qualifie themfor conventional financing.
Although REITs are usually not thetype of investments that finance gamingprojects, Vestin funds provided a loan forThe Cannery Casino Hotel, which wasbuilt in North Las Vegas five years ago.
REITs as Investments Despite the advantages of REITs, invest-
ment experts point out real estate is not forthe fainthearted. A plunging real estate mar-ket can hurt investors. Investment adviserssay the risk falls somewhere between thevolatility of stocks and the steadiness ofbonds. The financial performance of REITsand the track record of fund managersshould be checked before investing.
Las Vegas Certified Financial PlannerDeborah Danielson fears the volatility of
the markets and a dip in real estate valuescould affect real estate investment trusts.However, she is still high on REITs for thelong run, even though she does not believe20 percent returns will continue. She isplacing more of her clients’ money in non-tradable REITs, which are protected fromthe unpredictability of the markets. She in-vests about 20 percent of a typical portfo-lio in REITs, with about three-fourths ofthe amount in the non-tradable variety.
Danielson, president of Danielson Fi-nancial Group, points out that non-trad-able REITs do not have the liquidity ofpublicly traded trusts, but they often haveexit strategies, such as buyback clauses.Typically, clients hold non-tradableREITs for five to seven years and can ex-pect steady returns of about 9 percent.
Mike Cruz of the investment firmCourtland Financial Group in NewportBeach, Calif., advises investors to place aquarter of their portfolio in REITs, but healso believes they should have direct own-ership of property in cities with strongeconomic potential for growth. Cruz said,“I’m a big believer in the REIT marketboth now and in the long run.”
56 September 2005
the Villas, all the way to in-fill projectswith as little as three houses, Silverwingchooses projects based on quality, not size.
“Often times, we’ll take a deal thatsome bigger builders might not, becausethey don’t want to deal with projects withso few homes,” said Beth Bridges, salesand marketing manager for Silverwing’sReno office. She said there are benefits toSilverwing’s small size. The Reno stafftotals only seven; even at the Concordheadquarters, the staff numbers just nine.“This way, we can be more unique andpay more attention to the details. Not an-swering to a big corporate entity, we cancontrol what we’re doing from within,which gives us the ability to change fasterbecause we don’t have to go through asmany layers of decision-makers. If we seea great-looking idea, and we can work itinto the budget, we do it.”
Of the Northern Nevada market,Bridges said that while skyrocketingproperty values are good for business, italso means that in general, the area needsmore entry-level, affordable housing.“While interest rates are still down, theprice of houses is going up, so it’s prac-tically a wash. I think there’s a need forthe lower-priced houses, so people wholive and work here can afford to buy ahome,” she stated. The Villas at SkyVista, which were priced in the low-100sa year ago as starter homes, are now sell-ing in the low 200s.
On the horizon for Silverwing are sev-eral developments, including The Cot-tages, a series of 109 duets east of the air-port near Hidden Valley, and GrandSummit, a 79-home project located be-tween Robb Drive and McCarran, off I-80. Grand Summit just opened in late Au-gust, and a list of interested parties hasbegun for The Cottages, which shouldopen soon. Other unnamed projects arestill in negotiation.
“Silverwing’s partners have been doingthis for a long time, and they plan on stay-ing around,” said Bridges. “They’re metic-ulous about the projects they choose, andabout being able to produce an affordable,good-looking product.”
everal years ago, when SilverwingDevelopment entered the NorthernNevada market, the area’s housing
boom was just beginning. At that time, thedeveloper’s only Nevada project was a rawpiece of land in Stead, known as Sky Vista.The land was broken into smaller parcelsfor subdivisions, and sold to other develop-ers for residential building. And in onesmall portion, Silverwing built the SkyVista Commons apartment complex. Outof this small project, Silverwing Develop-ment has grown to become one of NorthernNevada’s top developers, and a 2004 win-ner of a Builders Association of NorthernNevada People’s Choice Award.
Silverwing Development, founded in1986 and headquartered in Concord,Calif., has been active in residential, com-mercial and land development projects inCalifornia, Nevada and Texas. Its princi-pals have experience in both institutionaland entrepreneurial real estate environ-ments and have been involved in the un-derwriting, development, managementand sale of Class A office buildings,shopping centers and multi-family pro-jects, as well as attached and detachedsingle-family homes.
Since its arrival in Northern Nevada, Sil-verwing has contributed greatly to thearea’s changing landscape. Across thestreet from Sky Vista Commons, in a for-merly commercial property, it developedthe Villas at Sky Vista, a series of 126 at-tached homes, or duets. Then came BearCreek, a community of 28 executive-stylehomes in Galena, and University Ridge, 50homes overlooking the city from the ridgenorth of North McCarran Blvd. andSocrates Drive. From large projects like
Silverwing Development
S
Right at Home in Northern Nevada
Las Vegas Statistics Compiled by ColliersInternational & Restrepo Consulting
Reno Statistics Compiled by Grubb & Ellis Nevada Commercial Group
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 Construction
PROFESSIONAL CLASS A
Total Square Feet
Vacant Square Feet
Percent Vacant
New Construction
Net Absorption
Average Lease sf/mo (nnn)
Under Construction
Planned Construction
PROFESSIONAL CLASS B
Total Square Feet
Vacant Square Feet
Percent Vacant
New Construction
Net Absorption
Average Lease sf/mo (nnn)
Under Construction
Planned Construction
PROFESSIONAL CLASS C
Total Square Feet
Vacant Square Feet
Percent Vacant
New Construction
Net Absorption
Average Lease sf/mo (nnn)
Under Construction
Planned Construction
MEDICAL OFFICE
Total Square Feet
Vacant Square Feet
Percent Vacant
New Construction
Net Absorption
Average Lease sf/mo (nnn)
Under Construction
Planned Construction
29,333,066
3,388,479
11.6%
592,947
757,660
$2.16
1,638,378
4,117,326
3,330,392
234,184
7.0%
64,700
155,908
$2.54
336,000
1,109,350
9,928,054
939,778
9.5%
181,247
153,462
$2.13
477,833
987,176
10,215,685
1,413,009
13.8%
347,000
276,632
$2.14
573,627
1,356,259
5,858,935
801,508
13.7%
0
171,658
$2.12
250,918
664,541
7,762,000
993,536
12.8%
140,000
104,000
$2.00
220,000
480,000
3,084,748
413,356
13.4%
46,000
32,000
$2.05
108,000
240,000
2,021,760
281,024
13.9%
94,000
-36,000
$1.85
102,000
240,000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
OFFICE– 2ed Quarter 2005
Next Month: RETAIL
by Jessica Groach-Santina
CHEYENNEVALLEYG A T E W A Y
A Lyle Brennan Development
(702) 385-5999www.CheyenneValley.com
PROFESSIONAL OFFICE & RETAIL PARK
“Own Your Office for Less Than Rent”
58 September 2005
Panattoni Breaks Ground on Business Center
Panattoni Construction’s latest projectin the Nevada market is the Creek-
side Business Center at 2575 East Wash-burn Road in Las Vegas. Phase I of thedevelopment includes two multi-use fa-cilities: 40,140 square feet and 38,833square feet, respectively. The tilt-up con-struction buildings, featuring space forboth warehouse and office uses, are pro-jected to be finished in December 2005.Additional mixed-use buildings, includ-ing retail components, are planned forPhase II of the business center. PanattoniDevelopment Company is managing theproject, and Blakely Johnson and Ghusndesigned the buildings.
PENTA Opens Reno Office
PENTA Building Group, a LasVegas-based construction company
with offices in Scottsdale, Ariz. andSouthern California, has opened an of-fice in Reno to handle commercialbuilding projects in Northern Nevada.Lou Primak, area manager in Reno, saidthe four-person office in the SouthMeadows area recently completed a re-modeling project for Conway Distribu-tion in Sparks. PENTA specializes inseveral market areas, including hospital-ity, distribution, office, industrial andhigh-end retail. It has completed pro-jects for clients in 13 states.
Korte To Complete BeltwayCorporate Center
The Korte Company has brokenground on a $4 million office build-
ing for DSA Development in SouthernNevada. The 64,000-square-foot space isthe first of two office buildings that willbe added to the Beltway Corporate Cen-ter at Eastern Avenue and Pebble Road.The office buildings, along with a 160-space parking structure, will be the finalcomponents of the mixed-use center,which already contains numerous retailshops and restaurants, the Las Vegas Ath-letic Club and Starbucks. The first of thetwo tilt-up office buildings is planned forcompletion in March 2006.
Condo Development Plannedfor Queensridge
Las Vegas-based Executive HomeBuilders and Peccole Nevada Corpo-
ration recently unveiled plans to develop acustom condominium community inQueensridge, at Rampart Boulevard andAlta Drive in Las Vegas. The first phase ofthe project, named One Queensridge Place,broke ground in April and is scheduled forcompletion in the fourth quarter of 2006.Buyers can choose from 43 different floorplans, ranging from approximately 2,000square feet to 14,000 square feet. Phaseone will include 219 units in two 18-storybuildings with two levels of private park-ing. Phase two includes the construction oftwo additional buildings, along with17,000 square feet of class A office space.Prices currently begin in the low $1 millionrange, with penthouses available starting atapproximately $4 million. JMA Architec-ture Studios served as architect for the pro-ject, with Perini Building Company actingas general contractor.
Carina Corporation To SellResidential Assets To Lennar
Carina Corporation recently an-nounced that affiliates of Lennar Cor-
poration have entered into an agreementwith Carina to purchase substantially all ofthe assets related to Carina’s LamplightHomes program. The sale includes mosthomes, neighborhoods, developed and un-developed lots and plans related to Cari-na’s Lamplight Homes homebuilding divi-sion. The transaction value wasundisclosed. The transaction does not in-clude the commercial developments at TheVillage of Centennial Spring, a 41-acremixed-use urban village currently underconstruction in the northwest Las VegasValley. Carina Corporation is a privatelyheld company established in 1996 byMark and Michelle Doppe. Mark Doppesaid the company intends to concentrateon mixed-use “new urban” developments.
September 2005 59
Wi-Fi Arrives at Reno Airport
The Nevada Commission on Tourism(NCOT) has won a national award
for its marketing campaign in China,where the agency operates the first U.S.tourism office licensed to do businessthere. NCOT was among 10 travel in-dustry organizations to win a coveted2005 Odyssey Award from the TravelIndustry Association of America (TIA),the nation’s largest tourism and traveltrade organization. The awards cover 10categories and NCOT won for Interna-tional Travel Marketing. “When NCOTembarked on our mission to developtourism in the huge China market, wedid not emulate any models or forerun-ners because there were none,” NCOTDirector Bruce Bommarito said. “Wecreated our China marketing programand office from the ground up.” Duringa recent tourism-building mission inChin to celebrate the one-year anniver-sary of the tourism office, NCOT offi-cials signed a friendship agreementwith their counterpart agency in Shang-hai to develop and promote tourism andcultural understanding between thestate and Shanghai, one of China’slargest cities.
Metl-Span Opens Manufacturing Facility
Metl-Span recently opened a new manufac-turing facility in North Las Vegas for the
company’s line of polyurethane insulated pan-els for roof and wall applications. The newplant is located at 4700 Engineers Way in theGolden Triangle Industrial Park. Metl-Spanalso operates production facilities in Rich-mond, Va. and at its headquarters near Dallas,Texas. The 165,000-square-foot plant willemploy approximately 45 people. Metl-Spanis a subsidiary of Grupo IMSA, a multi-na-tional conglomerate with a significant inter-national presence in steel, aluminum and con-struction products.
Nevada Companies Recognized for Safety
The Safety Consultation and Training Section(SCATS) of the state of Nevada’s Division of
Industrial Relations recognized three Nevadacompanies this summer for successful completionof the Safety and Health Achievement Recogni-tion Program (SHARP). The companies honoredwere: Mr. Gasket Performance Group, based inCarson City, which manufactures aftermarket andprofessional racing products; Tamarack JunctionCasino and Restaurant in Reno; and the BonanzaCasino, also in Reno. The no-cost SHARP pro-gram is designed to help small employers (thosewith less than 250 employees) develop and im-plement effective safety and health programs.SCATS consultants assist employers in identify-ing potential workplace hazards and help themdevelop and implement safety programs.
BankWest Inks Monorail Deal
BankWest of Nevada recently an-nounced it has signed a $1 million,
three-year deal with the Las VegasMonorail Company to install AutomatedTeller Machines (ATMs) at every mono-rail station and to be the first local com-pany to purchase the rights to all of theavailable advertising space on one of themonorail’s nine trains. At a VIP unveil-ing event the bank introduced: an ATMsystem that enables users to win cash; acity-wide billboard advertising campaignfeaturing the new BankWest of Nevadatrain; and a bank-wide consumer sweep-stakes campaign to win free lifetimemonorail passes. The red Bank West ofNevada monorail train has been namedthe “Moneyrail.”
60 September 2005
The Regional Transportation Commission of Southern Neva-da (RTC) has a vision for everyone, not just those whodrive automobiles. While the RTC oversees the funding of
roadway construction, we know that people need other ways tocommute than driving their cars on increasingly busy streets. Inaddition to the CAT and MAX transit systems, another compo-nent of our overall vision of an integrated transportation systemis the proposed Regional Fixed Guideway (RFG).
The RFG, envisioned as a regional rail or rail-like system,would link Henderson, Clark County, Las Vegas and North LasVegas with the Las Vegas Resort Corridor. Though the RFG isbut one part of our larger vision, it is indeed a critical compo-nent to ensuring the future vitality of our community.
Here’s why: At last count, 11 people per hour move to South-ern Nevada. More than 100 cars are added to our roadwaysevery day. By 2008, conservative estimates put our populationat 2 million people and by 2015 at 2.5 million people. That’s theentire population of Utah – or for a more urban example, thepublic transportation Mecca called the Bronx.
Projects like the RFG can move more than 60,000 people perhour in a 40-foot wide corridor. Contrast that with the mere 2,000cars per hour moved on a freeway lane. That’s why it’s so vital tomake the most efficient use possible of existing right-of-way.
Further, public transit that utilizes our roadways just isn’tenough if we are to avoid gridlock and maintain the quality oflife that is largely responsible for the population and economicgrowth in Southern Nevada.
We cannot expect everyone in Southern Nevada to use masstransit – nor could the RTC handle such heavy demand. But wemust have efficient solutions that attract some out of their cars.In cities from Portland to Dallas, more people use light raileveryday and the same can and will happen here if we providea fast, safe and convenient rapid transit system.
Why should we continue to give our part of the gas-tax dol-lars to other communities instead of keeping that federal fund-ing in our own backyard?
It’s time to accept our responsibility as a world-class city thatrequires varied modes of transportation. Learn more atwww.rfguideway.com and by attending public meetings.
By resisting change, we could lose all we have been working tocreate. Our economic future depends upon maintaining the quali-ty of life we Southern Nevadans sometimes take for granted.
Jacob Snow is the general manager of the Regional Trans-portation Commission of Southern Nevada
The taxpayers cannot afford another “smart growth” plan basedon irrational idealism without taking into account economicrealities. We should learn from our own experience and the ex-
periences of other communities throughout the United States andaccommodate the transportation needs of our citizens without pur-suing ill-advised schemes, such as the Regional Fixed Guideway.
To fairly analyze the situation, two issues must be addressed. Thefirst is whether the proposed RFG will meet the demands of thepeople. It has been thought that if the Regional Transportation Com-mission builds it, riders will materialize. However, the only placesthat have achieved measurable acceptance of mass transit are dense-ly urbanized areas with significant concentrations of businesses orresidents. However, our community infrastructure has already beenestablished utilizing a late 20th-century model of less density, madepossible through the flexibility of automobile travel.
Presently, residents of Henderson travel, with the freedom oftheir vehicles, for work, school, shopping, dining, etc. throughoutthe entire Las Vegas Valley, not just to and from the Strip andNorth Las Vegas. This will not change. Published CAT ridershipfigures demonstrate that two of the four least-traveled routes arethose serving Henderson and Green Valley (only about 450 regu-lar commuters) – the very areas the RTC proposes to be served bythe RFG Henderson Corridor. Moreover, the RTC’s argument thatStrip workers will sacrifice their vehicles for train service is beliedby the fact that the proposed service hours will only accommodateone of three casino shifts.
Next to be considered is whether the ostensible benefit justifiesthe cost, which could exceed $2 million per commuter (basedupon RTC construction estimates and existing ridership data).Moreover, the cost of continued operation will plague us forever.Witness the Monorail fiasco, which cannot seem to break even andwhich knowledgeable experts predict will be taken over by theRTC (at taxpayer expense). Similarly, but less known, CAT rev-enue figures reveal that the CAT bus system is being subsidizedwith almost $50 million per year.
Cities all around the country using the same failed paradigm arejust as unsuccessful. Reflecting on the absurdity of the situation,Wall Street Journal writer P.J. O’Rourke recently observed thatmunicipalities picking up the tab for mass transit losses could havemore economically leased a luxury automobile for every com-muter served. Public responsibility mandates that we approach theproblem of transportation with an eye on economic viability.
W. Leslie Sully, Jr. is an attorney with the Law Offices of Leavitt,Sully & Rivers in Las Vegas.
Question:Should a light rail line (Regional Fixed Guideway)
be built from Henderson to North Las Vegas?
Yes, Our Economic Future Depends on Itby Jacob Snow
No: Mass Transit Has Failed Enough Already by W. Leslie Sully, Jr.
September 2005 61
enny Guinn created a new prece-dent when he decided to run forgovernor – two years before the
race actually started. Now candidates forthe state’s highest office announce theirintentions well ahead of time and havecampaign offices in full swing more thana year away from the general election.
This type of early campaigning hasn’tbeen limited to the governor’s race, how-ever. Candidates have been announcedfor nearly every constitutional office inNevada, and some have already put to-gether impressive organizations and aretouring the state to line up votes.
Until a few weeks ago, the most activecandidates were those for lieutenantgovernor. Democrat John Moran, Jr. hadraised a warchest of more than $1 mil-lion and put together an impressive cam-paign team, but he unexpectedlydropped out of the race, citing a desireto spend more time with family. Noword as yet on who might jump into therace on the Democratic side, but attor-ney John Hunt, who ran unsuccessfullyfour years ago for attorney general, hasbeen mentioned as a possible candidate.
On the GOP side, State Treasurer BrianKrolicki has made rumblings he wants thejob, and has hired November Inc., thecampaign group headed by Mike Slankerand Ryan Irwin, who have guided many aRepublican candidate to victory. Krolickiis no doubt going to have trouble raisingmoney against Moran, but may find morewilling donors now that his chief opponenthas stepped aside.
Another name surfacing on the GOPside is former Lt. Gov. Lonnie Hammar-gren. He has the personal wealth to fi-nance his own campaign, but has beenreluctant in the past to spend any of his
Campaigning for 2006 Seats
own money to get elected. His namerecognition, however, will be formidable.
The race to replace Attorney GeneralBrian Sandoval, who is expected to re-ceive an appointment to the federal benchthis fall, is also heating up. KatherineCortez Masto will be the Democraticnominee. She comes from a prominentpolitical family (her dad is former Coun-ty Commissioner and LVCVA DirectorManny Cortez), and has made numerousconnections throughout her career.
The Republican candidates are less cer-tain at this time. What might make a hugedifference is the timing on Sandoval’s ap-pointment. If he leaves the job in the nextfew months, Guinn will be obligated toappoint someone to fill the rest of histerm. That person will certainly have a legup as the incumbent, as well as a signifi-cant fundraising edge. Las Vegas attorneyGeorge Chanos and public defender anduniversity regent Brett Whipple have beenactively seeking Guinn’s appointment. Itis unclear whether they will both run ifthey do not receive an appointment.
Supporters of Masto have encouragedGuinn to appoint a caretaker to the seat,
someone who would agree not to run andjust manage the office until the next attor-ney general is elected. Those close to thegovernor, however, have indicated he isnot likely to do that and wants to give hisfellow Republicans an edge in the race.
The other major statewide office gettinga lot of attention is secretary of state. Thecurrent officeholder, Dean Heller, has an-nounced his intentions to run for the north-ern congressional seat being vacated byJim Gibbons. Most of the action has beenon the Republican side, where formerUNLV basketball star Danny Tarkanian issaid to be interested, along with party loy-alist Brian Scroggins.
Democratic State Senator ValerieWiener has expressed an interest in run-ning for the seat, and Northern Nevadabusinesswoman Kate Marshall has alsobeen meeting with possible supportersand fundraisers. As of publication time,neither woman had announced or hiredany campaign staff, and others are expect-ed to look seriously at the race.
Michael Sullivan is President of KnightConsulting, a local government affairs firm.
How Early is Too Early?
K
by Mike Sullivan
62 September 2005
2) Arrange a Trust Fund for thePlan’s Assets – The assets invested inyour company’s 401(k) plan must be heldin trust. This is a security measure thatsafeguards the plan’s assets and assuresthose assets are used solely for the benefitof the plan’s participants and their benefi-ciaries. You will be required to name atleast one trustee to oversee the trust funds.The integrity of the plan depends on thetrustee, because the trustee handles contri-butions, investments and distributions toand from the 401(k) plan.
3) Develop a Recordkeeping System –Once your plan is operating, you’ll needto have a comprehensive recordkeepingsystem in place to keep track of contribu-tions, earnings and losses in participants’accounts, expenses, plan investments andbenefit distributions. The plan administra-tor typically carries out this function. Anaccurate recordkeeping system will alsohelp you or your plan administrator to pre-pare the plan’s annual report, which mustbe filed with the federal government.
4) Provide Plan Information to Em-ployees – The Summary Plan Description(SPD) is a plain-language document withinformation about the plan’s benefits andrequirements. The SPD must be distrib-uted to all plan participants. The docu-ment must include information about fea-tures of the plan, including: when and howemployees become eligible; contributionsto the plan; how long it takes to becomevested; and when and how to claim bene-fits. The SPD must also explain the basicrights participants have under the Em-ployee Retirement Income Security Act.
You may also want to provide addition-al information that highlights the benefitsof joining the plan, such as pre-tax contri-butions, employer matches if you chooseto make them, and compounded tax-de-ferred earnings.
Consult with a CPAWith proper education and research,
small business owners can provide retire-ment benefits to employees – and to them-selves – in a cost-effective manner. If youneed help in determining whether youshould establish a 401(k), you should con-sult with a CPA.
or small business owners, a 401(k)qualified retirement plan can be pow-erful tool for attracting and retaining
talented employees and for helping themto achieve a secure retirement. Theseplans offer tax benefits as well – for boththe employer and the employee.
As an employer, you will be responsiblefor making important decisions regardingyour company’s plan. Because establish-
Setting Up a 401(K) Planfor Employees
ing and administering a 401(k) plan is fair-ly complex, many business owners use theservices of outside professionals. The fol-lowing four steps are an overview of thekey actions you need to take to establish a401(k) for your employees. Remember,your choices and actions must complywith specific, detailed rules.
1) Adopt a Written Plan – The writtenplan governs the day-to-day operation ofyour 401(k) plan and ensures your planconforms to legal requirements. Your firsttask is to decide on the type of 401(k)plan you want to open – a traditional401(k), a safe harbor 401(k), or a SIM-PLE 401(k) plan.
Once you have selected the best planfor your company, you can determinewhat investment options to make availableto the plan’s participants. You will alsoneed to decide how much of the employ-ees’ contributions will be matched by you,although employers are not required tomatch employee contributions. Keep inmind that federal law dictates who is eli-gible to participate in such plans and theamount employees can contribute.
Where Do You Begin?
F
by the Nevada Society of CPAs
September 2005 63
ith money flowing into the state’scoffers since the end of the 2003legislative sessions, the prevail-
ing view was that the 2005 legislative ses-sion would be relatively easy compared to2003. And generally it was, if you dis-count the legislative politics of the last 10days. During that time, a record numberof bills were put “on the desk” and moreconference committees were held than inrecent sessions. Unfortunately these cir-cumstances led the governor to call the22nd Special Session, which lasted nearlyeight hours, causing the Legislature to ex-ceed its 120-day limit.
For most property owners, 2005 wasviewed as a good session, because proper-
The 2005 Legislative Session: Some Property Tax Relief Accomplishedty tax relief was provided. It was the issuethat dominated the first two months of thesession. To a lesser degree, meetings onproperty tax relief continued throughoutthe rest of session to address issues thatwere not addressed in the original bill(AB 489). Finally, by the last week of ses-sion a second bill (SB 509) – a companionto the original bill – was passed.
From the perspective of residential prop-erty owners, it was probably the best leg-islative session since 1981, when propertytaxes were reduced an average of 46 per-cent statewide. While the 2005 session didnot reduce property taxes, it did minimizeincreases in property tax bills by cappingthe amount of increase. For homeowners,
property tax bills are capped at a maximumof 3 percent over the prior year. For otherproperty owners, the cap is 8 percent.
For local governments, includingschool districts, property tax relief has ledthem into uncharted territory. However,as long as sales tax revenue comes in atthe current record levels, revenue reduc-tions from property tax will be offset formost local governments.
It remains to be seen if property tax-payers will be satisfied with the relief theyreceive; if there will be constitutionalchallenges; or if a petition for a Califor-nia-style property tax cap will qualify tobe placed on the ballot and be approvedby the voters. Only time will tell.
by Carole Vilardo, President, Nevada Taxpayers Association
W
Major Provisions of Property Tax Legislation
CAP AMOUNTS• All property: 8 percent over the prior year’s property tax bill. Includes centrally assessed property.• Homeowners who occupy their residence: 3 percent. The cap still applies if the owner operates a home business out of the residence or if the title has beenplaced in a trust for the purpose of estate planning.• Residential Rental Property: 3 percent, if the rent charged meets federal requirements for low-income housing. This cap does not apply to hotels, motels orother transient lodging.
TO CALCULATE THE CAPAdd the greater amount of all property taxes levied the prior year on the property or what would have been levied without any exemptions that might have beenapplied; and1. The percentage of the amount determined which is equal to the lesser of:The average percentage change in the total assessed valuation of the county over the average of the current year plus the prior nine years; or 8 percent; andthen take2. The percentage amount that is equal to the greater of:The resulting percentage amount calculated in number 1; or twice the percentage increase of the Consumer Price Index (CPI) for the prior calendar year. (Note:The CPI percentage used for this fiscal year, 2005-2006, is 5.4 percent.)The resulting percentage becomes the tax cap for each parcel of property for the current fiscal year.
EXCLUDED FROM THE CAP• Any increase in the assessed valuation of the property from the prior year that is due to any improvement or change in the actual or authorized use of theproperty.• Ballot questions that indicate the property tax increase requested is outside of the cap.• Any property tax rate imposed by the Legislature.
DEFINITIONS• “Single family residence” - property occupied by one family with facilities for living, sleeping, cooking and eating. Includes: a mobile or manufactured home; acondominium; a home in a common-interest community, a planned unit development or a similar property.• “Primary residence” - designated by the owner in this state, exclusive of any other residence of the owner in Nevada that is not rented, leased or otherwisemade available for exclusive occupancy by any person other than the owner of the residence and member of the family of the owner.
NOTES• A taxpayer who believes the wrong cap has been applied may apply to the county treasurer to correct the cap.• Provides for a simplified form to be developed by the Department of Taxation to allow owners of business property to use the income approach to ap-peal their property.
64 September 2005
support, help and the means necessary forthem to be able to leave.”
“We meet different needs at the ShadeTree,” said Dizon, “Women and childrenwho are homeless or who have beenabused receive immediate protection andsafety. Then, we work with them to takethe steps necessary for a normal life withstability, dignity and self-reliance, whileteaching them how to break the cycle ofhomelessness and abuse.”
The Job Development program assistsresidents in getting a job, as well as de-veloping the skills, attitudes and abilitiesnecessary to work up from lower-wagejobs to employment that enables resi-dents to support themselves.
All services provided are free to theclient, regardless of the length of stay,removing any barriers that may affectsomeone’s decision on whether to utilizethis valuable resource.
TST continues to grow. The Las VegasFurniture Show, a furniture exhibition held atthe Sands Expo in July, worked with its ex-hibitors and provided truckloads of new fur-niture from the show. Later in the year, TSTwill open an animal shelter called Noah’sAnimal House for the placement of familypets that can no longer stay with their fami-lies, or that would be harmed if left behind.
The organization, funded by city, county,state and federal agencies as well as privatefoundations, is a local agency with no na-tional affiliation or support. Sixty-three per-cent of its $2.9 million budget is providedby local community support, and 94 centsof every dollar donated to TST is used fordirect client services. Dizon pointed out thatdirect donations, fundraisers and specialevents are crucial to the continued successof TST as it continues to grow and workwith an ever-increasing number of womenand children in need.
“I am looking ahead to the opening ofNoah’s Animal House,” said Dizon. “Andthen, the endless possibilities from there.”
he Shade Tree (TST) is the only 24hour-accessible shelter designedspecifically to meet the needs of
women and children in Southern Neva-da. Since 1990, TST has served home-less and abused women and children.Many of those who stay at TST are vic-tims of domestic abuse, elder abuse orstreet violence. Others who make TSTtheir temporary home include femaleveterans, the elderly, the working poorand the physically disabled. Thesewomen and children do not receive justa place to stay and remain safe. Theyalso receive an opportunity to rebuildtheir lives through the numerous pro-grams the shelter offers.
TST’s mission is simple: to providesafe shelter to homeless and abusedwomen and children in crisis and tooffer life-changing services promotingstability, dignity and self-reliance.
Each year, it provides more than 80,791nights of shelter with 364 permanent bedsand 50 temporary beds for those in need.Beds are maintained at all times for crimevictims, so those who are brought in by thepolice during the night will have a place tosleep. It also offers residential areas withsleeping rooms, libraries, training rooms,children’s play rooms, a kitchen, laundryfacilities and showers. Last fiscal year,TST sheltered 3,987 women and children,including 1,421 under the age of 18. Resi-dents at TST represent all ages, races, eth-nic groups and educational levels.
“Women are sad and scared when theyfirst come here,” said Brenda Dizon, ex-ecutive director for TST. “We take ourtime and try to make them feel more com-fortable, try to let them know there aremany women here who have been in theirsituation. We want to be able to provide
The Shade Tree ShelterHelping Women and Children in Crisis
T
1 West Owens North Las Vegas, Nevada 89030
702-385-0072www.theshadetree.org
September 2005 65
Saint Mary’s Health Network
n 1877, a group of intrepid nuns madean unplanned stop in Reno on theirway from California to Kentucky.
When they saw the need to educate thechildren of miners and farmers, theyditched their Kentucky plans and stayed inReno to build a school. By 1908, the nunshad gone on to build a hospital for therapidly growing community. While theDominican Sisters could not have predict-ed what the area would become nearly100 years later, they would have beenhappy to know that their legacy of com-passionate healthcare continues to thrive.
Today, Saint Mary’s Health Networkemploys more than 2,500 people and con-sists of 11 healthcare facilities in NorthernNevada (including a health plans divisionand a philanthropic foundation). But justas it was when the sisters came throughover 100 years ago, Reno is still growingand changing.
Lawrence O’Brien, president andCEO of Saint Mary’s Regional MedicalCenter, who came to Reno from Hawaiithis year, was attracted to the balance ofmission and margin at a faith-based fa-cility. He was also attracted to the chal-lenges of Reno’s dynamic communityand Saint Mary’s active approach.“Healthcare is changing dramatically,”he said. “It is becoming more of an out-patient business. And hospitals are builtfor inpatient service.”
In response to this shift and to fill thecommunity’s needs, Saint Mary’s expand-ed its West Campus with a six-story,215,000-square-foot Center for Health ad-jacent to the existing hospital. The build-ing is owned by Ensemble Real EstateServices and leased by Saint Mary’s. The
Center for Health focuses on the comfortand care of clients, with an emphasis onarchitecture and design elements to makepeople feel at ease. Halls are wide, ceil-ings high, colors soothing. Windows bringin ambient light where possible. State-of-the-art technology is balanced by a respectfor privacy and individuality.
The center features clinical and fitnessfacilities including: a complete health, fit-ness and rehabilitation facility; radiationoncology with high-dose-rate brachyther-apy, linear accelerator and CT scanner; awomen’s center with digital mammogra-phy, breast MRI and cancer resources;outpatient physical, occupational andcommunication therapy; executive healthand wellness; outpatient imaging serviceswith a complete range of diagnostic andradiological services; cardiac and pul-monary rehabilitation; a complete labora-tory; high-tech auditorium and physi-cian’s offices. To complete the picture,Saint Mary’s added a new 1,150-spaceparking garage and a unique second-storypublic plaza with grass, fountains andbenches – all open to employees, families,patients and the public.
Saint Mary’s West Campus’s impor-tance as a regional economic center, aswell as its strategic location adjacent todowntown Reno, were some of the rea-sons this area was selected by the city tobe included as part of a new Redevelop-ment Area.
A Redevelopment Area can offer prop-erty owners the staff, expertise and re-sources to spur economic developmentand reduce crime without levying a newtax. The Redevelopment Area allowssome of the property taxes to fund pro-jects designed to further private invest-ment. Over time, property owners and res-idents in and around the RedevelopmentArea see a more attractive community, in-creased property values, lower crime ratesand increased services.
While a new Redevelopment Areacould help lead to more retail and housingfor employees and the public, O’Brien isconcentrating on the healthcare needs ofthe community by expanding SaintMary’s emergency room. “Our ER wasbuilt for 23,000 visits a year,” he said, “butwe are experiencing about 52,000.” Hehopes to see the expansion completed inlate 2006.
by Cindie Geddes
I
Still GrowingAfter All These Years
66 September 2005
Another major issue is the corporateknowledge that will walk out the doorwhen Joe leaves. Far too often, the ra-tionale for decisions, programs, projectsor plans are never documented. Walkaround your organization and ask someof the long-term employees why certainsoftware programs were written the waythey were, or why a specific contract ordeal was written the way it was, andyou’ll find a lot of that information isstored only in the heads of those direct-ly involved.
Contingency planning or successionplanning is not just an organizationalinitiative; it should be a shared responsi-bility with employees. Employees needto understand that it is up to them tocontinue to grow and learn as much asthey can, so they continue to be valuableasset to the organization and be ready tomove up as opportunities arise. For itspart, the organization needs to definethe criteria necessary to move into vari-ous positions so employees know whatknowledge, skills and experience areneeded for the position.
The benefit to the organization is thatit has a pipeline filled with people atvarious stages of readiness who canmove into positions the organizationknows they can handle. Additionally,employees are going to be more produc-tive, better trained and in almost allcases, more motivated to perform be-cause they can see where the organiza-tion is going and the roles they can playin its future.
Relying on an ad in the Sunday paperto find the right employees when youneed them is an iffy way to run a busi-ness. Those organizations developingand implementing contingency or suc-cession plans are the ones that will bethe strongest in years to come.
Mark Keays is president of Desert Man-agement Services, a Las Vegas-basedmanagement consulting firm, and a fac-ulty member of the University ofPhoenix, where he teaches in the areasof organizational change, human re-sources and management.
he office phone on the empty deskrings and rings, but no one is thereto answer it. Not a problem in
your organization today – but howabout tomorrow, next week or nextyear? Take a look at the people in yourorganization. How many of them arenearing 65 or are eligible to retire? Inmost cases, the list is a lot longer thananyone expected. It is estimated thatover 76 million baby boomers will beretiring in the next 10 years and only 45million Generation X’ers will be avail-able to replace them. There is also the“beer truck” scenario. One of your keyemployees, vital to the ongoing successof the company, doesn’t look beforestepping off the curb into the street and– bang – immediate job opening.
Far too many organizations wait untilpeople announce they are retiring orleaving to decide it is time to find re-placements or fill positions vacated byattrition. The leadership of any organi-zation should complete an analysis ofretirement-eligible personnel and keypersonnel and then look at who is beingprepared to fill those slots.
Looking at the retirement-eligiblegroup, many organizations take the ap-proach that “Good old Joe will be withus forever,” and then get a rude awaken-ing when Joe makes it known he plans toretire in six months. Depending on Joe’srole in the organization, there may be ashort or very long learning curve forsomeone to gain the level of proficiencyand knowledge needed to effectively fillhis shoes.
Where Did All My People Go?Contingency Planning for Your Company
T
by Mark Keays
September 2005 67
cerns about your lawsuit. When you havea few of them written down, call your at-torney or set an appointment to see him.Once you have his undivided attention,discuss all matters on your list until youare satisfied. If you don’t use thismethod, you may find yourself callingyour attorney five times a day and youmay be charged for five calls at the attor-ney’s minimum billing increment insteadof for one conversation.• Ask if there are matters you or yourstaff can handle. Many times a client canobtain information, run errands or per-form document gathering and organizingtasks that will advance the cause of thelawsuit and save money. Don’t be afraidto tell your attorney that you are con-cerned about fees and want to handlesome ministerial matters yourself.
Jay Young is a shareholder at Marquis &Aurbach whose practice focuses on gen-eral, civil and commercial (business dis-putes) litigation.
ow that you have chosen an attor-ney, how do you keep from givinghim or her a blank check? In many
ways, you control the amount of fees.Remember the famous saying attributedto Abraham Lincoln: “A lawyer’s time ishis stock in trade.” Every time you oranyone calls or writes your attorney, youwill be charged for the time needed tofield the call or read the letter. You cansave fees by following a few tips:• Prepare a detailed chronology, completewith important dates, details of conversa-tions and correspondence between theparties. Nobody is more familiar with thefacts surrounding your case than you are.Your attorney may spend hours and hoursporing through documents trying to makeheads or tails of what has happened, butyou can save time and fees by taking afew moments to provide an outline ofwhat happened and when.• Organize your documents in chrono-logical order and flag those documentsthat are most important and that tell yourside of the story. If you want, you canhighlight sections of documents, or referto them in your chronology. Give yourattorney all documents, even if you don’tthink they will be helpful, because yourattorney has an obligation to give the op-posing party a copy of all documents thatmight be relevant. I have had too manyclients hold documents back, thinkingthey weren’t essential, only to find outlater (and many times too late) that thedocuments contain the proverbial“smoking gun.” Don’t forget to includeany notes or even doodles you createdwhile talking on the phone with anyoneinvolved in the suit.
Saving Money on Attorney’s Fees
• Prepare a list of all witnesses. Include allpeople who have, or could have knowl-edge about any portion of the lawsuit. Pro-vide their names, employers, positions, ad-dresses and phone numbers. It is better togive more information to your attorneythan less. You may even want to give yourattorney a short written narrative aboutwhat each person may know, may havewitnessed, or told you about the event. • Bring skeletons out of the closet. If youhave something to hide, assume some-body will find it, because they probablywill. You will only hurt your own causeand end up costing yourself more moneywhen you try to keep damaging informa-tion away from your attorney. Armed withknowledge of your weakness, your attor-ney can fortify your position against an at-tack. There is nothing worse to an attorneythan being blind-sided at trial with infor-mation his client didn’t disclose becausehe thought nobody would ever find out.• Consider keeping a pad of paper onwhich to write ideas, questions and con-
A Guide for Clients
N
by Jay Young
The Congress, by joint resolution, has designated September 17th asCitizenship Day and the week beginning September 17th and ending
September 23rd of each year as Constitution Week.
ATTN: NEVADA TEACHERSFREE EDUCATIONAL DVD
ON THE FRAMING OF THE CONSTITUTION
AMore Perfect Union: America Becomes A Nation is the firstcomprehensive recreation of the stirring, heated debates thattook place during the summer of 1787 at the Constitutional
Convention. Filmed on location at Independence Hall, Williamsburg,Virginia, and other historical sites, the movie dramatically chronicleshow America became a nation and illustrates the underlying princi-ples that guard our freedoms today.
The film, produced in 1990 by KBYU-TV, was initially shown onPBS nationwide and was viewed by almost 2.5 million people. It re-ceived several gold and silver awards in national and internationalfilm festivals, including an Emmy Award.
Because Nevada Business Journal realizes that it is vital forschoolchildren to learn and understand the Constitution and its prin-ciples, we have ordered a limited number of copies of this educa-tional program. As a public service, we will provide a DVD FREE OFCHARGE to any Nevada teacher who wants to use it in his or herclassroom. A teacher’s guide for the movie may be downloaded fromthe Website of the National Center for Constitutional Studies.
To order your free copy, please call our office at (702) 735-7003ext. 28, or email your contact information to [email protected].
68 September 2005
studies center, art museum and auditorium.“We have gone from scarcity of knowledgeto this explosion of knowledge,” Lilley saidabout the resources that are readily avail-able to students now in the digital age. At$105 million, the library is the largest pub-lic works project in the history of the state.It is slated to open in 2008.
UNR also found some success this yearin the legislative session, when the stateallowed it to keep all of its research fund-ing. Typically, 25 percent of almost everyresearch grant goes to facilities and ad-ministration. “We appealed to them to letus keep all those dollars and invest themin a new biotech/biomed facility at theSchool of Medicine that will serve notonly the School of Medicine, but NevadaCancer Institute. It will also support cut-ting edge biology and cutting edgebiotechnology,” Lilley said. As a result,the university will be building a $75 mil-lion biomed/biotech research center.
Truckee Meadows CommunityCollege
Whenever Truckee Meadows Commu-nity College (TMCC) President PhilipRingle is asked if the college needs any-thing, his usual response is: “The collegedoesn’t need anything. The right questionis, ‘What does the community need thatthe college can help with?’”
Ringle said TMCC prides itself on helpingto provide Northern Nevada communitieswith a skilled, trained workforce and helpingto create economic diversity. “We see our-selves as a real partner with the communityand with both governmental agencies andbusiness and industry in solving some of theworkforce needs in the area,” Ringle said.
The college is working with various in-dustries where the need is greatest, in-cluding construction, manufacturing, au-tomotive repair and allied health. Thisyear it started two new accelerated nurs-ing programs, in which students can earna degree in 18 months. One is for adultswho already have a bachelor’s degree andthe other is a dual-admission program for11th graders, who attend the program thesummer before their senior year in highschool and the summer after.
This year, the college also opened itsRedfield campus, a joint venture withUNR. TMCC offers various programs, in-cluding nursing and veterinarian techni-cian training, as well as general education.It is planning to add an alternative-energyprogram in the future. Ringle said the twoinstitutes will be looking at offering sever-al joint programs.
TMCC also received a television chan-nel from Charter Communications that willhelp with its distance education programs.“We now have 3,000 students enrolled insome form of distance education, via theInternet or television,” Ringle said. “We’llnot only be providing distance education,but we will be able to broadcast to the com-munity some of our cultural events, playsand musical performances and highlightsome of our programs via television.”
Western Nevada Community College
High school seniors who are hesitatingabout whether to attend college had betterwatch out. “If we get our hands on them,we turn them into college students,” saidWestern Nevada Community CollegePresident Carol Lucey. “And we hope they
become successful college students, earn-ing associate degrees and then bachelor’sdegrees. We’ve had many success storiesof students who have gone on to lawschool and graduate school and have suc-ceeded at some of the best institutions inthe country.”
The college has campuses in CarsonCity, Fallon and Minden/Gardnerville, aswell as four rural centers. Its enrollment isjust over 5,000 students.
Lucey said community colleges oftenfocus on students who might be the first intheir families to go to college. “Our mis-sion is to help those students make thattransition to higher education by provid-ing a lot of TLC,” Lucey said.
Western recently implemented an ath-letics program with a women’s soccerteam and men’s baseball team, bothscheduled to begin play in the 2005-2006 school year. They will competeunder the division I Scenic West Athlet-ic Conference. Both teams are fundedentirely by philanthropy, Lucey said.The college also started a surgical tech-nology program, which offers a certifi-cate after one year of training. “This pro-gram trains people to assist in operatingrooms, freeing up nurses for bedside du-ties, so it assists with the nursing short-age,” Lucey said.
Answering ChallengesDespite the challenges Nevada college
and university presidents have keeping upwith ever-increasing student enrollment,Harter said Nevada has something that moststates don’t: an entrepreneurial spirit. “Theentrepreneurial spirit here makes it possibleto develop a whole variety of new programsand activities very rapidly and very success-fully,” Harter said. “It’s just a greatly posi-tive environment. There are no obstacles.”
Carpenter agreed, saying, “In mostplaces I’ve been, when you talk about try-ing something, people say, ‘Oh no, wetried that. That won’t work.’ Here it’s,‘Let’s give it a shot.’ It’s more receptive tochange, to different ideas.”
Rogers said he is excited about theuniversity system’s future and hethinks the public should be as well. “IfI were the public I’d be watching thisand saying, ‘Wow, look at these excit-ing things they are doing in the sys-tem,’” Rogers said.
Philip Ringle
Carol Lucey
Continued From Page 10
September 2005 69
Today’s business leaders are facing somethought-provoking issues, from regula-tory compliance and global outsourcing,
to maximizing shareholder value. MBA pro-grams are tasked with preparing executives forthese and other real-world challenges, and thebest way to do that is not through theoreticalconcepts, but through experience in scenariosthat are as real as schools can make them.
For example, University of Phoenix has aprogram called Next-Generation MBA, whichfocuses on management and leadership chal-lenges. Several simulations are woven into thecurriculum to allow students to make real-time decisions, just as they would in the work-place. Working in teams, they are confrontedwith real-world problems such as communi-cation difficulties, ethical issues and humanresources challenges.
“The complex issues confronting managersrequire more than experience and technical ex-pertise to resolve,” said Brian Lindquist, associ-ate vice president of academic affairs and deanof the College of Graduate Business and Man-agement at University of Phoenix. “Above all,managers must have keen judgment and ex-ceptional problem-solving capabilities.”
Regis University, a Jesuit institution based inDenver, trains its MBA students to run a busi-ness through a type of software known as a“responsive model.” The computer simulationputs students in charge of a virtual company inwhich the decisions they make affect the com-pany’s balance sheet, cash flow, market shareand stock price.
Classes are divided into teams who are putin charge of a fictional sneaker company.Students work together to make decisionsthat eventually affect the many divisions oftheir firm. The computer software showsthem how each choice has ripple effectsthroughout the organization.
Michael Goess, chairman of Regis’ divisionof business graduate programs, said, “Every-thing you do in the classroom is analyzingwhat someone else has already done, or whatsomeone else thinks should be done. Youdon’t get to put your ideas into play. But thereis no better experience than actually doing,rather than watching.”
Education Extra:
MBA Programs ModelReal-World Experience
70 September 2005
Business Indicatorsunits 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. Depart-ment 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
5/05
5/05
4/05
4/05
5/05
4/05
4/05
5/05
5/05
4/05
4/05
5/05
5/05
5/05
4/05
4/05
5/05
5/05
4/05
4/05
5/05
5/05
5/05
4/05
4/05
6/05
6/05
6/05
6/05
1q05
1q05
5/05
6/05
5/05
1q05
6/05
5/05
6/05
6/05
6/05
1,223.6 1,213.7 1,148.3 0.8 6.6
3.7 4.0 4.2 -7.5 -11.9
3.683 4.079 3.330 -9.7 10.6
878.22 1,031.86 827.54 -14.9 6.1
4.404 4.179 4.083 5.4 7.9
90.15 96.37 90.42 -6.4 -0.3
4.424 4.376 4.383 1.1 0.9
869.5 863.5 808.4 0.7 7.6
3.7 3.9 4.3 -5.1 -14.0
2.748 3.031 2.473 -9.3 11.1
723.52 864.99 679.05 -16.4 6.5
3,610 3,595 3,020 0.4 19.5
126 130 86 -3.1 46.5
3.904 3.707 3.571 5.3 9.3
61.12 65.40 60.58 -6.5 0.9
3.841 3.795 3.743 1.2 2.6
217.3 215.0 208.1 1.1 4.4
3.5 3.9 3.6 -10.3 -2.8
0.529 0.591 0.500 -10.4 5.9
84.66 86.30 84.07 -1.9 0.7
629 469 490 34.1 28.4
29 20 41 45.0 -29.3
0.414 0.397 0.424 4.3 -2.3
14.78 15.37 15.52 -3.8 -4.8
0.373 0.373 0.431 -0.1 -13.6
1133.537 133.391 131.479 0.1 1.6
5.0 5.1 5.6 -2.0 -10.7
194.5 194.4 189.7 0.1 2.5
200.6 200.8 196.6 -0.1 2.0
167.4 166.4 163.5 0.6 2.4
136.9 136.1 133.2 0.6 2.8
350.775 345.072 320.016 1.7 9.6
17.49 16.62 15.37 5.2 13.8
2.009 2.005 1.974 0.2 1.8
11,096.2 10,994.3 10,697.5 0.9 3.7
111.620 110.440 115.640 1.1 -3.5
-55.349 -56.899 -48.742 2.7 -13.6
1,202.22 1,191.50 1,140.84 0.9 5.4
2.92 2.94 0.95 -0.7 207.4
0.96 1.24 3.34 -22.6 -71.3
Strong
Very Favorable
Up Annually
Up Annually
Up
Price Effects
Up
Strong
Very Favorable
Up Annually
Up Annually
Up Annually
up
Up
Price Effects
Up
Strong
Excellent
Up Annually
Flat
Up Annually
Up Recently
Holding
Price Effects
Down Annually
Up
Improving
Modes Oil Impact
Still Good
Up
Favorable
Staying Strong
Up
Staying Strong
Still Expanding
Mixed
Trending Down
Up
Up
Narrowing
he data, across a wide range ofmeasures, support what wehear: the economy is doing well,
with more favorable than unfavorablefinancial reports.
The U.S. price and employment pictureshows stable prices, even in the face ofsharp increases in oil prices, and a steadi-ly – if belatedly – improving job market.Inflation remains at less than a 3 percentgrowth rate, up 2.5 percent annually forthe Consumer Price Index. Even with theemployment-to-population ratio remain-ing well below the peak levels of the1990s’ expansion, the U.S. unemploy-ment rate continues to drift downward,now hovering at 5 percent.
Nevada’s key economic sectors also re-port strong performance of late, thoughReno’s travel and tourism sector languish-es, having grown a modest 0.7 percentfrom April 2004 to April 2005. This is infact a decline, if adjusted for inflation. Incomparison, Las Vegas travel and tourismhas been lively, up 6.5 percent measuredyear-over-year for April. Construction con-tinues to remain robust throughout thestate, with both Reno and Las Vegas con-tinuing to do very well. The marked in-crease in commodity prices has rekindledgrowth and further stimulated theeconomies of rural Nevada.
Though most foresee no quick reversalin economic fundamentals, it is not un-common for problems to first emerge dur-ing the mid-phase of the business cycle. Itis not surprising, therefore, to see the in-creasing attention now focusing on hous-ing-market speculation. The increasinguse of interest-only mortgages, purchas-es of real estate for quick price apprecia-tion, the increasing participation in themortgage market by households with lim-ited resources or precarious finances,along with modestly increasing rates,foretell one possible issue that couldbring the current expansion to a close, butcurrent conditions point only to a possibleconcern, not a high-level alert.
All in all, strong momentum has kept theSilver State’s economy performing nicely,and it should do so in the months ahead.
R. Keith SchwerUNLV Center for Business and Economic Research
T
