With a growing Midtown District and RiverWalk area, companies like Tesla setting up shop, and an ever-expanding university, Reno is gambling on a new kind of boom.
By Whip Villarreal
Photography by Gina Munda
THE BIGGEST LITTLE CITY IN THE WORLD
Settled on the valley floor of the Sierra Nevada mountain range near Lake Tahoe, Reno is home to just under 245,000 people, making it half the size of Sacramento and about one-third the size of Las Vegas. But rapid growth and economic boosts have helped it evolve from a small “gambler’s paradise” to a place that attracts entrepreneurs, startup companies, renewable energy firms, tech industries and corporate giants.
Beyond the neon lights of the casinos that illuminate the night sky, the city is quietly becoming a modern day boomtown, not unlike Virginia City when the Comstock Lode was discovered almost two centuries ago. Older parts of Reno are being revitalized, new businesses are opening everywhere, and the housing market, which was hit hard by the Great Recession, is showing signs of recovery.
It’s not by happenstance: In 2011, a new economic development strategy was adopted by business leaders and city officials that focused on attracting manufacturing companies to Reno and creating a marketing campaign to rebrand the region.
Since then, non-gaming industries have stepped up to become more prominent in Reno’s economy. With gaming steadily losing its stronghold as the largest economic factor in the region, the city has placed its bets on a more diverse economic future, and so far it’s paying off.
DEFINING THE ODDS
Data from the U.S. Bureau of Labor Statistics shows the unemployment rate for the Reno area has steadily decreased: from 30,879 in 2011 to 11,543 as of August 2016. Other data from the Economic Planning Indicators Committee report, which analyzed job growth in the Northern Nevada region, projected the area will create 50,000 new jobs from 2015 through 2019.
Fueling this trend is the surge of interest by companies and residents from neighboring states to move into the Northern Nevada region for its low taxes, relatively cheap land, recreational areas, quality of life and low cost of living.
But as these newly transplanted businesses and families begin to call the area home, the second largest city in Nevada is faced with both old and new challenges. Affordable housing is becoming more difficult to find as inventory runs low; local public schools must keep up with the influx of new students; traffic is increasing and the resulting air quality issues are a concern.
Additionally, as revitalization efforts continue, casinos are clutching tightly to the city’s gambling roots as they remain the most dominant feature of the skyline in the heart of the city.
THE TESLA EFFECT
One of the biggest names among the new companies setting up shop in the area is Tesla Motors.
In 2014, Tesla announced the construction of its enormous Gigafactory that stretches across 3,200 acres of land on the outskirts of Reno. Once construction is complete, the building itself will measure the length of 107 football fields, and by the end of the decade, it will produce batteries for its electric cars at a planned production rate of 500,000 cars per year.
Similar to the size of the Gigafactory, the deal between Tesla and the Nevada Legislature was itself mammoth. The enticements offered by state officials to sway the company to build the Gigafactory near Reno were so lucrative, it forced the Nevada Legislature to hold a special session. For two days straight, lawmakers carefully drafted the bills that would finalize the historic deal. Finally, in the late night hours of Sept. 11, 2014, in front of weary reporters and exhausted lawmakers, Gov. Brian Sandoval signed the bills into law.
Ultimately, the company received 980 acres of free land and more than $1 billion in tax breaks. Among the incentives for Tesla: 20 years of no sales tax on equipment and construction materials, a 10-year break on property and payroll taxes, and $8 million in electricity discounts over an eight year span.
In return, Tesla agreed to donate $7.5 million a year to local public schools, beginning in 2018 and ending in 2022, as well as $1 million to battery research at the University of Nevada, Reno.
By the time the factory is running at full speed, it will employ a total of 6,500 people. Half this Gigafactory workforce is required to be Nevada residents under laws stipulated by the agreement between the Nevada Legislature and Tesla. Experts anticipate the overall economic input to the region will be as much as $100 billion throughout the next 20 years.
“There have been some pretty dramatic changes here in the business environment,” says Mike Kazmierski, President and CEO of the Economic Development Authority of Western Nevada. “There are 125 new companies that have moved into the region through the last five years, many of them being manufacturing, which we really have not capitalized on in the past. Tesla is just one of the new companies moving here, and there are plenty more coming down the pipeline.”
One of those is Switch, a Las Vegas company that developed SUPERNAP data centers. The company is currently constructing a 6.4-million-square-foot industrial campus that will utilize a fiber optic network connecting Reno, Las Vegas, San Francisco and Los Angeles in what the company is calling a “superloop.”
Once the facility is at full operating capacity, it will be the largest data center in the world and will fetch $3 billion of investment and more than 400 jobs to the region.
Other firms such as Panasonic, Apple, eBay, and Microsoft have also begun operations in the area near the Gigafactory at the Tahoe-Reno Industrial Center just outside the city.
“The fact that we are oftentimes thought of as a small gaming community is a very obsolete perspective since only 4 percent of our local economy has anything to do with gaming,” Kazmierski says. “Casinos are an important part of the economy and to the state, and they are a wonderful complement to our recreation and tourism activity in the region. But 96 percent of what goes on here has nothing to do with gaming activity. It is no longer the major economic driver of our local economy like it is down south.”
UPPING THE ANTE
As casinos’ role in the Reno economy became smaller, entrepreneurs, developers and the city government began to rebuild areas that were under- or never developed.
One of the first parts of the city that showed signs of recovery from the economic downturn was the Midtown District. The area was once a haven for tattoo parlors, liquor stores, sex shops and smoke shops. But Midtown now boasts an increasingly vibrant restaurant scene, with hip outposts and trendy bars. The area’s historic red brick buildings house cafes with locally sourced food, coffeehouses, craft wine and beer, book and record stores, recycled furniture shops, or design and photography studios. Midtown also supports live music events and public art.
As Midtown began to bounce back, so did the downtown area. Replacing the 110-year-old Virginia Street bridge, renovating surrounding buildings, and constructing new buildings has tackled the blight of deserted motels and empty liquor stores that plagued the area for many years.
A good example of the downtown revitalization is the RiverWalk District, on the scenic banks of the Truckee River. Development of this area has brought in popular restaurants and bars, art galleries, theaters, hotels and museums, and it regularly hosts events like Wine Walk and Dine the District. Similarly, Food Truck Friday, held along the river May through September, attracts customers to Idlewild Park with live music and street food.
Also located on the river, and considered the centerpiece of downtown’s redevelopment, is the Greater Nevada Field, home to the Triple-A Reno Aces baseball team and—as of February 2017—the Reno 1868 FC, a professional soccer club.
TACKLING THE CHALLENGES
KEEPING HOME AFFORDABLE
Although there have been improvements across many areas of the community, it hasn’t all been smooth sailing for the growing city. Increasing home prices are good for homeowners and sellers, especially those who were “underwater” after the market dropped, but housing affordability is now a hot button issue in Reno’s housing market.
According to the Reno/Sparks Association of Realtors, as of October 2016, the median sales price for an existing single family residence in Reno was $308,500; a 5 percent increase from October 2015. Prices for existing condominiums and townhouses also increased 10 percent from last year to a median price of $180,000. Rent prices have sharply increased in recent years as well. A report from Johnson Perkins Griffin Real Estate Appraisers and Consultants showed that the average rental price in Reno increased from $876 in 2014 to $1,029 in 2016.
Local governments estimate the region is going to need 17,000 more households over the next five years in order to keep up with an increasing population and business development. And in fact, builders such as Jenuane Communities, Lennar, Toll Brothers and Del Webb are constructing tracts of new homes in the Reno area.
But the Builders Association of Northern Nevada says the region’s housing inventory is still below the current demand. They warn that if developers do not keep up with the sudden growth caused by Tesla and other mega companies bringing jobs and workers to the area, Reno will continue to see rising housing prices.
MAKING THE GRADE
However, what may be the biggest issue facing the growing community is the strain on Reno’s public schools, which are a part of the Washoe County School District. Overcrowding, crumbling infrastructure and the need for new schools are among the mounting problems facing the district.
According to data from the WCSD, just under $240 million is needed immediately for area schools. Additionally, more than $223 million will be needed throughout the next 10 years.
Out of the 93 schools in the district, 31 are more than 30 years old and nine are at least 50 years old. The WCSD Public Schools Overcrowding and Repair Needs Committee says that 15 new schools—a combination of elementary, junior high and high schools—are needed in order to keep up with the projected population growth rate.
But there is hope on the horizon: Washoe voters recently approved a ballot initiative in the November 2016 election to increase the sales tax in the county half a percent, to a rate that is slightly more than eight percent. The additional tax revenue will go to the WCSD to repair existing public schools and build new ones. Also, in 2018, five years of annual contributions from Tesla begin.
THE WOLF PACK
One Reno school that is already thriving is the University of Nevada, Reno, the oldest public college in the state. The school is consistently ranked as a tier one public university, and in recent years, it has been investing resources into expanding and renovating the campus, as the student population has grown significantly.
In the 2013 fall semester, student enrollment was 18,776. Through the following years, enrollment steadily increased. As of fall 2016, 21,353 students were enrolled for courses at the university, accounting for the largest student population in its history. As the student body increased, so did UNR’s faculty by 166 positions. Administrators plan on adding 400 more faculty jobs by fall 2021.
University President Marc Johnson says the fastest growing colleges are engineering, business, and health sciences. He added that those areas of study are essential for the new high tech industries that are coming into town.
To keep up with growth, the university has completed construction of new student dorms and academic buildings across campus and is currently constructing a new 108,000-square-foot fitness and recreation center. The university also has invested resources into renovating Mackay football stadium and the university’s historic brick buildings, which date back to the late 1800s.
Looking ahead, administrators outlined future growth in their Campus Master Plan of 2015–2024. Included in the master plan, which has been adopted by the City of Reno in its strategic plan, are designs to expand the southern part of campus from Ninth Street down to Eighth Street. This will help the college link with downtown and Midtown, dubbed “the gateway area.”
“We have done preliminary designs on a new College of Business building, and that would be the first building we intend to put down in the gateway area,” Johnson says. “We have designs and most of the money raised to add another arts building, and there are preliminary designs to add another engineering building as well.”
The college has also invested in the university’s Career Studio, a program aimed at helping students obtain internships and jobs. It hosts job fairs throughout the year on campus and regularly interacts with local businesses to understand what they are looking for in terms of background, skills and qualifications for potential employees from the college.
This is part of the university’s strategy to keep graduates in the Reno area instead of returning “home” or being lured to other parts of the country to start careers. Along with job placement, Johnson says, another goal is to make UNR a livable campus with lots of activities and clubs, as well as opportunities to enjoy the surrounding area, including the Lake Tahoe region. The objective is for students to build a fondness for the area so they want to stay in town permanently after graduation.
HOW IT’S POLLING
The Thomases moved from the San Francisco Bay Area in May 2016 to a house they are remodeling in the ArrowCreek neighborhood, on the south side of Reno.
Cliff, 59, and Tammy, 51, retired early and moved to Reno because of the tax advantages for their pensions and 401ks when compared to California. The Thomases were also fatigued by California’s property tax rate and the “relentless” Bay Area traffic.
Cliff, who came here on business for many years, began to notice the massive improvements to the city. But Tammy says when he suggested moving here, she had doubts because of the old stigma she associated with Reno. However, those doubts dissipated fast as they started looking at homes to purchase, and the area quickly felt like home for the couple.
“All our friends told us, when we announced that we were moving here, ‘Are you sure you want to move to Reno?’” Cliff says. “Since then, we’ve had a couple of our friends come through and visit us. We all had dinner downtown, with the Truckee River in the backdrop, and they said, ‘Wow, this is really nice.’ So I think when people come and visit they are going to see this new Reno that’s emerged.”
The newly transplanted couple says Reno also offers much of what they liked about California, but at a better cost value.
“(We realized) Lake Tahoe is so close we could get there easily and get out on a boat if we wanted, or get on the mountains to go skiing,” Tammy says. “Our ultimate goal was to be in a place we not only could enjoy and afford…but also be able to travel to our (adult) kids as easily as they could travel to us. Reno really afforded us the luxury of all of it.”
Growth is both a blessing and a curse for longtime Reno resident and UNR college of business student Mark Reynolds, 25, who was born and raised in the growing city. He can recall the first Wal-Mart opening here when he was a child, and a time when driving around town was relatively stress- and smog-free.
“Traffic has been getting worse over the past couple of years,” Reynolds says. “I really noticed it the other day when I was on the freeway at 5 o’clock. I was stuck in traffic for like 30 minutes and that is not normal for Reno.”
He is grateful for the influx of new jobs coming to the city, but is worried about the rising cost of rent and the state of the school district. However, Reynolds is optimistic for the outlook of the city and feels that it is in an upward trajectory. “I’m not sure if the Tesla deal will turn out to be a benefit for Reno-ites in the future, but Reno is a little city that feels like a big city,” he says. “It has grown so much in such little time and I think this area has the potential to be a place of innovation and entrepreneurship in the years to come.”