Las Vegas' economy is rebounding from the devastation of the pandemic, but there are challenges ahead including housing costs and job losses.

So what does the future hold for the city?

Well, that's this week on Nevada Week.

♪♪♪ Support for Nevada Week is provided by Senator William H. Hernstadt and additional supporting sponsors.

(Kipp Ortenburger) Recently the Las Vegas Global Economic Alliance, or LVGEA, held an event to launch the 41st annual Las Vegas Perspective, a treasure trove of data about Southern Nevada.

Now, covering everything from the price of homes to the price of groceries, the perspective offers a snapshot of Las Vegas that can be used to lure businesses to the city and also foreshadow what's ahead for the city's economy.

Well, joining us to talk about the perspective and the future of Las Vegas are Jared Smith, chief operating officer of the LVGEA, and Jeremy Aguero, principal of Applied Analysis, which works with LVGEA to put together the annual report.

Welcome to you both; we're really excited to have you here.

I was at the event, it's always a big to-do, a really great turnout, which was really great to see.

Jared, give us some perspective.

What is the hopeful outcome of both the event itself but then also the report that is provided during this?

(Jared Smith) So this is the 41st year of the perspective.

I mean, how exciting is that.

And this is made possible by our perspective council which includes Cox, Switch, Nevada State Bank, Channel 13, and of course our friends at Applied Analysis.

So 41 years of giving that perspective of Nevada's economy.

We aim this material at the companies, communities and people, and they use it to make data-driven decisions, and Jeremy can talk to you a little bit about that data.

But LVGEA, you know, one of our mottos, or at least my personal motto is if you want to bring the outside in, you have to bring the inside out.

So we have to really aggressively tell our story.

So that's who we are, and that's why it's used.

-Aggressively tell your story, and Jeremy, of course your presentation at the perspective is one of the big ways we tell that story.

What's interesting about your presentation is I was trying to find the right word-- "caution" came to mind in your presentation.

We are seeing what a lot of people consider somewhat of a rebound to the economy, but you said quote, we've spent our way to prosperity, and you reference things like our interest rates are low, we have a lot of federal relief coming in, record-breaking gaming and spending right now.

What happens if and when that spending stops?

(Jeremy Aguero) It's not "if," right, it's "when."

There's no doubt about it.

We can't sustain the level of spending that we have today, and the whole idea behind the stimulus package was to build a bridge to get us to the other side of COVID-19, and I think we've done that very effectively in the United States.

The other side is the biggest risk wasn't spending too much money, it was not spending enough money.

Obviously we don't want to see people out on the street.

We know that a lot of people lost their jobs during COVID-19.

There's a great deal of uncertainty out there, but that uncertainty creates a need for us to transition back into something that's normal.

And right now what we're seeing is a lot of masking, relative to some of the challenges.

More people have jobs because of that stimulus.

There's more spending that's occurring in our economy because of that stimulus.

More visitors are coming to our community because of that stimulus.

We expect that stimulus is going to start to burn off by the time we get to the end of this year, and then both a combination of pent-up demand and pent-up capital-- I think it's important to understand people have also saved up a lot of money because they didn't take that vacation that they might have taken last year.

Now they're starting to come back out, and they're excited about doing things again.

That transition is something we're going to have to keep a very close eye on in this community.

-Yes.

We're going to talk more about that in just a second.

Jared, I want to get your perspective too.

Let's talk about the business community.

How much caution are you seeing in a new business, a business that's maybe trying to relocate here?

Are they looking at things like where relief is and maybe where that cutoff is going to be?

-So Kipp, it really depends on the industry.

You know, certainly there's caution in tourism obviously, health concerns, but you would be surprised to know that over 60% of our business development pipeline is in manufacturing and logistics.

So this is really a field of dreams, "build it and they will come" moment for us.

So we've been talking about economic diversification as something that's critical for the future of this city.

Now economic diversification is seeking us, which is different, and we talked about these billions of federal dollars that are coming down to Nevada and to our municipalities here.

We're leading a grant fund with an EDA grant request, and the issue is what can we do with those federal dollars to pivot our community and have our workers ready for the economic diversification that's seeking us?

So this community in my mind is not holding back.

Again, granted there are certain industries that, you know, are still hesitant, but I mean, last year was bad.

I mean, we know it.

There's no doubt about it.

Our results in business development show that a lot of projects got put on hold, but there is good news here.

I started saying this in social media and I'll say it again, this is going to be one of the biggest-- if not the biggest-- year in economic development, jobs-assisted results that I've ever seen in the five years that I've been here and in my career.

So there's a good story here.

-Jeremy, let's get your perspective on that too.

Do you share that same outlook given-- because of where relief is ending as you said kind of coming to an end in the fall?

I mean, are we looking this good?

-You know, there's no doubt that I do, and I think a great deal of credit goes to LVGEA and their member businesses that sort of drive that forward, right?

Modern thought with regard to economic development is not that you abandon the industries that got you where you are, but you seek out multiple specializations.

We can't just be good at one thing, we need to be good at a lot of things, and the best economic development strategy that we have is to make sure that businesses like mine and that operations like this and all those other businesses that are here have the greatest opportunity to succeed.

Because what Jared just talked about is businesses seeking us out, and we're not just seeing the businesses seek us out, we're also seeing employees seek us out.

Population growth continues to be relatively strong.

Yes, our unemployment rate is elevated, there's no doubt about that, as our hospitality industry continues to come back, as do other industries, but we're creating jobs in almost every sector of our economy.

And as a matter of fact, Las Vegas was number one among the top 30 metropolitan areas in the country in terms of job formation in just the past 12 months.

That is exactly what Jared is talking about.

These are businesses that are choosing us, and employees that are choosing to have a better opportunity at their dream by coming here.

-You know, Jeremy, I'd like to add to that.

So the question is why?

Why are they choosing us?

Well, lots of reasons.

Number one, in my mind this is an unparalleled quality of place that we have here in Southern Nevada.

I mean, the weather's great, the traffic is better than other major cities, and I could go on and on and on.

The accessibility that our city offers a company is amazing with the airport that we have, with the locations to other proximity markets, right?

But I'm going to tell you, there's a secret here.

Even though we have high unemployment at certain times, that is improving.

You can look at that as a curse or a blessing.

I choose to look at it as a blessing, and one thing we've learned through COVID is that people are willing to pivot in their own careers now.

So maybe I was involved in the tourism sector before, and now maybe my mind's eye is open to doing something else.

So it's incumbent upon the community and our partners in workforce development and workforce training to assist those people to meet the future demand of what's coming at us.

-Yes, it's so important and a divergence of so many things we're talking about.

Jeremy, let's talk about unemployment for a second.

In your presentation, there is a significant population that is choosing not to go back to work right now and is potentially looking to upskill; a big opportunity for our region then to maybe upskill these employees.

But then federal relief comes back into play and the use of some of that federal relief towards workforce development programs.

Are those two interlinked?

Should they be interlinked?

-Yes, I don't think that's an "or," I think that's an "and," right?

Yes, people are finding opportunities they didn't have before, right?

You and I were talking about it a little earlier, about how the fact that so many folks have quit their jobs.

We're seeing a lot of that even during a period when unemployment is high.

Why would that happen?

Well, during COVID-19, I think a lot of people took a little while and decided something was maybe different than it was before, and I don't think we can just, you know, wave over the fact that people have just come out of a pandemic, right?

Yes, a lot of people are sitting on the sidelines.

Yes, we want them to come back off the sidelines.

Yes, a lot of those folks are on the sidelines because of an extension of unemployment insurance benefits beyond what we've ever seen before.

But there are also people that wanted to wait till their kids were back in school and they felt safe, because during COVID-19, they had to take care of their kids.

There are people that are very scared of the virus for whatever reason they may have.

It causes them to be very uncomfortable about going back to work.

Those things are all getting better today, and if you look at where we were three months ago versus where we are now, we are miles ahead of where we were.

And I would suggest to you if we look at where we are now versus where we're going to be in 90 days relative to that employment problem, I'm telling you more people coming off the sidelines and fewer businesses calling us every day, as I'm sure they do Jared, saying we have all these people that are unemployed, and I can't find anybody to fill the job that I have open.

I think we are going to make marked improvements in that, and it will push our economy forward by the end of this year.

-Let's talk more about affordability here in this conversation.

Another big selling point usually of our region is how affordable it is.

We're seeing the housing market increase, we're seeing consumer prices and inflation increase as well.

Low-wage earners and middle-wage earners are more affected with this.

How important is this to the conversation, especially new businesses coming in?

How much are they looking at affordability for those populations?

-So I think it's incredibly important.

I think affordability depends on the comparison.

So if you compare us against maybe some Southern states, maybe our costs are higher.

If you compare us against California, we are much more affordable, and I think that's what we're seeing.

So the question now then is now that we know that we are a more affordable option, how do we serve?

How do we do equitable economic development, right?

So you can say that we are recruiting companies that are at least the state's average wage or higher, and that's like $25 an hour, you know, in that range or higher, but we know that 60% or more-- Jeremy, correct me if I'm wrong on this stat-- 60% or more of the people who were affected negatively during the pandemic make $27,000 a year or less.

That tells me that some of those low-wage earners need help, right?

So our team, we don't just say oh, we're only recruiting these big-tech jobs or these big manufacturing jobs, you know.

If we can help take somebody who's making $12 or $13 an hour to $18 an hour and improve their hourly wage by 50% or more, that makes Christmas better, and that's why we do our job.

-Jeremy, I want your take on this too.

-You know, looking at affordability is something that keeps me up at night, Kipp, I'll be honest with you.

Housing prices escalating is a challenge for us, and we're going to have to deal with that.

That having been said, I think what Jared said is exactly right.

It's a question of relativity.

A lot of the folks that are moving in are bringing equity with them, and we're going to have to balance that out.

You know, when I look at the housing market today, it's clear to us that we have a supply side problem, right?

We just don't have enough supply coming online for all the demand that exists, and that's putting upward pressure on prices.

This is what's happening.

That combined with record low interest rates, which make housing as affordable as-- you know, if even though prices are higher, it's more affordable in terms of that monthly payment for folks that have a mortgage.

But, you know, we are going to be dealing with the housing-- we had a housing affordability problem before COVID-19, before all of this, and I think the fact that as we go forward that home builders are trying to be very pragmatic about addressing it, I think the fact that employers are now starting to have that conversation about housing affordability, and I think the fact that there's more housing options than there used to be.

I mean, I think one of the things that often gets overlooked is the fact that we had almost no condos built in this community five years ago, and now they represent about 15% of all the product that's coming online.

Yes, the footprint might be a little smaller, but it provides an opportunity for someone to have ownership where they may not have had it before.

So I think some of the strategies that we're dealing with in order to address that housing affordability issue are going to be very important as we go forward, but it's not the only issue.

We've seen cost of living rise here in a number of ways.

We have to be mindful of that, because the vast majority of people that moved here moved here because the American dream still exists here in Southern Nevada, and we don't want that to fade away.

-We don't want that to fade away, and we have a couple of minutes left.

I want to come back to what we've already talked about a little bit briefly, diversifying our economies.

The big question that comes up with any type of recession, it comes up in every single legislative session we have.

Let's talk about how realistic and timely this is, and by diversifying, I mean that we are not as dependent as we are on gaming and hospitality.

Is it possible, Jared?

-It's absolutely possible, and it's not just possible, it's happening right now.

So like I mentioned earlier, more than 60% of the companies that we're engaged with are in manufacturing, logistics and tech.

We just did a whole new target industry study that's available at our website at lvgea.org that folks can download and read.

We also have a comprehensive economic development strategy where we talk about economic diversification.

What does it mean?

What is it going to take, right?

And when we think about scarcity and issues, if we want to grow in areas like manufacturing, we're going to have to address a land issue here.

We are woefully short on land with infrastructure.

The great news is that the federal government is literally throwing billions of dollars towards infrastructure.

So if we can just get the BLM to grant us the right to go in and do the work and have this infrastructure, you know, there is massive opportunity.

So inside and when you think about what our future is, it is absolutely possible and happening that we're going to diversify.

-Absolutely.

Jeremy, we've got about a minute left.

Two big things right there: Infrastructure, but also commercial real estate, industrial real estate, something you presented and your presentation said it was extremely limited.

How limited is limited here?

-Well, limited is that we don't have enough, and as we look to the development pipeline, we're going to burn through what we have today.

What Jared said is absolutely right.

The key to all of this is infrastructure development.

It opens up development opportunities within the urban core and gives us the opportunity to grow.

But right now the limitation of land and the limitation of infrastructure is going to mean that industrial development that has pushed our economy forward really for the better part of the past three years, if we look forward very far, it starts to get very difficult to develop particularly big projects, ones that require 50 acres or so to get done.

It's something we're going to have to address, so I'm glad we brought it up here today.

-Thank you.

Well, I want to thank our guests, Jared Smith, chief operating officer of the Las Vegas Global Economic Alliance, and Jeremy Aguero, principal of Applied Analysis.

Now, an important part of our economy right now is the billions we're getting from the federal government, as we just talked about, through the American Rescue Plan.

Recently, we spoke to Nevada State Treasurer Zach Conine about how that money could help transform Nevada's economy.

Treasurer Conine, thank you again for joining us for the second part of our discussion here.

I want to remind our viewers if they didn't see the first half, we were really talking about the listening tour that you're going on and then some of the elements that you are trying to gain from that listening tour.

Let's talk more specifically about the American Rescue Plan funding, and I think one term that does come up a lot is restricted-- $6.7 billion, as you mentioned in the first segment, but a lot of that money is restricted.

What does restricted mean here?

(Zach Conine) Well, in some cases restricted means very specific, right?

We're getting something like $84,000 for elder abuse prevention, and that can be used for a specific type of program.

We get some money that is quasi-discretionary, right, where the state has some choices but what the money is to be used for is pretty specific, and that's things like the rental assistance dollars through ERA 2, emergency rental assistance 2, which of course follows ERA 1 and the money we spent last year.

Total the state will have about half a billion dollars or-- yes, half a billion dollars for rental assistance but it comes in multiple tranches, each with different rules.

But some of the money is less restrictive, right, and when we look at the rules around the state and local piece, which is 2.7 at the state level, a little bit over a billion dollars at the local level, those are two of what we've identified so far as 105 different buckets of funding.

So the way we're thinking about it-- and it's a little colloquial but it works-- is we've got two buckets of cash, right, the state money and the local money; rules, but pretty flexible, and then we have 103 gift cards.

So the process at the state level is very much one of making sure that we spend the most restrictive dollars on the most restrictive things.

So for instance one of the ideas that's come in a lot is childcare.

How do we expand childcare?

Not just lowering the cost but increasing access, making sure we have more providers and can retain and recruit them with 330-odd million dollars for childcare.

So we want to make sure we spend that money within the rules first before we spend the less restrictive dollars that could go to some other purpose.

-Go it.

So giftcards first; cash, so to speak, second, and that is the state money you're talking about, $2.7 billion, and then another billion dollars in municipal money as well.

The challenge it seems here is name it: Healthcare, unemployment, housing, anything you talk about as a municipal problem and concern as much as it is a state, how then specifically are you coordinating?

Because I know that the counties and the cities are going through their own listening sessions right now, and they're trying to plan how to use that money, even if it is the last thing on the table.

How are you making sure that coordination is happening?

-So we need to make sure we are talking more, and during the height of the crisis during middle of 2020 when the Coronavirus relief fund dollars came in, the CARES dollars came in, communication and coordination is always the hardest, and we were building that plane in the air, right?

When we put together what ended up being a $100 million PETS program, that was myself and a team of three or four people from my team over a long weekend putting out a plan to put $100 million out to help Nevada's small businesses.

We needed to move quickly because the urgency was there and because there were rules around the money that said we needed to spend it by the end of last year.

Now, this money has a different timeline.

It's expected to be allocated by December 31, 2024 and spent by December 31, 2026.

The point of that money is for it to be intentional, right?

Intentional is language the President has used, and the governor said it the best when he rolled out the every Nevadan in recovery framework that set up the structure under which we were going to do this.

Spending is easy, investing is hard.

Now, we know we have to balance the immediate needs of people with fixing those long-term problems, but I would argue and I think most would, the reason why the immediate needs are so great is because we haven't invested in the systemic safety net pieces that stop those immediate needs from happening.

For instance, we haven't invested in our unemployment insurance system for a long time, so one of the decisions the legislature made early on in the process was they were going to buy a new UI system to replace the underlying system at DETR.

We didn't need to go to 75 events at 75 places over 75 days to realize that we needed a new unemployment system, right?

It failed Nevadans.

So if that system had worked properly, some of the needs we saw in rental assistance, in food assistance, in emergency aid wouldn't have been felt, right?

We could have invested some money back then and had a better outcome now.

We're not going to make that mistake again.

-I want to ask you on the allocation of money you mentioned $2.7 billion that is just state revenue alone, and of course that is then being interwoven into a lot of these other revenue streams, over 100 streams you mentioned here too.

Exactly how does that coordination then work when you have unemployment that needs to be paid, rainy day fund debt that also potentially needs to be paid, significant budget cuts that happened during COVID as well, how are you integrating all that together?

-Well, I think you have to look at it all together.

Now, certain things like the rainy day fund are specifically excluded from the guidance.

We know we can't put money directly in the rainy day fund, and when that happens, it's easier for us to take that one off the table.

Now, the good thing is we've restored the one-time transfers into the rainy day fund that happened every year at the beginning of a budget cycle-- 1% of the budget goes in.

Plus if there's an ending fund balance for fiscal year 21, which just ended at the end of June, that'll restore that and I can tell you, because I'm the one that talks to all the rating agencies, they are deeply appreciative of that work and that's the reason why Nevada has the highest credit rating it's ever had and we maintained it through the pandemic.

The coordination becomes the work because we know that there are those immediate needs.

We know there are budget cuts the legislature has said are a priority.

We know there are staff positions that need to be filled.

We know things like DETR and other cuts that were made during the time plus making sure that we can pay back the 330 or so million dollars we borrowed from the federal UI trust fund, right?

There are other items that were outlined in SB 461 that were sort of immediate priorities, right, and those are going to get done more quickly.

There are other ideas that are coming up that are going to take more time to execute, and I think, you know, we talk about this moment, right?

We talk about where we kept asking ourselves-- I bet you've done this too, I'm sure your guests have-- when do we get back to normal, right?

Like what does normal look like?

Is it people being able to be in a room without masks?

Is it conventions coming back?

Is it the Raiders playing?

Like what is the thing that getting back to normal looks like, and we had this moment at the end of last year where we just kind of looked to each other and said maybe normal is not good enough.

Nevada has been at the bottom of every bad-- or the bottom of every good list and the top of every bad list forever.

We're 47th in education.

We do a relatively awful job of getting federal funds.

The level of childhood hunger and poverty is off the chart.

We can do better than this, and the purpose of this money is to fix those long-term systemic problems, not just to deal with the fires, but to install the sprinkler system, to buy new fire departments, to fix it long-term.

-And to use that analogy then, I mean, what is at the top of that list?

I mean, we could go right down talking about diversifying economy, that's a half-hour show right there.

We can talk about housing, that's probably two shows in itself.

Mental health and healthcare is another, education, as you mentioned, is another.

Infrastructure is another.

What's at the top of the list?

-Well, that's what Nevada is going to tell us through nevadarecovers.com and this listening tour, right?

We know there are needs: Broadband infrastructure around the state, mental health, access to healthcare, access to fresh food, access to childcare, access to affordable housing.

The question is how can we best lever these dollars and other buckets we have.

For instance, the state infrastructure bank finally funded and is up and running and will be attracting outside capital, money coming in from an infrastructure package at the federal level which could be around $3 billion into the state.

Whatever happens with reconciliation, which could be another 5 to 10, all of those buckets of funding need to be thought about as investments, and that's what we do, right?

I'm the state's chief investment officer.

Every day we're trying to take a little bit of money and make a little bit more money.

This is about taking a little bit of opportunity and fixing some generational problems.

-I want to talk about one of the big concerns that's come up.

Some economists have talked about regardless of when the relief funding ends, we're going to have somewhat of a cliff effect and we're going to have a huge dropoff, and that dropoff could lead to gaps that are exacerbated, that are more disproportionate than they were before the pandemic.

How are you looking at that, and how are you trying to manage those risks so that we're kind of leveling off that cliff a little bit?

-I think it's a great question, right, and one we talk about a lot.

One of the main ways we can do that is by avoiding creating unfunded mandates.

So we want to make sure that we're using this funding to rebuild the social safety net, to buy assets that have long-term funding streams whether those are private philanthropy or federal grants, right?

For instance, we know if we build a federally qualified health center, the cost of building that health center, which can provide services to the community, are significant.

Once we build that, it can be funded with ongoing Medicaid revenues but you got to build it, right?

So part of that analysis all the way through is how do we make sure that we're not setting the last folks, the next folks up for failure by building things that aren't going to be able to be sustained and building things that will be there because once this federal money comes out of the system, there will be as you know this hole that's left from it.

So we've got to make sure we fill that hole with assets and capital projects that are going to last.

-And last for a long time as you've mentioned.

Treasurer Conine, thank you so much for your time; we appreciate it.

-Thanks for having us.

-Like many community-based organizations in Southern Nevada, Vegas PBS is participating in state and local listening sessions and have requested related funding.

Well, thank you as always for joining us this week on Nevada Week.

For any of the resources discussed on this show, please visit our website at vegaspbs.org/nevadaweek.

You can also always find us on social media at @nevadaweek.

Thanks again, and we'll see you next week.

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