The announcement 16 months ago that Internet shoe retailer Zappos would move its headquarters to downtown Las Vegas started a buzz that the once-beleaguered area would become a burgeoning technology hub.
Expect the buzz to get louder now that Zappos is ready to tear into the renovation of the former City Hall building they're planning to fill with more than 1,000 employees.
On Tuesday the city of Las Vegas closed the deal to sell the former City Hall at Stewart Avenue and Las Vegas Boulevard to a company that will lease it to Zappos for $18 million.
As early as today fences could go up around the building, and shortly thereafter construction workers will start work on a renovation project that's expected to cost about $40 million.
"You will be able to see the construction happening," said Zach Ware, who is leading Zappos' effort to move from its suburban Henderson headquarters to downtown Las Vegas. "It is cool to see it turn into reality."
The deal was the career capstone for former Mayor Oscar Goodman, whose tenure from 1999 to 2011 was distinguished by downtown revitalization efforts, and involves several partners.
City Hall LLC, which is managed by Resort Gaming Group, a company owned by downtown developer Andrew Donner, is buying the former City Hall with a parking garage across Stewart Avenue.
The company will lease the building to Zappos, which is owned by Internet giant Amazon, to use as a company headquarters.
In addition to the City Hall deal, Donner's firm and Zappos have options to buy about 10 acres across Las Vegas Boulevard for development for about $9.3 million, a price that is set to escalate 6 percent annually every year they don't exercise options.
The deal is seller-financed, meaning Donner's firm will pay the city directly for the real estate. According to terms provided by the city, the closing comes with a $3 million initial payment. Interest-only payments of $600,000 annually will start in 2014 and go through 2028.
In 2029, the payments increase to $1.4 million and continue through 2043, with the total amount of interest and principal going to the city amounting to nearly $34 million.
The transaction comes as Las Vegas is seeking to dig itself out of a recession. City leaders hope the downtown area, for decades considered an area in decline, will lead the way. Recent months have included the opening of the National Museum of Organized Crime and Law Enforcement, aka the Mob Museum, and The Smith Center for the Performing Arts. The new City Hall at 495 S. Main St. also opened.
But those projects were heavily subsidized by taxpayers and charitable donations.
The Zappos move, albeit with the benefit of friendly financing courtesy of city government, is significant because Zappos, under CEO Tony Hsieh, is a for-profit company looking to increase revenue and add employees.
"Given Tony Hsieh's interest in downtown, there are a lot of different ideas flying all over the place," said Bill Arent, the city's director of economic and urban development.
According to Ware, once the fences go up around the former City Hall, workers will go in to identify and remove any hazardous material.
Next they will tear out old carpet and fixtures and demolish walls to open up the interior.
Zappos also plans to open the parking garage to employees working in a building at 302 E. Carson Ave., that the company recently rented.