City officials and business executives on Wednesday sang the praises of Zappos' planned move to Las Vegas as if it were about to start raining $100 bills all across downtown.
"There are times in life when words don't appropriately articulate a moment," said Andrew Donner, founder and CEO of Resort Gaming Group, which plans to buy the existing City Hall and remodel it for use as Zappos corporate headquarters. "This may be one of those times.
"I think it's truly a tipping point for downtown Las Vegas," he said, and then spoke directly to Mayor Oscar Goodman: "Although your term is coming to an end, I can assure you that ours is just getting started."
The Las Vegas City Council unanimously approved an agreement selling City Hall, two parking garages and the KCLV-TV building to the Resort Gaming Group for $25 million. Zappos will lease the building and move 1,000 employees from Henderson to downtown Las Vegas. The sale is scheduled to close by November 2011.
The city of Las Vegas is building a new city hall on Main Street that's expected to be ready by 2012. The city will continue to occupy the building on Las Vegas Boulevard and Stewart Avenue until its new home is ready. Resort Gaming Group also has options on city-owned land across the street from City Hall for future expansion of the corporate campus. Room to grow is one of the reasons Zappos sought a new location, and one projection said the company could have as many as 3,000 employees downtown in 10 years.
"It's kind of weird that you're fixing to vote on something in what's going to be our future auditorium," observed Tony Hsieh, CEO of Zappos. "And Mayor, I think you're sitting in my future seat.
"Las Vegas is changing," Hsieh said. "We're just at the beginning of what's possible."
During the hourlong hearing preceding the vote, city leaders issued rhapsodic proclamations about what the online retailer's relocation would mean.
"Las Vegas is on the tipping point of being the greatest city in America," said City Councilman Ricki Barlow.
Councilman Steve Ross said he was "giddy."
"The value of downtown properties has just changed," he said. "I'm getting giddy. I'm so excited."
Goodman, downtown's most high-profile cheerleader, called the agreement a "watershed moment."
"We are in a position to crow and to brag," he said. "We have been validated today. We have been legitimated. We have, as they say in professional sports, gone to a whole new level."
The sale breaks into a $3 million down payment and a $22 million promissory note held by the city. The buyer will pay $17 million in installments over a 30-year period, with a $5 million "balloon" payment at the end.
The note is subordinate to a private loan of up to $18 million for improvements to the City Hall building, which was completed in 1975 and expanded in 2003. The developer is responsible for all tenant improvement costs.
Once sold, the property returns to the tax rolls. Money from payments on the sale, from the sale of additional parcels across the street and from new property taxes is expected to total $97 million over the 30-year period. That will be dedicated to paying off the $147 million cost of the new city hall building.
"It is not a dollar-for-dollar offset," said Bill Arent, director of the city's business development office. "We never expected it to be. But it does generate a good bit of revenue."
Zappos started in the San Francisco area and relocated to Henderson in 2004. Since then, it has grown from fewer than 100 employees to more than 1,000, and revenues increased from $185 million in 2004 to more than $1 billion today.
Amazon.com bought Zappos in 2009 for $850 million.
The Resort Gaming Group is part of the redevelopment of the shuttered Lady Luck casino, which is scheduled to open under a new name in 2012, and is also developing about 100,000 square feet of retail and restaurant space around the soon-to-open Mob Museum.
Contact reporter Alan Choate at firstname.lastname@example.org or 702-229-6435.