Elko experiences economic boom with spike in gold prices

Quick: List Las Vegas’ suburbs.

You’ve got Henderson. North Las Vegas. Maybe Boulder City. Oh, and Elko.

Elko?

OK, so Elko’s more than 400 miles away. But this northeastern Nevada metro area of about 40,000 is a hive of economic activity for Las Vegas business operators looking for work amid Southern Nevada’s sustained downturn. For equipment dealers striking big deals with mines, and construction companies sending crews to build housing, Elko has become an economic suburb of Las Vegas – a far-flung town with local ties so subtle most people don’t even notice.

Maybe that neighbor you see only on weekends has taken work up there building new homes, or part of your kids’ new school came from mining money.

"As much as we like to think that what happens in Clark County affects the balance of the state, the same thing can be true of rural areas," says Jeremy Aguero, a principal in Applied Analysis, a Las Vegas consulting and research firm. "Those areas are drawing in huge amounts of investments."

Mike Pack, president and COO of Henderson-based equipment dealer Cashman Equipment Co., can tell you just how huge those investments are.

Cashman is doing 500 percent more business up north than it’s doing in Southern Nevada, he says. At the height of the Southern Nevada boom in 2004 and 2005, the split was 50-50.

Tops among Cashman’s recent mining deals was a sale of 32 360-ton ore-hauling trucks, valued at up to $6 million each. The trucks are headed for Barrick Gold Corp.’s Cortez mine south of Elko.

Business has been so good that Cashman is more than doubling its Elko showroom and office space, from 40,000 square feet to 95,000. It also doubled its six-acre equipment yard just off Interstate 80.

"We wouldn’t be here today if it weren’t for mining," Pack says.  "Construction crashed that badly."

Pack says Cashman actually could survive five or 10 years, but "life would be a lot more difficult if we were not heavily diversified into mining."

COMPANIES, WORKERS MOVE ON

Some everyday Las Vegans are finding the same good fortune. Jose Luis, an electrician with Las Vegas-based McKimmey Electric, moved with his brother, Rogelio, and other crew members to work on the Rabbit Brush Run apartments in Elko.

"Ten years ago, Las Vegas was nice. There was a lot of work there," Jose Luis says. "Now, it’s low. That’s why we’re here."

Luis’ wife, children and extended family still live in Las Vegas, but he’s thinking about hanging around Elko after Rabbit Brush Run wraps next spring. There’s word of a project with 200 homes in the pipeline. And Brandise Construction of Las Vegas plans 140 attached units north of I-80.

Don Ahern, president and CEO of Las Vegas-based Ahern Rentals, says he sees the work flowing to Elko.

"What’s good about many of our customers here in Vegas, especially contractors, is that they’re going up there to do work," says Ahern, who has boosted his company’s Elko staff from five to 25 in the past two years and is building an office park in the area. "Elko is providing jobs for people in Las Vegas who would otherwise be out of work."

For Coach USA, Elko saved the charter bus company’s Nevada operation.

Coach USA’s former parent company, Las Vegas-based K-T Contract Services, opened an Elko hub with 11 buses in 1998. By 2008, the Elko division, which also serves Winnemucca and Ely, had grown to 64 units hauling employees to and from remote worksites.

As that division took off at the recession’s start, the company’s Southern Nevada tourism base tanked.

"Las Vegas was one of the hardest-hit markets," says Ryan Veater, Coach USA’s vice president and general manager. "People were not traveling as they had been. The volumes just weren’t there anymore. There were too many (bus) companies and too few customers."

Coach USA closed its Las Vegas operation in 2011 and put all its chips on the Elko-Winnemucca-Ely segment. It now has 138 buses there, closing in on the 160 buses it had at its 2007 peak in Southern Nevada. (Scotland-based Stagecoach Group bought Coach USA in May.)

Mining’s link to Southern Nevada isn’t just in corporate revenue. Clark County received $71.2 million in net proceeds of minerals tax revenue from the state’s general fund in calendar 2011, with money going to education, social services and health care, according to Applied Analysis. Another $23.4 million went to the state’s school distributive account, which helps fund education in all counties.

 

LAS VEGAS BEFORE ITS DOWNTURN

 

Elko officials trace the good times back to 2005. That’s when gold prices began inching up, says City Manager Curtis Calder.

Since then, national retailers – Home Depot, Ross Dress for Less, JoAnn Etc., Famous Footwear – flocked to town, opening their first area locations, sometimes to record first-day sales.

The city is trying to keep up with infrastructure, from repairing roads to adding water wells.

The average home price has soared from $185,000 10 years ago to $242,000 today, according to Jim Winer, broker-owner of Coldwell Banker Algerio/Q Team Realty in Elko.

Affordable housing? Not a chance: People pay $2,000 a month for rentals that used to go for $800. More than a third of the city’s hotel inventory is now permanent housing for miners, Calder says.

Sound familiar? That’s because Elko has gone the way of so many suburbs, its investment possibilities eclipsing a faltering mother city as capital flees for growing outskirts. Burgeoning retail, strapped infrastructure, spiking home prices, a shortage of workforce housing – Elko has become what Las Vegas was before the downturn, Applied Analysis’ Aguero says.

"The things going on there are things we have a tendency to associate so much with Las Vegas," he says. "They have problems we were dealing with in spades."

Even as Elko struggles with growth, it’s getting an assist from Las Vegas.

Take McKimmey Electric, which has made electric work at Rabbit Brush Run possible.

"One of the main problems we had was finding enough companies to handle the load" of Rabbit Brush Run, recalls Brandon Palmer, project manager for Ormaza Construction, the complex builder. "We looked all over the place. McKimmey came in partly due to price, but … they had equipment in their shop right now to do the work."

And there are further indicators that Southern Nevada’s interest in Elko is building.

Aviation service company El Aero has seen corporate jet traffic from Las Vegas into its base at Elko Regional Airport jump, says President Ginna Reyes. The incoming flights are part of a business boom that financed a new, 7,000-square-foot headquarters with a pilots’ lounge and concierge services.

But like any city towering over a suburb, Las Vegas has its share of bad influence on Elko’s development.

HOUSING FINANCING MISSING

Southern Nevada’s – and to a lesser degree, Reno’s – housing bust is partly behind Elko’s housing shortage. Banks that lend to builders for new-home communities now associate all of Nevada with a plague of foreclosures.

That’s "severely affecting" development in Elko, Calder says.

The city has issued permits on 800 residential units that "could break ground tomorrow," he says, but financing just isn’t there.

Winer says the housing shortage makes it tough to recruit workers, and estimates the city needs 300 to 350 single-family homes and 700 to 800 apartments to meet demand.

Barrick Gold has stepped in to help, financing the $20 million Rabbit Brush Run. But the complex’s 192 units won’t dent the need.

"If we could pick up some of those empty Vegas homes and move them here, that would be great," Winer says.

If Las Vegas homes aren’t going anywhere, neither are many of its residents. Despite the gold boom, there’s a missing element that defines metro-suburban connections: Migration.

Cashman had trouble convincing workers to move north three years ago, when "Las Vegas really tanked," says Pack, its president.

"People are worried about the winters, and rural versus urban living," he says. "People have their roots in a certain place and don’t really want to upend them."

Adds Coach USA’s Veater, who lived in Las Vegas before moving to Elko in 2008: "For a lot of people making the move, it’s a culture shock."

Most of the Coach USA employees let go in 2011 found jobs in Las Vegas rather than going to Elko, he says.

Elko hopes to convince more city folk to give it a chance. City officials and business leaders held an "economic opportunities summit" in Reno in May for builders, developers, commercial agents, lenders and others to explain the city’s potential. Winer says the group is weighing a Las Vegas summit before the end of 2012.

The pitch: "Our story is an interesting one, and we don’t think it’s done."

ad-high_impact_4
Business
Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like