No glitches in union, city accord

A pending labor peace ordinance for downtown Las Vegas probably won't impede development, experts said.

Indeed, given the poor economy, the fact that some projects downtown could have to use union workers is probably the last thing to be worrying about, they said.

"It looks like it's a hard market anyway," said David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. "Binion's just closed down its hotel. They're already facing a lot of hurdles to development."

The city of Las Vegas on Dec. 2 signed an agreement with the Culinary Local 226, which mounted vigorous opposition to some of the city's redevelopment projects downtown, including the new city hall building that the City Council approved on the same date.

The city prevailed in those challenges but wanted to avoid similar ones in the future, so a deal was made:

The Culinary would back off if the city, among other things, required downtown hospitality projects in which the city has a direct financial stake to employ union workers.

The agreement with Culinary will last for five years, and could be extended for as long as four years beyond that.

City Attorney Brad Jerbic said the ordinance, which is still being drafted, will be modeled on an ordinance in the city of Pittsburgh and would apply to gaming hospitality projects in which the city has a financial stake in the operation's success.

That would include projects in which the city is receiving lease payments, royalties or similar payment that's tied to the profit of the business, Jerbic said.

For example, if a developer builds a hotel-casino where the Las Vegas City Hall now stands, as is anticipated, and the developer buys the land or it is donated, the labor peace ordinance would not apply, Jerbic said.

If the site was leased, however, the agreement would kick in, requiring union workers, he said.

The pact also would prohibit labor strikes, something the union is giving up in exchange for collective bargaining.

The ordinance wouldn't apply to incentives offered to projects through the city's redevelopment agency, since those are tied to property taxes, Jerbic said. Those must be paid whether a business is operating or not.

The ordinance is being drafted and is expected to be presented in January. Meanwhile, work is scheduled to begin next month on a new city hall, which officials hope will encourage other developments to start as well. Those include two new hotel-casinos and a sports arena, all to be built on city-owned land.

The fact that would-be operators on those parcels might have to work with a union work force probably won't be a big deal, said Bill Lerner, president of Union Gaming Group, a gaming consulting company.

"Most of the existing major gaming companies in Vegas have organized work forces, so in the unlikely event any of them are considering a downtown project it wouldn't likely be a problem," Lerner said.

"Ultimately, this would be case by case for other entities with interest in downtown development. For some it may be a major deal point, and others not," he said.

The bigger deal is the economy and the growth, or lack thereof, in the downtown Las Vegas market. The recession has hit all sectors. Gaming revenue is down 12.3 percent on the Strip and 10.8 percent downtown this year, according to the Las Vegas Convention and Visitors Bureau.

Even before then, however, downtown had shown flat revenues, Schwartz noted.

Between 2000 and 2007, downtown hotel revenues hovered around $1.1 billion annually. On the Strip, though, that figure went from just under $10.2 billion in 2000 to $15.8 billion in 2007.

There has been activity downtown, though, including the recent opening of a new tower at the Golden Nugget, the approval for building the new city hall, and construction of the Smith Center for the Performing Arts and the Cleveland Clinic Lou Ruvo Center for Brain Health, both in Symphony Park.

"There has been some movement forward, but in general the market has been pretty flat," Schwartz said. "It's just difficult to see that kind of growth in the pipeline right now with the existing ones having so much trouble."

Contact reporter Alan Choate at achoate@reviewjournal.com or 702-229-6435.