If it’s Wednesday, it must be Las Vegas for Shaun Donovan, the secretary of the U.S. Department of Housing and Urban Development, who took a whirlwind tour with Zappos CEO Tony Hsieh today to glean what he could from downtown’s redevelopment.
Over roughly 90 minutes, Donovan met Hsieh at Zappos’ new headquarters in old City Hall, threw a bean bag at the Gold Spike, saw the new skating rink being built behind the Spike, toured the close-to-finished Inspire Theater at Las Vegas Boulevard and Fremont, walked to the new Container Park, walked through the railroad car-turned-barbershop in the Container Park, ate Big Ern’s BBQ, took a peek inside Stitch Factory, then went on his way.
All the while, Donovan asked questions: How do locals feel about the redevelopment? What are the biggest obstacles to redevelopment? What about company incentives for housing?
All of it, Donovan said, is to learn ways HUD can become a catalyst for growth like this, which is occurring in urban cores around the country. Admittedly, he added, that way of thinking is a departure from the federal agency’s past.
“So often what you had in the past was that fed government bought a neighborhood and sort of wiped it away, tabula rasa for highway projects, renewal or housing,” he said. “It used to be a cancer to be cured instead of finding interesting things there for us to build on. So this is much more about the federal government becoming a partner and being a little more humble.”
Hsieh’s Downtown Project, separate from Zappos, is putting $350 million into education, entertainment, technology, real estate and small business. One of its biggest accomplishments, the Downtown Container Park, opened last week.
About 2 years old now, the Downtown Project hasn’t grown without occasional problems, which Donovan asked about.
“What has been the response from neighborhoods?” he asked Hsieh as they shuttled between venues. “Have any long-term residents pushed back on the change?”
Hsieh replied, “We’ve made a few mistakes,” and described one of those. After it purchased Town Terrace, 330 S. 7th St., for instance, residents went to the press saying they were being abruptly evicted.
Those evictions were stopped. Then, when renovation was about to begin on the John E. Carson Hotel, at 6th Street and Carson Avenue, which the Downtown Project also purchased, its residents were given free rent and moved into a different motel nearby, also owned by the organization.
“Any change, I think, is hard and challenging,” Hsieh said.
Donovan nodded. Before he was appointed HUD secretary and confirmed in 2009, Donovan was commissioner of the New York City Department of Housing Preservation and Development. He described it as an “eminent domain agency.”
“So, large-scale changes — those are really difficult decisions,” he said.
When Donovan asked about some of the biggest obstacles to redevelopment, both Hsieh and Michael Cornthwaite, who is close to opening Inspire Theater and just opened Pork & Beans and the Beatnik in the Container Park, cited making it through government processes and the unforeseen expenses of bringing old structures and infrastructure up to code.
The Downtown Project has transformed a few old hotel rooms at the Gold Spike — which it owns — into rental units, but Donovan also wanted to know whether Zappos is offering other financial incentives to get employees to live downtown.
Instead of financial, Hsieh characterized it as “emotional” incentives, adding that redevelopment efforts are making the area as attractive as possible “so that a lot of people will want to move here.”
Downtown Las Vegas, Cornthwaite noted, is dotted by numerous neighborhoods and, in reality, is very densely populated. What has happened only on a small scale before, but which is beginning to grow, is that nearby residents are starting to visit downtown.
“A lot of people are within walking distance or biking distance, but they just haven’t come over here before,” he said. “It’s a new thing.”
In the Container Park, Ernie Loya, a former Zappos employee, sees the people coming — in droves. Having operated Big Ern’s BBQ for more than a year from under a tent on 7th Street, he told Donovan the most he had ever made in a day was “in the hundreds of dollars.”
Last weekend, Big Ern’s sold $4,000 worth of BBQ in one day. Then he ran out of food Monday, doubled it Tuesday and ran out again.
“And we’ve been going up ever since,” Loya said. “It’s been incredible.”
By tour’s end, Donovan said the information he learns from visiting emerging areas like downtown Las Vegas will help craft policy in the future.
“This is one way to see this,” he said. “The question is: How can the federal government support efforts like this so that they grow and are catalytic, not just a drop in the ocean.”