Economic Development
Tesla in Reno
The possibility of Tesla opening a battery factory in Reno has been the hot topic lately, and it’s no surprise. Tesla’s decision to move here would change this area dramatically. First, they would bring 6,500 skilled jobs to the region, which will lower our unemployment rate and remove Nevada from the top of the unemployment list. The bigger discussion is the ripple effect those jobs will have on the region. The facility by itself is supposed to be 10 million square feet, and therefore the construction industry will be the first to benefit from the decision. Once the facility is built, all 6,500 employees will need support businesses, which will create more jobs. Support businesses could be anything: dry cleaning, entertainment, home improvement, etc. The RGJ posted article that estimated 6,500 jobs would bring a total of 15,500 jobs.
In addition to the obvious job impact, there could be implications in unknown markets. Support businesses for Tesla would likely pop up, bringing additional skilled jobs in the lithium battery manufacturing field, among others. This could assist in creating the landscape entrepreneurs in Reno are dreaming of. If new businesses can emerge from Tesla’s decision, it could put Reno on the map as an entrepreneurial hub. In addition to attracting entrepreneurs, Tesla’s decision would likely attract other businesses. In fact, the publicity they are already generating isn’t bad for Reno. They would increase our list of existing corporations: Apple, Patagonia, Amazon, Microsoft and more. This would also assist in bettering Reno’s reputation.
Tesla’s decision would not come with out some negative impacts: We currently have very low inventory in the housing market. This low inventory has caused housing prices to increase quickly. This is good for homeowners, as many will see their equity restored, or rising. However it’s bad for buyer’s because it will increase competition, and even push some buyer’s out of the market. For example: If a buyer is qualified up to a $150k purchase price and housing prices increase significantly, that person may not be able to find anything. If Tesla’s decision has an immediate effect on average income, qualification may not be a problem. But I don’t think Tesla’s decision will cause other employers to increase wages, at least in the short term. Schools and freeways will also become more crowded, as well as ski resorts. Overall I think Tesla in Reno would bring many more benefits than problems. If you think Tesla in Reno would be a good thing, pat yourself on the back. If you think it would be a bad thing, leave me a comment and explain your logic. I would love to hear your thoughts.
Recent Reno Changes
Recently there have been a few changes occurring, or proposed, in and around downtown Reno. First, the Aces developer, Herb Simon, is at least affiliated with the Bundox property purchase. According to Washoe County documents, the property sold for $1.95 miilion. The property sits a 0 Lake Street, between the river and the Aces Ball Park. Nobody is certain what Simon plans to use the property for, but it will likely compliment the Freight House/Aces Stadium. Tim Ruffin from Colliers International thinks it will be used for retail-based businesses such as bars and restaurants. You can read a little bit about the history on the Downtown Reno Makeover Blog.
Next, an investor group called the Siegal Group is going to buy the El Cortez Hotel. Their plan includes upgrades to the building, but they want to keep the “historical character” intact. Specifically, the plan to paint, upgrade the floors, modernize the equipment and appliances, etc. A priority will be to fill the western retail spaces and apparently they’re already entertaining offers from potential tenants. I found an interesting article about the history of the El Cortez that you can read here. I’m interested to see what happens with this property, as the El Cortez would not seem attractive to me if I were an investor. I think serious renovations will be necessary to turn the place around. Further, there are already so many hotels in Reno, I’m curious how investors are going to differentiate themselves from the competition?
UNR is gaining popularity. To make accommodations for the influx of students, the University plans to demolish Lincoln Hall to build new residence halls. Lincoln Hall was built in 1896, making it one of the oldest operating resident halls on the west coast. The outside of the building has never been modified since its original construction. This initiative is being met with much resistance in the community because people see it as a landmark on the UNR campus and they feel it’s important to UNR’s historic legacy. This link will lead you to a petition that you can sign if you feel strongly about preserving the building. Personally I think we should get rid of the old and welcome the new. In my opinion, functionality and practicality for the present should take priority over the past.
The Lost City Farm was officially opened around September of last year, but I didn’t realize they were fully operational. Therefore I’m considering them a recent change and I’m blogging about them. This urban farm is located at 512 South Center Street, very close to SUP in midtown. All of the vegetables and flowers grown at this location are herbicide and pesticide free. Food from this farm is sold to local restaurants within a five mile radius. You can check their website to learn about events the organization holds. They sell produce directly to the public from their onsite farm stand once a week. Growing is seasonal so don’t expect fresh tomatoes when it’s below freezing in December. (Photo Credit)
It’s good to hear changes happening in Downtown. I hope the investors mentioned in this blog see an incredible ROI for their purchases. It would be ideal if their success sparked the interest of other investors, as that could encourage more purchases and renovations around downtown. Downtown Reno still has a long road until the downtown area is as attractive as other cities, but I consider all of the things mentioned to be steps in the right direction. What do you think? Leave me a comment and let me know!
Review: The MBA Program at UNR
Let me begin by saying you need to get your MBA for the right reasons: If you’re looking to make a career change from another field to the business world then it’s a good option, especially considering you don’t need any educational background in business to be accepted. That was my purpose for pursuing the program. If you’re looking to advance your career by getting your MBA, it may not be a good decision. Unless your company vows to promote you once an MBA is achieved, I would argue your time and money is best spent working to earn a promotion, or gain the necessary credentials and experience to transfer to another company.
If you’re interested in the program for networking purposes, I would say it’s ok. When I started over 2 years ago, there wasn’t any formal networking in place. Now I have helped create the Nevada Business Connection Club, which should assist in creating a platform for MBA students to network with each other, as well as business professionals in the community. This effort and similar efforts are being promoted with the assistance of Jim McClenahan, Director of Corporate Outreach. You can see his beautiful face to the left. I’m confident that networking within the program will grow sustainably from this point forward. (Photo Credit)
The Program was ranked at the #4 part time MBA program in the country for the last few years, one slot above Berkeley’s part time program. Unfortunately we dropped to #24 this year. The program gets ranked on criteria such as affordability, #students per class, etc. I have certainly learned a lot in the program, and more importantly it has changed the way I think about business. However, I think there is room for improvement.
Here is the course curriculum for the MBA program. In my opinion, all of the core classes are not valuable. They’re almost no different than undergrad classes and they usually don’t add true value to real working environments. I think they should be revised completely. The “breadth” and elective courses have generally been much more valuable, and the level of value really depends on which classes you pick. Most of them require group projects/presentations and much of the coursework revolves around case studies. Therefore there is good real world application. Certain professors provoke discussions where you better learn to think on your feet, as you will get called on randomly. These are my favorite classes, as they are engaging.
The program is a lot of work, but it has given me a good business background that I didn’t have previously. Overall, I’m MUCH more satisfied with my education at UNR than I was at the University of Oregon, where I received my undergrad. I’m currently taking ENT 693 Entrepreneurship Topics, and it’s one of the best classes I’ve ever taken in my life. It would be great if the core courses in the program were restructured in an entrepreneurial context. For example: rather than learn about operations in a broad, forgettable manner, you would have to build a company and make the operations efficient by applying the concepts you learn in class. If you found some information in this article useful, please buy me a beer the next time you see me.
Education in Reno
On a prior post one of my classmates, Mike Curtis, left an insightful comment regarding one of the largest barriers to Reno’s future growth: education. Usually when comparing the quality of education, the ranking is performed on a state level. Nevada consistently sucks, and therefore you can usually scroll to the bottom of the list to find us. However Nevada as a state is not necessarily representative of Washoe County in particular, and even schools within Washoe county can vary greatly.
EDAWN conducted a study that compared Washoe County to the other 50 states and the results showed that Washoe County actually ranked pretty high in many aspects. As of December 2013, the Washoe county School District (WCSD) ranked 15th in the nation for “College Readiness in all Subjects,” which was better than California. The WCSD ranked 12th in “AP Test Takers,” 18th on the “ACT test for Math,” and 24th on the “ACT test for English.” Washoe County still ranked very low in some aspects: 50th for “”Per Student Funding,” 49th for “Student to Teacher Ratio,” and 43rd for “Graduation Rate.”
When I see those results it shows me that overall it seems the quality of our education is pretty good, as evident by test scores, but it also shows the funding for our schools is not good. I have a few friends who are High School teachers in the area and they reported that the quality of their students depends on the family they come from. They informed me high schools that draw students from affluent areas consistently see better results than high schools that draw from lower income areas. Because Reno is small, you often get students from both dynamics at the same school and therefore the results within one school can vary enormously. If the parents don’t motivate their kids then the teachers can only do so much.
What are the solutions to increase the ratings among schools in Washoe County and Nevada as a whole? The honest answer is I don’t know because it’s a field I don’t know enough about. However I can conclude we need to start by providing schools with the necessary funding to be successful, especially if we are dead last in terms of “per student funding.” I don’t know what the state’s budget looks like, but I have to imagine they can cut costs in some area in order to dedicate more to education. Or maybe they can increase sales tax to subsidize the cost, get a grant from the Federal Government, or find a group of wealthy private investors in Washoe County to donate money. Don’t tell me it can’t be done, because it can. Like anything else, it will require some creativity and persistence.
If a company were interested in moving to the area and education for the employee’s children was a major concern, I would recommend checking out the private schools in the area, such as Sage Ridge School. Although private schools can be expensive, they are much more likely to provide a better education than any public school, even public schools in higher ranking states. I went to a public high school in California and I don’t think the education I received was particularly valuable. I would fall back on the argument that the success of a student heavily depends on what the parents do outside of school to stimulate the student’s academics. I included a video about Sage Ridge School below since I had never heard of it before I wrote this post, and therefore you probably haven’t either. Hopefully Washoe County and Nevada will be proactive in reversing the negative ratings education consistently receives in this state.
What steps do you think Nevada needs to take to increase its education rankings? Leave me a comment and let me know.
Reno Headlines
Believe it or not, I am not the only person who recognized Reno as a great place to live. In fact, I have seen Reno recognized for various reasons in numerous articles lately. Each article touches on something different and I believe every article is from a different source. I know you hate reading, and therefore I will summarize each article for you…
1. Reno ranks as the 3rd hottest Real Estate Market, according to MSN.
This article rated the “hottest markets” by comparing the year-over-year median home price increases. All of the data comes from realtor.com, however I have to question the data based on the data I’m familiar with directly from the MLS and the Reno Sparks Association of Realtors. For instance, the article claims the median home price rose 26.8% in the last year, and to my understanding it was 23.6%. Also the article claims the median home price in Reno is $259,900. The median house price fluctuates monthly, and it was $227,000 in March and $235,000 in February. The article picked a beautiful home to advertise, as you can see by the photo to the left. (Photo Credit.)
2. Virginia City Ranks as one of “The Coolest Desert Towns” by Travel and Leisure.
I know, I know, they meant to say Reno but they actually said Virginia City. Virginia City is about 25 miles south of Reno, and since my blog is about the Reno area, you have to let this article slide. They highlight the fact that Virginia City has a lot of historic sites, including wooden boardwalks, dusty graveyards and classic saloons. I know Virginia City best because they have kooky events like the camel/ostrich races and the Rocky Mountain oyster festival. Although you can pan for gold and explore old mines, there’s much more to do and see in Reno. We will credit the article for attracting attention the area.
3. The Downtown Library was rated as “The Coolest International Space” by Cengage Learning.
I have never been to this library and I’ve never heard of Cengage Learning, but thanks for the recognition! The article highlights that the books stack fill 4 levels, so you can get your reading on. Known as “the garden,” apparently the lowest level is full of vegetation and it’s the place where patrons can read. I attached a picture to the left so you can get a more visual idea of what the bottom floor looks like. I think it’s a pretty cool idea to be surrounded by vegetation while reading and I think the UNR Library should recognize it! (Photo Credit)
4. “Reno Shares Biggest/Little moment with Biggest Little City Movement”
This is more of a local article but I wanted to touch on “The Biggest Little City Movement” since it’s awesome. Basically this movement is dedicated to changing the perception of Reno based on sharing the stories of those who live here. This article explained how many entities in Reno got together at UNR to support the movement. The University is now taking part in the effort and the video below is a story told by the head football coach at UNR. “In the coming weeks and months, Biggest Little City plans to organize voter registration efforts in other cities as well as Adopt-A-Business efforts to help non-profits and small businesses in the area more effectively brand what they do and explain whey their work is important.”
If you know of any other headlines worth highlighting, please send them to me in a comment.
The Financial Perks to Living in Reno
I was filming the final segment of my personal branding video today and I calculated some numbers regarding the cost savings associated with living in Reno. Some of the things I discovered shocked me, and I think they will shock you too. I compared living in Reno to living in California, since that is the low hanging fruit. I compared money one can save via taxes, the cost of living and commuting.
1. Income Taxes:
If you didn’t already know, Nevada does not have state income tax. Using this income tax calculator from Ca.gov, I discovered that if you make $100,000 per year in California, you will pay $6,860 in state income taxes if you file as single. Over the course of 10 years, that’s $68,600 you will save just by living across the border. Further if you were to invest the $6,860 per year, you could pretty easily turn your savings into over $100,000 over ten years, or more depending on your returns. That’s a huge amount of money that I would prefer to spend in almost any way other than giving it to the state.
2. Cost of Living:
I saw recently at the end of this article from the Reno Gazette Journal that the cost of living in Reno is about 5.8% below the national average. When evaluating the cost of living, the items discussed usually include the items displayed int he graph to the left. One aspect where Reno has a large advantage in savings compared to other areas is utilities. I’m not going to retrieve my bill and examine the amount I pay per kilowatt, however after speaking with my Dad who lives in El Dorado Hills California this weekend, I feel very fortunate to be saving a substantial amount of money per month on utilities. In the future, I think utilities in Reno will remain low because Reno has an abundance of renewable energy: 300 days of sunshine per year, some of the best geothermal energy in the country and even a good supply of wind. If it costs $25,000 to live each year than you save $1,450 per year by living in Reno, or $14,500 over the course of 10 years.
According to Zillow, the median home price in Reno is $198,700. The median home price in San Jose is $661,700, $887,700 in San Francisco and $235,100 in Sacramento. Renting prices are also relatively reflective of the purchase prices for houses. In Reno, you may be able to afford a house sooner, which will allow you to build equity in your asset rather than throw your money away while renting a 400 square foot studio for $1,000 a month in San Francisco. The loan you pursue in Reno will be smaller, which will make it easier for you to qualify and easier for you to meet your monthly payment. Also, your loan will be much cheaper since the loan amount will be smaller and there will be less interest over the life of the loan. It’s very difficult to say how much you will save per year by your mortgage payment because there are too many variables, but we can conclude the savings could be significant. For now we will include the savings in housing with the lower cost of living figure above, (5.8% below the national average.)
3. Commuting:
I live and work on the opposite sides of town, and it takes me just over 15 minutes to get to work. The national average for a commute is about 25 minutes. That means the average person spends about 20 minutes per day in the car that I don’t. Considering there are about 250 days in a working year, (you have to exclude weekends and holidays,) that amounts to 5000 minutes or 83.3 hours or about 3.5 extra days in the car each year. That’s a lot of time. When I get reimbursed for mileage at work, I get about $0.565 per mile and this figure factors in both gas and the cost of car maintenance. If that extra 20 minutes per day amounted to 20 extra miles per day, (freeway travel,) that would equivelate to $2,825 per year or $28,250 over our 10 year example.
Let’s total up what we have so far: Savings in income tax + savings in cost of living + savings in commuting = $11,135 per year. Wouldn’t it be nice to put that extra $11,135 in your retirement account each year? Also remember: your savings could be much higher depending where you rent or buy a house. If you were to add up the same factors above over our 10 year example, you would have savings totaling $111,350. This does not even factor in the possibility of investments or the exact amount you would save in mortgage payments or interest over 10 years. That is simply the amount of cash you would save. Isn’t this insane? San Francisco is an awesome city, but is it worth the money to live there? And it’s only getting more expensive, what’s your price? If you saved $111,250 per year in Reno, would you move here?
If you found this article interesting and you’re pro Reno, retweet this post!
Business Environment in Reno
Reno is a great place to operate a business, and its small, locally-owned business community is rich. (Rich in the sense that there are many small business, not rich in the sense that all small business owners drive Ferraris.) The abundance of small businesses makes it easier for residents to buy local and support the community. They also create a unique culture as many small businesses bring character that is unmatchable by chains and larger corporations. The business environment and incentives in Nevada are the reasond so many small businesses have emerged, and I believe the business environment will create the incentive for new businesses to attract to the area.
Northern Nevada and Reno in particular has been cited frequently over the last few years as a great place to conduct business. The most recent award I saw was from the Kauffman Foundation, who ranked Reno as the #1 Most Populous and Highest Startup Density for the MSA size class. Others include: Nevada was also ranked as the #12 best state for business by Chief Executive Magazine. Nevada was ranked by the Tax Foundation as #3 most business friendly tax climate in the US. Reno frequently ranks as a great place to live, and you can check out a more comprehensive list of honorable mentions on EDAWN’s website. (Photo Credit)
If I owned a business and I considered relocating to Nevada, a few things I would be interested in would include:
- The cost of doing business, specifically taxes and regulation: (There are no corporate income taxes, no taxes on corporate shares, no franchise taxes, etc)
- Quality and affordability of life for my employees. (No income tax, 5.8% the national average for the cost of living, minutes from world class recreation, tier 1 University.)
- The location in reference to other business hubs. (20% of the country can be reached in one day through major shipping carriers, 53 departures per day from the airport, 7-8 flights per day to the bay area, 3 1/2 hour drive from the bay area.)
- Generally: What Nevada can offer me that other places can’t. (What is already mentioned above. Unfortunately Nevada does not have any big incentives for interested companies.)
Nevada can deliver on the items above. Since Northern Nevada is hungry for new business, I think new businesses are treated with open arms more than they would be in places like the Bay Area. This allows for new businesses in the area to stand out more. I read a pretty interesting article recently from the Reno Gazette Journal that described how EDAWN facilitates the process of showing an interested business the area. I was surprised to read that Reno’s Reputation is almost never brought up by companies interested in the area. “We don’t ever lose a deal for a perception of the city if we get to show them the real Reno-Sparks.” -Mike Kazmierski
The business environment has allowed for small businesses to be successful, and I’m curious to see what types of companies will develop in the future. If renewable energy ever gains steam again, Reno could see a boom in that industry as it has an incredible supply of solar, geothermal and even wind energy. If the Reno Collective and start up row gain enough momentum, Reno could become a major tech hub and steal some of the brightest minds from the bay area. Reno has already become a desired destination for logistics and distribution companies, and we could see a further expansion in those industries. Or perhaps Tesla will move here and that will open the door to more manufacturing plants? Maybe every company will decide they don’t want to move to Reno and we will see no growth at all?
What do you envision for the future business climate in Reno? Do you think certain industries will be more prominent than others? Leave me a comment and let me know.
The Biggest Little Secret 