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People, including a man in a cowboy hat, stand in front of a stage with a large sign reading “Reno.” AP

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Reno gambled with Tesla. Affordable housing paid the price.

The city’s tech-led transformation is changing downtown and straining the housing market

The last hurrah for Harrah’s says a lot about the changing face of Reno, Nevada. Set atop the original location of the bingo parlor, which was founder William Harrah’s first gaming enterprise in Nevada when he established it in 1937, the casino became legendary after opening the following year, expanding over the decades and playing host to such entertainers as Sammy Davis Jr. It was a jewel in the crown of a businessman who would help build the city’s gaming industry.

Later this year, the commotion of the slot machines and bustle of the gaming tables at Harrah’s will fall silent. The building will be remodeled and transformed in September to make way for Reno City Center, a forthcoming mixed-use development targeting the new money in town: millennial tech workers.

“You can take the elevator down from your apartment, go straight to work at the office, take a walk down the river then head to the gym—all within the same building,” Christopher Beavor, CEO of CAI Investments, the project’s backer, told the Reno Gazette-Journal.

It’s likely that William Harrah, a man who professionalized the gaming industry and invented the idea of busing gamblers to his casinos for free, would find some humor in a casino making way for a building where one can go to work, and work out, without stepping outside. But as far as symbols of the future of Reno, it’s hard to beat.

“The downtown needed and still needs help,” says Anjeanette Damon, a reporter for the Reno Gazette-Journal and co-host of The City, a podcast that explored how the city has tried to push out strip clubs in a bid to reinvent itself. ”It’s been a dying downtown for a while, as the gambling industry has suffered and started to evaporate.”

How Reno is being rebuilt by a tech boom

The Reno City Center project, which will replace the aging symbol of the city’s gaming industry with 530 new apartments and 78,500 square feet of retail space, as well as restaurants, bars, and coffee shops, is just one of the proposed and ongoing projects that seek to transform the “Biggest Little City in the World.”

The red-hot real estate in and around Reno currently has $15.5 billion in ongoing or proposed projects, according to a map maintained by Applied Analysis, a Las Vegas–based economic consultancy. This includes the Neon Line District, a $1 billion, 20-block reshaping of downtown that proposes to line West Fourth Street with $25 million worth of repurposed sculptures formerly on display at Burning Man.

“The city’s transformation is in its infancy, its adolescence,” argues Jeremy Aguero, principal of Applied Analysis. “There’s new business and new energy, and it’s just getting started.”

An arid landscape from above with roads and some low-slung buildings. There are mountains in the background.
An aerial view of the Tahoe Reno Industrial Center. Several companies are building facilities in an area about 15 miles east of downtown Reno in this development project named the Tahoe Reno Industrial Center including data storage facilities from Switch. Apple is also building a data storage facility nearby in the Reno Technology Park.
Corbis via Getty Images

In the last five years, Reno and the adjacent city of Sparks have rebranded themselves, with economic development officials and local leaders pushing the region as a burgeoning tech hub, not a destination known for gambling and quickie divorces. This push gained global recognition when Tesla opened its Gigafactory manufacturing plant in Sparks in 2016, the world’s largest building and a showpiece for the state’s high-tech ambitions (lured, in part, through $1,3 billion in tax breaks).

Like Tesla’s founder, the building generated headlines and media attention. But according to Mike Kazmierski, president and CEO of the Economic Development Authority of Western Nevada (EDAWN), it represents just 5 percent of the growth in the region’s tech economy since it began operations in 2016, “more important as far as rebranding our image than anything else.” Kazmierski says more than 200 companies have opened offices in or relocated to Reno and Sparks in the last seven years, including Apple, as many tech firms and founders have jumped ship from the high cost of operating in the Bay Area to the tax-light Silver State. EDAWN claims the average wage at the companies that they’ve enticed to move to Nevada is $72,000. Kazmierski says that along with the dramatic increase in jobs have come new demands on the city.

“Those employees have different expectations of a downtown,” he says, in reference to the high-salaried portion of the new tech workforce. “They want that cool millennial feel. These are people who want to ski in the morning and then work at the downtown tech startup.”

These arrivals—part of the wave of new Nevadans who have boosted the state’s population by 21 percent since 2008—have also radically altered Reno’s housing market. Housing prices have shot up in the last four years; one-bedroom apartments that were $800 a month four years ago now cost $1,200. In January, the median sale price of a home in Reno, $405,000, was 12 percent higher than it was at the same time a year earlier.

“In a tight market, the pressure falls upon those least able to afford it,” says Brent Boynton, community outreach coordinator at the Reno Housing Authority. “If your rent goes up $200 a month, that can be a major inconvenience. If one of our clients’ rent goes up $200 a month, they may be homeless.”

Reno’s courting of Tesla and other tech firms has played out in ways familiar to other U.S. cities weathering a tech boom: a gamble on potential growth, jobs, and increased income, without any guarantees lower-income residents would be able to ride out the rising rent prices.

“Is what’s happening in northern Nevada akin to what we see in San Jose or Los Angeles?” says Aguero. “No, I don’t think it’s gotten to that point yet. Is it headed in that direction? Absolutely.”

A “for sale” sign in the foreground, with high-rises in the background.
This photograph, taken Wednesday, August 29, 2018, in downtown Reno, Nevada, shows one of the old motor lodges that have been shuttered and slated for demolition. Weekly motels are becoming the last stop before homelessness for hundreds of working families who can’t afford to live anywhere else. An economic boom spurred by the arrival of thousands of new employees at Tesla, Google, Apple, and other corporate giants has created an unprecedented housing crisis in the area. (AP Photo/Scott Sonner).
AP

When Tesla came to town

When Tesla was dangling the prospect of a massive new factory in front of cities back in 2014, the possibility of landing the tech darling led to an incentive arms race. Sparks ended up submitting the winning package, offering a $1.3 billion incentive package over 20 years. But it wasn’t just about the 10-figure tax breaks.

Building in Nevada meant light regulations and an accelerated time frame. The $5 billion, 10 million-square-foot Gigafactory was a massive undertaking, but would have been a more prolonged one had Tesla not taken advantage of lax land-use policy. (According to The City, lightning-fast project approvals helped Tesla build at a breakneck pace.) The electric carmaker wasn’t the only firm attracted to the region. Switch is building the largest data center in the world in Tahoe, in part thanks to $54.7 million in tax abatements, and Google is constructing a 1,210-acre campus at a Reno industrial park. The dry climate has also attracted food and food supplement production; your Starbucks breakfast sandwich may have been made at the Premium Brands plant.

Kazmierski points to the rapid decline in the size and importance of the city’s gaming industry as a symbol of tech’s new dominance: More than 20 percent of Reno’s economy two decades ago, it now represents less than 4 percent, struggling to stay relevant with the rise of competition from Native American gaming operations in nearby California and other gambling options. He says the fastest-growing segment of the economy is advanced manufacturing—more than 14,500 jobs in the last five years—including medical device makers.

“We see ourselves as a future tech community, and are moving rapidly in that direction,” he says.

The pace of change can obscure just how rough things looked for Reno a decade ago, during the Great Recession, says Aguero. (A 2015 article called the city “officially the most depressing place on Earth.”) The northern part of Nevada was then dependent on a tourism-based economy that had been waning for years, and the region was one of the last to make its way out of the recession, he says. Downtown was filled with fading casinos and hotels, which had pushed out residents when they were first built in the ’70s. In an October 2019 op-ed, Kazmierski called the city’s downtown “an eyesore.”

“I think oftentimes people forget the struggle the Reno-Sparks area had a decade ago,” Aguero says. “It seems like a long time ago now, but as a result of the policies that helped bring tech here, it changed the momentum for the region.”

For housing-stressed Nevadans, it’s still a struggle

For those in northern Nevada who landed jobs with the new influx of tech firms, or who can afford new apartments, Reno’s evolution has been positive. But for the many who haven’t benefited from tech’s arrival, the shift has been jarring.

“As more and more industry has come to town, even though the economy has improved, wages haven’t kept up with the cost of housing,” says Reno Housing Authority’s Boynton.

The Reno Housing Authority provides public housing and housing choice vouchers to roughly 3,500 families in the Reno-Sparks area, and has roughly the same number on waiting lists for assistance. Boynton says the number of families the housing authority is helping has risen dramatically, in pace with the escalating cost of rent. Between 2016 and 2018, the monthly cost of a one-bedroom apartment in Reno proper increased 27 percent, according to figures from Johnson Perkins Griffin, a local real estate appraisal firm and consultancy.

A Tesla sign in front of desert hills.
In this October 13, 2018, photo, a sign marks the entrance to the Tesla Gigafactory in Sparks, Nevada. A population inrush to Nevada has been driven by people seeking more affordable housing and a growing tech industry around Reno.
AP

Another key stat, the housing opportunity index, the share of homes sold that are affordable to a family making the area median income, underscores the uneven opportunities that have come from this boom, according to Aguero. The percentage has been cut in half since 2011, from 87.5 percent to about 47.7 percent late last year.

The shortage of affordable housing options, in the face of renewed development and displacement, has led Reno to take drastic action. Mayor Hillary Schieve’s 1,000 Homes in 120 Days initiative offered to streamline regulations and defer fees to speed up the construction of new housing units, as long as they were built within 18 months of approval. Developers have been slow to return and build new housing, the mayor told WBUR radio, and these kinds of incentives are needed to tackle the backlog of needed housing. Experts have noted that increased construction costs, the prevalence of single-family zoning, and a dearth of developable land between the surrounding mountains all have contributed to the lack of new supply.

“We know housing is the leading challenge in our city,” Schieve said during a December 9 press conference, when she announced that projects that would add 2,038 units had already been submitted to the program. “Our staff created this bold plan that helps speed up new housing, but also makes sure the city gets every dime it’s owed. A true win-win.”

The mayor’s scheme will ultimately be a drop in the bucket, according to Boynton, but it does bring attention to the city’s dire housing shortage. (A recent regional study estimated Reno alone is short 25,385 affordable units.) Reno may be booming in ways that attract firms from Silicon Valley, but it’s also bringing some of the same economic hardships caused by previous tech booms elsewhere.

“There’s a lot of people who kind of would say, ‘I miss the Reno that used to be, when it was easy to afford to live here,’” says the Gazette-Journal’s Damon. “The flip side was there weren’t as many job opportunities. It’s the same question so many cities are grappling with, how do you make sure all that growth is equitable and everyone gets a piece of the success?”

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