Reno Takes a Gamble on Its Future

RENO — The neon promise still stretches across Virginia Street: “The Biggest Little City in the World.” These days, though, that bright arc is anchored at the corner of a boarded-up casino called Harolds.

Next to Harolds is a boarded-up casino called the Nevada Club. Nearby is a boarded-up hotel called the Virginian. The historic Mapes Hotel--at 12 stories, once the tallest building in the Silver State--has stood empty since 1982. The graceful Riverside Hotel has languished, with plywood over the windows, since 1987.

Once the nation’s top gambling destination, Reno has endured a 20-year slowdown, aggravated in the past decade by the swift spread of casinos nationwide and the explosive growth of its sexier sister to the south.

In fact, this city’s fall from gambling grace mirrors America’s deepening love affair with the sporting life:

Las Vegas toppled Reno from the No. 1 spot in 1950.

Atlantic City, N.J., kicked Reno out of No. 2 30 years later. Chicago-area riverboat gambling knocked the city down another peg in 1996. And Connecticut Indian casinos pushed Reno out of the No. 4 position just last year.

“Reno got squeezed” when investment money was lured elsewhere, according to Mayor Jeff Griffin. “People said, ‘We’ll be able to make a pile of money wherever--how ‘bout Biloxi?’ We’ve had to prove ourselves worthy of a second look. I think that’s happening now. I sure as hell hope so.”

After decades of dead-end schemes to kick-start the struggling downtown--everything from an outlet mall to an oxymoronic High Desert aquarium--Reno has finally approved a project to revitalize its casino core.

Only one thing: the project is devoid of gaming. As change slips quietly into town after a rocky absence of 20 years, it is sparking a serious debate about where the top industry in Nevada fits into its increasingly diversified second city.

Those who view the growing warehouse and high-tech industries with pride are going head to head with those who note that it is gambling that lines the state’s coffers and bankrolls services for a growing population.

Yet a third camp, the preservationists, looks at the city’s fledgling efforts--the first step is a complex of movie theaters, shops and restaurants with an “Old Reno” flavor--and wonders why officials want to tear down the Mapes Hotel in the name of redevelopment.

As Reno struggles to figure out its future, the process offers an object lesson to America’s other gambling cities, the ones that share the shadow of Las Vegas, the places that kicked Reno when it was down.

“We’re trying to reinvent what the heck a community is going to be and what a region is going to be,” said Mike Reed, dean of the College of Business at the University of Nevada in Reno. “The lesson we have for these other places is . . . that with any maturing industry you’ve got to reinvent yourself, reinvent your core, market differently, bring in new elements.”

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For the first half of this century, Reno had no trouble bringing in new elements. In a state that was the first to embrace prizefighting, quick divorce, gambling and prostitution, Reno pioneered the earliest, splashiest versions of all of America’s favorite vices.

Reno became the divorce capital of America after silent screen star Mary Pickford appeared in 1920 for the quick split that let her marry dashing Douglas Fairbanks. It was home to the first prostitution establishment on a supermarket scale--a 1920s venture called variously the Stockade and the Bull Pen, where scantily clad working women reclined by open windows.

Harolds Club, born on Virginia Street in 1936, was the state’s first widely marketed casino. The operation drew in customers with a game of chance called mouse roulette, in which gamblers bet small change on which color or number a scrambling rodent would choose to rest.

Not too long thereafter, though, the problems began. Aided by the military, Hoover Dam and Bugsy Siegel, Las Vegas fast became Nevada’s newest boom town, a label that would only become more valid with the passage of time.

By 1947, northern Nevada was turning up its nose at the upstart to the south and made plans never, ever to be like Las Vegas. The first step: a boundary to keep casinos confined to Reno’s small downtown.

“They put a red line around downtown,” said Deke Castleman, author of the Nevada Handbook. “That’s about as conscious a decision as you can make. It wasn’t lifted until 1978 or 1979, and then the whole place exploded.”

But it was too late to recoup the ground lost--first and foremost to Las Vegas and then to Atlantic City. Today, 10 states have casino-style gambling, 24 states have Indian gaming, 38 states and Puerto Rico have lotteries. With so many options out there, many gambling experts argue, why should a tourist--particularly in Nevada--pick Reno?

“Reno has yet to become a national destination,” said Jim Rogers, senior vice president and general manager at Harrah’s Reno. With just over 5 million visitors last year--most from Northern California and the Pacific Northwest--Reno has been a regional tourism destination “since its inception.”

“Las Vegas will do over 30 million tourists this year,” Rogers said. “We’ve got to look at that and say, ‘How do we capture some of the trips to that destination and bring them to northern Nevada?’ ”

But in the 20 years that have passed between Nevada’s gambling exclusivity and national saturation, what has Reno done to capture the fickle tourist dollar? Not a lot, is the general agreement.

Some casinos have been renovated, but in 1989 Harrah’s pulled its headquarters out of Reno and headed for Memphis and the shiny new riverboat niche.

The Eldorado Hotel/Casino and Circus Circus Hotel/Casino joined forces to build the classy Silver Legacy--all dark wood and green marble with an antique-filled lobby--which opened in 1995. And the city built the National Bowling Stadium, which brings more than 80,000 bowlers to town two out of every three years.

But those efforts have done little more than keep the city treading water, as splashy new mega-resorts such as Luxor, Treasure Island, the MGM Grand and New York, New York revitalized Las Vegas, and riverboat gambling and Indian casinos hit the rest of the country.

“Frankly, the attractions that have been and will continue to pop up in Las Vegas are much more exciting to someone than going back to see the same old, same old in Reno for the 15th time,” said John Rohs, a gaming analyst for Schroder & Co.

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Today, a score of businesses--hotels, gambling joints, tour companies, stores and restaurants--stand vacant in the struggling downtown of the city that introduced the modern-day casino to the world.

Gambling revenues--the lifeblood of tax-shy Nevada--have eked out only slow growth here. As the population has grown, employment has blossomed; gambling jobs have not.

This is the crux of Reno’s ongoing debate. On the one hand are the diversifiers, who look at Michelin’s new tire-producing plant, at UPS Worldwide Logistics’ new 265,000-square-foot operation, at the cadre of Microsoft lawyers recently moved here, and at Sherwin Williams’ plans to build a 1-million-square-foot facility.

They look at the 75 subdivisions under construction in 1997 and at the plummeting unemployment rate--about 3% compared to the national rate of just under 5%--and say: “What in the world is wrong with this?”

“We’ve had a boom going in the past two years in manufacturing and commercial construction,” said Chuck Rosenow, city economic development manager. “It’s dazzling.”

Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada at Reno, will not argue that growth in warehousing, corporate headquarters and technology have outpaced gambling.

But he worries about that change--basically because Nevada has no income tax and gets most of its general fund money from taxes on gambling. More people but less gambling means more services needed and less money to pay for them.

“Reno is terribly dependent on its tourism base for its economic lifeblood,” he said. “Gaming is still strong, but if gaming performs terribly, it will have significant effects on everyone who lives in northern Nevada.”

Perhaps nowhere has this divide--along with Reno’s well-honed civic disputatiousness--been more evident than in discussions about the city’s downtown. From talk radio to the newspaper pages, the Internet to the City Council’s cozy chambers, they are fighting about the role of gambling, about diversification, about history, about Reno’s very essence.

Because, for once, the city did something to fight about.

In January, after 21 public hearings, the city’s redevelopment agency gave final design approval to a theater and retail complex that would stretch along the blighted Truckee River corridor. On Monday, the agency approved the project’s overall financial plan.

Created by OliverMcMillan Development of San Diego, the project will include a state-of-the-art multiplex movie theater, restaurants, an arcade and a variety of retail establishments.

The $16-million project, which broke ground Tuesday, is designed “to recall historic Reno.” The hope, city officials say, is that it will emulate the feeling and success of such developments as the Third Street Promenade in Santa Monica and Universal CityWalk.

No gambling is included “by design,” said City Manager Charles E. McNeely. “‘If you go into any downtown area, the tourists want to go where the locals go. So it was important to us to develop something that would attract the locals.”

Here’s what some locals said about it the night the redevelopment agency took its January vote:

“Reno was better when they took care of the business of Reno, which is gambling,” and “My memories of theaters are of sitting next to children dumped there by parents who went to casinos, of sitting next to drunks,” and “It’s a very pretty sow’s ear.”

A month after approving the Truckee Corridor design, the city agreed to turn the historic Riverside Hotel--once the fabled home of soon-to-be divorcees--into the state’s first live/work space for artists. The price tag: $12 million.

Those combined actions moved an optimistic Reno Gazette to boast in an editorial: “For years this community talked fitfully about tourist diversity but never achieved any. Now it lies within reach, as does a significant explosion of the cultural life that distinguishes a civilization.”

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The stickiest decision to face the redevelopment agency was put off Monday until May, when it will decide the fate of the Mapes Hotel--a once-proud Art Deco property that is now the center of a whirlwind debate over preservation and progress, culture and commerce.

Unlike the Riverside, which is being shepherded by the Minneapolis-based developer ArtSpace, the Mapes’ main champions are historic preservation buffs who believe that Reno’s salvation lies in its history--something, they say, that cannot be said about Las Vegas.

This building, they argue, should be rehabilitated for retail and residential use, not torn down and replaced by a modern block of shops and restaurants.

It was, they say with pride, the first big hotel project built in the nation after World War II. It is the prototype of the modern multistory hotel casino. Topped by the elegant Sky Room, they note, it was--in its time--the most glamorous venue in the Silver State.

But the marquee that once boasted appearances by Judy Garland and Mae West today makes the following claim: “Project of the Reno Redevelopment Agency.”

On the “Save the Mapes” Web site, the two sides rage: “Tearing the Mapes down in 1998 would be like ripping down the Eiffel Tower in Paris in 1925! Of course the French people never considered such an option!” says Wayne McKenzie.

Ha! counters J. Healy, who argues the free-market line that businesses failing to meet expectations cease doing business. “Clear the area for useful space that we and our children can use,” Healy says. “Your precious, dilapidated structure was barely up to code back in 1950 and is not worth the price of the plywood used to cover its tired windows.”

Alice M. Baldrica, deputy state historic preservation officer, contends that the Mapes and the Riverside set the city skyline apart--a characteristic that could be exploited to bring people in.

“If you see the Mapes and the Riverside, you know you’re in Reno, Nev., not Columbus, Ohio, or Amarillo, Texas,” Baldrica said. “If you take away the buildings, you’re left with Anywhere, USA.”

In fact, as the city ponders just what to do about its past and its future, it is also struggling to repackage itself, touting the region’s natural beauty, linking its name to nearby Lake Tahoe in a variety of marketing efforts, exploiting a history that far outdistances its competitor’s to the south.

“The future as far as I see it for northern Nevada, for Reno is open,” said Reed, the business school dean. “Gaming will always be here. Warehousing will be here in some critical fashion. The proportions I’m not sure of.”

But this uncertainty does not give Reed pause when he looks at what is in store for his hometown. When a city has made it living on gambling, what’s another risk?

“That’s what makes it the most fun,” he said.

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The Reno Report

* Population: 162,000; up from 135,000 in 1990 and 1,000 in 1880.

* Location: About seven miles east of the California border along Interstate 80; about 40 miles northeast of Lake Tahoe.

* Founded: 1868

* Founder: Myron Lake, who bought a toll bridge across the Truckee River in 1861, then donated land to the Central Pacific Railroad “to ensure the perpetual prosperity” of what was then known as Lake’s Crossing and is now Reno.

* Why Reno: Railroad officials named the city after Union Gen. Jesse L. Reno, killed in a battle in Maryland during the Civil War.

* Why there: A railroad city and river crossing, Reno was in the middle of the main east-west emigrant road linking the Truckee Meadows with Virginia City, site of the largest silver deposit ever unearthed.

Sources: City of Reno; “Nevada Handbook,” by Deke Castleman; “The Silver State;” by James W. Hulse