Transcript


Jack Heald: Welcome back everyone, to the OZExpo podcast. I'm your host, Jack Heald, and I am here today with Derek Armstrong, who is the deputy director of the Nevada Office of Economic Development. Derek, welcome to the OZExpo podcast.

Derek: Jack, thank you very much for having me.

Jack: It's good to have you. So I like to find out about my guests, not just what you do, but who you are. And I generally do it this way. Derek, who are you, how'd you get here? What, what road did you travel to become the deputy director of the Nevada Office of Economic Development?

Derek: It definitely wasn't an easy straight line to where my professional career, one went one way. I started off in the military, spent five years in the Marine Corps, left the Marine Corps as a Staff Sergeant. Went to college. I got my undergraduate in economics. I went to law school, opened a law firm and an accounting firm for about five years. Decided to run for office. I ran for office back in 2014 as a state assemblyman in Nevada, had the privilege of honor and serving, ended up being the Chairman of the Taxation Committee and also committee as a whole.
So, a lot of the economics, a toolset that Nevada house I helped pass and now I get to be on the other side of that. You hope you pass good policy but then you want to execute it as well. So, I had the privilege of executing on that and leading the effort in the state to promote economic development. Opportunity Zones are one of those tools that we helped nominate some of the Census Tracts in the state. And looking forward to continue working in that area as well.

Jack: I have to tell you, when I think about the qualifications or the background, of somebody who goes into tax accounting, “Marine Staff Sergeant” isn't the first thing that springs to mind. And again, I'll just reiterate what you said, not a straight line. I don't think my line would have gone from Marine Staff Sergeant to tax accountant, lawyer, and especially probably would not have taken that detour through, what'd you say? You got a degree in economics?

Derek: I did. I think that you know, the military background definitely helped with that. You have to learn a bunch of rules and be able to follow a lot of different areas and have some vision and some leadership. And when you talk about economics and just being able to forecast and have some of that analytical thinking that I think is, is involved in and being a lawyer as well. And when you talk about taxes and you talk about the military, sometimes it doesn't make sense, but there there's a lot of rules and I think just having a strong background in a lot of different areas, it's kind of helped me.

Jack: Well, let's tell some stories because stories are what helps our audience really connect. You're now with the Nevada Office of Economic Development, we don't really need to focus on Opportunity Zone yet, but give us a good story about how your work at the Office of Economic Development is helping to spur the economy and the growth of Nevada.

Derek: Yeah, so Nevada was one of the hardest hit states in the country for the, for the great recession. And the previous governor, Gov. Sandoval, really made it an effort and made economic development a priority during his administration.

And some of the successes that we've seen across the state have really helped diversify the economy
Nevada was always reliant on tourism, gaming and mining industries. And since then we've seen companies like Tesla come up north. That's really, been a catalyst for northern Nevada to really change how their economy operates. No longer are we seeing, headlines that Reno is the new Detroit or things like that. And, Southern Nevada, we've had a lot of work, working in logistics and technology companies. At the end of last year, dual had announced their $600 million data center project for Henderson in southern Nevada. And additionally, we've seen companies like Amazon, Bigelow, Aerospace, Microsoft, and a lot of other big companies come to the state.

But for us, 92% of the companies that we've helped in our office had been small businesses that are either 150 employees or below. So, we helped move the needle to really diversify the state in a number of different areas for sure. Technology, advanced manufacturing, healthcare and other spaces.

Jack: What's the message that you send to folks looking to, considering Nevada as a place to invest? What are the specific advantages that “Nevada” Nevada brings to the table, over and above other places that might be competing?

Derek: Well, first before I say that, I appreciate that you went from “Nevada” to Nevada. That's a key point for anybody moving here. Nevada is a great place and we've seen a number of different companies come to Nevada quite often, right? Las Vegas is a place where conventions happen. Some of the largest conventions in the world are happening in Las Vegas every year, whether that's CES, or SEM or Magic or a lot of the others large convention. So, we had one company, active, who's in the autonomous vehicle space and they were coming to town every year, and finally they just reached out to us because they wanted to establish a presence in the state because they were just tired of having to come set up for these trade shows and then leave.

Once they actually came and they were moving from Michigan. They liked the business environment. We welcome businesses with open arms. Our structure is pretty friendly. We don't have a state income tax. Uh, some of our incentive packages is really key on some of those areas that we're focusing on. And then they decided to move their global headquarters to Las Vegas. So, it's one of those things that once people come, they realize that Las Vegas and southern Nevada is just not about the strip, that we are actually a growing economy. And in our valley we have over 2 million people. So, we're a home where people can come stay and grow and bring their families. And we don't have snow so that's another advantage.

Jack: I'm in the Valley of the Sun here in Phoenix, Arizona. I think experienced roughly the same thing that you experience in Las Vegas. I don't have the gaming like you do.

Let's talk about the Raiders. As I did my research, I saw that you were involved in the effort to bring the football Raiders, currently the Oakland Raiders from the Bay Area to Las Vegas. Now that's big. That's really, really a big get for the state of Nevada and the city of Las Vegas.

Tell us a little bit about that effort, what went into it and, what kind of development you're seeing as a result of the Raiders coming to Las Vegas.

Derek: Yeah, there is absolutely no doubt that that's huge for the state. It's another sign that our economy is taking it a step from just being viewed as a smaller market to, to one of those as a mature market to where we're able to host them and really promote, professional sports. It's not only the Raiders, but, the Las Vegas Golden Knights as well. As they sure done a tremendous job here. So that process was quite a long process.

There was a commission that was formed by Governor Sandoval and called the Southern Nevada Tourism Infrastructure Committee. It was an 18 month process to where we vetted different proposals at different revenue models and different areas across the state to where we could figure out what type of tourism infrastructure we needed. One of those recommendations that came out of that committee was a stadium and with the hopes that the Oakland Raiders would get approved by the NFL to move to Las Vegas.

Derek: They were, and that was a great process. In doing so the legislature and, and I had the honor of, sharing the legislative committee to approve of that proposal. We were able to build a asset that's owned by Clark County and pay a third of the price. That public financing portion of that was a 750 million for a $2 billion stadium, which the county owns. You know, if you could buy at stadium for a third of the price, it's a great asset. But then it solves lot of the other issues in the state for tourism.

We were probably the largest market of our size without, a stadium that could seat 60,000 people. So, for us, viewing Las Vegas as the entertainment capital of the world, but we had some of the largest concerts passing us because we just didn't have a stadium sized venue for some of those folks like Beyoncé or U2 or, or otherwise that, that wants to focus on larger events.

Derek: It just made a lot of sense for us to move forward with that. The Raiders were an awesome, partner in that they're a great organization to work with. And then additionally, there was other benefits for the state for that. The local university, UNLV has been trying to build a new facility for their football team for a number of years and one that was closer to the university. And when we were looking at models for that, those stadiums would've cost $450 million or above. And we were able to also include them in this proposal as well. So, there was just a tremendous amount of benefit to the state in addition to getting the Raiders. You know, we're just going to see a tremendous amount of activity there. So, the Raiders will play there some somewhere between, 10 and 14 games with preseason and playoffs. Uh, and then every other day the number of events that will be there will be tremendous. So, as we'd like to say, we want to get heads in beds and that stadium will be able to do that for us.

Jack: When does that stadium open?

Derek: So that stadium, which is going up now, so everybody who goes to this conference. You'll probably be able to see the stadium as you're flying in the roof is supposed to be, I think put on by the end of this year. And then is scheduled to open next August. I think the scheduled date is about, a week or two before the first preseason game will be there. So, there's a tight timeline, but they’re definitely on time and on budget to bring that stadium into service.

Jack: Talk about the differences, now that you are in public service. Talk about the differences between the demands upon you as someone who has to produce results in a public venue versus being a private citizen and a private businessman.

Derek: There's a view, I think, of politics as people fighting and not wanting to get stuff done. At this point in my life and what I've done, I feel like I have a tremendous amount of responsibility to ensure that, what was passed, as a politician or even what I'm working on now, serves a public benefit. Everything that I do is to help make people's lives better. And as we talk about economic development or other types of activities, when we're talking to businesses, we want to make sure that, yeah, we offer some incentives for them to come here or expand, but we want to make sure that we're developing community partners to help make Nevada a better place.

And we do that and we've had a tremendous amount of success with that. With the Raiders, they're going to be setting up all sorts of community events and being involved in the community. We have other companies, technology companies like Switch that has helped lay a broadband fiber across the state to help connect rural communities and really focusing on, improving education in the state.

Tesla has committed almost $40 million to promoting STEM and public education. So, you know, when I look at things, I looked at not only, what we have to give up, but what, where's the benefit? Where's the return for our citizens in the state. And I can honestly say that, you know, the state’s in a much better place than it was just a few years ago. And, the direction where the state is great for, 1.) developing a diversified economy and 2.) improving the quality of life or for the Nevadans now. And for the Nevadans of the future.

Jack: What are the key metrics that you're looking at when you're trying to decide how to move forward with a program? I suspect those are very different than they would be in a private business. In the private sector.

Derek: If you're in the private sector, you're focusing on just business growth, return on investment and some of that does financial impacts. But for us it's, and then in connection with, what are the goals of the state. What are the strategic areas that we're focused in on? Nevada will always have the core industries of gaming and mining and we're here to support that as well, but we want to look to the future and what, what are the jobs of tomorrow? Those technology jobs, and just the environment we want to operate in.

Nevada has been a leader and pretty aggressive and our office has helped lead this charge for autonomous vehicles and what that looks like. In the next 10 to 20 years when you're trying to integrate, you know, autonomous vehicles, smart cities, the drone industry and just the infrastructure needed for all of that. It's about the return on investment, the quality of life, and then the public good. So, there's just I think additional considerations that are outside of just a traditional business environment. But we are pretty entrepreneurial in how we think about those things.

Jack: How do you measure quality of life?

Derek: Well I think there's a number of different indicators for that. There's one obvious one, right? You want to be creating high quality, high wage jobs for individuals. But in doing so, we also need to develop a workforce for that. So, our office has a number of tools to collaborate with businesses called our Workforce Innovations for New Nevada. So, if we don't have skill sets that they think that they need for their employees and we're able to either fund or stand up, education programs, with universities or two year colleges or nonprofits or whatever we need to, to create those jobs.

So that's the second part. Then you start looking at some of the community development and how's our healthcare system stack up, how's our education system stack up? How are the activities? Not only just entertainment, like around the strip areas, but some of the, those outdoor activities and just making sure that, as we're thinking about things is what is it that makes us the best community possible, not only for those businesses to be successful, but for those families to be successful as well.

Jack: What is it about you, what qualities do you innately possess or have developed over your lifetime that allows you to succeed in such a complex and demanding environment?

Derek: I think one of the things that I learned about myself, and this is as I transitioned out of the military and when I went through college, and then I started my own law firm and I looked at myself and, and I wasn't quite satisfied with what I was doing. I was much happier in the military. And I think a lot of that is the idea that I want to be something,
I want to be part of something that's bigger than myself to make sure that, at the end of the day that, that I've made an impact or I've made a difference. And, and in doing so, ever since then I've looked for positions and opportunities that leave me satisfied with that. And often times those are the most difficult jobs that require you to have a different skill set or be able to see a bigger picture.

So, I served in the legislature, which, you know, you learn a lot about, a lot of different things and a lot about yourself when you're talking to people and you're learning about subjects. So, I've definitely grown as a person there. In my role as the Deputy Director of Economic Development, I traveled the state. I've had a lot of international travel as we're all learning about how other governments and how other places functioning and really developed they're same area.

So, I can bring those tool sets to the state. And then in my private life, definitely, in my family, you learn and you grow a lot about yourself and, and what makes you happy and then your family happy. I think that makes a difference as well. And then I also volunteer, as well. I'm the vice president of a nonprofit for disabled veterans to help disabled veterans get out into an environment and be in a group setting. Veterans and the suicide rates and the epidemics are trying to help out with that as well. So, I think it's a lot of, I believe in public service and I believe in and wanting to make sure that I'm leaving and making a difference in people's lives.

Jack: What ideas have you have you picked up in your travels, both nationally and internationally in other ways of governing. What have you seen that you've brought back, and either have implemented or hope to implement in Nevada, Nevada? Man, lifetime is saying it wrong. I'm sorry.

Derek: Yeah. Okay. Toughest part of this interview. That's okay. I think a lot of it is you know, when you go, you see how other places value different things and different qualities. I had the privilege of going to Australia last year and we were working with the government of Brisbane and the premier there to develop water technology. Uh, southern Nevada is obviously in a very arid climate.

And we have a research institution called the Desert Research Institute that are one of the leaders in water technology. And once going out there and figuring out some of their issues and a lot of that, the common challenges that our two areas face is really teaming up to develop a lot of those water technologies that will help not only our areas but we're sharing that around the world.

We went on trips with some of the African nations last year -- to really establish a working relationship -- that develop projects that would not only benefit us but also benefit the world. And in doing so, not only do we bring stuff back, but we try to be collaborative with every government that we're working with at this point. And same thing, with the drone industry with Canada right now we do a lot of work with Alberta to promote the industry, the Alberta Economic Development Trade Association, our office or Nevada and institute of accounting assistance through our universities.

And just working on that collaboration to ensure that, you know, there's a lot of smart people around the world working on a lot of similar projects. So, if we can try to match and, and take our strengths and their strengths and, and do something great, that's what we want to do. And that's what I've been trying to implement in Nevada.

Jack: Let's talk now specifically about the Opportunity Zone program itself because that's what this is all about. Las Vegas is hosting the Opportunity Zone expo coming up in May. So, of all my guests, a particularly unique perspective on the expo on Las Vegas, but also on Opportunity Zones. First of all talk about Opportunity Zone development in Nevada.

Derek: Yeah, absolutely. So, as it was passed in 2017 in Congress, 120 days to nominate 25% of it's low income Census tracts in the state. My office and I were definitely one of the leaders in this area, developed those list of tract, which we would then nominate and become certified. So, in doing so we worked really closely with the local governments to find out where their priority areas were. Local governments have a much better view of micro managing -- or not managing but a micro view of their priorities.

Jack: Yeah, they drive by it every day.

Derek: Yeah, absolutely. So, if somebody knows it should be them, which was tremendously helpful. I created a southern Nevada task force to make sure we knew what was going on and everybody was on the same page. And then I, what I did is, is, you know, the intent of the program was to spur, investment in low income area. So, I went out and I looked at some national surveys, by the Urban Institute and then the Governance Project, one that looks at social need and they ranked all the census tracts in the country based off of that.

And then the likelihood of investment in those areas, we didn't want to nominate any tracts that, you know, might not be ready or were likely to receive investments. So, then we built a model that ranked all of the Census rtacts in the state. And then we took the top 61 of those and, and, and nominated those. Obviously we would have liked to do more than 25%. And I received calls and emails all the time asking how we can add additional ones. And my hope is that this eventually this program will be expanded. But then, you know, I think we did a really good job of creating a mix of zones across the state, that made a lot of sense.

Jack: What kind of questions or difficulties or problems are OZ investors bringing to your office? What are you dealing with on a day to day basis?

Derek: Yeah, I think that there's probably just, there's a few standard questions. The one that I still always get is how can I nominate my area as an Opportunity Zone? Obviously without authorization from Congress, we can add any additional tract and the initial designation lasts for 10 years. So, we're left with that.

That's something that's unfortunate that I have to tell people at this point. The next is how do I start a fund? So, you know, I ended up becoming a connection point to refer people to either accountants or lawyers or the IRS website or just for different information sources. And then the third part, it's interesting, people have all sorts of different ideas for how they can use these Opportunity Zones, which is great because I think the program, outside of those in businesses that, that it can't be used for, are trying to look at a number of diverse areas for this.

Two calls I received this week. One person who was interested in developing a sports recreation park, with, you know, his thought was you can do indoor, skiing in Vegas year round. I was like, okay, that's very interesting. I had another group in northern Nevada that were looking to develop farming and do some farming activities on land.
And wanted to know how the rules apply to land and what type of improvements would have to be made there, if they could use it. And you know, a lot of times since October, since the first set of regulations came out, it's like, well, we don't quite know how Qualified Opportunity Zone Businesses are going to operate. And those, a lot of those questions were answered last week when the regulations dropped. So, as we move through that, I think the questions will probably change as to how do we operate.

Jack: Well you, you anticipated my follow up question, which is “what are some of the more interesting proposals that have come across your desk?” Indoor skiing year round? That one's big. I've heard of indoor ski slopes. I'm not sure where...

Derek: Vegas is definitely a valley and there is foothills. And they thought if there is a zone close to that. I think you use a natural elevation for that. And I thought that was a very interesting idea.

Jack: You mean they were going to put a roof over the mountain and then do snow? Oh my gosh, no, there's a fascinating…

Derek: Yeah. I’ve had groups I want to do, yeah, males in north Las Vegas. Uh, I've had groups that want to do use it as an incubator, spaces around universities, which I think is a great idea. And I think the regulations helped make some of that possible, I think moving forward. So, I think there's a tremendous amount of opportunities, probably the wrong word when you're talking about Opportunity Zones. But there's, there's just a lot of different ideas out there of how this program can be beneficial. It's going to be interesting to see how a lot of those ideas take off. And I'm hoping that, we're able to bring some of those to Nevada.

Jack: Well, let's talk about Derek Armstrong the man, rather than Derek Armstrong, the politician, the government, the deputy director. What particular personality traits or, or talents did you bring to this job that, that allow you to succeed, to thrive?

Derek: One, I was born in Las Vegas, so I care a lot about the community. I think that's helpful. The second part of that, I think that my, the education you receive it in law schools, not just about education, you learn how to think analytically about a lot of different issues. So, being able to try to think through a lot of the complex issues, especially my experience in tax, I think it's pretty helpful as well.

And I think it's just a desire to do well and do good things and wanting to, I hate to go back to what previously said, but just make people's lives better I think is a great quality for when you're looking at, the position that I'm at and then all the relationships from all of the different jobs that I've had in the past have been tremendously helpful. And I have a lot of mentors that have helped me along the way.

Jack: How did your experience as a Marine leverage those innate abilities?

Derek: Well, I joined, I joined the Marine Corps in March of 2000 and then a year and a half later, September 11th, happened.

So when I first joined the Marine Corps, my desire was to get out of Vegas for a while and then serve for four years. And I ended up serving for five and then going to school. But what you don't realize or I think most of what most people realize when they join the military is you grow up really fast.

And when you're training for life and death events and yeah, when you're 19 or 20 and you're put in charge of 20 to 30 people's lives and you become their mother and their father when you're serving in a place, like I was in Okinawa for a year and a half and that's the first time people are away from their family. You just developed this sense of responsibility you just become somebody that's probably a little bit older than your years. And I think hopefully I have matured a little bit faster and that's helped me out.

Jack: Okay, there we go. That was what I was after. Seriously. So, here's what I hear. Nevada native. Probably innately -- or at least by culture -- outwardly directed towards helping people. And then, in the hothouse incubator that is the Marine Corps, having tons of responsibility dumped on you, far beyond what somebody outside the Marines would experience at your age. And for you it was a positive emotional experience.
It was something that imprinted you in a way that made you want to continue that once you got back into civilian life.

Am I reading that right? Is that a good enough story?

Derek: Yeah. I think that would be correct. I don't really fear challenges too much after that. I'm willing to take on what I think is right

Jack: When I'm in the pool and my body is screaming at me to stop, I remind myself, what I think the Marines say, which is that “the only good day was yesterday." Is that right?

Derek: Yeah. Yeah.

Jack: Embrace the suck, or something like that. I don't remember. It keeps me going. That's all I know is that it keeps me going

Derek: There's a tremendous amount of one liners that motivate Marines that I quote quite a bit.

Jack: What's your favorite one?

Derek: I do like "embrace the suck." There is always this thing that, when you're training, there's this legendary Marine called Chesty Puller. He's a lot, probably more a modern day for people that relate to is Jim Mattis. When Marines look up to Chesty Puller they are always like, “one more for Chesty. One more for Chesty.” And was like a signal to dig down a little bit deeper. And I think through that sometimes. It's like, okay, I could give, I can always give a little bit more.

Jack: I'm going to flip it around a little bit. Everybody's got both the light and the dark side. What's one thing that drives you out of your mind?

Derek: I think for me, and being in this environment for a number of years and understanding how complex it is and when you're, when you're thinking about, how an investor feels, how business feels, how those people that will be employed by those businesses feel, how will the community feel and then, and then what does that mean in the future? I know that completely a complex issue that I have. I don't even think that, that, I would probably realize all the ramifications are unintended consequences that could happen.

But when somebody just cherry picks one of those areas and that’s they're only focus without realizing that there's so many other impacts. That to me when we're talking about economic development or other, policy discussions. If all you can think about is just one item versus how that impacts a bigger picture. That that to me is sometimes frustrating when talking through some of that, some of those policy discussions.

Jack: I'm grateful to hear you say that. I really am. Thinking about the secondary effects of all those decisions. It seems like too many political decisions are taken with a single variable in mind.

Derek: Yeah.

Jack: It's good to hear somebody say, “you know, there's impacts, there's unexpected impacts and non-foreseen consequences of all these choices. So, let's try to be wise here.”

Derek: Yup.

Jack: Well Derek, it's been great talking with you today. Before we sign off, any last words you'd like to share with us?

Derek: Yeah, just, just a few. So, if you're interested in coming to Nevada, obviously reach out to me and you can find my information on our website. The economic development website is diversifynevada.com. We also have for Opportunity Zone a page on there with an interactive map. So, if you're looking at an area or an address, you can put that in and see if you're in an Opportunity Zone. And then if you need some additional information, always reach out to me my phone number in my office at (702) 486-2709. And Jack, I just really appreciate the opportunity to be on and thank you very much for the questions.

Jack: Well thank you Derek. And I want to remind our listeners that the information Derek just gave us is also going to be printed on the website so you don't have to wreck the car while you're trying to write it down.
Well, once again, I am thrilled to be able to chat with you about not just both all things Opportunity Zone, but to find out a little bit more about you as a person, get some insight into what drives you.

And I think it's those kinds of qualities in the hands that are running these programs that are actually going to give them the impact that we all, I think we all want them to have.

Jack: I'm Jack Heald for the OZExpo podcast. I thank you for joining us and we will see you next time.

Announcer: This podcast is for informational purposes only and does not constitute legal tax or investment advice. For specific recommendations, please consult with your financial, legal, or tax professional.

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