When the powerful out-of-state company looked to build a big facility in Nevada, there were high-fives all around. Backers said it would diversify the economy, pump in hundreds of technical jobs, lure other big business and improve the area’s image.
The governor met with the CEO and, prodded to do whatever it takes, called a special session of the Legislature and approved new laws for the company. Months later, construction was underway.
Brian Sandoval luring Tesla Motors last year, right?
Try again. Before the current governor brought the Silicon Valley electric-car maker to Northern Nevada with $ 1.25 billion in incentives for a massive battery factory, he had a template to follow.
Thirty years earlier, then-Gov. Richard Bryan approved changes to state banking law to get New York financial giant Citicorp to open a roughly $ 8 million, 120,000-square-foot credit-card processing center in Southern Nevada with 1,000 employees.
Both governors approved the deals in shotgun lawmaking sessions in rough economic times for big-name companies eyeing several states for an expansion site. Both deals also had critics but overall were seen as major, almost unprecedented boosts to Nevada’s casino-heavy economy.
Tesla’s arrival gives Nevada “a ‘Good Housekeeping seal of approval,'” Mike Kazmierski, CEO of the Economic Development Authority of Western Nevada, said last year.
Citicorp’s arrival, Bryan said in 1984, “in effect is like the ‘Good Housekeeping seal of approval.'”
Today, the bank’s facility on Sahara Avenue near Durango Drive is empty, listed for rent because Citigroup, as the lender is now known, closed shop last year.
Passers-by see a big, vacant, suburban office complex with faded and stripped “citibank” signs. But decades ago, the facility in the desert was the most celebrated new business in town, with Bryan comparing its “epochal” arrival to Nevada’s legalization of gambling and construction of the Hoover Dam.
And despite the open arms and hopes of newfound prestige, Citicorp bosses wiggled out of using their host city’s name.
About 539,000 people lived in Clark County in 1984, a quarter of today’s population, and areas west of Interstate 15 now packed with homes and strip malls were open desert with unpaved roads.
Las Vegas had been growing fast for years, and the casino industry, after years of mob control, was becoming more corporate, though organized crime wasn’t entirely gone. In 1982, bookmaker and mob associate Frank “Lefty” Rosenthal survived a car bomb outside Tony Roma’s on Sahara Avenue.
Las Vegas had about 12 million visitors per year and was already known as a party town where adults could cut loose. But Nevada, which held a monopoly on American casinos since the 1930s, was getting squeezed.
New Jersey became the second state to legalize casino gambling when voters gave the OK in 1976 for Atlantic City. The United States also slid into a deep recession in the early 1980s, with Las Vegas’ unemployment rate more than doubling in just five years, to 10.3 percent by 1983.
The valley’s economy apparently was even less diversified than today. Locals had thought the casino business was recession-proof, but the downturn “proved everybody wrong,” former Nevada financial regulator L. Scott Walshaw said.
Las Vegas, however, got some help from an unlikely place — a bank’s back-office.
With the economy slumping, South Dakota politicians gave the green light to an idea to boost business: wipe out the state’s cap on interest rates.
A few years before, the U.S. Supreme Court ruled that credit-card issuers could essentially charge whatever interest rates were allowed in their home states, no matter where the customers lived. Lenders, to borrowers’ dismay, saw opportunity in no-limit South Dakota.
New York’s Citicorp, the country’s largest bank-holding company at the time, opened a credit-card processing center there in 1981. Others followed.
Wanting to expand, Citicorp tried to open a credit-card center in New Mexico, but in early 1984, lawmakers there shot down a proposal to let the company set up shop.
Nevada had also lifted its cap on interest rates, in 1981. A few years later, hoping to lure Citicorp, Nevadans kicked off efforts to do what New Mexico wouldn’t.
Because 1984 fell between Nevada’s biennial lawmaking sessions, business boosters with the Nevada Development Authority called for a quick, off-year gathering to change state law, which blocked out-of-state companies such as Citicorp from acquiring banks in Nevada.
Not everyone was on board.
“Maybe I’m a protectionist, but I think the financial institutions that built this state deserve a little consideration,” state Sen. Bob Robinson, of Las Vegas, said at the time.
Three weeks later, after New Mexico’s rejection, Robinson changed his tune.
“If I were the governor, and something of this importance were to come along … I would call a special session,” he said.
Citicorp was considering such places as Utah and Missouri for a credit-card facility, in addition to Southern Nevada. Bryan hesitated to call a session, but shortly after meeting in New York with Citicorp’s top boss, he praised the company.
Executives throughout Southern Nevada — from real estate, health care, utilities, media, casinos, the arts — supported the move. They urged Bryan to act quickly, saying Citicorp would boost and diversify the economy with computer jobs, give the area much-needed prestige and show that any company, not just casino owners, can work here.
As Nevada Power Co. chief executive C.L. Ryan put it, “Such opportunities for diversification do not appear too often.”
“We feel very strongly in favor of doing whatever is necessary to bring Citicorp into Clark County!” R.H. McClintic, secretary of the Nevada Marine Trade Association, wrote in a letter of support. “To not do so would be a direct slap in the face to (the) NDA and all of us who work so hard to broaden our economic base. We simply must take every step now to make this a reality.”
Bryan convened the session March 29 and signed the measure changing state law, Senate Bill 2, the next day. It restricted Citicorp’s ability to make loans to and take deposits from Nevadans but allowed bigger delinquency fees on all customers.
All told, Citicorp could charge credit-card holders whatever it wanted, Tim Carlson, then-executive director of the NDA, said recently.
“This is like letting a lion in the living room,” then-Assemblyman David Nicholas, of Incline Village, said. But he hoped that with some controls on Citicorp, “the lion would not eat the furniture.”
The broader excitement didn’t fade, though, with a news article calling Citicorp’s site selection “one of the biggest guessing games in Southern Nevada.”
The company chose desert property at Sahara and Durango owned by developers the Collins brothers. They were planning a massive housing and commercial project there dubbed “The Lakes,” with homes surrounding two man-made lakes. (They ended up building just one lake, but the plural name stuck.)
Other developers also were building lakes in Southern Nevada’s desert around that time as perks for new housing projects, including Henderson’s Lake Las Vegas and northwest Las Vegas’ Desert Shores community.
“Even then, people thought it was crazy that people were building man-made lakes in Las Vegas,” Bob Fielden, lead architect for Citicorp’s facility, said recently. “But it sold (homes) and drew people to the area.”
Citicorp broke ground in September and opened the credit-card center in April 1985. But some time before, boosters were hit with a surprise: the bank scrapped “Las Vegas, NV” for its mailing address and opted for “The Lakes, NV.”
According to a Wall Street Journal report in March 1985, the company “secretly obtained permission” from the U.S. Postal Service for the name, and critics figured Citicorp was distancing itself “from Las Vegas’ arguably unsavory image as a rip-roaring center of high rolling, fast living and other unbankerly pastimes.”
Bill Briare, Las Vegas’ then-mayor, said the city was “duped.”
“It’s a slap in the face,” Donald Mello, then a state senator from Sparks, said.
Bryan, for one, said in a recent interview the company had been “very open” about using the other name, though he said he couldn’t recall if Citicorp brought it up before he agreed to the special session.
“This was a seminal event,” Bryan said of the facility, “and they could have called themselves anything they wanted.”
Citicorp — which at some point also began using “Red Rock, NV” for outgoing mail — insisted its use of “The Lakes” was meant only to promote the broader development there.
“It was a marketing decision,” a local Citibank spokeswoman said in 1996. “I don’t think they realized the stink it would cause.”
The furor didn’t last long, though, and in 1987 the company unveiled expansion plans for a $ 13.5 million office building next to its first. Workers had onsite child-care facilities — at one point Citibank was the only company locally to offer that — as well as a fitness center and a cafeteria. Employees were well-paid and respected in the community, Fielden said.
The bank eventually switched operations at the Lakes to mortgage-processing, but by 2013, it was shedding workers. That September, company officials said they would eliminate 1,000 employees from Citigroup’s home-lending business, with most of the cutbacks in Las Vegas, where roughly 760 people lost their jobs.
In January 2014, management told 220 employees at the Lakes that their jobs would either be eliminated by October or become work-from-home positions. About 60 were earmarked to telecommute, leaving 160 others out of work.
The job losses came amid rising mortgage rates and an expected industry-wide drop in home-loan applications. Citigroup officials, however, closed the book on their once-celebrated facility with vague corporate jargon, saying the cutbacks were related to “ongoing efforts to increase operational efficiency.”
The landlord’s current asking rent, $ 1.10 per square foot, is 42 percent below market average, according to local brokerage firms.
Looking back, the NDA’s Carlson said the credit-card center sparked the investment that boosters hoped for, producing at least 25,000 new jobs.
“We did some neat things,” he said, “but that was the crown jewel.”