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Zappos CEO Tony Hsieh steps on some toes as he remakes downtown Vegas

LAS VEGAS — He's a painfully private entrepreneur with very public dreams for this city's decaying downtown core.

Around Sin City, giddy officials are heralding online shoe retailer Tony Hsieh as a visionary, the latest in a line of moneyed Las Vegas dreamers such as billionaire Howard Hughes and casino mogul Steve Wynn.


FOR THE RECORD:
Downtown Las Vegas: An article in the Feb. 28 Section A about redevelopment of Las Vegas' downtown by Zappos.com founder Tony Hsieh said tha longtime resident Lou Filardo was 68. He is 69. —


Mayor Carolyn Goodman says Hsieh is offering people a chance to open their dream businesses, and "that can't be bad." Former Mayor Oscar Goodman's description of the city's confidence in Hsieh harks back to the mayor's days as a mob lawyer: Anyone who doubts Hsieh's sincerity, he said at a public meeting, should have his legs broken.

PHOTOS: Developing downtown Las Vegas

Using $350 million of his own money, Hsieh has embarked on a development project that city officials hope will transform the blighted neighborhood just east of the Fremont Street casinos into a Silicon Valley in the desert.

Hsieh, the 40-year-old founder and chief executive of Zappos.com, envisions a bustling retail and technology hub spanning 20 square blocks where residents walk to restaurants, bars and gyms in a live-work community with the feel-good fraternity of a "Cheers" episode.

Hsieh calls downtown — a world away from the Strip and home to many of the city's poorest residents — a "blank slate" that could come to resemble the bustling neighborhoods of clubs and galleries seen in Austin, Texas.

Inspired by the creative campuses at Google and Facebook, Hsieh is moving about 2,000 of his own employees to a new headquarters in Las Vegas' former City Hall, an area that until now has been home to down-market casinos, neighborhood cocktail lounges and auto repair shops.

The Downtown Project, Hsieh's development arm, has purchased dozens of properties for Hsieh's vision of blurring the lines between work and play. The new, upscale Container Park, opened last year, features an art gallery, a beauty salon and boutiques selling fine wine and e-cigarettes. In front sits a curious piece of art: a towering statue of a praying mantis.

But while city officials have welcomed the development plan — a "watershed moment," Oscar Goodman called it when the Zappos transfer was initially approved in 2010 — residents who have long embraced the down-to-earth vibe of East Fremont worry about the march of big-money development into one of Las Vegas' last authentic neighborhoods.

Leading the resistance has been longtime downtown resident Lou Filardo, who has written letters, called City Council members and rallied neighbors to argue that redevelopment should not come at the expense of residents in the city's poorest ZIP Code, where half the households rely on supplemental assistance and the welfare rate is three times the state average.

Filardo, 68, is a wiry Long Island, N.Y., native — a former journalist, political campaign manager and cab driver who considers himself more representative of the area than Hsieh's high-tech crowd: He drives a 1994 Toyota Corolla with 97,000 miles, watches TV on an 18-inch screen and shops at a dollar store.

Each morning, Filardo leaves his one-room flat to visit the mom-and-pop shops he says give the area its blue-collar character. One by one, the graying Vietnam veteran on a fixed income has watched them vanish.

First his sandwich joint closed, followed by the market and bank branch.

The worst blow came when his car mechanic went under. Hassan "Gino" Massoumi had worked tirelessly to keep Downtown Express Oil & Tune afloat.

Massoumi said low-income residents were all at risk under a development plan that is leaving many of them reeling.

The shop owner said he had fallen a few months behind on his rent, but was taken aback when the Downtown Project, which had purchased his building, told him his lease would not be renewed.

"I'm an honest man. I do good work," he said. "My wife and I came here when no one else would. For 10 years, we worked seven days a week — not one day of vacation. Then one day, Tony Hsieh's people tell us to get out of there."

His shop is now occupied by a firm that services classic cars. The sight of the new owners at their opening made him weep: "It broke my heart."

As Hsieh's development associates buy up apartment buildings to house hundreds of Zappos workers, many blue-collar families cannot afford the new, higher rents; others, like Massoumi, have been told their leases aren't being renewed.

"I know you can't make an omelet without breaking eggs, but why are the poor eggs being broken?" Filardo said. "Why not someone else for once?"

Hsieh says the burden of helping the poor falls on the city, not a for-profit firm using no taxpayer funds. But the drumbeat of calls for him to do more social good has taken its toll. "I'm not a big fan of 'What are you going to do for us?'" said the San Francisco native, who often dresses in a T-shirt and jeans. "There are a lot of people waiting for handouts."

Mayor Goodman said it was the city's job to remedy the needs of the area's poor, but did not point to specific assistance programs.

"It achieves a greater good to have a safe and walkable downtown," she said. "The city must help the underprivileged who can no longer afford to stay there. That, sadly, is part of development."

Critics want the city to demand that Hsieh do more public good. "There's a lot of back-scratching going on," said Michael Borer, a sociologist at the University of Nevada, Las Vegas. "Urban development is more than new bars and statues."

Jerry Davis, a professor at the University of Michigan's Ross School of Business, says it's too early to tell whether Hsieh's infusion of "hip capitalism" will save downtown. "The city is betting on the Tony Hsieh model: Rich guy moves in and says, 'This is my canvas.' Anybody who spends that kind of money is going to be popular with city officials," he said.

But Davis asked, "Can you really base downtown redevelopment on hipsters with interesting facial hair who are probably going to leave as soon as they can?"

Clark County Commissioner Chris Giunchigliani, who once represented the downtown area as a state assemblywoman, was sympathetic when Filardo contacted her.

"The goal should be to remove the blight but not at the expense of the businesses and people that have made the place their home," she said. "They've been there. They've contributed. They're valuable."

Giunchigliani said even the homeless and unemployed had a stake in the area's future. "Don't assume they aren't engaged and don't deserve to be part of the conversation," she said. "They do."

Caron Richardson, co-owner of Rachel's Kitchen downtown, is one of those who have been drawn to the area by Hsieh's vision, even if some shops have closed. She opened her restaurant in March on the ground floor of the building where Hsieh now lives in a penthouse.

"It's sad when somebody can't sustain their dream, but small businesses go under all the time," she said.

And she has an answer to claims that some can't afford her gourmet fare: "Choose a half salad or sandwich. It's more affordable."

john.glionna@latimes.com

Copyright © 2014, Los Angeles Times
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