Transcript of interview with Kevin T. Orrock by Claytee D. White, December 04, 2015

i AN INTERVIEW WITH KEVIN T. ORROCK An Oral History Conducted by Claytee D. White The Building Las Vegas Oral History Project Oral History Research Center at UNLV University Libraries University of Nevada Las Vegas ii ©The Building Las Vegas Oral History Project University of Nevada Las Vegas, 2016 Produced by: The Oral History Research Center at UNLV – University Libraries Director: Claytee D. White Editors: Stefani Evans, Franklin Howard Transcriber: Kristin Hicks, Frances Smith Interviewers and Project Manager: Stefani Evans and Claytee D. White iii The recorded interview and transcript have been made possible through the generosity of the UNLV University Libraries. The Oral History Research Center enables students and staff to work together with community members to generate this selection of first-person narratives. The participants in this project thank the university for the support given that allowed an idea the opportunity to flourish. The transcript received minimal editing that includes the elimination of fragments, false starts, and repetitions in order to enhance the reader’s understanding of the material. All measures have been taken to preserve the style and language of the narrator. In several cases photographic sources accompany the individual interviews. The following interview is part of a series of interviews conducted under the auspices of the Building Las Vegas Oral History Project. Claytee D. White Director, Oral History Research Center University Libraries University Nevada, Las Vegas iv PREFACE Kevin T. Orrock, president of Summerlin and vice president of Master Planned Communities for The Howard Hughes Corp., has come full circle. Born in Pioche, Nevada, he spent his early years in the San Francisco Bay area and in Pittsburgh, Pennsylvania. Graduating from a small liberal arts college, he arrived in Las Vegas in 1974 with a degree in accounting and a teaching credential, finding work in the Desert Inn accounting department. Howard Hughes owned the Desert Inn, so from 1974 Orrock has consistently been in the employ of Howard Hughes, Summa Corporation, and Howard Hughes Corporation. Orrock later earned his M.B.A. at UNLV. In this interview, Orrock focuses on Summerlin, the 22,000-acre, award-winning, master-planned community on the west side of the Las Vegas Valley. He discusses Summerlin’s physical layout, its history, its development, and its future. He specifically credits Summa Corporation’s early visionaries John Goolsby and Will Lummis for having the foresight to sell some of the company’s land in order to build the financial foundation that, in turn, permitted Summerlin’s fifty-year development plan. He also talks about the development and future of Downtown Summerlin; its balance of private, charter, and public schools; and the ways the company selects its residential builders. v TABLE OF CONTENTS Interview with Kevin T. Orrock December 4, 2015 in Las Vegas, Nevada Conducted by Claytee D. White Preface..…………………………………………………………………………………………..iv Talks about early life, arriving in Las Vegas in 1974 and working in the Desert Inn accounting department, which began his Summa Corporation/Howard Hughes Corporation career. Describes Summerlin’s physical plan, its beginning, its development, and its future……………………1–9 Credits early visionaries John Goolsby and Will Lummis and speaks to Summerlin's developing Downtown; its balance of private, charter, and public schools; and how it selects its residential builders………….………….………....………………………………………………………9–18 vi 1 This is Claytee White. It is December fourth, 2015. I am in Summerlin. Kevin, could you please pronounce and spell your full name for me? Sure. Kevin T. Orrock. K-E-V-I-N. Orrock, O-R-R-O-C-K. Thank you. And can you tell me where you grew up, what that experience was like? Sure, if I can remember that far back. I'm sure you can. Well, actually, I was born in Pioche, Nevada. My dad was an electrical engineer and my grandfather had a similar background. They actually ran the Lincoln Power Company in Pioche. We only lived there for a year and my dad was transferred to the San Francisco area. We were in the Bay Area until I completed sixth grade. I loved that area of the country—Cupertino, Sunnyvale, San Jose. My dad's company was acquired by a company in Western Pennsylvania, so we moved all the way across country. I started my junior high years in a small town called Canonsburg, Pennsylvania, which is where Perry Como was from. Spent my early childhood years there, junior high, high school. Did everything that most kids did in those formative years, played a lot of sports, football, basketball, and did quite well with that. Did well academically in school. Actually, I really liked the Pennsylvania area. People were the salt of the earth, very well-meaning people. I really enjoyed that time of my life. Ended up going to college in Ohio. Why? Small liberal arts school. I had some friends that had gone to this one particular school, Wittenberg University, and I had visited it and quite liked it. It had a population of twenty-five hundred kids, a very old campus, very well respected. So I spent four years there. I graduated with a Bachelor of Arts degree. 2 Which field? Business. Also, ended up with a teaching certification. I had completed my major early. So I decided, well, what am I going to do the last couple of semesters of school? And I said, well, I'll try teaching. I thought that might be kind of fun. So I did that. Spent my last semester actually teaching junior high and high school from seventh grade all the way to twelfth grade. So that was quite an experience. Now, did your mom work outside the home? Well, she did on and off, yes, in different jobs. She mostly stayed at home. So I got out of school and wanted to take a little time off and decided that I was going to come to Las Vegas because I had been to Las Vegas. Actually my grandfather had worked for the city. Of Las Vegas? Las Vegas, yes, through some of his career. So we had visited here when I was younger. It was a small city back then and I really enjoyed visiting Las Vegas. I had other relatives here as well. So I said, "Well, I'm going to go out and visit my relatives, do a little R and R for the summer." So I'm getting ready to fly out to Vegas and I get a phone call from a school district in Ohio and said, "Mr. Orrock, we'd like to offer you a job in teaching and coaching. Would you be interested?" I said, "Well, I'm leaving for Las Vegas tomorrow. I will call you when I get back." I never went back. So why did you decide to stay? What happened? I just liked the West. I've always liked the West. I just thought maybe there was just more opportunity here in Vegas. It was a growing city. When I came there was three hundred thousand people. So we're sitting at 2.1 million now. So I've seen all the growth, amazing 3 amount of growth. But I came here and I spent the summer kind of just enjoying myself, traveling down to Baja and California and kind of putzing around. Got some odd jobs and ended up working at the Desert Inn (DI). That's where I started my career. It was the Summa Corporation back then. So what did you do at the Desert Inn? I was in the accounting department. It was a gaming property and an interesting place to work. But I actually ended up doing what you did: I went back to school. So I worked during the day and I went and got my master's at UNLV in the evening. I think two or three years into my tenure at the DI, I worked with some folks from the corporate office. They ended up offering me a job to move to the corporate office, which was the Internal Audit Department at that time. I ended up being the audit manager for Summa and eventually working my way up through the organization. Where were those offices at the time? They were at the [Alexander] Dawson Building at Spencer and Flamingo. They were actually two floors below ground. It was a very interesting office with a fair amount of security as well. I had several job offers throughout my career, but it just seemed when those opportunities occurred something within the organization changed. It was a constantly evolving organization. So my business card has always had either Summa or Howard Hughes (Corporation) as the entity. I never really changed who I worked for, but the company owners changed. The Rouse Company acquired Hughes back in 1996 and in 2004 the Rouse Company was acquired by General Growth Properties (GGP). I stayed through all that transition, mostly in the financial capacity side of the organization. When General Growth Properties acquired Rouse, they asked me to take over the operations of the land development here in Las Vegas. So I switched from a 4 financing capacity to an operational position and have been here ever since. General Growth filed bankruptcy in 2008. GGP emerged from bankruptcy in 2010. GGP spun off its land holdings and redevelopment properties into an entity, which became the Howard Hughes Corporation. The Howard Hughes Corporation now trades on the New York Stock Exchange under HHC. A new board, new management team, new corporate headquarters—the headquarters is out of Dallas—they asked me to stay on in my current capacity. So I agreed to do that and it's been a great ride. Wonderful. Tell me about the beginning when you were at the Desert Inn. What kind of history did you learn about Howard Hughes at that point? Now, is that 1974 when you first started? Yes, '74. Hughes passed away in 1976. So at that time Will Lummis became the administrator of the estate. I actually managed the cash portfolio for the estate at one point. So I worked through all those years; it took from his death until 1989 to resolve the estate issues. So at that time really it was trying to decide how all these assets that Hughes had acquired would move forward with the eventual Hughes heirs. As I said, that took from '76 to '89 to resolve. It became apparent—Will Lummis deserves a lot of credit for working through a very complicated estate, probably one of the more complicated estate issues with all the assets that Hughes acquired, and so many challenges to the estate that were finally resolved, and eventually transitioning to a real estate development company. As you know, we read a little of that. Yes. So those were interesting years. It had to be. And there were still people that had worked for Hughes for years at that point. I'm kind of the 5 longest tenured Hughes employee now, but there were folks that had been with Hughes for decades. So it was an interesting time. It had to be. That was wonderful. So Summerlin, tell me about what you remember about the beginnings of Summerlin being inside when that was coming about. When you start looking at the assets that Hughes had owned, the one thing that he owned that he never really capitalized on was all his land holdings. The corporate office was here in Las Vegas. He owned a number of gaming properties. But we had thirty thousand plus acres of land here in Las Vegas. The question is, okay, well, there's value in this land and if you had any foresight about where Las Vegas would eventually be—and a lot of people really couldn't see that—I think we had folks that were making decisions back then that realized that this was a pretty valuable asset and we own it all, basically own the western portion of the valley, let's capitalize on it. So the company began in earnest selling some of its non-strategic assets to build a financial war chest so that we could manage through an early development process for land holding of that magnitude. What happens typically with projects of that size is they're far undercapitalized. They start into the project and if the market isn't there immediately, you tend to run out of capital. Well, the powers to be back then decided let's sell some assets, some of the land holdings off, such as The Lakes area and Desert Shores; that was our land. Those land holdings were sold off to create a financial foundation so that we could move forward eventually with a longer term plan for the development of this community. Now, obviously if you've got twenty-two thousand acres, it doesn't get developed overnight. So at the beginning, it was envisioned to be a fifty-year project, and it probably will end up to be that. It looked like we were going to develop at a faster pace given the growth in the nineties and the early part of last decade. Obviously, when you have a project of this magnitude, you go through cycles. I believe 6 a lot of folks didn't think we would ever see a cycle here. But they do show up and it showed up with a vengeance. But we're back and things are going good and we're on the upswing again. But it's a long duration to eventually end up with a full development at some point. I read that now the target is about 2039. Yes, somewhere in that neighborhood. So you have a long time to go. Yes. I hope I'm still going to be here then. That's right. So we hear now about Downtown Summerlin. Tell me the next step with downtown. Well, first of all, we went twenty-four years without a downtown, which is very unusual because we had a population of a hundred thousand and really didn't have any major social gathering area. Usually you end up with a town center or something. It's very unusual that we would go that long. One of the reasons is this project was relatively close in to a major employment center. So you didn't have to create an employment center because we were so close to the Strip. And the housing was just on fire. So the commercial took a backseat to the housing. Well, at some point it made a lot of sense to now create—and that area had always been targeted for years—as really the epicenter of where that social gathering—retail, entertainment—area would be. That [center] was completed in October 2014. But really it's only the first phase. So it's 1.6 million square feet of office, retail, and entertainment. The project sits on about a hundred acres. If you look at Charleston [Boulevard[, Sahara [Avenue], [Clark County Route] 215 composes the remaining 39.2 miles (63.1 ...) and Town Center [Drive]: that block, if you will, is about four hundred acres. Our Downtown is going to be that area. Where the existing development is now, all the surface parking are really potential placeholders for future 7 development if the market warrants additional development. Pavilion is another two hundred acres. You'll see residential development. You'll probably see some retail possibly connecting the east side of Pavilion to the west side. You'll see more office product. You'll see what will eventually become more of a real downtown area as most people would define it. So you're going to see residential product from town houses to potentially a high-rise condominium project. What you won't see there is traditional housing. You won't see detached housing. It will all be attached for-sale or for-rent type of product, in higher density, something you would see in more of an urban area. So I also read that in that area you're going to do some cultural things. So are we looking at another performing arts center? I wouldn't rule anything out. Now, we could see athletic type of programs over there as well. I think the possibility for culture, for athletics, something that really helps define what a downtown should be. So everything is on the plate. And it's going to take a while. Part of that longer term build-out is the result of when you start doing higher density urban areas; that tends to stretch out that time horizon in terms of development. That's one of the areas that stretches the time horizon out. So I love some of the neighborhoods that you've developed over time. We read that the average income is a hundred and thirty-nine thousand dollars. So these are the kinds of neighborhoods with just beautiful, beautiful homes. What is your favorite neighborhood? What are some of your favorite neighborhoods? It's a great question because every one of these villages—Summerlin is divided into villages—and each village, the intent is to diversify within that village and for that village to have its own uniqueness. When you ask somebody, what's your favorite village? If you look at the Vistas, 8 the Vistas is a great village, because you've got the clock towers at the end, one of the most photographed monuments in Summerlin. You also have two beautiful parks with surrounding the clock towers. That's a great village, great neighborhood. On the other side, you have the Ridges where the Ridges is not as heavily diversified, but you have this beautiful public golf course. You have on the Ridges’ western border the conservation area. So that edge will never be developed. It's unique because the western border is protected forever. The residents can always look out and see those beautiful mountains. You have this beautiful golf course that the public has access to. In some of the earlier neighborhoods...What's nice about Summerlin is because we still control the HOA management group, you can go to the older neighborhoods and they look as good now as they did twenty years ago. Some of these neighborhoods, they're twenty-four years old. The first home was sold in 1991. That's important because as a developer and an owner of this massive community, you want to be able to say, "Look, you can go to our older neighborhoods and the older neighborhoods are as well maintained as the newer neighborhoods." We want people to understand that. "Hey, you move into Summerlin, it's a quality of life, it's a community, but, gee, it just feels really good to be here." One of our real signatures is the streetscapes compared to when you look around other areas in Las Vegas. Sidewalks are wider than code. There's a reason for that. Because we like to see people using the outdoor areas. You see bikers. You see people with baby strollers walking, running. That's all part of the lifestyle we're trying to create. And people love to be outdoors in Summerlin. The trail system is a hundred and fifty miles. It's fantastic. So we want people to feel good where they live, how they live, what they do when they're here. Now we've got downtown to compliment. They don't have to leave Summerlin to go 9 shopping. We've kind of completed to a certain extent the amenity package that you would need, which was missing for twenty-four years. The entertainment/shopping component was missing. So tell me about education, because I think that is one of the strong suits. You're absolutely right. One of the primary challenges or opportunities of any community is their educational system. So the very first transaction of Summerlin was the Meadows School, the very first, nothing else. We had a freeway coming in. But the first thing that was done was the school and that happened to be a private school. We've continued to make that a course of action for this community and make sure that the school system, the educational opportunities for people not just in Summerlin but in Southern Nevada because obviously other kids could go to these schools, but it's important. We have a really balanced number of schools between public and private. We're going to put our first charter school in; it will probably open up next year. People can choose to send their kids to a private school, a charter school, or to a public school. The public schools tend to be some of the higher rated schools in the [Clark County] School District. How do you do that? What does the Howard Hughes Corporation do to ensure that quality? Well, I think it's...In my opinion when I look at education, education starts with the families. So the family unit is really the driver at the end of the day. That is why some public schools are better than others. To me that's just a fact. You can throw money at all these schools, but if you don't have the strong family unit, then you're going to have to have something else to support that educational system other than the family unit. I would say that's primarily the reason is you just have a lot of people willing to participate. The residents participate in the public schools in Summerlin. 10 Who are some of the visionaries over the years that have allowed Summerlin to get to where it is? I know you've been there all along. Who are some of the other visionaries? John Goolsby. You have to give credit to Will Lummis. My current senior management group now, Downtown Summerlin, we took a big risk. That came out of the ground and the economy still wasn't back. I think that decision was made at some risk, but also at some forward-thinking opportunity that that was the right thing to do at the right time, and it proved to be right. It helped revitalize Southern Nevada. David Weinreb is our CEO now and Grant Herlitz the president. They're not afraid to make tough decisions. I hate to say specific individuals because I've got a whole team of people. I can't do this by myself. I lead from thirty thousand. But the people that really make all this happen are the people whose names you don't see very often. So we've got a number of people throughout the years on the planning, sales, construction, engineering, government relations, PR, marketing. All those people deserve credit because one person can't do this. That's true. And you've done a fabulous job. Tell me about the developers. How do you decide which developers you're going to allow to develop a village or a neighborhood and how is that done? How are they picked? You're talking about our home builders. Yes, home builders and even for Downtown Summerlin if there are certain developers. We're the developer of Downtown Summerlin. That's us; that's the Howard Hughes Corporation. So we're a real estate development company. Prior to this, somebody else might have done that. We'll do a lot of the vertical development going forward because we are a real estate development company and we understand creating value by going vertical as opposed to going horizontal. We'll create tremendous opportunities especially when you basically have a 11 monopoly on the west side of Las Vegas. All the home builders in Southern Nevada aren't home builders in Summerlin. There's reasons for that. Some builders would rather go out and buy land at a lower price, or they don't want to have to conform to our requirements. When a builder comes in here, anybody, even if we sold a parcel of land to an office developer, everything is approved by us. All the architectural, everything has to come through us for approval. The residential, the commercial, everything that you see out there gets our stamp of approval—colors, architecture, landscaping, maybe even hours of operation. Some builders don't want to be told what to do. They don't want to be told, "Hey, you have to have a certain amount of outdoor space," because it costs them a little more money. But we're trying to do what's right for the end user as well as the home builder. They're our partners. So we want them to succeed, obviously. If they don't succeed, we don't succeed. Then I can say the same thing about anybody that does business in Summerlin. We want everyone to succeed. So, yes, we want everybody to do well. But don't developers see this as prestigious, a feather in their cap to be selected to come into Summerlin? Well, I think they need and want to be here. Not all the builders feel they need to be here. If you look at our home builders, they're all the top tier home builders. We have a lot of public home builders now. We at one time had a good balance of public and private home builders. When you say "public," what do you mean? The builders that are publicly held versus a private builder who doesn't issue common stock. But we had a combination of public and private, which is good, but the recession took a lot of the private builders out. So that whole group kind of went by the wayside, not all of them, but a lot of them didn't make it through the recession. So right now most of our builders are publicly 12 held. The Tolls, the Pultes, KBs—we've got about eight home builders with us. I believe the only active private home builder is Woodside. But we're always looking to add home builders. We certainly would encourage builders to want to be here. I really like to have a broad brush of builders because they all bring different product and different price points. Some home builders are at the higher end; some are at the lower end. In a community like this, you want a broad price point to be able to offer to everybody. We want everybody to live in Summerlin if they so choose. So last week my sister and I looked at a Richmond American home. There is a model called the Robert. I don't know if you're familiar with it. No. Where was it? Richmond American, was it down south by Bishop Gorman? Yes. It's off Town Center somewhere. Okay, yes. It is the most beautiful kitchen. I'm not a cook. I mean I will pour the wine while somebody else cooks. There you go. I do the same thing. The most beautiful kitchen I have ever seen in my life. The island was as big as your office. It was just amazing, anyone walking in there. So I understand why you use different developers, different builders. So you have some amazing properties. Yes. We encourage the home builders to bring different ideas from other markets. Home builders have different products in other markets. If you've got a good product down in San Diego, bring it over. So when you're traveling around the country, do you look at properties? Oh, yes. Oh, yes. I was on one of our projects in Houston. I went into a Toll home—no, it was 13 Lennar. It was completely different than anything I had seen here. So I told my team, I said, "Hey, let's get with the Lennar group and ask them if they can bring this product in Summerlin, because it's really nice." Now, they don't always do that. I always like to encourage things to change. Builders typically...I mean if it's selling, well, why change it, right? Exactly. Encouraging new ideas when you have a project of this magnitude, it's what you want to do. Oh, yes. So how do you think the residents of Summerlin feel when they read, "In 2014 Money Magazine named Summerlin one of the best places to live in America?" I hope they felt that they made a good choice. That's what we're striving for. We don't need awards. Awards are great. But we want people to feel good about their decision to buy a home and to live or rent, whatever, or office. We just want you to feel good that you made the right choice. We've had awards throughout the years for two decades. We were one of the top master planned communities in the country in sales. We dropped because of the recession; because of Vegas we dropped out of that group. I think this year we're sitting right at six right now. We may be in the top five. So we're back. That has to do with sales because we sell the most homes and that's not the goal. The goal is to create a place where people want to live. And this is what we want for the whole area, for the whole city. Yes. A lot of times people say, "Well, why don't you do it like Summerlin?" I kind of feel bad when someone says that because things don't have to be like Summerlin, but it's a great compliment to say, "They've got something working over there. Maybe you ought to consider and go find out what they're doing." So since you've said that there is a historic African-American community in Las Vegas. It's commonly known as the Westside. I have a passion for that area of the city. I know 14 the history. I've done some writing about it. I do presentations about it. How can that area become like Summerlin? That's a great question. I think it has to start with the folks that live there. I think it has to start with pride of ownership. I mean that's one thing I see in Vegas every place. The problem with Vegas that I see is older neighborhoods deteriorate. You go to other communities in this country; that doesn't happen; older areas don't necessarily deteriorate. People have pride of ownership. Their yards look good. Their homes may be old, but they look nice. Again, I'm not saying the Westside. You can go right down off Spring Mountain and see exactly what I’m talking about. People after a certain period of time, it's like they don't care where they live. The area is plagued with vacant lots. I would say 40 percent of that old portion is really just vacant lots. How do you get started? Well, it's going to be a community effort to do that. I mean, look, everybody would like to own a home. There are obviously groups that are buying lots and building homes and putting people in those homes. Now, I think they've even done it on the Westside. There are some developments, yes. Help me with the organization that...What is it? I know them well. They're all over the country where they have people build homes. Habitat for Humanity Yes, Habitat, exactly. Don't you do volunteer work for Habitat? Well, we've been involved with them, yes. But an organization like that that's what they do. So I think it's just getting folks interested in the area and what the opportunities are down there. It just has to start with kind of a grassroots type of effort. 15 I think it has begun. UNLV's architectural school went in with some creative plans, got the input of the community, started community meetings last year, got everybody around a table looking at this is where we are; this is what you want; how do we get there? So I think it's starting already. I mean, it's a challenge, and it's a challenge every place. But I think there seems to be a very strong interest in getting things right every place. Yes. It's only a half-mile from downtown. One last question and I'm going to leave that area. Surrounding the community on two access points there are homeless shelters, the Mission and the Salvation Army. Unfortunately then, when you drive into the community, those major arteries going into the community, there are homeless people. Of course, they have no place else to go. So they're right there on those blocks that take you into the community. How can a city, all of Southern Nevada, how can we cure homelessness? If anybody had an answer to that...It's systemic in every major city in the country. It's something that's hard to figure out. There are people I'm sure—some of those interviews we hear there are people that choose that lifestyle. Then there are problems with mental illness. There are problems with people just having that hard time in life, that downturn that they just have not been able to come out of yet. So I think we see probably as many problems as there are people in those conditions. It's sad. Yes, it is. You don't want to see anybody in that predicament. With no place to sleep at night. 16 Yes. When I see people like that it kind of pulls at my heartstrings because I don't know how they do it. Day in, day out. That just amazes me that they can survive in that type of environment. But again, it's everywhere. It's like the question is—in order to help somebody they have to want to help themselves and sometimes you can't get that help; they won't do that. You can do what you can, but a lot of folks just fall back into doing what they do. But others, they come right out of it. Exactly, because they have some kind of skills. They have some kind of dreams, ambitions, goals. On reading a little something about you, there were two entities that you were involved in. One is the Nevada Development Authority. What is that? That's the old Las Vegas Global Economic Alliance group. Tell me what that is. It's about redevelopment, about diversifying the economy. So the Nevada Development Authority used to be that entity, but it's now the Las Vegas Global Economic Alliance. So it's about diversifying our economy. I will tell you because I've been here for so long that the gaming and resort business has been the engine that has driven this economy. My hat’s off to them because they continue to create unbelievable projects and jobs. And properties. Yes. They've lifted this community for years. So they've been the engine. But when we hit this recession—the old saying, Don't let a good recession go by without making an opportunity out of it—it became apparent that we needed to diversify. That's what that entity's trying to do, market Southern Nevada to bring in other types of industries and businesses to this community. Tesla up in Reno...They're doing th