Vail Valley Voices: Recovery could be prolonged
Vail, CO, Colorado
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report for August. The Daily publishes weekly excerpts from the association, which keeps a close eye on economic and political trends in and outside of the town. The newsletter electronic version with links to supporting documents is available at http://www.vailhomeowners.com.
There are forecasters saying that the economic recovery for Vail and Eagle County will be lengthy (five-10 years or more). These projections are consistent with global and national trends.
The town of Vail revenue trends are currently 11.92 percent less than the 2008 high.
The town continues to meet its reduced budget projections primarily through capital improvement set-asides. Modest increases in sales tax occurred over the 2009-10 ski season and officials are hopeful that the summer season will show some growth from lodging and sales taxes.
June sales taxes wereup 21.6 percent over last year. There is increased activity in Vail business openings, closings and relocations. Empty storefronts are not common. Vail is weathering the recession better than most of its competitors in Colorado.
There is a major economic disruption occurring in the work force, which could result in an eventual significant restructuring of the local population.
Should development-related job losses continue, the local population will shrink as the numbers of part-time residents accelerate.
Unemployment in Eagle County peaked in May at 11.15 percent with the highest rate in 18 years, and the number of jobs showed a significant decline (24,298), down from the high of 32,965 in February of 2008. The workforce for May also reflected a substantial exodus at 27,347 workers, down from 2008’s high of 33,992.
June’s preliminary figures show improvement and the long-expected shift from temporary redevelopment-related construction jobs to tourism services should occur by the end of the year.
Higher rates of residential property foreclosures continue in communities with higher percentages of permanent work force population.
Summer events that attract large crowds are having a positive effect, particularly for the restaurants and bars. But not for all businesses.
Galleries reported business down during the Teva extreme sports long weekend event in early June.
The weekly Sunday farmers market is a thread that ties together an expanding menu of specialized events. Tour buses arrive with foreign visitors from Russia and elsewhere, but nowhere to the degree that commonly occurs at the Canyon Lands resorts in neighboring Utah.
It is being said by some retail merchants that customers are back buying, but not aggressively. Generally, anecdotal reports for the early part of the summer season are that the apparel business is slightly up, women’s jewelry is selling, but not men’s, and restaurant wine sales remain tart.
There are retailers who believe they are fighting the consumers’ perceptions that retail prices in Vail are marked up on the same items that they can just as easily buy in Denver or on-line.
Some hoteliers are saying it is time to raise room rates, as they see lodgers spending more on their dinner tab than they lay out for a hotel room.
Last year, the lead-time to book a room was several days ahead. Now, in some instances, it occurs on the customer’s drive up from Denver. In boom times, reservations were made weeks, if not months ahead. Hoteliers are experiencing renewed business from weddings, the Denver drive-up trade and small corporate meetings.
Many of the new properties built to cater to the “carriage trade” have yet to open or go into full operation.
International business over the summer, according to some retailers, is experiencing a noticeable increase in guests from Mexico, which is more typical for the winter months. Higher prices, says a restaurateur opining the obvious, changes the composition of the guests.
The summer’s Bravo classical music venue led off and closed with world renown headliners cellist Yo-Yo Ma and the New York Philharmonic. Bravo and the International Dance Festival are being applauded by local restaurateurs and gallery operators for the business they generate beyond just the summer months by adding value to the seasonal stays of part-time residents.
Bravo holds up as an example the jam packed Yo-Yo Ma concert of how Vail and the surrounding region will support highly regarded talent. Donors, many of whom are part-time residents, say that given the recession, their financial support should not be taken for granted.
Greater scrutiny is being given to the sales tax-generating effectiveness of town-financed events, which to some means that the uniquely local aspect of these venues may get pushed aside for the big crowd-pleaser extravaganzas. The farmers market, Bravo and the dance festival are the events that actively seek to engage with artists and participants from the local community — unlike many of the imported sporting and special events, which use the community solely as a commercial backdrop.
Local retailers often complain that crowded street events actually hinder their sales, but other types of businesses say they would rather give the appearance of commercial success than leave the opposite impression. It remains to be seen if these conflicts can be reconciled.
Many businesses say they are feeling the effects of a slowing in the construction trades, even with an upturn in remodels and smaller projects. The perspective on whether the economic water glass is half full or empty depends on how one derives their livelihood in Eagle County.
The shrinkage in employment has become noteworthy, as have the continuing elevated rates of foreclosures in work force communities. Some see affordably housing the work force as no longer being the problem it was during boom times.
Political analysts observe that the significance of the decline in Eagle County’s jobs and employment opportunities sends a message to those in the political arena that “social equity” issues, such as affordable housing and energy conversion, may have a shrinking constituency.
Nationally, as a consequence of the recession, financing for government-sponsored “affordable housing” projects has fallen into disrepute. The perverseness that infected financial markets was caused, in the view of some economic critics, by a laudable but impractical philosophy of social activism that assumed government-sanctioned entitlements could provide workers with affordable rents and, if they desired, universal home ownership.
The realpolitik of “social equity” policies are taking their toll, causing, some believe, the qualifications for low-risk financing to be all the more difficult for governmental affordable housing projects both in Vail and Eagle County.
It remains an item of conjecture if zoning-mandated affordable housing requirements will stay on the books as local government casts about for incentives to attract new development.
A local political analyst observed that rolling back expectations could be a painful experience for those in elected office and disillusioning for those whose expectations remain unfulfilled.