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Why we need economic study

Don Cohen

Last week, the Vail Daily ran a short story announcing the beginning of a new economic study sponsored by the Vail Valley Economic Council, the Vail Valley Convention and Tourism Board and underwritten by local businesses and Eagle County.One reader replied to that article via the “Wisdom on the Web” e-mail response link, “Are you kidding me?! We need to pay someone $50,000 to tell us that the population center is moving to the western end of the county?”Yes, we do. And here’s why.Of course we accept the fact that there’s a population shift to the western part of the county. Anybody can see that. But there are many bigger questions involved which we don’t know the answers to. Here are just a few:– How large a population shift might that be? If the state demographer’s estimate of our population projects a doubling to more than 80,000 in the next 20 years is even close, how many will live west of Wolcott? 20,000 more? 30,000 more? And if the towns of Gypsum and Eagle say that’s too much and restrict their growth, will Wolcott see the next housing bubble?– Will such a seismic shift reverse commuting patterns that now flow upvalley to going downvalley. That’s exactly what happened to the U.S. 36 corridor in the 1990s when traffic flow suddenly shifted away from Boulder and to Denver. Not only did it create big traffic headaches, it continues to demand expensive transportation engineering solutions.– What would that population bulge in the western side of the county look like? Are they retiring baby boomers in search of second homes? Maybe cashing out their 401Ks doesn’t allow them to buy a million dollar home in Singletree, but a very nice $500,000 home in Eagle Ranch. And if supply doesn’t meet demand (like our overheated market now) it’s inevitable that housing prices will continue to rise. As a matter of fact, the county Housing Department just reported that the median income for a family of four in Eagle County is $79,950 and the median house price in 2004 was $383,500. To keep things in perspective, the national median income is $43,318 and the median price of a home is $207,000.To qualify for a median-priced home, a household in Eagle County, one being a teacher with five years of experience and the spouse being a nurse at the hospital, would not be able to qualify for a mortgage even if they managed to scrape together a $38,000 down payment. These middle-class families are caught in an ever tightening squeeze between more affluent buyers competing for homes and builders who prefer building more expensive homes because the profit margins are higher.– And if this shift in population skews toward a higher income and higher housing prices, what will the problems be in income stratification as the gap between rich and poor grows wider? Higher income homes place economic demands on the service sector where traditionally the lowest paid jobs are. Do these demands create an even higher incentive to attract illegal workers? And if so, what additional demand does that put on our public education and health-care institutions?Now let me ask an even bigger question: Do we have to accept the fact that our population will double in the next 20 years? I’m not sure it needs to, but how do you gently apply the brakes and not end up getting rear ended by some greater macroeconomic trend? How do we think about economic development, not in the traditional terms of creating more jobs, but in creating personal income growth to keep our working families from leaving Eagle County?That’s why we chose the Leeds School of Business at the University of Colorado to develop a study that looks beyond superficial population statistics. The CU report will not be a rehash of numbers, nor will it make any specific recommendations on changing public policy. What it will do is offer some specific tools and models that the county, towns and even businesses can use to better divine what policies and actions might be the most beneficial for our long term economic health.Today when a condominium complex, housing development or retail complex is approved, very little time is spent thinking of the broader questions like how many jobs will a second home or new retail business create? Where will the employees commute from? What is the economic lifetime of the product? (Keep in mind Vail only lasted 40 years before major rebuilding and refurbishment became necessary to erase decay.)Of course the population is shifting to the western part of the county. But if we want to give more than just lip service to protecting our quality of life, we better get a handle on the socio-economic factors that will be driving that growth so we can make better political and business decisions.Don Cohen, executive director of the Vail Valley Economic Council, can be reached by e-mail at dcohen@vvec.org.Vail, Colorado


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