Wednesday, September 1, 2004

Can our valley find a balance?

Second-home industry looms large in impacts debate

Express Staff Writer

Commuting cars, pickup trucks and SUVs back up at the intersection of State Highway 75 and Golden Eagle Road, between Ketchum and Hailey. As Blaine County has attracted increasing numbers of residents and service workers, traffic on the highway, the main thoroughfare, has increased. Express photos by Chris Pilaro

The specific impacts of the booming construction industry in the Wood River Valley can be seen almost everywhere, from the bustling hallways of local schools to heavily trafficked state Highway 75.

As more and more mountain enthusiasts move to the region, and more and more businesses erect new facilities, life is changing at an unprecedented pace.

In many neighborhoods chosen for new and in-fill construction, noise and dust are parts of everyday existence. Once-pristine open spaces, some abundant with wildlife, are being compromised. Pollution is finding its way into the air, soil and water—which becomes increasingly precious as finite supplies are tapped to meet increasing demand.

Moreover, local governments are seeing their costs rise and are seeking means to extract more dollars out of residents and the visiting public. Infrastructure must be added and improved. Educational facilities must be expanded. Police, fire and emergency-response squads must be bolstered to respond to an increased need for their services.

Is smart growth smart?

With the impacts of the approximately $170 million-a-year Wood River Valley construction industry ever more visible, a rift has surfaced.

Some individuals and nonprofit organizations maintain that growth must be actively managed to protect the valley’s scenic environment, agricultural heritage and distinct, attractive communities.

Others have argued that an overall shortage of available land and increasingly strict regulations being applied to new development have already driven up real-estate costs to the point that only the wealthy can envision a future here.

In the middle are the valley’s government-employed planners, who must contend with making all of the pieces fit within the rules and guidelines of their various jurisdictions.

Harold Moniz, Ketchum planning director, said the flow of new construction projects cannot be turned off but can be guided so its negative impacts are limited.

“I don’t have a problem with development as long as we are able to mitigate the impacts,” Moniz said. “You’re never going to stop development. You’re just going to manage it.”

The city of Ketchum, the economic hub of the valley, is finding success in developing and applying regulations that foster attractive, appropriate devel-opments, Moniz said.

Challenges remain

However, the city, he believes, is coming up short in its efforts to gain affordable housing for local workers and their families.

“The city’s incentive-based approach is minimally chipping away at the problem,” he said. “In my opinion, we need a more regulatory approach to the issue.”

The other challenge for the city, Moniz said, is making sure the city is compensated for the tangible public costs of new developments, particularly those of large scale.

In an effort to do that, the city of Ketchum has commissioned a study to determine appropriate development-impact fees.

“Out of that, I anticipate we’ll get some street-impact fees and other impact fees that will help mitigate the costs,” Moniz said.

Kathy Grotto, Hailey planning director, agreed with Moniz that cities must be more proactive in offsetting development impacts. She said the greatest challenge facing the city of about 7,000 residents is “trying to figure out how to make all of the future growth pay for itself.”

Grotto said impact fees are justified because the cost of providing services and amenities to the public “is going up faster than taxes.”

The second-home debate

As debates about growth and its impacts are played out in Blaine County, they often come to a crescendo when addressing the well-established trend of affluent visitors deciding to purchase and maintain a second home in the area.

The trend—which has occurred mainly in the northern Wood River Valley—is certainly nothing new. But as it continues to unfold, arguments have sur-faced about whether pricey vacation homes that often sit empty much of the year contribute to or detract from the valley’s mountain-resort community.

There is little debate about whether the trend is entrenched in Ketchum, Sun Valley and parts of Blaine County that surround the two cities. And, there is little debate about whether the construction of part-time or fractional-ownership residences plays a substantial role in fueling the region’s economy.

In these matters, the numbers tell the story.

According to Sun Valley officials, their city has approximately 2,400 housing units, 1,600 of which are occupied part-time. Part-time residents—those who spend anywhere from several weeks to several months per year in the city—number approximately 4,800, more than three times the number of full-time residents.

A 2002 homeowner survey conducted by consultants for Blaine County indicated that 36 percent of respondents were using their residence as a second home.

Jobs and earnings abound

A 2001 study commissioned by the Sun Valley-Ketchum Chamber & Visitors Bureau—called “Economic Analysis of Blaine County, Idaho”—concluded that in the year 2000, vacation-home construction brought 290 jobs and $8.4 million in earnings to Blaine County.

The second-home trend is clearly visible in Ketchum, where luxury condominium and fractional-ownership projects have been replacing old buildings—some commercial, some residential—on a routine basis.

The points that are brought to the debate table relate directly to the impacts of the second-home phenomenon. In some instances, the discussion graduates to a “locals versus part-timers” conflict.

The issues are complex, but the primary argument is rather simple.

One school of thought holds that part-time homeowners displace full-time residents on fixed incomes, consume unnecessarily large quantities of re-sources, drive up real-estate prices and don’t spend much money at local restaurants and businesses.

An opposing school of thought claims that second homeowners not only enhance the construction industry, they provide vital support to local businesses and community-oriented organizations, create large numbers of jobs for people who service their residences and help sustain public agencies by paying prop-erty taxes.

Answering the question

So, which is it?

The most-recent, in-depth study of the matter came forth in June from Colorado, where the Northwest Colorado Council of Governments conducted a study called “The Social and Economic Benefits of Second Homes.”

The study concluded that in Eagle, Grand, Pitkin and Summit counties—whose economies are linked to mountain resorts such as Vail, Winter Park, As-pen and Breckenridge—the second-home industry is the single greatest economic driver.

Construction of second homes and spending by the owners and residents of those homes accounts for 34 percent of the outside dollars that filter into the four Colorado counties, the study said. Spending by winter visitors accounts for 26 percent, making it the second-largest economic influence.

Still, not all the news was good. Despite the findings, the study concluded that the growth of the part-time population has fostered problems.

“As their numbers increase, and the land available for development decreases, a dilemma is created,” the report noted. “Second homes have generated the need for more workers, but the rise in property values and subsequent housing costs have made it difficult for the workers to live within a reasonable distance of their place of work.”

Blaine mimics Colorado

If the scenario sounds familiar, it should. It is playing out in much the same way in Blaine County.

While service workers are being displaced and are driving long distances to get to their jobs, the vacation-home industry is assisting tourism in driving the local economy.

The 2001 “Economic Analysis of Blaine County” report concluded that the county’s second homeowners in 2000 spent more than $110 million for dining, recreation and retail items, sustaining some 1,610 jobs. In the same year, they contributed approximately $10.3 million in property taxes, the report said.

Carol Waller, executive director of the Sun Valley-Ketchum Chamber, said in a July 2004 newspaper guest opinion that second homeowners play a very substantial role in driving the local economy.

Nonetheless, Waller—who co-authored the column with a Ketchum business owner—noted that vacation-home owners could have a greater positive in-fluence if they spent more time in their secondary residences.

“The key for us is to encourage these secondary homeowners to visit here more often than a few weeks per year, to increase their repeat visitation and economic impact,” Waller noted.

What are negative impacts?

Christopher Simms, executive director of Hailey-based Citizens for Smart Growth, said he agrees the construction and maintenance of second homes does have positive economic impacts. However, he said, an abundance of second homes, can—particularly if they are oversized—put undesirable pressures on cities and communities.

“We do have a resort-based economy and one measure of the success of that is the number of second homes,” Simms said. “We’ve done pretty well with that. The real-estate economy is strong. But, we have to ask, ‘Who is servicing these homes?”

In time, Simms said, a vastly successful second-home industry can reduce the availability of private land, drive locals out of desirable living areas and ultimately have the secondary effect of “creating empty towns” that thrive only during peak visitor periods.

Simms said he believes government agencies should consider imposing impact fees on so-called “super-sized homes,” many of which are second homes.

Ford Frick, a renowned Denver-based resort-planning consultant, said he believes the days of arguing about whether second-home owners are the enemies of tried-and-true locals should be part of the past.

“The black-and-white world of locals versus second-home owners is missing the point,” he said.

Frick said many mountain resorts are “evolving” with the trend of second-home ownership, with some of the distinctions between second-home owners and residents becoming more “blurry” all the time. In some cases, residents can be wealthier than second-home owners, he said, and more and more second-home owners are increasing the amount of time they spend in the mountains.

Nonetheless, growth issues do continue to afflict mountain resorts across the Rockies, Frick conceded.

What the future holds

Amid all the talk, one thing many valley residents can agree on is that the future holds many challenges.

Simms said Blaine County’s government agencies need to be much more active in stemming the negative impacts of sprawl.

David Wilson, owner of Ketchum-based Wilson Construction, said he believes the Wood River Valley construction industry is now “strong” but could become hampered by the astronomical cost of land.

“When an average lot is $300,000, how do you do it?” he said. “You can’t change the cost of bricks and sticks. The only variable is the cost of the land.”

What becomes of Blaine County’s last parcels of vacant land will certainly be the focus of the next major debate.

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