For the past year, some Ketchum residents and business owners have been quarreling over the potential costs and benefits of additional hotels in the area.
In an attempt to quell concerns, the city requested an independent study on the estimated economic impact of three proposed hotels: Warm Springs Ranch Resort, Hotel Ketchum and Ketchum Lodge.
Richard Caplan, of Richard Caplan & Associates, a longtime consultant to the city, conducted the economic impact analysis.
In April 2008, Caplan presented his findings to the Ketchum Planning and Zoning Commission. After making a few changes to his calculations, most pointedly changing the percentage of hotel occupancy from 40 percent to 60 percent in order to account for just hotels room occupancy and not condominiums, Caplan presented the newest numbers to the Ketchum City Council last Monday.
Overall, Caplan's study predicted large economic benefits for the city of Ketchum.
"The addition of three hotels is universally favorable to the local economy," said Caplan.
He projected total revenue for the city from the three developments at around $54.8 million, with an estimated cost to the city of Ketchum in services around $10.9 million, giving the city a net revenue surplus of $43.9 million.
Caplan asserted his estimates were on the conservative side as the study's net surplus was projected over the course of fifteen years.
It did also not include a number of other sources of revenue such as new retail sales generated by new condo residents, new employees and construction workers.
Caplan also cited an economic impact study done by DDRM, the developers of the Warm Springs project. DDRM's study projected revenue from the Warm Springs Ranch Resort to the city of Ketchum around $37 million, while Caplan's study suggested only $30 million.
Not all members of the public were in agreement with Caplan's findings.
Ketchum resident Lee Chubb raised concerns about the numbers reported in Caplan's study. Quoting former New York Sen. Daniel Patrick Moynihan, Chubb said, "Everyone is entitled to their own opinion, but not their own facts."
Chubb suggested Caplan's numbers were not reliable.
"We need to agree on numbers and we need to talk to each other about the good and the bad," he said. " I do not think this satisfies the rigorous standards of economic analysis studies."
Chubb's main contention with Caplan's data was the time period over which he looked at the data. Rather than choosing data from the same extended time period, Caplan, in the words of Chubb, "cherry picked" where he started and where he ended.
One example Chubb cited was Caplan's local option tax revenue data. While Caplan's study shows a decease of about 5 percent in LOT for the city of Ketchum from 2001-2007, Chubb noted that Caplan started with a year in which Ketchum had a particularly high amount of LOT revenue, making the downward trend inevitable.
Caplan's study also took out an entire year when looking at Ketchum lodging unit trends. While there was a decrease from 919 hotel rooms in 2004 to 643 hotel rooms in 2006, there was no data for the year 2005.
Caplan responded by saying the Sun Valley/Ketchum Chamber & Visitors Bureau had provided him with the data so he could not be held responsible. He also acknowledged that it was a complex study with lots of variables.
"I can't even tell you the margin of error," said Caplan.
Council members, however, did not seem as concerned.
Councilman Larry Helzel said, "No matter how noble the pursuit of perfection is, we are not going to achieve it. But that doesn't mean we as a council can't get a good idea."
Councilman Ron Parsons asked for more input from the chamber. Since the chamber has argued in favor of the proposed developments and seeks to support local business, Parsons said he would like to know how the chamber came to its conclusions.
Despite all the criticism the study received, Caplan and his associates were not asked to revise or augment the study in any way.
