January 1, 2011

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Boom or Bust

The Face of the Recession in Rural Utah

Gaylen Webb

January 1, 2011

Trying to pull onto Highway 40 from a side street in downtown Vernal is getting tougher these days, thanks to all of the traffic. That might seem like a problem to some people, but Tammie Lucero thinks it’s a harbinger of a resurging Uintah County economy. “Highway 40 isn’t as busy as it was several years ago, but it is getting busier, and that’s a good sign,” she says. As economic development executive director of Uintah County, it’s Lucero’s job to keep her finger on the county’s economic pulse. While economists don’t usually factor traffic congestion into jobs data, key figures support Lucero’s hope that the worst of the recession is over in Uintah County. Other rural Utah counties are improving, too. In fact, three counties rank among the top 50 in the nation for job growth from October 2007 through October 2009: Uintah, Duchesne and Grand counties. Employment in Uintah County has increased 9.1 percent since December 2007. Duchesne County has a similar story, sporting a job increase of 11 percent for the same period. The biggest employment increase, however, was in Grand County, which added 1,315 jobs—a 31.1 percent increase—since December 2007. Overall, rural Utah has seen a 5 percent increase in jobs in the last two years, according to figures from the Bureau of Labor Statistics. But not all of Utah’s rural counties are feeling so fortunate. In truth, the face of the recession—and economic recovery—changes in rural Utah as fast as the landscape. From counties in the southwest corner of the state to Box Elder and Rich Counties on the north, economic recovery has proven elusive. Disappearing Jobs Box Elder County was hammered first by the closure of the La-Z-Boy factory in Tremonton, and then by massive layoffs at aerospace giant Alliant Techsystems (ATK) and other manufacturing and construction businesses integral to the economy. In fact, Box Elder County lost 11 percent of its jobs between December 2008 and December 2009. Unemployment is now hovering around 9 percent. “I don’t know that we have seen the end of the recession yet,” says Brigham City Community and Economic Development Director Paul Larsen, who is leading an effort to develop an economic development strategic plan that would evaluate key economic inducers in the county, which could be enhanced to support local industries and help them add jobs. Such a strategic plan could cost $100,000, depending on its breadth, he estimates, but that would be well worth the expense. Jobs have also evaporated in tiny Rich County, falling 12.8 percent between December 2008 and December 2009. But nowhere has the recession and subsequent bust been more painful than in Washington County, where unemployment is well above the state average and banks are still taking a bath on foreclosed homes. According to Utah Department of Workforce Services (DWS) estimates, Washington County shed about 15 percent of its jobs from early 2008 to the start of 2010. The majority of those jobs were construction related or tied to the real estate market. Regarding Washington County’s once high-flying real estate market, Terry Marten, developer of the Kayenta community near Ivins, says “flip” is now a four letter word—at least in his mind. He blames greed by investors “falling all over themselves to turn a fast buck” for much of the real estate turmoil that brought down the county’s once top-ranked economy. “We have created a monster,” he says. “Now all we can do is wait it out. The county’s current absorption rate is horrible and the real estate market is brutal. Many homes and lots are selling for 20 cents on the dollar and banks are taking a bath in order to get their loan-to-asset ratios back in line.” Having been through five recessions, Marten says he was better prepared for this recession than others he’s faced in the past. “I was offered some fantastic deals—$100,000 an acre for lots that I paid $27,000 for, but I didn’t sell to speculators, and that has helped keep property valuations in Kayenta very close to normal,” he says. Obviously, not the “normal” of 2005–2006, he adds, when real estate lending went crazy in Washington County. Consequently, lots in Kayenta are right in line with reasonable growth and haven’t seen devaluations like elsewhere in the county. Twelve homes are currently under construction in the Kayenta community. New Growth The other four counties in Southwest Utah’s five-county region—Kane, Garfield, Iron and Beaver—are suffering right along with Washington County. Despite the gloom in Washington County, construction of key infrastructure projects, like the new $160 million airport and interchange improvements on Interstate 15, have helped sustain jobs, but not to the degree necessary to improve the anemic economy in Utah’s Dixie. Thus, business and civic leaders say they recognize that the glory days of a real estate-driven economy are in the past, and sustained growth can only happen by diversification. Consequently, the announcement by food manufacturer Litehouse Inc. that it is building a new, $10 million facility in Hurricane—and adding 162 new, full-time positions in the rural community—is a dream come true. Other events, like the Ford Ironman Triathlon held in St. George last May are also helping sustain the economy. The triathlon had an estimated economic impact of $8–$10 million. Record-setting enrollment at Dixie State College is also good news. What’s more, UDOT’s road construction projects in Washington County could not come at a better time. In one project, UDOT will spend $25 million this year and another $45 million in 2012 to construct a new Dixie Drive Interchange on I-15 near the Dixie Center on the south side of the city. Meanwhile, Grand County’s job boom feels sustainable, says Moab Mayor David Sakrison. He believes the job growth and strengthening economy can be attributed to a variety of efforts, such as the stimulus money being spent by the federal government to remove radioactive mill tailings along the Colorado River and numerous building projects that have occurred in the county, such as the construction of a new city recreation center, two new schools, a new hospital, and the construction of two bridges by UDOT over the Colorado River. Sakrison says the City of Moab is also in strong financial strength. “We kind of saw the recession coming, so we have been a little ahead of the curve, adjusting our budget and watching our hiring,” he adds. “We have exceeded projections regarding city revenues and are pretty pleased about that.” Businesses in the area are doing fairly well, too, he says. “I am a business owner, as well, and I have had a pretty good year. I think that is fairly representative of other businesses in the area.” The tourism industry is doing well, which is a good indicator, says Sakrison. Furthermore, if the federal government continues to spend money cleaning up the tailings along the Colorado River, that should bode well for Moab City and the county. Challenges Ahead Back in Uintah County, Lucero is hopeful, but not definite, the economy is seeing sustainable growth. “I am getting a lot of mixed signals,” she says. When Uintah County advertised two job openings—one in the county attorney’s office and another in the sheriff’s department—58 people applied, she explains. On the other hand, the owner of a drilling company told Lucero he was having a hard time finding people to fill openings at his company. Meanwhile, at the last regional quarterly council meeting conducted by DWS, it was reported that some 180 jobs were open in Uintah County. “Last year at this time the DWS reported only 80 open jobs, so now we are more than double that,” Lucero says. “In fact, our worker levels are higher now than they were in 2006.” Challenges she sees in growing and sustaining Uintah County’s economy, and that of Duchesne County, too, are the bureaucratic obstacles created by the federal government in relation to growing the area’s natural resources industry. Oil and gas companies in Uintah and Duchesne counties are some of the biggest employers, and will continue to be, despite efforts to diversify, but the federal government makes it appear that Uintah County has an unfriendly environment, she says. “Even appearances can hurt,” Lucero explains. Natural gas prices are another inhibitor to economic growth. Plentiful supplies have driven prices too low to make drilling profitable, she adds. On the other hand, Duchesne County has 26 new requests for permits to drill for oil. Meanwhile, a variety of businesses with proven oil shale technology are beginning to move forward with projects in the area. “Oil shale development actually can happen,” she says, “but that still goes back to the federal government and the permitting process. If we were dealing with private land, permitting would not be nearly the issue it is today.” If the oil, gas or even oil shale industries kick into high gear, Lucero expects the rest of the economy in Uintah and Duchesne counties to follow suit, and that’s not pie in the sky, she says.
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