Articles
9 February 2012

Northern Utah: Weber and Davis Counties

by Utah Business Staff

09 February 2012—

 We’d like to give a special thank you to Ron Kusina, executive director of the Weber Economic Development Corporation, for moderating the discussion, and to the Ogden/Weber Chamber of Commerce for hosting the event. 

Like the rest of the state, Davis and Weber counties are feeling a hit; yet, leaders remain cautiously optimistic. In this regional roundtable, area experts discussed commercial and residential real estate trends, local educational offerings, and travel and tourism growth.

Participants:

(1) Scott Lunt, Davis Conference Center 

(2) Jay Greaves, DATC

(3) Marty Smith, Ogden Eccles Conference Center

(4) Cari Fullerton, Bank of Utah

(5) Steve Curtis, Layton City

(6) Dan Musgrave, Downtown Ogden 

(7) Jim Smith, Davis Chamber

(8) Ron Kusina, Weber Economic Development Corp.

(9) Rich Koski, Ogden/Weber Convention and Visitors Bureau

(10) Steve Cloward, DATC

(11) Marlin Eldrid, Davis County Community and Economic Development

(12) Barbara Riddle, Davis Area Convention and Visitors Bureau

(13) Tyler Dabo, Utah Business

(14) Vickie McCall, Utah Executive Real Estate

(15) Dave Hardman, Ogden/Weber Chamber of Commerce

 

Not Pictured: Lewis Gale, Weber State University

How has the economy impacted your business communities?

 

CURTIS: Layton City is like every other community in the nation—we have felt the effects of the economic downturn. But the thing that has helped us is a strong economic base. Layton is experiencing an upturn, in reality. A lot of that has to deal with the building of the south Layton I-15 interchange which will help us in our efforts to revitalize our historic downtown area, as well as our emphasis on the East Gate business manufacturing park. We’ve collaborated with Hill Air Force Base to establish the East Gate. Hill Air Force Base is Utah’s No. 1 employer and there is a lot of emphasis that we are putting on it to continue to solidify the mission of the base. And this only does that—it coincides with what is being planned for the west side of Hill Air Force Base. Frankly, it is a good parallel because on that side they’re working more administratively, where on the east side we’re going on manufacturing. So we are complementing each other. 

Our housing is starting to see movement. We’re on the upturn there and we hope that continues. Overall, we’re very excited in Layton. Layton has a lot of up-and-coming opportunities that we are taking advantage of.  

 

ELDRED: I think our economy has just been like everybody else’s. I think we’ve seen our ups and downs, but we envision 2010 and 2011 to really come out strong. We’ve spent the last year developing relationships with the cities, and working with the DATC and the CVB. We’ve developed an organization called Davis Unified Economic Development where the cities all come together once a month. We invite elected officials, real estate agents, developers—everyone can come out. We talk about what’s going on economic development-wise and we do training. We’re also currently working on establishing two different CDAs, which are Community Development Agencies, which help with the infrastructure of specific land development that allows for tax revenue financing. 

The other thing we’re seeing is that cities are starting to realize what they can do with tax increment financing. That doesn’t mean we’re going to become a community that just gives everything away—what we’re doing is utilizing it as a carrot to hang out there to say we want qualified businesses that are going to bring good jobs to Davis County, and those are the ones we’d like to try to attract through these agencies. We’re seeing a lot of cities focusing on the future and determining how they want to grow. I think a lot of cities are also taking a step back and realizing that land is finite—when it’s gone, it’s gone. So, cities are starting to take land inventory and strategically develop it. They’re asking: What do we want to do with the land? Do we want to go industrial? Do we want to go retail? Do we want to continue with housing? What we’ve tried to do is develop a relationship to bring real estate agents and other leaders together, tell them our ideas and ask for their input. As a county, we have really been focused on relationship building with the cities and all the external entities. We all know economic development isn’t done in a bubble. It’s done through relationship building. And as far as our future, we feel that Davis County is positioned for huge growth in the next two years. 

 

JIM SMITH: I agree that there are a lot of good things happening in Davis County. We really don’t build our base on retail—we build it more on manufacturing and retail comes as we get jobs and the kind of growth that supports the service and retail industries. So there are a lot of great things that are happening in terms of bringing in some new businesses. We really have a great advantage when you combine Weber State and the DATC with the kind of training that they can bring in and make available. That is still our most saleable aspect. The educational level of the people we have in our communities here is outstanding. 

Overall, I think the county is becoming more positive about the future. There is starting to be just a little bit of optimism, and I think it will be contagious and start to get people feeling more confident about buying and selling. I think we’re headed in the right direction. 

 

HARDMAN: I think the Ogden-Weber area is feeling the same type of optimism. One of the members of our board of directors, who serves the organization that owns Newgate Mall, recently said that with the exception of the Mervyn’s space, they’re pretty well leased up, which is really a very positive thing. They’re saying people are starting to spend a little bit more and that things are starting to look up.

Entertainment and restaurants are also doing better. As I visited with some of our restaurant owners, I heard from most that they saw a banner holiday season, and it looks very good going into spring. I was visiting with the manager of Texas Roadhouse about how they’re doing and he said to me, “What recession? We’re doing great.” People are starting to spend money even though things are tough. They’re still saying, “I can spend $25 and go out to eat.” 

The Junction, which is a regional center for entertainment and recreation, is seeing amazing results. The Larry H. Miller team is just extraordinarily happy with what’s happening in the megaplex—it is packed every single night. The same thing with Salomon Center—they’re busy all the time. And it’s drawing from a regional area instead of just the locals. So we’re seeing some great things happening in that area. 

The Riverwalk project is a question a lot of people have. There are some new partners that have come in and it will begin construction this spring. Wal-Mart is expected to open next January with their Super Center that will be right by the freeway entrance off from Wall Avenue. There are also other developments, including a sports center that will house indoor football and indoor soccer. We also have commitments out four years with the International Archery tournaments that will be in the summer, as well as cycling projects that are coming on board. When you look at the downtown core of Ogden, which is kind of the core for Weber County, there’s a lot going on. But then as you look at the individual cities—there’s also a lot going on. I think we’re all very optimistic about the development that’s taking place. 

 

MUSGRAVE: I agree with what Dave [Hardman] has said—there are a lot of great things taking place here. I would like to add that in order for us to create jobs and reduce unemployment, we need to support our small businesses. Small business success, I think, will lift us out of these economic lulls and that’s who we need to support. Overall, we’re doing very well and I am very pleased with everything that’s taking place in our community. We’re very optimistic that things are going to get better. 

 

JIM SMITH: I think that optimism is the word. Everyone is talking about economic impact, but I think there’s an emotional impact that we need to be aware of. As people start to realize that things aren’t that bad, we’ll see even more growth. That’s not to say that we haven’t had some sad things happen. We’ve lost some very strong banks and businesses. Yet in the reality of business now, others come and they expand and they grow, and there’s a real positive spin on even some of the most negative news that we have, so it is a great place to live and to do business. We are really poised to go into the future in a very positive way. Now, I don’t think we’re going to match what we did in 2007 and 2008, because in some ways that was built artificially, but there are some great things that are happening right now. 

 

CLOWARD: We [DATC] founded an entrepreneurial alliance, Northfront Business Alliance, which is a networking organization, and it has been very, very successful. There are a lot of people who want to own their own business. What we have found is there is a tremendous amount of knowledge that needs to be shared from our alliances. As good as you hope to be able to train new entrepreneurs as they come up, you can’t really teach them about business—they have to learn it. Sometimes it’s an expensive lesson for a lot of people, evidenced by the number of failure rates of small businesses. But invariably the death straw for most is lack of capital. They just run out of money. Unfortunately, I’ve never seen the market for the small business as tight as it is right now. For example, I own two quick lubes and car washes and I’ve been a franchisee for about 30 years. Historically I’ve had no problem finding money; in fact, we’ve never been turned down for a loan. But today the terms have all changed. What used to be 20 percent down for a loan now is 30 to 35 percent for small businesses. So the ability for small businesses to even come up with a down payment to obtain the financing for the new business has become very, very difficult. 

 

LUNT: Which then takes more of your capital.  

 

CLOWARD: It does. It eats it up. By the time they use all the capital to meet the down payment, many have no working capital for the first year to 18 months that they’re going to need to survive. That has been an impact. Today to get an angel capital investment, you’ve got to have not a good idea, you’ve got to have a product, you’ve got to have a track record, you’ve got to have sales in line to show that you can survive because the tolerance for risk in that environment has slowed so dramatically during the last couple of years. But, it will turn around—it will come back. There’s a lot of money out there to be invested obviously. There’s just a lot more stipulations on it. So we continue to work with a lot of businesses that come in for counseling and we love it. Despite the negatives, there’s a lot of optimism among entrepreneurs.  

 

Hill Air Force Base is a major part of Northern Utah. Discuss its role in the local economy. 

 

McCALL: I think Hill is on very solid ground. We are looking at the F-35 hoping that we will be the first bed-down base and operational base for the F-35. There was an EIS study going on a couple of weeks ago. It’s an environmental impact study. When you look at Hill compared to the other bases that they are looking at, we still think we should be at the top of the list. So we’re excited about that. 

Overall, though, it’s like a pendulum—one day things are looking great and the next day something could be horrible. Right now the Air Force in general is experiencing huge cutbacks, just like the rest of the economy. They’re going to have to cancel programs and they’re going to have to retire aircraft. I would guess at some point there’s probably even going to be a reduction of personnel. How that will affect Hill Air Force Base? I’m not really sure—it’s probably too early to tell. There are some significant things to be watching that could negatively impact us, but overall it’s probably the strongest of all of the employment options in the state. We just need to make sure we can focus on missions that are not only current now, but will get us 20 years down the road. 

 

KUSINA: The East Gate small industrial development on that side of the base is a great development. On the west side is the Falcon Hill National Aerospace Research Park. There have been some delays within the Air Force as they’re restructuring some dollars for different projects. But as of the last meeting of UDA, I think it’s fairly accepted that we’ll see something underway in the spring of this year with some ground actually turning over and some buildings starting to go up. 

 

How are the commercial and residential real estate sectors doing?

 

McCALL: I think real estate has changed dramatically from a year ago when we were sitting around the table. Every headline was focused on the real estate market declining—it was just doom and gloom. But that’s not the case anymore, and people are just starting to feel like we’ve gone through the worst. People are beginning to recognize that this is a good time to buy because interest rates are low and property prices have definitely decreased. We’ve seen prices slide as much as 20 percent, but I think it’s kind of a self-correction in the market. 

What I am looking forward to is getting all of the short sales and the foreclosures off the books. They are just killing us because those are the properties that are moving right now. I’m shocked as a real estate agent when I go out and show homes, how many short sales and foreclosures are out there. If I’m showing 10 homes, I can guarantee you that four or five of them are going to be short sales or foreclosures. And they just bring that market price down. But my personal opinion is we’ve hit bottom and we’re coming out of this. Whether we get out of it in 2010, I don’t know. I think we’ve got another wave of short sales and another wave of foreclosures that are going to hit us, but hopefully by 2011 we can at least see moderate increases. 

 

FULLERTON: I’d like to point out that banks are lending money. And there’s a wide spectrum of institutions within the financial industry that are lending. 

One thing I hear a lot of realtors and real estate professionals talk about is a sub-inventory that hasn’t hit the market yet—inventory that’s not in the MLS. Banks are holding those properties off the market. There was a foreclosure moratorium so everyone thought that might save them. And they’re talking about there being another tranche of inventory that we don’t even know exists, and so there’s a false sense of movement and activity because you’ve got this other big wad of real estate sitting there. 

 

McCALL: I do think banks are holding onto property. I recently had a call from someone wanting to know more about a house they thought was for sale. Well, when I called the number on the sign I was told, “This is a foreclosure and we haven’t put it on the market. We’re just taking input right now.” We’re seeing a lot of those situations, and I think there’s a lot of inventory that the banks are just holding onto to make sure they don’t saturate the market. 

 

FULLERTON: We’re also still doing a lot of construction lending. Builders are making money and there are good buyers out there who know what they want and they know they’re getting a deal, but they’re also willing to pay for value. But on construction lending, of course, the risk is completion and time, and we’re finding many more qualified presold buyers who are prequalified in real terms which wasn’t what we had in the last two or so years. On the commercial side, for owner-occupied construction and owner-occupied residential, there’s money available.  

 

McCALL: One of the issues that we see in the real estate market is this issue of qualified buyers. A couple of years ago you could take 10 buyers into a lending institution, and most likely nine would come out with a loan. Now you can take 10 buyers into a lending institution, and maybe four will get a loan. Every “i” has to be dotted, every “t” crossed, and you have to have real money and really be able to pay for the house. I think that’s a good correction in the market, but it certainly does affect the volume.

 

Discuss how the local educational institutions have been impacted by the economy. 

 

GALE: [Weber State University’s] situation can be described as the best of times and the worst of times. We saw very large decreases in the state allocation and at the same time we saw increases in enrollment, which I’m sure our other higher education partners experienced as well. It’s been difficult to try to manage that balance, but we are still innovating and engaged in development. Weber State University does play a strong role in the community, and we expect to continue to move forward. We’re making plans for not just this year or next year, but for five years from now.

 

GREAVES: I’d agree that it’s the best and worst of times that we’ve seen at the Davis Applied Technology College (DATC). Usually we have about 10,000 students a year. This year’s projections were up about 18 percent over last year’s 30 percent growth, so it’s a great time. The hard thing is to sustain this because our budgets have been cut back 20 percent. We’ve impacted salaries, vacation, holidays and now we’ve just eliminated three programs. It’s a robust time, but with the budget cuts, it’s a killer time to keep it energized. 

 

How is the area’s travel and tourism industry doing?

 

RIDDLE: Tourism is alive and well, including the meetings and conventions component. There’s been a lot of focus from the tourism efforts in our county in working with the Utah Office of Tourism through the marketing and the funding that’s provided through the legislature. And as a result, we’ve seen an increase in visitation at Antelope Island State Park to the tune of a 5 percent growth. Overall, our occupancies are slightly down, but they’re not down too far. We’re really proud of where we’re at and what we’re doing within our state. 

In regards to meetings and conventions, in 2009 people started actually booking business into the future years—we booked several groups with three-year contracts up through 2013. We found with our CVB we met our goal in bookings for meetings and conventions in 2009, and the team brought in close to $5.6 million in economic impact for the Davis County area which is a demonstration that tourism, meetings and conventions is a great economic engine, a clean economic engine for a community. 

Our restaurant tax collections are another bright spot within Davis. The statewide average is down by about 4.3 percent, but Davis County is down by just .5 percent, so that’s been very positive for our county. 

I would also like to highlight our location next to Hill Air Force Base. That’s been a huge pocket to our success, and it is so key that tourism and meetings and convention promotions are supported, not even just at a local level but at a statewide level.

 

KOSKI: Weber County has had a very good last two years—2008 was a record year and in 2009 we exceeded our revenue goal by 15 percent, room night goals by 28 percent, and our revenue directly from the conference center was up by 46 percent. So by all measures we did a terrific job, but what really played a major factor is our affordability and accessibility. 

 

HARDMAN: We recently hosted the Dew Tour, which was great. This was the first time that they have ever brought the Dew to a location where the city and the resort were separated. And they were nervous about that, so there were a number of things planned. We ended up having a business after-hours at the Marriott which was a great success—when they came in and saw 250 people from the community and chamber they were really impressed. Then, on Saturday, they had the largest attendance ever at a Dew Tour event, right here in Ogden. That was really extraordinary. The economic impact we will see is about $ 4 to $5 million. But in addition to that, the publicity that Northern Utah received from having that kind of tour is really quite extraordinary. 

MARTY SMITH: The convention business is just a sector of the overall tourism business. We saw a drop in certain sectors in 2009—corporate business dropped some and state association attendance was down. But we’re already seeing a turn around in 2010, so we’re optimistic that 2010 is going to be good. The one sector that has not dropped at all was the Air Force business that we get. Our biggest show is an Air Force event that’s been up 50 percent over the last three years. It’s already almost sold out for the coming year. Overall, we had a pretty good year in 2009 despite the economy, and 2010 is going to be pretty good, not amazing, but good. 

 

LUNT: We were down a bit in 2009 over 2008, but it overall was a decent year. What I’ve noticed is as unemployment goes up, occupancies go down. So as employment gets better, occupancies will continue to get better as well. The forecast nationwide, not just Utah, for the hotel business is that by the fourth quarter of this year we’re going to see a pretty good turnaround.   


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