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14 Jul, Tuesday
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Special Report: Summit & Wasatch Counties

A special thank you to Myles Rademan, director of public affairs for Park City Municipal Corporation, for moderating the discussion. And a special thank you, as well, to Red Ledges for hosting the discussion.

PARTICIPANTS:

Tim Anker, Cushman & Wakefield/Commerce

Laurie Backus, Jordanelle State Park

Mitchel Burns, Red Ledges

Catherine Cimos, Grand Valley Bank

Tom Fisher, Summit County

Hans Fuegi, Grub Steak Restaurant

Jeff Jones, Summit County

Alison Kuhlow, Historic Park City Alliance

Bill Malone, Visit Park City

Alan McDonald, Heber City

Terry Nolan, Park City Board of Realtors

Bill Rock, Park City Mountain Resort

Tracy See, Wasatch Mountain State Park

Rick Shand, Park City Board of Realtors

Rich Sonntag, Promontory Development

Ryan Starks, Wasatch County

Kevin Stocking, Heber Valley Bank

Jonathan Weidenhamer, Park City

Bob Wheaton, Deer Valley Resort

 

First let’s talk about skiing. We were up by almost double digits this past season.

ROCK: Utah had a record year, over 4.4 million skier visits. And we had a record year in Park City for all resorts combined. Last year, the East Coast had a terrible ski season. The Midwest had a terrible ski season. Anything west of the Mississippi did really, really well. So it was a tale of haves and have nots in the ski industry last year. A lot of East Coast visitation came out West because of what they were facing with snow conditions.

I think about why our company is here, and we’re here because Park City is an amazing community. It’s got unprecedented access to the airport. It’s got the greatest snow on earth. We invested $50 million to take two resorts and create the largest in the United States, so that certainly created a lot of buzz and generated visitation.

For those of you not familiar with the Epic pass, it’s sold by our company to our whole network of resorts, including in Perisher, Australia. It’s sold in all 50 states and over 100 countries. It really changed the paradigm of the ski industry about seasons passes, which used to be a product for locals who skied 40, 50, 60 days a year. Now it’s really become a product for destination guests, something for them to ski affordably and with lots of flexibility. We introduced the Epic pass here when we bought Canyons.

In Wasatch County, has the ski industry started to affect you more, or do you still see it quite separate from what you do?

STARKS: More and more the line between Summit and Wasatch Counties is getting blurry. When Summit County has a great ski season, that certainly benefits us—people will spill over and they want to see what else we have. So we have a lot of traffic in our Visitors Center, skiers from Park City saying, “What else is there?” We can refer them to our Homestead Crater or to the Heber Valley Railroad.

This past winter, luckily, mother nature was on our side and gave us some good cold weather and we had a successful year with the ice castles. Ended up generating about 80,000 visits to the area. So it certainly spills over quite a bit.

SEE: At Soldier Hollow, we see more and more skiers show up looking for another avenue in winter recreation. And between both of our concessionaires for snowmobile rentals and our Soldier Hollow Legacy Foundation area, we had our top sales for the year in both those areas this past year. Cross‑country skiing, tubing and snowmobiling were really big for us this past year.

WHEATON: Our guests that come—especially our destination guests—don’t know when they are going from Summit County to Wasatch County, nor should they really care. It really shouldn’t matter.

Let’s talk about real estate a little bit.

SHAND: We are seeing more and more people deciding to be a part of this community. We are seeing an expansion of the city. We are seeing expansion into Wasatch County. The Wasatch and the Heber Valley numbers, this year compared to the last 12 months, is astounding. Volume is up. Median price is up. We are seeing a huge demand in more affordable price points. There is certainly the Deer Valley clientele, but the main push is under that median price point, or right at that median price point for the county, whether you are looking for a single‑family home or a condo.

Alison, what have you seen on Main Street in Park City?

KUHLOW: There is a high demand for tenant space on Main Street. Turnover has been quick when businesses leave and new businesses want to come in. We’re seeing spaces that have never been rented before for retail down into the Marriott Summit Watch Plaza. We’ve got a number of new businesses that have located there with the expectation that the increased visitation to Main Street has really solidified and strengthened the pedestrian traffic throughout the entire district.

We are, as we define ourselves, really the heart of Park City. We are part of what brings people to town. So for us it’s trying to maintain that uniqueness, that character and really trying to meet people’s expectations, whether it’s the quality of the environment that they are feeling walking down on Main Street as well as the quality of the services.

ANKER: We are, for the first time seeing, lower Main Street finally fill up. For many years it’s really housed only vacancies on lower Main Street, but I think the clientele don’t really notice the difference anymore between upper and lower Main. So vacancy is down on lower Main, lease rates are up, and it’s all becoming one thoroughfare.

But overall the commercial real estate market is quite healthy. The only challenge we have is a lack of product. Lease rates are up in nearly every sector. For office space throughout the basin, we’re averaging around $20 a foot triple net. Obviously it’s much different if you get on Main Street. Some deals have actually approached $100 a foot. First time we’ve ever seen anything near three digits on Main Street for retail.

FUEGI: I think you’ll start seeing some of the restaurants being converted to retail spaces, especially on Main Street. At $50, $60 a foot, it’s almost impossible to make money in the food business. It’s a very expense‑intensive industry. There are only so many high‑end restaurants any street can afford, and we’re certainly getting there. The medium or lower-price restaurants on Main Street are becoming a rarity.

The mix of Main Street is extremely important, and whether we are going to be able to maintain some local merchants and food businesses, along with the T‑shirt business and the galleries—that is going to be an interesting dilemma. I certainly wouldn’t like to see Main Street go by way of some other resorts, where you see nothing but chain stores and high‑end luxury goods stores, because that would take away from the vitality and the viability and the uniqueness and character that we have on Main Street right now.

What do you see in the banking sector? Are you seeing more people ask for loans?

CIMOS: We’re seeing new construction, and that’s where most of our loans are going right now. A lot of it’s in Promontory. But a lot of these existing properties people are paying with cash. That’s just our market. So we do have a lot of new construction. Commercial lending is lower.

STOCKING: In the Heber Valley we currently have a limited rental supply. It’s driven rental prices through the roof. So affordable housing is still a very important issue that we’ve got to face. Housing prices in the valley have increased dramatically since the recession. Right now it’s cheaper for someone to buy a home with 3 percent rates than it is to rent. So that’s driving a lot of the new starter home market. Edge Homes has been very successful in the valley building new homes. It’s just a very interesting market right now.

Are any emergent developers talking about building apartments?

STOCKING: There are additional apartments being built just north of Walmart right now. There is some high‑density housing. The Boyer project that’s next door to Walmart is building high-density homes that are in the lower price range. There is a new development, the North 40, that is being started. So I think there are going to continue to be some apartments being built and planned for, and that could compensate for the limited rental market.

What’s happening in some of our high-end communities?

BURNS: At Red Ledges, we see a lot more spec builders building and we’re selling the homes before they can be finished. So that’s coming back.

Even though we’re selling to the grandparent, what the grandparent’s really buying is a place for their grandkids to come and visit them. So if you were to walk around this complex of buildings, instead of being golf focused, it’s really kid focused. You’ll see playgrounds, game rooms, pools. It’s all about not somebody’s child, but someone’s grandchild coming in. So we’re really focusing on that.

SONNTAG: We’re building things so that families can have, if you will, their own destination resort that the family comes to from all over the country. Yeah, we have great ski areas here; we put in great golf courses, and that’s good for five, six months of the year. But we’re building beach clubs, we’re building gymnasiums, we’re building all these other things in our community so that the whole three‑generational family can come and have everything they want. We have a membership that goes up and down within a vertical family, and they can always use it from all over the country.

What you are seeing at the state parks?

BACKUS: This year we’ve seen unprecedented visitation. It has been mind‑blowing, the amount of people that have come this summer. We have a new attraction, a water park called AQUAxZONE. It’s a private business, so we get a percentage of their gross sales. But people are coming from out of state just to go to this. There are only four of these west of the Mississippi, and we’re one of them.

SEE: The mindset of some of our legislators and our directors is that we have to focus on recreation. They want to see us use the public lands for the benefit of the people to get outdoors, have healthy lifestyles. It’s not just a camping experience any more. It’s not just a golfing experience. It’s what can you provide for the niches of those people to have a positive outdoor experience.

They’ve given us a lot of latitude to look at the areas we have in our parks and start to develop different things we can do. Wasatch has seven different concessionaires between our cafes, our golf, our biking, our snowmobiles, our ATVs. So it’s about making those partnerships so that we’re supporting private businesses by using public lands to provide people opportunities and recreation.

It’s nice that they say, “Dream big, think outside the box, decide what you want to do, what you can provide.” And you have to do a business plan. You show how, over time, your revenues are going to come back in, and that’s how they determine where they are putting their dollars. So we’ve come around to being a business instead of just a government entity.

Are there entrepreneurs who are seeing the opportunities of working with state parks?

SEE: Yes. For example, Dawn Larsen runs the Deer Creek State Park. But her new zip line that’s down there, he, as an entrepreneur came and gave a business plan to the state parks. It had to go out for bid through the capital bidding process. But he came forward with basically down money and then what he was going to do over time to pay that back and how many years he needed in a business plan. They jumped on it, and it’s been real successful.

BACKUS: We’re having a really hard time finding seasonal help. I’m still several positions down. Affordable housing is critical to our operation. We’ve increased our seasonal wage between $10.17 and $12 an hour and we still have openings. It’s really difficult to run something like that and not have the help.

We are getting more pressure because of the Utah Lake situation and now the Jordan River OHV Center and the aquatic stuff at Deer Creek. So we are really getting compounded because of all those assets.

Jeff, tell us about promoting economic development in a booming economy.

JONES: Our population is a little over 40,000 in Summit County, and we have 28,400 jobs that are primary-employment jobs. But we also have another 11,000 classified as extended proprietors, where people have a primary job where they earn the majority of their living but they have a second job or they have an entrepreneurial pursuit. That’s a lot of jobs within a county our size.

If you look at our gross regional product of $2.7 billion in county that’s 40,000 people—that is astronomical. Food service is 11 percent of that gross regional product. But what’s right there with it is real estate rental and leasing. So you can see how they’re joined at the hip. Our tourism markets and our recreation markets represent 6 percent. When you combine recreation with food, and then you see the spinoff to the real estate side, that’s gigantic.

When we look at the number of jobs that were created from ’15 to ’16, we’ve gained about a thousand primary jobs during that period, but we only gained about 490 people in population. And of that 490, more than half of them, 280, were natural increase. So in‑migration was actually a fairly small number. This is not something that just happened last year. This has been going on since 2010. So that difference between population that comes into the county and the amount of jobs that are created on a year‑to‑year basis, that creates our housing balance, which in turn creates some of the transportation, congestion issues that we’re trying to contend with.

STARKS: In Wasatch County, about 70 percent of our workforce commutes outside of the county on a daily basis. Summit, Provo and Salt Lake are the three big markets. And of that 70 percent, you’ve got to think that’s a lot of trips on Main Street every day. What if we were to flip that and create those jobs within Wasatch County—less commuting out and less traffic congestion.

A lot of people gripe about congestion between the two counties, but within 25 years Wasatch County’s population will double. It will go from 30,000 to 60,000. And I believe Summit County’s will be somewhere near the 70,000 mark. That is going to put increased pressure on transportation, on development, on housing. So Summit County and Wasatch County, Heber City and Park City are talking and planning more than they ever have. Hopefully that dialogue continues.

What are the things keeping you up at night?

WEIDENHAMER: It’s the quality experience of the visitor and the quality of life of the residents. When I get a little more granular, it’s workforce; it’s affordable housing. Our city council talked two weeks ago about a goal of providing 800 affordable housing units over the eight years. We can’t do that. There is no way. Where is the land? Where is the capital? So delivering workforce housing is a big one that really keeps me up at night.

FISHER: Our main transportation challenge is getting in and out of Park City. All of the main roads are owned by the state. And our challenges, compared to the challenges in the Salt Lake/Utah County valleys are not comparable. So the ability to take control of these, from a monetary standpoint, locally, is incredibly important. But we’re very limited in what we can do. We’ve got property taxes. We’ve got very limited ability on the sales tax side to raise revenue.

The other challenge is we have some values within the Snyderville Basin, the west side of the county, that conflict with some of the solutions that would normally be put in place. We purchase open space and we limit densities in order to maintain quality of life, and it’s of very high value. Well, affordable housing, workforce housing, are butting up against that directly. At some point we’ve got to get smarter about how we reconcile those things and plan a little bit better. Or choose other ways to deal with it and just acknowledge it. In our county, we constantly look at how we’re increasing the density of housing in our borders. And that’s directly affecting service provision in Wasatch County. So that’s one of the regional things that we need to reconcile as well.

We’re at a tipping point where we’re not going to be what we were, and we’re maybe not going where a lot of people who came here said they wanted to go. I didn’t move here to be urban and yet, realistically, in order to do transportation, jobs, affordable housing, you are getting more and more urban.

WEIDENHAMER: I think we’ve become exactly what we said we wanted to become, at least from a Park City economic development standpoint. As best as I can tell, your generation set out to create a year‑round, destination resort—that we’ve become. We took active steps to build a resort‑based economy on Main Street, and now we have to deal with those decisions.

I think a lot of people who have come and who have made it are saying, “Whoa, I didn’t know it was going to come with traffic and transportation.” We should acknowledge that. It’s the next chapter; now what are we going to do with it?

STARKS: Heber City recently broke ground on a new, large industrial park and found a tenant to develop it. What we’re seeing, though, is not a lot of companies wanting to come from out of state, or even out of the county, although we do get some of those. It’s more of our existing businesses are saying, “The economic climate is now good enough to where we want to expand.” One of our chocolate manufacturers is growing by 10,000 square feet. And Probst Electric is also building a new 20,000‑square-foot building, with another 20,000‑square-foot spec building. So we’re seeing an organic rise of our existing businesses.

SHAND: With all the growth and everything that’s going on right now, a lot of the dormant development parcels are starting to come forward. Developers are back, they’re on the hunt. What keeps them up at night, though, is absorption. Everybody is concerned about overbuilding and, believe me, it’s on the minds of the developers. The last thing they want to do is build a ton of product, have a really slow absorption rate and not have it sell out in two or three years. So as much as development is on the table, that is concerning.

BURNS: The average economic expansionary period has only been five years since the ’50s, so we’re two years past the average. How many more years are we going to go? As a developer, if I’ve got to stick $84 million into the ground, am I going to do that before or after the cycle ends? We’ve got more stuff to do, we have more investments to make, but are we a year away, two years away, because there is a cycle coming? We all know it. I just don’t want to get caught with my pants down.