Abstract
As popular rural tourism destinations evolve from the provision of general tourism products and services to also becoming desirable second home destinations, particularly where there is high-end real estate development, important planning, policy, and management issues must be addressed. Decisions regarding these issues will only be effective if based upon an accurate understanding of the impacts of a second home economy and the amenities that must evolve to serve the needs of second home residents and the workers who in turn serve them. Using research from Colorado, this chapter addresses the significant effects of high-end second homes on rural resort destinations. These include such elements as housing prices, the number and types of jobs generated, effects on community services and on the overall economy, among others. This chapter also assesses the usage patterns of second home owners of community amenities and the similarities and differences of recreation patterns and assessments of community offerings. A basic industry economic analysis documented the substantial impact of second homes on the region’s economy and on the number of jobs created due to home construction, maintenance, and operations, as well as on second home services. Elected officials, community planners, nongovernmental organizational personnel, community leaders, and public managers can use this information to understand, estimate, and manage both the primary and secondary effects of second homes in tourist-based economies and thus contribute to the long-term sustainability of mountain resort rural communities.
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Notes
- 1.
Aspen’s population increased in the 1990s by 17% from 5,049 to 5,914. However, census block data available for those years shows that only about 400 persons were added to the area included within the city’s 1990 boundaries.
- 2.
The census doesn’t do a very good job measuring extreme wealth. The top category in the 2000 census was “$250,000 and above,” somewhat akin to lumping all NBA players above 6′6″ as “very tall.”
- 3.
Although Aspen’s strict land use controls are often blamed (and surely contribute) to the demographic changes in that community, it is very apparent that these controls are not the driving force of these changes as so many resorts with few restrictions are experiencing similar changes. For instance, Steamboat’s 50–54 population more than doubled, and its 55–59 age group almost tripled during this time period, illustrating the demand side component of the changes.
- 4.
The Northwest Colorado Council of Governments is a voluntary association of towns, cities, and counties in North Central Colorado.
- 5.
The logarithmic relationship between house size and employment generation found by Clarion was \( y=-4.67138{e}^{(0.000328x)+2.01}\) which meant that they predicted a 12,000-square-foot second home would create about 4.0 jobs (or FTEs) for post-construction operation. Of course, job generation is thought to be a function of the homeowner’s wealth which is only roughly correlated with house size. A similarly sized locally owned home was predicted to generate far less employment, about 24 jobs for a locally owned house.
- 6.
The fact of increasing wealth concentration is not seriously debated; see for example, The Economist, January 6, 2005, Ever higher society, ever harder to ascend. There is a wealth of literature on wealth concentration and a measurement called the Gini Index that measures this phenomenon on a scale of zero (perfect equality) to 1 (one person owns everything). The current index is about.43, and has been rising steadily since the early 1980s. See http://www.nber.org/data-appendix/w8467/w8467-app.pdf, National Bureau of Economic Research - income data.
- 7.
Aspen Pitkin Housing Authority 1993 study for the Aspen Area Community Plan is the source for the percentage of workforce data. Aspen Board of Realtors is the source for median free-market house process in dollars adjusted for CPI-U.
- 8.
One of the competing uses that transform commercial districts is residential housing. Most zoning schemes contemplate commercial development as a “higher and better” use and therefore do not prohibit the conversion of property from (commercial to residential use). Zoning is more often seen as a means of protecting residential property values from detrimental commercial development. In fact, the earliest zoning cases revolve around the attempts of neighborhoods to protect themselves from the “evils” of bars and gas stations ruining the neighborhood and those battles continue to this day over parking, noise, traffic, and character issues.
- 9.
Twenty years ago, Aspen was one of the few resort cities in Colorado with a public transit system. Today, virtually every resort community has at least a local bus system, if not, a regional system. The Aspen bus system has grown into a regional carrier providing four million rides per year in 11 towns and three counties, with a $10 million budget and a system of trails.
- 10.
While still small, the Hispanic population grew by a factor of 2.5 in the 1990s in Steamboat Springs. In Carbondale, about 100% of the population growth under age 45 was Hispanic. The same is true in Sun Valley, Idaho, where Hispanics were much younger than the population as a whole.
- 11.
Aspen and Pitkin County have participated in the purchase of four mobile home parks totaling about 350 units. These neighborhoods were resold as individual lots to former tenants with resale restrictions, approximating the rent formerly paid by the owners.
- 12.
One of the goals of the ongoing second home research at NWCCOG is to learn more about this group. As noted, the census provides little distinction between the mere haves ($250,000 a year administrators, for example) and have a lots. The goals and needs of this group are critical to planning, for example, how many second home owners are hoping to eventually become permanent residents, what services do they need or want, and what community activities they will support.
- 13.
While tinkering with land use codes is an effective solution for the types of problems traditional resort economies face, the available incentives such as fee waivers or one-step review processes are inconsequential relative to the investment alternatives at stake. Nor does up zoning in and of itself seem to help: there is no way that the market can be saturated with enough housing to bring the price down to affordable levels in high-end resorts. And there is little political will to risk the experiment when the community already feels traffic and construction is a problem.
- 14.
Several resorts including Aspen and Park City have contemplated or adopted zoning to prohibit offices uses in ground floor spaces in the commercial core. The effectiveness of this strategy is unproven.
- 15.
Base Village is approximately 600 condominium units and 90,000 square feet of commercial space. It calls for structures much larger and much taller than allowed by the recent master plan. Some affordable housing is included in the project. The marketing target is expected to be the usual 55–65-year-old baby boomers. Pitkin County has objected to the failure of the plan to include substantial road impact mitigation for the primary two lane serving Base Village.
- 16.
It appears that CAST refers to “demand” and “supply” side solutions, that is, access through mortgage financing, down payment assistance, etc., as “demand” solutions and direct creation programs as “supply” solutions. Not to be confused with “supply side” economics or any other hocus-pocus.
- 17.
Vail had a similar unhappy experience when an apartment complex with a 20-year deed restriction had to be repurchased (“bought down”) to preserve affordability.
- 18.
Pitkin County formerly based affordable housing requirements on the presumed impact high-end development had on the local market. This approach makes little sense when a project’s economic impact might move the typical housing price from very unaffordable to extremely unaffordable. Pitkin County now attempts to measure job generation from residential construction in a manner akin to the measurement of employee generation by retail or other commercial activities.
- 19.
The first $100,000 in sales are exempt from the housing RETT. An additional 0.5% RETT supports the historic Wheeler Opera House. You might have seen the author of this chapter there in 1983 appearing in the Marriage of Figaro but probably not.
- 20.
Land prices are also driven upward by federal and state ownership of areas surrounding resorts. Pitkin County, for example, is about 87% national forest and Bureau of Land Management land.
- 21.
The census data is, of course, not classified by “free-market” and “affordable” units. However, some census blocks are almost purely one or the other. About 918 affordable units in nearly “pure” census blocks were studied for age and number of school-aged children per unit along with a like number of free-market units in almost “pure” census blocks. Another 230 free-market units were matched against voter registration records to check the conclusion. The voter match project found a median age of 60 for those owners. Pitkin County also did a community survey in 2004 that showed affordable housing owners to be much younger than free-market residents.
- 22.
The Aspen Highlands base area did lead to the replacement of aging ski lifts but, thus far, no dramatic increase in skier numbers. Although the retail enterprise is admittedly a failure in spite of hard work on the part of local merchants and low rents, that does not mean the developer took a loss overall. The real estate is apparently selling well and at high prices. The Aspen Skiing Company is seeking approval of a larger base village at Snowmass and blames the lack of vitality at the Highlands on the county commissioner’s failure to approve more units. The open question remains, however: would three times as many 60-year olds create vitality at Aspen Highlands?
- 23.
Colorado Ski Country. (n.d.) Skier Visits report. Retrieved March 29, 2005, from the Colorado Ski Country Web site: http://www.media-coloradoski.com/index.cfm?cid=7547,7549
- 24.
Due to the 9–11 attack on the World Trade Center and the general economic slowdown, the counties experienced short-term job losses during 2001 and 2002.
- 25.
Projections provided by Colorado State Demographers Office, Colorado Department of Local Affairs.
- 26.
Bleven, J. Denver Post, July 4, 2004. www.Denverpost.com. Retrieved July 5, 2004.
- 27.
Full-Time Household Equivalency was a term created by the Steering Committee to describe the extent to which a housing unit was occupied on a full-time basis by its owner.
- 28.
Resident income includes retiree income, transfer payments, dividends, interest, and rent.
- 29.
This includes mining, manufacturing, agriculture, and Interstate I-70 thru-traffic expenditures.
- 30.
In Aspen, Colorado, the Real Estate Transfer Tax is dedicated to the purchase of affordable housing units.
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The authors wish to acknowledge Ms. Linda Venturoni, Principle, Venturoni Surveys & Research, Inc.
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Long, P., Ireland, M., Alderman, D., Hao, H. (2012). Rural Tourism and Second Home Development: The Case of Colorado. In: Uysal, M., Perdue, R., Sirgy, M. (eds) Handbook of Tourism and Quality-of-Life Research. International Handbooks of Quality-of-Life. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2288-0_35
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