Reflecting on 2009 in Aspen
Aspen, CO Colorado
There aren’t many Aspenites who will remember 2009 as a great year. Sure, there may have been certain personal moments or family occasions, but from a business and professional standpoint, it was a difficult year. People lost jobs, changed jobs, relocated, tried new occupations, filed for unemployment benefits, struggled to make ends meet, reduced spending and made all sorts of unexpected adjustments.
If it’s true that the economy has hit bottom and is now recovering, then it may seem like dwelling on the negative to reflect back on 2009. But we think last year will go down in memory as something of a benchmark, so we decided to take stock, and to give that benchmark some clarity.
This article looks at seven different aspects of the local economy, one by one: Construction, real estate, skier visits, occupancy, retail sales, unemployment and foreclosures. Each snapshot includes a look at where we’ve been over the past year and, if possible, where we might be headed.
Let’s hope 2010 marks an improvement, for Aspen and the nation.
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The real estate industry dropped in 2008 and 2009, but the construction industry suffered a resounding thud.
After experiencing boom days from 2004 through 2007, the value of construction in Aspen fell 33 percent in 2008 and another 40 percent in 2009, according to the city building department.
The value of completed projects fell from $255.27 million in 2007 to $170.1 million in 2008 to $101.35 million last year.
At the height of the boom in 2006, the value of projects in Aspen proper exceeded $300 million, city data shows.
“I think it’s the worst I’ve seen, for sure,” said Steve Hansen, who founded Hansen Construction 30 years ago, in a recent interview.
Several major projects in Aspen and throughout the Roaring Fork Valley got caught in the credit crunch. Work stopped when they lost their financing. That includes high-profile projects outside of Aspen such as Snowmass’ Base Village and the Willits Town Center in Basalt, where construction of a Whole Foods Market stopped when financing disappeared.
Subcontractors have filed mechanic’s liens on several projects, attempting to collect for work performed.
Hansen noted there is a delayed reaction to the downturn in the construction industry. Some construction companies have remained busy with jobs that started before the recession hit with full force. But the activity level for architecture firms is a bellwether for construction – and many architecture firms laid off up to 50 percent of their staffs in 2009 for lack of work.
“Lots of architects are hurting and need the work,” Hansen said.
In casual conversation, two architects said this month activity is picking up a bit, but that competition for jobs is fierce.
Construction companies based in Pitkin County shed 296 jobs from mid-2008 to mid-2009, according to data tracked by the Colorado Department of Labor and Employment. Employment fell from 1,298 to 1,002 as of June 2009, the latest information available from the state. Job losses may be more severe by now.
– Scott Condon
For 15 straight months, the city of Aspen’s sales tax collections had run behind those of the prior year – until December 2009 offered a glimmer of hope with revenue remaining flat relative to December 2008.
The last time sales tax collections increased over the previous year was August 2008, when revenue was up 6 percent over the year before, according to City Finance Director Don Taylor. Ever since then, sales tax revenues have been lower than the year before.
Yes, the close of 2008 and all of 2009 were difficult for Aspen retailers and lodges.
As the recession reared its ugly head in fall 2008, consumer confidence fell. Fewer people booked vacations, and those who did spent less money while on vacation.
Tourist accommodations took the biggest hit in 2009 with a 24 percent decline in revenue over the previous year, but other industries didn’t fare well either. Total retail sales in 13 sectors in 2008 were $511,030,244. In 2009, that figure fell to $438,663,714 – putting a major dent in the city’s general fund, which depends heavily on sales tax collections.
As a result, the city government laid off nearly two dozen people and put major capital projects on hold.
Industries hit hard in 2009 were mostly tourist-driven: specialty retail was down 26.7 percent; sports equipment and clothing, 15.6 percent down; restaurants and bars were down 10.7 percent.
The city hasn’t had to cut services yet, but it’s possible if the economy continues to slide. The Aspen City Council will examine how its 2010 budget is holding up on March 15.
The city’s forecast calls for a small, 1.5 percent increase in sales taxes revenues in 2010, and a 4 percent upswing in 2011.
“We expect plenty of economic challenges in 2010 and 2011 due to the nearly unprecedented unemployment rate and the severe reductions in loan availability,” said City Manager Steve Barwick. “However, the Roaring Fork Valley is teeming with entrepreneurs who operate in a free market economy and this is still one of the world’s best places to live and visit.
“We’ll be OK in the long run.”
– Carolyn Sackariason
Gauging Aspen’s economic fortunes as a destination resort used to be as simple as checking in with its hotels and lodges. The fuller the tourist accommodations, the better the bottom line.
It’s no longer that simple.
Most certainly occupancy rates were down last year, dropping from an overall average of 56 percent in 2008 to 43 percent in 2009, according to data maintained by the Aspen Chamber Resort Association. The single best month of the year in 2009 was January, with an average occupancy rate of 70 percent according to the ACRA. That was down from 86 percent in January 2008.
The national economy began its downward spiral in fall 2008, affecting the 2008-’09 ski season, but the calendar year 2009 was the first full year of the resort’s new, recession-era reality.
“I call it the low bar – 2009 is definitely the new benchmark,” said Bill Tomcich, president of local reservations agency Stay Aspen Snowmass.
Occupancy rates in 2010 may eclipse 2009 numbers, but they still lag far behind the numbers posted during headier times.
And a new indicator has emerged alongside occupancy rates – average daily rate (ADR).
Local hotels and lodges have responded to the challenging economy by offering deals, whether it’s lowering rates or offering one or more free nights with certain minimum stays.
The effect is something of a double whammy – a reduction in revenue that is the result not only of fewer bookings, but lower rates paid by visitors who do come.
For summer 2009 – a period defined as May through October – Aspen’s average occupancy rate stood at 40.8 percent, according to the Mountain Travel Research Program, which tracks occupancy data at mountain resorts. That number was down 16.4 percent from the same period in 2008, when the average occupancy rate was 48.8 percent, according to MTRiP.
The average daily rate during that period dropped from $278 in 2008 to $235 in 2009 – a 15.5 percent decline.
In December alone, the average occupancy rate remained steady from 2008 to 2009, at 49 percent for the month, according to the ACRA data, but the impact of the lower ADR was apparent in the city’s 2009 sales tax report. Lodging tax collections were down 12 percent in December 2009, compared to 2008.
Lodging tax collections for all of 2009 were down 25 percent, compared to 2008, according to the city.
Actual receipts in the tourist accommodations sector totaled $113.9 million in 2009 – down 24 percent from 2008.
– Janet Urquhart
After skier visits slipped as expected when the recession hit last winter, the Aspen Skiing Co. hoped to avoid further losses this season.
Skico officials said before last ski season they expected skier visits – a customer skiing or riding for any part of the day – to drop between 5 and 15 percent because of the recession. The forecast was so accurate it would have made a meteorologist jealous. The Skico’s 1.36 million visits were down 7.6 percent from the prior season.
Skico executives forecasted flat business this season. So far, expectations have been exceeded. As February draws to a close, skier and rider visits are up about 5 percent, according to Skico spokesman Jeff Hanle. But the company isn’t ready to declare the season a success.
“March is make it or break it,” Hanle said. “And the last couple of Marches weren’t that strong.”
Advance reservations indicate this year could be a bit stronger. Many Skico marketing initiatives have been designed to boost business, especially by attracting families during spring break.
As of Dec. 31, Buttermilk and Snowmass were up by the highest percentages. Aspen Highlands was up slightly and Aspen Mountain was flat.
Skier visits dropped by 5.5 percent in both Colorado and across the country last season, according to industry trade associations. The National Ski Areas Association reported 57.4 million skier visits. No statistics for the current year are available.
– Scott Condon
The real estate market took a big tumble in Pitkin County and throughout the Roaring Fork Valley in 2008, then slid even further in 2009.
Even so, the sales volume exceeded $1 billion last year despite caution by buyers and the ongoing unwillingness of many sellers to offer deep discounts.
For the year, sales totaled $1.07 billion in Pitkin County. That was down 21.5 percent from $1.37 billion in the prior year, according to a year-end report by Land Title Guarantee Co.
The number of transactions slipped 15 percent in 2009 from 2008, the title company’s report showed.
“It was the perfect storm – going in the wrong direction,” Mason and Morse Real Estate President and CEO Bob Starodoj told The Aspen Times in January. The 40-year veteran of the Aspen real estate market said conditions have been the most volatile he has ever seen.
Real estate agents are cautiously optimistic about 2010. The number of property showings and sales picked up in the fourth quarter of last year. Still, nobody is predicting a gangbuster year.
“I don’t see a huge surge in 2010,” Brent Waldron, managing partner in Aspen for Chaffin Light Real Estate, said in February.
The frenetic days from the middle of the last decade are a distant memory. Sales volume topped $2.24 billion each year from 2005 through 2007.
Tougher times mean changes for the industry. Many firms have reduced support staff. And some smaller firms that have struggled to hold on, hoping for a quick turnaround, probably won’t have staying power, Waldron said. That means more contraction and consolidation in the real estate industry.
A report by the Colorado Department of Labor and Employment showed that real estate sales and rental companies in Pitkin County employed 153 fewer workers in the second quarter of 2009 then in the second quarter of 2008. Employment fell from 1,329 to 1,176. Those totals don’t include real estate agents on commission rather than salary.
– Scott Condon
In the clerk’s office on the third floor of the Pitkin County Courthouse hangs a bulletin board, where notices of Rule 120 hearings are posted.
If you’re not a lawyer, bureaucrat or someone whose home is on the brink of foreclosure, you probably don’t know what a Rule 120 hearing is. But an increasing number of Pitkin County residents are becoming familiar with Rule 120 hearings, which are prompted by lenders who claim a property owner is in default on a loan. The hearings are held to determine whether the lender can legally foreclose on a property and sell it at auction.
These days, the aforementioned bulletin board has become crowded with Rule 120 notices. This hardly comes as a surprise, given that 2009 had the most foreclosures in Pitkin County since 1983, when 130 properties went into default.
All told, 105 foreclosure filings were made last year. Of those filings, however, foreclosure proceedings were staved off in 37 cases because they were either cured, withdrawn or went into bankruptcy, according to data from the Pitkin County Treasurer’s Office.
Among those spared from the auction block were downtown Aspen’s historic Hotel Jerome, which had been scheduled to go to a public sale last month.
Foreclosure filings ran the gamut last year, from a $112,000 property on Aspen’s Fabi Way (the foreclosure was later withdrawn), to $110 million for Related WestPac’s Snowmass Center, Snowmass Inn and Snowmass Mountain Chalet, which were sold in July for $110 million to Related’s parent developer.
Through Feb. 25 of this year, Pitkin County’s foreclosure filings totaled 16, included two that have been withdrawn, according to the Treasurer’s Office.
Statewide, 2009 saw a record 46,394 foreclosures last year, according to The Denver Post.
– Rick Carroll
It doesn’t bode well for the local job market when someone starts a 12-step program for the unemployed.
That’s what happened in Aspen last year, when a jobless person launched Unemployed Anonymous.
2009 apparently was the right year for such a program, given that Pitkin County saw its unemployment rate hit 5.75 percent, the highest in at least 10 years. Still, Pitkin County’s jobless rate is lower than the state’s 7.3 percent, which jumped sharply from 2008’s 4.9 percent, according to the Colorado Department of Labor and Employment.
And based on a recently released report from the labor department, Pitkin County lost 1,804 jobs and 55 businesses during the first six months of 2009, while monthly wages dropped $285 on average.
More so, there were 16,474 jobs in Pitkin County in 2008 but 14,670 by June 2009.
As a result, demand for the state’s unemployment funds has been high.
“Like all states, Colorado has been hit hard,” said Donald J. Mares, labor department executive director, in a prepared statement. “More people are tapping into the benefits.”
In November, the state processed more than 22,200 new applicants for unemployment. The same month, $94 million in benefits were paid out, compared to $42 million in November 2008 and $21 million in November 2007.
Still, things aren’t as dim as they once were.
Earlier this month the federal government announced the national unemployment rate was 9.7 percent, marking the first drop in seven months.
– Rick Carroll
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