Mammoth Real Estate Q&A | The Economic (Self) Stimulus Puzzle

This column appears in this week’s issue of The Sheet.

Q: So Paul, what’s your take on the economic stimulus plan in Mammoth??

A: While I applaud those who are making the effort and the discussion is an important one, the topic of economic stimulus still remains a puzzle in my mind. Years ago we were forewarned by Rusty to “not become addicted to the heroin of development.” But many did and many are. Now we’re having withdrawals. I hear local residents wishing for “the good old days.” Sorry, these are the good old days. The Town can’t print money or fund some massive program, but the residents can be proactive. It seems like outside of the Goldilocks years of the 2000’s, the discussion of local economic stimulation has occupied center stage for the past 30 years that I’ve lived here. And the Roaring 2000’s became the Whoring 2000’s. Such is life and a resort economy. Now un-stimulated times are back, like an old friend.

So far, the primary discussion is about reducing (or eliminating) construction and development permit costs, aka DIF. You may be inDIFferent to that if you are not in the building or real estate field, but in reality we all are. Some people are naïve enough to think they aren’t. If you benefit in any way from public services, the ups-and-downs of building, development and the real estate market is going to impact you. (Well, maybe not if you’re a trustafarian.) This DIF reduction creates a small incentive for those who want to build a home or some commercial project or development. It’s a small part of the entire cost but it can push the viability or motivation of a project into one that creates paychecks for locals. Maybe lots of paychecks. Time will tell. It certainly won’t create a development boom. It may help keep some doors open. We may be considering this DIF reduction for many years to come, especially if it works even just a bit. Quite frankly, Mammoth has some of the highest fees in the nation. For larger projects, we’ll be negotiating these for the rest of our lives. We’ll probably welcome the opportunity. And we’ve learned that hedge-fund types can be pretty persuasive. We just need to remember that the proponents of today may not be the proponents of tomorrow.

But let’s face it; the community of Mammoth can’t rely on handouts any more. Even the Ski Area is a model of corporate stingy-ness (by design). And another problem; Mammoth is this envied island of recreation and fun and debauchery based on folk’s disposable dollars. As the macroeconomics grind down, we’re increasingly on our own. Let’s not count on Nancy Pelosi going to bat for us. But like anybody with a problem, we have to get out of denial. For many years I had an “old timer” associate in my company who had a corporate background from the 1960’s.  He liked to sound-off on a variety of business and community subjects. He was famous for saying, “we have met the enemy, and it is us.”  There it is. The worse part is Goldilocks spoiled most of us, and that type of economy isn’t coming back anytime soon, if ever. I know, it hurts. Get over it. The early 2000’s were crazy and fun. But so were the 80’s and 90’s. The only difference was the flow of money.

Part of the solution is, shall I dare say, “self stimulus.” We need to get smart, or starve. Many years ago there was an economic study in Los Angeles about the flow of money in different ethnic neighborhoods. (If I recall this was part of a college course.) The results were quite interesting. There was significant difference between how many times a dollar turned over (the velocity) and how long it stayed inside the particular neighborhoods. Now I’m sure somebody is about to accuse me of being a racist (again) but I’m focused on the economics and the effects on the community. Essentially, the particular cultural mindset of some neighborhoods kept the dollars flowing inside the neighborhood at a greater pace and for a longer time. The result was a vibrant economy in the neighborhood. Other neighborhoods experienced just the opposite and it was quite evident in the deterioration of their micro-economy. We can and need to improve our cultural mindset. Keeping the dollars flowing inside the community before letting them escape may be the most important stimulus we can make. But that’s easier said than done when we’re all trying to save a few bucks. That brings me back to the impact of reducing the DIF. Some believe that local contractors are some of the best at spending and maintaining dollars spent within the town. The claim is their dollars flow around town more times before they leave. Restaurant and barkeeps might agree. Suppliers, gas stations, etc. might agree too.

What else can we do?  Well, I’m not tired of harping on the obvious points of trying to maximize bed tax collection or creating a greater service culture in the community (although we’re getting better). Bed tax is the life-blood of this community. It’s escaping everywhere from what I see. Talk to any property owner that self-rents online and you will discover that the renters are at war with us because they don’t want to pay bed tax, and they’ll canvas and negotiate until they can avoid it. This is a new challenge of a new era. We can either figure out the solution or do without the dollars. Strict enforcement may work but maybe we need to educate our visitors as to the importance of collecting the revenue (and the cost of snow removal?). And in this new era we also need to prove to them the money is not being squandered.

Meanwhile, the general economics are sorting out those who understand the need to constantly improve the service culture. Those who don’t get it are going out of business or losing their jobs. Resort Darwinism is alive and well in all local industries. Survival will be tough enough even with quality products and services. And don’t expect the customer to be less demanding or discerning. This is the age of  “doing what you don’t want to do” to be successful (or survive). But many have met the enemy, and it is us. This is part of the economic stimulus puzzle I see.

But there is something else, almost the opposite of Resort Darwinism. Seems we wear the restraints of unmotivated employees too. I have many friends who are local small businessman. Many are sole proprietors, many are true experts in their field, and almost all work their butts off. They take risks. And lately, really lately, they all seem to have the same problem. They can’t find enough good employees. At least ones that will show up, not whine and complain all day, and the odds are better than 50% that they will show up the next time their name is on the schedule. This isn’t pointed at anyone younger or older, long-time local or newbie.  Working three jobs or 60 hours a week was always the norm here in Mammoth. That is if you expected to get ahead, stay here, or stay ahead. Seems like half this town drags the other half down. But that might be true for this whole country. The complainers are usually the ones who aren’t working. And they do nothing to get money moving around this town. Many local businessmen are simply afraid to expand due to the lack of confidence in the labor pool.

The real estate industry is a classic example of the puzzle. It is almost laughable. Half the people are too busy and the balance do very little. These “do nothing” agents are on what I call the European Plan; “work” no more than 25 hours per week, expect plenty of handouts, don’t want any responsibility and demand their leisure time. None of that behavior can be enabled anymore, in any industry. Or maybe we’d all be happier on that Plan. We have met the enemy…

So maybe we should forget all this talk about economic stimulus. Maybe the puzzle is solved. Reality is the people who don’t need the stimulus don’t need it. The people who think we need stimulus don’t really want it. If you aren’t “doing what you don’t want to do” then you better make sure your trust fund is in order. These economic times will define the next phase and future of this community. We better know who the enemy is.

Have a great Labor Day Weekend!


9 thoughts on “Mammoth Real Estate Q&A | The Economic (Self) Stimulus Puzzle”

  1. On the subject of reduced DIFs, it doesn’t seem like we really need new housing stock since we are still working through the 2000s surplus. However, it would probably make sense to create incentives to rehab existing housing stock. Renovations of tired condo projects in certain areas would put the same folks to work, enhance the community, but not create even more excess housing.

    New development has real ongoing costs to taxpapers…infrastructure, police, fire, schools, etc. Someone has to pay these costs and existing homeowners plus TOT payers in general should not. Developers and buyers in these projects can be given the option to pay the DIFs over time through supplemental, temporary property taxes that expire over time. The developers get their housing, the community doesn’t foot the bill, and the market incentives don’t get distorted.

  2. Very good point about employees. Eroding employee work ethic is the biggest problem for every business today and is a sign of further decline to come. Part of the reason for this decline is that employees still look at 2000s as the model and feel the business owner is short changing them while pocketing the money. The second factor is the high cost of living. Employees are having a hard time and that reflects on their work ethic. Mammoth has a lot more pain coming in next few years.

  3. a breath takingly good post paul

    i don’t (ever) see how the bed tax works . “voluntary enforcement” ; come on . i mean , doesn’t the whole nation of greece avoid paying taxes and isn’t it also the american way ? u’d be better off putting up toll booths (maybe disguised as agricultural inspections stations) at (all) the entrances to town and hitting up the 3 and 7 condo stayers there .

    another thought that crossed my mind as i read ur piece is it’s weird mammoth is such a destination spot for so many well to do people yet (apparently) has such deeply ingrained money problems . do snowmass and deer valley have the same issues or is it more a management thing here ?

    finally , what scared me was the thought of working 3 jobs / 60 hours a week (been there , done that) . i mean , other than for buffet and maybe the donald , that’s not the end game is it ? surely there’s more to life…

    great piece . thanks .

    ps when do we hear how the lower fannie and freddie limits r impacting ? and what’s this i hear of threats to the mortgage interest deduction…

  4. I couldn’t agree more about horrible employees. The staff at most restaurants and other service providers is awful, and has forced me to consider changing how I spend my money in Mammoth. This past visit was the worst by far, and it was almost universal at the restaurants we frequented (and we’re not talking about fast food establishments or $7 per entree places either).


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