Will and Angus Burns stroll through Gondola Square in front of One Steamboat Place on Thursday morning while vacationing in Steamboat Springs from Australia. Base area businesses are a key component of the local economy. The Steamboat Springs City Council discussed ideas for stimulating the economy during a retreat Thursday.

Photo by John F. Russell

Will and Angus Burns stroll through Gondola Square in front of One Steamboat Place on Thursday morning while vacationing in Steamboat Springs from Australia. Base area businesses are a key component of the local economy. The Steamboat Springs City Council discussed ideas for stimulating the economy during a retreat Thursday.

Steamboat City Council emphasizes building economy on foundation of existing assets

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Joaquin Van Thienen, right, helps Seattle resident Bill Deschner on Thursday morning at Terry Sports near Steamboat Ski Area. Base area businesses are a key component of the local economy.

— Many other municipalities across the country, when attempting to revive recessionary economies, could be trying to start from scratch and create new sources of business and industry in their communities.

Not so in Steamboat Springs.

Preserving existing economic drivers and assets, and using that foundation to improve business-related infrastructure and government efficiency, was the framework the Steamboat Springs City Council established Thursday night in Howelsen Lodge to guide future economic development policies. That’s not to say the City Council thinks new businesses aren’t welcome in Steamboat — building on the current foundation and adding improvements, such as better broadband access, can help diversify the economy and attract more companies that could provide high-paying, career-level jobs that many say are lacking locally.

But Thursday’s primary focus, from city officials and the public, was on keeping and improving what we’ve got.

“It’s very important for us to preserve as much as possible the assets and businesses that are already here,” City Council President Cari Hermacinski said. “I think the current assets we have represent the best conduit for the long-term goal.”

Steamboat Ski and Resort Corp. President Chris Diamond, citing an example of positive local investment, said the city’s multimillion-dollar base area redevelopment projects have spurred other investment at Steamboat Ski Area. The cost of Ski Corp. improvements on Mount Werner, he said, have more than matched the city’s redevelopment costs.

“It’s been a huge change, and I think that investment is already showing returns, in that we’re better off than we would have been otherwise,” he said.

Diamond also cited ongoing fundraising efforts for improvements to Howelsen Hill, which got a boost last month with $900,000 in grants from Great Outdoors Colorado.

“Protect your recreation base … keep these two major projects going,” Diamond said, referring to Howelsen and the base area.

Developer Jim Cook also spoke about Steamboat’s outdoor industry, citing homegrown businesses including Big Agnes, Honey Stinger and SmartWool. SmartWool’s current lease at Steamboat Springs Airport ends in September 2012.

“We need to keep our finger on the pulse of those businesses — we don’t want those businesses to leave,” Cook said.

The City Council will hold at least two more economic development discussions with facilitator Roger Good, likely at the end of January and then in mid-February. The goal is to craft short- and long-term goals that can guide business-related policy decisions.

Plenty of ideas were on the table Thursday.

City Council members Meg Bentley and Walter Mag­ill spoke in favor of better broadband infrastructure, an idea that received support all around.

Councilman Bart Koun­ovsky floated the idea of an organization that would serve as an advocate for businesses before city government, citing the complexity — and sometimes, uncertainty — of shepherding a development proposal through the city planning process.

Hermacinski said that idea could be excessive.

“If we have to create a whole new organization to help businesses interact with government, we’ve got a problem,” she said. “We’re small enough to make those changes on our own.”

Near the end of Thursday’s meeting, a train whistle blew outside Howelsen Lodge. The whistle’s significance — during a meeting essentially about money — wasn’t lost on Scott Ford, of the Routt County Economic Development Co­­operative.

Among his many economic ruminations and research projects, Ford recently has taken a look at coal prices and tonnage to estimate the financial value of each coal train that rumbles through Steamboat.

With an October “spot price” of $51.53 for a ton of coal from Twentymile Coal Co. in west Routt County, about 100 tons of coal per rail car and 110 rail cars per train, Ford has a ready estimate related to one of the county’s most vital industries — an industry facing an uncertain future.

“There goes a half-million dollars,” Ford said under his breath Thursday, as the coal train rolled by.

Comments

rhys jones 3 years, 7 months ago

Dad built power plants. He said one trainload would run one typical 3-unit power plant for one day. Just throwing that out, as food for thought. There is a bright future in power, whatever form it takes. Dad also said "Everybody wants pizza."

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Fred Duckels 3 years, 7 months ago

It remains to be seen, what the long term picture will look like if construction remains flat. We may be saddled with more growth than we like, to pay the bills.

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Scott Wedel 3 years, 7 months ago

With what has previously been disclosed about operations at TwentyMile which is that they have long term contracts, and sell at virtually none at the spot price. It would appear that they are getting closer to $30 per ton. Also, the newer aluminum rail cars hold 118 tons per car. So, that calculation is off 40% on the high side for the price and off 20% on the low side for the amount passing by.

It is also unclear whether Twentymile's coal is the same coal quoted the in spot price. It would appear to be just short of metallurgical coal which is the portion that has strong export growth. Hopefully, it is suitable for that market.

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Steve Lewis 3 years, 7 months ago

The article describes a sensible direction for this community - getting back to the basics and the economy that sustains us today.

For the first time in decades, resort towns are leading Colorado in foreclosures (see below). Growth is the last thing we need to spend our time on today. Hearing of Bart's idea, and other efforts to streamline codes for future development, I'm still not sure this council understands this.

A Denver Post article this week:

"The Colorado Division of Housing is still compiling its 2010 foreclosure report for the Western Slope. But the division's community relations director, Ryan McMaken, expects to see resort counties — which for decades ranked at the very bottom among state foreclosures — filling the top 10 list for 2010.

"The top 10 used to always be the Front Range. Now it's all mountain counties," he said. "Clearly, the market was really overheated up there in '07 and they had nowhere to go but down. I think we still may be looking for the bottom up there."

"I don't know if we've reached the bottom of the hole yet," said Routt County trustee Jeanne Whiddon. "But as a politician-economist recently said, we will be at or near the bottom for a long time. The recovery, if in fact we are in one, will probably be a slow, gradual one."

http://www.denverpost.com/search/ci_17071031#ixzz1AvsreK3z

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Leslie Faulkner 3 years, 7 months ago

While a business advocacy organization (an idea from Bart Koun­ovsky) is probably the answer to many, many economic problems facing Steamboat today, it should not be sanctioned, goverened or in any way associated WITH the city. The people, the businesses need a separate voice to interact with city government. The fact is, we do have problems and our local government officials are not out in the trenches like the struggling business owners and people of Steamboat. And likewise, we are not in their shoes. I think it's a positive and proactive idea but business owners (not the city) would have to spearhead and drive it.

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kathy foos 3 years, 7 months ago

That railroad project that Scott Ford is up to,is very interesting.The raiload employees live in South Routt,Craig, Pueblo, Denver,Colo.Springs,Grand Junction,etc.The ones that dont live in the Valley,come up every other day and spend money in Yampa and sometimes Steamboat when rooms aren't available.Coach America hires many people as drivers in South Routt.Coal miners are all over the Valley and they are permanent with familys.If coal ceases to go out of this Valley it will hurt all over but would be a major blow to South Routt and the coal,railroad workers.There are many workers available that arent going to make it without Steamboat reaching out to locals in the valley as employees.If Steamboat takes on too many Visa workers it will make ghost towns out of the rest of the Valley Leslie ,I agree with you.An organization with all kinds of variety for current and future enterprises.For marketing,advice,investor contacts,and maybe some new industry in the surrounding areas of the county.It cannot be just about Steamboat.South Routh is at risk.

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Scott Ford 3 years, 7 months ago

Hi Scott W - I sincerely appreciate you challenging data assumptions. Thanks for keeping me honest with data.

There were all sorts of crazy statistics tossed out Thursday evening during the meeting. Some examples: The average worker in Steamboat Springs works 2 or 3 jobs to survive. Or, that Steamboat Springs is losing $60 million of retail sales monthly due to leakage because there is no Target locally. It was amusing to listen to although total fantasy. Who among us does not like occasionally a good fairy tale?

All this number tossing only proves, what Andrew Lang, the Scottish author of the mid-19th century said, "An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts - for support rather than for illumination." A very insightful statement from a Scottish author that wrote primary fairy tales.

Here is how I arrived at the numbers that were quoted in the article. Coal is priced by the ton; however, the price per ton is determined by the coal's energy content. The energy itself is priced per million Btus. Coal from Twenty Mile according to Peabody Energy, the owners of the mine, yields about 11,350 Btus per pound. This simply means that a ton of coal (2,000 lbs) will have 22.7 million Btus.

The October 2010 spot price per MMBtu (million Btus) of coal was $2.27. (Source = Dept. of Energy / Energy Information Division) If sold on the spot market a ton of Twenty Mile coal would have cost $51.53. Since a fully loaded rail car contains about 100 tons of coal, each rail car has about $5,153 worth of coal. On average, the trains leaving Twenty Mile have 110 rail cars of coal. This means the value of the coal being transported by the train is about $567K.

Twenty Mile's daily production rate of about 23,000 tons of coal per day means that two coal trains on average would pass through Steamboat Springs. (Source = Colorado of Division of Reclamation, Mining and Safety Reports) The value of this coal would be slightly over $1.1 million. Viewed annually this means that about $413 million of coal went through town during 2010 from Twenty Mile. To put this in perspective Retail Sales in Routt County for 2009 reported by the Colorado Department of Revenue was $892 million.

It is important to recognize that very little coal is actually sold at the spot price. Most coal is sold based on a contracted price, which may be lower or higher than the spot price depending on market conditions. The spot price does, however, provide a general range of the market value of coal at a given point in time.

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Scott Ford 3 years, 7 months ago

Scott W. -

The coal being mined in NW Colorado is classified as "steam coal" and is used for electric power generation. There is a difference between "metallurgical coal" used in blast furnaces to make iron and "steam coal." It has something to do with the chemical composition and the coal's heat value. When I had the opportunity to visit with the Twenty Mile management and asked this question they simply told me it the wrong kind of coal for metallurgical uses.

Perhaps there is someone reading the blog who could educate me.

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Scott Ford 3 years, 7 months ago

Hi Leslie - I hesitate to even think about adding yet another Economic Development organization in the Yampa Valley to the mix of the ones that already exist before defining what economic development means in the Yampa Valley. I know this much that it does not mean the same thing to everyone.

Getting agreement on the definition of economic development is an important first step that is often missed in the rush to do something (anything) in a hurry. The temptation is to start doing all sorts of things in the name of economic development without a clear understanding what the desired outcome of economic development is and equally as important how is it going to be measured routinely and objectively.

I am encouraged that we are beginning to see these discussions emerge throughout the Yampa Valley. We seem to be avoding the tempation to start doing "stuff" before we know where we want to go.

The Hayden EDC and Town Board are having a discussion on Tuesday night. The Craig Moffat Economic Development Partnership is working through this process as well. This is hard work but it will be time well spent. Way too often communities (including this one) have embarked on an economic development journey without a clear understanding of the officers and crew of the ship where it needed to go.

I would be curious. What are your thoughts and the thoughts of others are about what Economic Development means. What do we want our local economic development efforts to accomplish long-term? And, equally as important how will we know that we are making progress toward the desired outcome?

I know that there are a few SS City Council members and Hayden Town Board members that read the Pilot Blogs and they would enjoy reading our exchanges.

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Leslie Faulkner 3 years, 7 months ago

Thanks for your thoughts Scott. Economic development in this economy is very complicated and not something I personally could answer in a single post. The age-old dilemma is government vs the people and independent businesses that drive the economy. I feel our current council is a bit out of touch with businesses (and the unemployed, underemployed and low wage earner) and how incredibly difficult it is for the average person or business to survive, let alone succeed, in this recession in one of the most expensive places to live in Colorado (also known as Routt County.) The collective mindset of the city needs to change and that is a tough one. Here is an example of my overall frustration: the last City Council meeting I attended was in the Spring of 2010. At that meeting council was trying to decide how to SPEND a 750K surplus. After all the lay offs and furloughs and closed businesses and declining sales tax revenues, the city had a surplus which was unusual. Anyway, some people from the community shared on why the city should use the surplus money on their idea or organization. Plus, a now former city councilman stubbornly proposed some of the surplus should go to city employees who took pay cuts and give some back in the form of merit pays. Only one proposal (in light of our horrible economy) made sense to me and that was from Tony Connell to use 250K for economic development, help for struggling businesses and a way to attract new business patterened after something that Ft. Collins had done (and succeeded in doing by the way). The way it all unfolded, was an initial decision to spend 250K for merit pay to city employees, 250K to improve Howelsen Hill and 250K to fire and police services. I think the merit pay was eventually overturned. However, it seemed the entire council just simply did not hear the best proposal of all which was a proposal to improve our economy using a method which already proved successful in Ft. Collins. Does Howelsen Hill need improvements? Absolutely! Do city employees eventually need their full time hours back? Absolutely! But not at that time. I felt an opportunity and a gift of sorts, was completely ignored by the present council. The bottom line is that businesses need their own advocacy group as a voice in front of city council. We need more of a we-are-all-in-this-together partnership with the city, our city. I can't speak for all business owners in Routt County but having owned a business, I heard and saw a general discord and distrust of city officials and certainly not a positive partnership, willingness or openmindedness coming from the majority of our current council. I have no idea how to solve our economic issues but a proactive, positive collective business community VOICE would be a fresh start. Hope that helps, thanks!

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Scott Ford 3 years, 7 months ago

Hi Leslie -

We have multiple things to discuss:

1 - What is the desired outcome of Economic Development?

At a very high level the outcome of "economic development" focuses essentially on two things, diversity and vibrancy. It is easy for any community, including ours, to miss the mark and just stop at saying the word diversity and vibrancy and think that is enough.

These two terms (diversity/vibrancy) need to be defined and the ways they are going to be routinely and objectively measured established. Otherwise, just about anything action associated with the commerce within a community can be done in the name of economic development. The focus on diversity and vibrancy is a very long term objective and should not change in either "good times" or "bad times".

Routt County is very unique in that it has done the very hard work to define these two terms and establish how they are to be measured.

In Routt County "Economic Diversity and Vibrancy" is achieved and/or being maintained when: A). The top 3 private industry sectors account for no more than 45% of personal income and employment.
B). The county's per capita income is increasing at a rate greater than the rate of inflation. The percentages listed in "A" were established in 2008 and will be re-evaluated every 5 years. These are very realistic for Routt County.
Strategies/tactics have been developed that have the reasonable possibility of improving both A and B. The focus is on: Expanding Higher Education Options Expanding both Broadband and Cellular capabilities

It is important to notice there is no mention of increased tax revenues in either the desired outcome, measurements or in the strategies/tactics. It is a very dangerous to have tax policy drive or define economic development outcomes, measurements or strategies.

Summit County is a prime example of this danger because increased sales tax revenue amongst the various communities was the focus of their economic development efforts. In 2008, the top three private industry sectors (Construction, Retail Trade, Food Services and Accommodations) in Summit County accounted for 52% of personal income and 53% of employment. The recession impacted these three industry sectors the most. Ouch! For Routt County the percentages for the top three private industry sectors during the same period were: Sources of personal income = 45% Sources of Employment = 41%

I do not want to be misunderstood. I acknowledge that it has been tough in Routt County, however, it has been horrific in Summit County. Routt County fared better because it is diverse.

This is where the second element of vibrancy comes in. Routt County's per capita income has essentially held its own, thus far. In Summit County it has declined, yet more evidence of an economy faced with some significant systemic economic challenges.

Time to make dinner - back later.

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ybul 3 years, 7 months ago

Scott F,

A question on the focus of higher education. It seems to me that the value of the college education (intellectual capital) is overplayed. WHile there might be good studies that show the wage disparity between one with and one without. I would counter that if one took into account the monetary capital and the lost potential to earn additional monetary capital as opposed to studying to earn more intellectual capital, the long term difference in income when interest on monetary capital is taken into account, there is likely very little difference in long term income.

Today, we are probably awash in intellectual capital and need to look at focusing more on investing in physical capital to create new wealth or add value to existing wealth.

So in a world of full employment creating more intellectual capital to increase earning potential is great. However, we are in a world where we have high unemployment and helping get people off the unemployment roles adds to economic vibrancy. We are moving someone from earning zero dollars to making some dollars. Which in all accounts should move the median/mean incomes up.

As you stated before we should not be too worried about focusing on low end jobs to help out vibrancy, this works in a world of full employment. Today, any employment opportunities help to move up the income levels of the community.

If it costs $5 million to add to the broadband capabilities of the region to add 5 jobs, or we could invest in other blue collar jobs that create 50 jobs in a localized food system, which will have a greater effect on moving the median income? We added 5 in one scenario but still have 50 unemployed. Or we could take 50 from earning 0 to say 30,000/year or more if properly designed. yes not above the median income, however, it is moving up the median income today. Those local food jobs also have a higher turn rate for the local economy than a retailer who brings in product to sell.

Not saying the counties path is right or wrong just offering a different opinion to chew on.

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Scott Wedel 3 years, 7 months ago

Scott F. The current aluminum coal cars hold 118 tons per car, not 100. The old steel cars hold 100 and look like they are used less than 25% of the time. You can read a car's carrying capacity as railcars roll by.

I think if you look more deeply at the current coal market then you will see the market for coal is currently more than pricing btus (which is then converted to price per ton based upon the heat content of the mine's coal). It looks like the demand for metallurgical coal is pushing up the quoted price even as other grades have seen smaller price increases.

I think you draw the wrong lessons from Summit County having a high number of service jobs. The economic development question is not whether a popular tourism area has a lot of service jobs, but what are the economic resources (labor, capital, education, transportation, etc) and to what extent government is encouraging/discouraging certain business sectors. So I think a deeper economic analysis of Routt County in 2007 would have found there were service companies based in other counties doing work in SB while local service companies faced difficulties meeting demand because of a lack of available labor and that lack of labor had roots in lower cost housing being fully occupied. Now that the boom has gone bust, it almost sounds like you are patting us on the back for lacking the economic resources to have boomed as much as other places because now we have fewer jobs in the most affected sectors to lose during the economic bust.

I see economic development being more of a question of economic forces and how government's actions direct those forces. For instance, SB has limited mmj retail operations and thus installed a government enforced lack of competition in local dispensaries.. But SB government has allowed the grow operations to be a light industrial use so tens of thousands square feet of warehouse space that would otherwise be vacant in SB is occupied with employees. SB could have chosen to ban or severely regulate grow operations like other parts of Routt County and caused that economic development to occur elsewhere. By allowing RMR to operate in SB then that allowed RMR to win awards for their strains and become not just a local business, but one recognized regionally.

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Scott Wedel 3 years, 7 months ago

SB city government was a spectator to the issue of mmj dispensaries and grow operations becoming a viable business models and having investors. But the City's response has affected that business sector. SB City prevented some number of retail mmj dispensaries from opening, but did allow grow operations. Also, the presence of local expertise, the availability of affordable warehouse space and lower cost electricity rates has enabled SB to have grow operations that could easily have been located elsewhere.

So, in terms of government policies regarding economic development, I think government should be focused on local resources and it's own policies while continually performing self analysis to see how it is affecting business activity.

I think it is entirely possible that SB will be more successful than I70 corridor in attracting location neutral workers because we are not on I70. We do not get crushed by weekend tourism like there. On the flip side, it does mean we do not see the tourism numbers on the weekends like I70 corridor. Those are powerful economic trends that are much more powerful than local governments.

I think the EDC should be looking at factor like housing, internet and so on. Among other issues, the regional gaps in wireless coverage may have economic consequences. We should examine why there are gaps and why the wireless providers have not filled in the gaps.

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