Real Estate: The economic (self) stimulus puzzle

By Paul Oster

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 withdrawal. 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 2000s, the discussion of local economic stimulation has occupied center stage for the past 30 years that I’ve lived here. And the Roaring 2000s became the Whoring 2000s. Such is life and a resort economy. Now unstimulated 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 … perhaps 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 stinginess (by design). And another problem; Mammoth is this envied island of recreation and fun and debauchery based on folks’ 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 1960s. 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 2000s were crazy and fun. But so were the 80s and 90s. 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 who 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 of the 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’d better know who the enemy is.

Have a great Labor Day Weekend!

Paul Oster is Broker/ Owner of RE/MAX of Mammoth. A recent archive of his past Q&A columns and other writings, as well as the ability to make comments, can be found at www.MammothRealEstateBlog.com. For legal, accounting, construction, etc., advice, seek out the appropriate professional.