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Down and Out in Mammoth Lakes—Council gets blistering economic report

June 8, 2012

Already feeling the slings and arrows of its restive citizens, the Mammoth Town Council on Wednesday received an unsparing, stinging report on the town’s economic future.

The 16-page report, created by FTI Capital Advisors, is entitled “Impact of Potential Tax Increases on Mammoth Lakes Economy,” and was prepared by Glenn D. Meyers, Ph.D., and William Kennedy, Ph.D., CPA/ABV, the managing director of the consulting firm.

Boiled down to its essence, the report said Mammoth is overtaxed already; its housing problems are just as bad as everyone thought they were, and there is no bright future ahead.

Although not officially linked, the report also answered outgoing councilman Skip Harvey, who in early May suggested the town raise revenues with additional, self-imposed taxes.

“I don’t want to see this town go backward,” Harvey said on May 9. “We’re getting things moving, but I don’t think we can get out of this without the help of the people. I think it’s going to take some kind of tax on the people—an entertainment/admissions tax—something that will bring the people, that would bring Mammoth Mountain in on it, to help us get out of this.

“There’s only so much money. We need to generate some revenue. We can continue to cut, but we need to generate some revenue to help get us out of the mess that we’re in.”

However, the FTI report—the full document is on the town’s website— argued strenuously against any kind of new tax, unless they were for new services or bolstering economic growth.

“Long-term, the economy of Mammoth Lakes has been stagnant, and on a near-term basis in decline; nor is recovery expected in the foreseeable future,” the consulting group concluded. “Imposition of added taxes not serving to finance improvements in municipal services or investment in growth could only exacerbate these problems and make recovery that much more unlikely.”

In its conclusions, FTI wrote: “No potential particular tax increase would be innocuous in its effects on Mammoth Lakes, either from an equity perspective or from the standpoint of economic growth. The welfare of the resident population is inseparably linked to the competitiveness of the ski resort and the derived demand for all facilities existing because of it, including all related real estate.”

The council did not respond to the report at its Wednesday evening meeting, although when a reporter mentioned to Councilman Rick Wood that the report was “pretty tough,” Wood said, “It’s tough, but it’s true.”

There was all kinds of bad news in the document, based on a study of the local economy, demographics, geography, climate, transportation, the real estate market, business and industry, government services and taxes and fees.

Beyond that, the study also conducted research on other ski resort communities and their economic attributes.

Among the “highlights” were: “Roughly 45 percent of employed residents work in the ‘recreation’ sector (ski area, predominantly), bars and restaurants, retail establishments, and hotels and lodges. Further, another 12 percent work in construction, a sector with higher wages but poor prospects, given the decline in construction activity post-2006 and the likelihood of continuing depressed performance.

“In part as a consequence of the foregoing, roughly 40 percent of the town’s households are classified as low-income, earning less than 80 percent of area median income, including 53 percent of renters and 24 percent of owners.

“The average wage in Mono County (of which Mammoth Lakes is a part) in 2010 was $33,124—38 percent below the California average of $53,196.

“Also reflecting the lack of diversity in the local economy, Mammoth Lakes’ municipal revenue has been declining since 2008 and by any number of key measures the local economy has been in decline.

“The causes of that decline include, but are likely not limited to, the national economic downturn and chronic deficiencies in competitiveness vis-à-vis other resort areas.”

As for real estate and housing, the report revealed a “dramatic decline” in the number of building permits issued in recent years.

In 2005, 52 permits were issued for new single-family residences, 16 for new multi-family residences, 32 for multi-family transient buildings, one for mixed use and 15 new commercial/industrial buildings.
In 2010, only 11 permits total were issued across the board.

The value of property, from its peak in 2007 to early 2012,  has fallen from $900,000 to $541,000—a decline of 40 percent. Condo prices fell 52 percent during the same time. Both figures are startling, even in the context of California, where home values declined by 37 percent overall.

As for property-based parcel taxes, Mammoth’s tax payment delinquencies over the last several years point to a “growing inability to shoulder the existing burden, much less a heavier one.”

About 250 households are at risk of losing their homes to delinquent rent or mortgage payments, and 15 percent (220 homes) indicated their debt exceeds the value of their homes.

As for transient occupancy taxes, Mammoth’s current rate is exceeded by only eight out of 431 California cities levying this tax.

Lift tickets, meanwhile, are close in price to those at industry leaders Telluride and Vail and substantially higher than those at Aspen and South Lake Tahoe.

For those who live here, the report indicates the cost of gasoline and a basket of eight basic grocery items, relative to their average cost in “West Urban” markets (U.S. Department of Labor, Bureau of Labor Statistics), indicates Mammothites pay 13 percent more for gas and a whopping 40 percent more for groceries, which include bread, chicken, eggs, milk, apples, bananas, oranges and tomatoes.

The report also dealt with the economic impact of air travel, insufficient resources and “inherent obstacles” to revitalization, such as Mammoth’s remote location.

In all, the report reinforced what we already had a sense of.

But now there are numbers attached.

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