In mid-September, the Joint Interim Committee on Corporations, Elections and Political Subdivisions of Wyoming’s legislature met in Jackson. While here, they breathed new life into HB 277, a bill killed in the 2019 session but which now may be re-heard in 2020.
Exactions help offset the costs new developments place on a community. Depending on how the final bill is worded, if passed the re-introduced HB 277 will strip away local government’s ability to levy some, if not all, exactions. This would be a big change for Jackson and Teton County, for both governments have levied affordable housing-related exactions since 1995, and other exactions even longer. Absent that tool, it will be much harder for local government to address the already fiendishly difficult challenge that is workforce housing in Jackson Hole. (For more about exactions, see box.)
Worried about maintaining local control over local issues, a number of organizations have teamed up to keep the bill from passing, including the Jackson Town Council, the Teton County Commission, Teton County’s legislative delegation, and several statewide advocacy groups. As a town councilor, one of my contributions to our effort is to counter advocates’ arguments that exactions are bad for the local economy. As a result, I’ve been doing a lot of research into the socio-economics of Jackson Hole over the past several decades. In this piece, I’d like to share some of my findings.
My research has covered a lot of topics. In each case I’ve tried to go back to at least 1990 to get a before-and-after sense of whether those exactions might have harmed the economy.
My basic conclusion? If housing exactions have harmed the economy, it’s sure hard to tell. Different flavors of housing exactions have been in place for nearly 25 years, and during that period Teton County has been an economic house afire. In fact, you could argue that, rather than harming Teton County, the exactions have instead actually benefitted us. How? By supporting our community character.
I say this because Census data about our seven “peer” Rocky Mountain resort counties – the locations of Aspen, Breckenridge, Park City, Steamboat Springs, Sun Valley, Telluride, and Vail – show that only 49 percent of their collective homes are occupied by full-time residents. In Teton County, the figure is 65 percent. No other resort county has even 60 percent. (Figure 1)
Having two-thirds of our homes occupied year-round helps keep Jackson Hole a community rather than a resort. Exactions have played a key role in keeping our housing stock locally-oriented, and as the data below suggest, tney have done so without compromising our economic vitality.
A dozen key facts
As I’ve come to see it, a dozen key facts paint a clear picture of just how robust Jackson Hole’s economy is.
1. Jobs per resident
My point of departure for my exactions research was the work I did for last month’s blog, which looked at Teton County’s workforce.
Specifically, a proximate reason why Jackson Hole’s local governments implemented workforce housing exactions in 1995 was what happened during the previous decade: a sharp rise in the number of jobs per Teton County resident. (Figure 2)
Specifically, between 1982 and 1990, Teton County’s per-resident job figure jumped from 0.82 to 1.23, a growth of 0.51 jobs per resident. To put that figure in perspective, in 1990 the US as a whole had an essentially-identical 0.55 jobs per capita – in eight years we added as many per capita jobs as the nation had overall.
To help address the resulting concerns, housing exactions were put in place. Yet even with this tool, today Teton County has 1.41 jobs per resident. This places us second among America’s 1,800+ counties with more than 20,000 residents, trailing only New York City and its 1.87 jobs/resident.
2. Constricted supply of land
97.2 percent of Teton County’s land is publicly owned. This ranks Teton second among America’s 3,100+ counties, trailing only the BLM-dominated Esmerelda County, Nevada, with a population of 826 and median age of 55.7. (Teton County’s population is 23,081, and our median age is 39.8.)
3. Virtually unlimited demand for housing
One-third of Teton County’s property tax bills are mailed out of the county. Teton County’s property owners live in 16 countries, in every state except North Dakota, and in 20 of Wyoming’s 23 counties.
Further, demand tor Jackson Hole housing is so great that it is spilling beyond Teton County’s borders, helping spur active real estate markets in portions of Fremont, Lincoln, Sublette, and other northwest Wyoming counties. While this Jackson Hole-driven growth is exposing people to Wyoming’s wonders beyond Jackson Hole, there is no evidence it is reducing demand for housing within the valley.
4. Nation’s highest income
In 2017, Teton County had by far the highest per capita income of any county in America: $233,869. This was one-third higher than second place New York City’s figure of $175,960, and 4.5 times higher than the national figure of $51,460.
In large measure Teton County’s sky-high per capita income is due to us having the nation’s highest per capita investment income, a result of Wyoming’s favorable income tax and trust laws. To this point, in 2017 Teton County’s per capita investment income alone was $174,804, essentially the same as second-place New York City’s per capita total income.
Between 1990-2017, Teton County had the highest per capita income growth of any US county. It also led the nation in per capita investment income growth.
5. Nation’s greatest income inequality
At the other end of the spectrum, Teton County also has the nation’s greatest wealth inequality. Two factors are at play here: our wealth and our job mix.
Regarding wealth, as noted above, Teton County residents have by far the nation’s highest per capita total and investment income.
Regarding job mix, historically Teton County’s economy has been oriented toward the tourism industry, whose business model depends on large numbers of relatively low-wage employees. In fact, for decades Teton County has ranked among the top 20 among all US counties in proportion of tourism jobs (retail, recreation, lodging, and restaurants).
Today, the average Teton County tourism job pays an annual salary of around $34,000. That’s one of the nation’s highest figures for tourism-related jobs, but it’s still only around one-fifth of our per capita investment income figure, and one-seventh of our total per capita income. This kind of gap makes it essentially impossible for much of our workforce to compete for our very limited housing stock.
Which leads to…
6. There is a huge gap between income and home prices
Teton County has high demand for a small supply of housing. As a result, according to the 2017 Census, Teton County’s median home price was $739,100, the nation’s eighth highest. (This will likely be much higher when the 2018 Census figures are released.)
Dividing Teton County’s median home price by the county’s median wage income of around $51,000, the result is 14.5. That is the nation’s second-highest figure, trailing only Nantucket’s 17.3.
In the US as a whole, the median home price divided by median income figure is 4.2. For Wyoming overall, it’s 4.4.
7. The market favors building high-end homes
Because of Jackson Hole’s supply and demand dynamics, high-end homes are the most profitable to build and sell. As a result, for two decades Jackson Hole’s housing developers have increasingly emphasized high-end homes, further squeezing the supply our workforce might be able to afford.
8. None of this is constraining Teton County’s population growth
Between 1990 and 2018 – i.e., from before we enacted housing exactions through today – Teton County’s population grew 108 percent. This was the highest growth rate of any Wyoming county, and ranked us in the top four percent of all US counties.
During that same period, as Teton County, Wyoming housing became more expensive, the population of Teton County, Idaho boomed. Its 229 percent growth rank the Teton Valley 15th in the nation, placing it in the top 0.5 percent.
9. Nor our growth in residential construction…
Jackson Hole’s initial housing exactions went into effect in 1995, and affected both residential and commercial building. Following implementation, building activity may have slowed down some (the records are not clear on this). However, within a couple of years construction came roaring back, and between 1990 and 2018 Teton County’s housing stock nearly doubled.
During that same time, on a percentage basis, among Wyoming counties only Sublette had more housing growth during than Teton County: 108 percent for Sublette versus 99 percent for Teton. And only three Wyoming counties – the much more populous Campbell, Laramie, and Natrona – added more homes overall.
Despite this rapid growth in supply, from 1990-2018 Teton County’s median home price rose over 450 percent, over three times the national average and twice the Wyoming average. Viewed through the lens of the basic laws of supply and demand, these data strongly suggest an essentially insatiable demand for Jackson Hole housing.
10. Or commercial construction…
Unfortunately, historic town and county building permit data leave much to be desired. That noted, all available evidence suggests that, as with residential construction, Teton County’s commercial building economy quickly adjusted to our system of exactions. In particular, since 1995, Teton Village has undergone a spectacular commercial building boom, and the Town of Jackson has been revitalized with hundreds of thousands of square feet of new hotels, retail space, office buildings, and the like.
11. Or tourism
Grand Teton and Yellowstone national parks changed their visitor counting methodologies in 1993, and did not update previous years’ counts.
Between 1993 and 2018, Grand Teton’s recreational visit count grew by three-quarters of a million people, a 28 percent increase. Yellowstone’s figures were 1.2 million and 41 percent. Roughly two-thirds of the parks’ combined growth came during the four summer months.
During that same stretch, both the number of skier days at the Jackson Hole Mountain Resort and the number of commercial enplanements at the Jackson Hole Airport more-than-doubled.
12. Tetons tourism packs quite a sales tax punch
Among Wyoming’s 23 counties, Teton County ranks ninth in population but sixth in amount of taxable sales. The counties it trails are either heavily dependent on extractive industries – Campbell, Converse, and Sweetwater – or have populations four-to-five times larger: Laramie and Natrona.
Conclusion: The Big Disconnect
Among the reasons economics is called the dismal science is that it’s not very tangible – so much of economics boils down to little more than arguments over figures on a page.
If we consider the more tangible aspects of Teton County’s economy, though, things have really grown over the past 30 years. In particular, during that time we’ve experienced extraordinary growth in a variety of areas, including:
- Three-quarters of a million more visitors to Grand Teton National Park
- Twice as many homes
- More than twice as many airplane passengers
- More than twice as many Teton Village skiers
- More than twice as many residents
What about that less-tangible stuff? There’s an interesting paradox at work.
During the most recent twelve months, Teton County’s merchants sold around $1.6 billion of taxable goods. In 2017, the figure was around $1.4 billion. These numbers are important because both the Town of Jackson and Teton County are very dependent on sales tax revenues for funding their general operating budgets: In FY 2020, Jackson estimates 74 percent of its operating revenues will come from taxable sales; Teton County’s figure is around 50 percent.
Now consider this.
Also in 2017, roughly $1 billion in Teton County real estate was sold, and residents earned another $1.2 billion in wage income. None of this $2.2 billion worth of economic activity – 50 percent more than total taxable sales – directly contributed a penny to local government coffers.
Add the three figures together – $1 billion in real estate sales PLUS $1.2 billion in wages PLUS $1.4 billion in retail sales – and the total is $3.6 billion.
Which is a lot of money. But it’s also $500 million less than the $4.1 billion Teton County residents earned in 2017 in investment income alone.
Do a bit more math, and in 2017 Teton County had at least $6.3 billion of economic activity that contributed nothing directly to local government’s operations: $1 billion in real estate; $1.2 billion in wages; and $4.1 billion in investment income.
Contrast that to the community’s $1.4 billion of taxable sales, and the bottom line is that we’re asking perhaps one-sixth of the county’s economy to support all we ask local government to do.
Including provide affordable housing. Hence the importance of exactions. Why? Because exactions give local government a housing-related funding tool unrelated to taxable sales, injecting a little balance into Wyoming’s wildly unbalanced system of funding local government.
Wyoming’s system for funding state local government was developed in the 1970s, and has proudly and stubbornly refused to change even as the world around it has. With our nation-leading status in so many economic categories, Teton County is about as far removed from the economy of the 1970s as any place on Earth, and all indicators are this disconnect will become only greater in coming years. As it does, the strains manifesting themselves in the kerfuffle between the Corporations Committee and Jackson Hole are only going to become more acute.