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Mountain News: One percenters and our widening wealth gap

The widening gap between the economic elite that constitute the bread-and-butter for high-end ski towns was in the news frequently last week. In Park City, economist Anirban Basu, chief executive of Sage Policy Group, said he expects the U.S.
MIND the GAP Former New York Mayor Michael Bloomberg, left, was in Aspen, Colo. last week speaking about income inequality and drawing national attention to his proposal to help elevate the poor in cities. Photo by Julie Angel Saad / Shutterstock

The widening gap between the economic elite that constitute the bread-and-butter for high-end ski towns was in the news frequently last week.

In Park City, economist Anirban Basu, chief executive of Sage Policy Group, said he expects the U.S. economy to grow 3.6 per cent this year, the largest growth since 2004. People will be spending more money, driving the economic growth, he said.

That should be good for mountain resorts, including Park City, where 44 per cent of visitors make $200,000 or more.

But Basu also pointed out that not all pockets are jingling with spare change equally. The wealthy are seeing the big gains, while income for the majority of Americans remains stagnant.

While Aspen elected officials considered a proposed hotel, current Aspen Mayor Steve Skadron expressed reservations, because the plan contains no guarantees that the hotel rooms will remain in the $150 to $200 per night range. Aspen remains concerned about keeping the door cracked open for middle-class skiers.

Former New York City Mayor Michael Bloomberg was in Aspen to speak about income inequality, drawing national attention to his proposal to help elevate the poor in cities. Education isn't enough, he said, and he said that removing guns from young men in poor, usually minority, communities would reduce the murder rate.

Responding to the comments by Bloomberg, who is now worth $36.6 billion, according to Forbes, Patrick Hunter called for greater redistribution of wealth as a way of helping poor people, something that the tax rates used to do.

"That redistribution worked a lot better when the top marginal rates were 90 per cent," he wrote in the Aspen Daily News. "We now live in a world where a handful of people control half the world's wealth. Are we supposed to be grateful?"

Former Aspen Mayor Mick Ireland also commented on the polarity of wealth. "Even the Republicans are starting to talk about wage inequality," he said in a column.

Raising the minimum wage will, if it occurs, have little impact in Aspen, where the minimum wage is already a de facto $10.50 an hour, he said.

Slashing tax rates for the wealthy, as has been proposed, also would have little effect. "The haves seem to be in a spending mood that probably won't get much crazier even if their effective tax rate falls further below my own," added Ireland, a lawyer, who lives in deed-restricted employee housing.

Ireland does see a direct impact on wages in Aspen if President Barack Obama's proposal to defer deportation of five million undocumented workers happens.

As undocumented workers, they have to take the most menial of jobs, no matter how smart or educated they are. If they gain legal status, they will be free to "take jobs that match their skills and pay better: driving a bus, managing a company, perhaps teaching, starting a company or practicing medicine."

That means Aspen's remaining "worker bees" will have more bargaining power. Wages will rise, Ireland predicts, because high-end resorts are, above all, labour intensive.

How soon for the next real estate correction?

ASPEN, Colo. — Has the resort real estate market really been climbing now for five years? Seems just like yesterday that the sky was falling.

And so it will soon enough again. That was the message in a presentation to real estate professionals recently covered by The Aspen Times.

Randy Gold, of the Aspen Appraisal Group, and Andrew Ernemann, of Sotheby's, painted a picture of great strength in the Aspen real estate market unseen since pre-recession days. For example, this might be the first year in more than a decade when prospective buyers outnumber listings, they told real estate professionals at the large gathering.

Gold predicted three to five sales in excess of $20 million. Already this year, three closings on properties of more than $10 million have occurred, with three more under contract.

Last year, eight condominiums in Aspen sold for more than $2,000 per square foot, and one exceeded $3,000 per square foot. This, said Ernemann, compares with Manhattan, London, and European ski resorts where $3,000, $4,000, and even $5,000 per square-foot price tags are common for condos. He said Aspen should start seeing more $3,000-per-square-foot sales.

Gold also pointed out that five real estate investors collectively own roughly 40 to 45 per cent of commercial real estate in Aspen's core downtown area.

But Gold and Ernemann also indicated that in the last 40 years, the average "up" cycle in Aspen lasted six years. In this case, because the recession was so deep, the bounce of this market might last longer.

"Andrew and I are both expecting that as 2016 comes to a close and we move into 2017, we're probably going to see another start of our next down cycle," Gold said.

"Real estate's cyclical, it's always been cyclical, it's always gonna be cyclical. And it's certainly important not to lose sight of that as we got caught up in all the enthusiasm in this market strength we see in 2014 and in what we expect to see in 2015."

This might be problematic for Snowmass, which tends to lag behind Aspen by two to three years in its up-cycle. Development of Base Village, Aspen's answer to Beaver Creek, Deer Valley, and other sparkly resorts studded with new hotels, was stopped by the last recession, and the pieces still haven't been put together again.

Candy left in hotels has some extra kick

BRECKENRIDGE, Colo. — So, you're a housekeeper at a hotel, and you see some candy left by a guest. Scarf it down? Take it home for the kids?

That's been the practice at most hotels and lodges, including those in Summit County. But police tell the Summit County News that the practice has resulted in several people seeking medical help during the last year after accidentally eating marijuana edibles.

"When paired with concerns over youth abuse and prevention, they (edibles) have fast become one of the cannabis industry's most controversial and polarizing products," the News observes.

It cites the example from Basalt, located near Aspen and Snowmass, where a seven-year-old girl ate an infused chocolate her mother had brought home from an Aspen hotel.

That seems to be the only report of candy being given to a child. In fact, in what is called the Vail Valley, there have been no reports of housekeepers seeking medical care.

In Summit County, however, Breckenridge police officer Caitlin Kontak reports "at least several" instances of housekeepers seeking medical care. She points to inadequate labelling as a problem.

"If you've seen some of the labels on these candy bars, the writing that says it contains THC is microscopic and they're all very similarly packaged," Kontak says. "The main problem with hotels is that people know they can't take marijuana home. That's one of the few rules everyone is aware of, so instead of taking it back, they leave it as a tip, just as they would with any kind of food in a hotel."

Recreational products contain up to 100 milligrams of THC, which is roughly the potency of 64 joints made with pre-legalization marijuana, Kontak says. First-time users shouldn't eat more than five to 10 milligrams at a time.

Kontak says that after working with lodges, most have instituted in-house training programs to let employees know the effects of consuming edibles left by guests.

No evidence cannabis has repulsed families

STEAMBOAT SPRINGS, Colo. — Has Colorado's legalization of cannabis for recreational use drawn or repulsed tourists?

Predictions both ways were made in the early days. But after 13-plus months of legalization, the Steamboat ski area tells the Steamboat Pilot & Today that there is no evidence cannabis has driven away families.

"Once the dust settled along with public education, outreach programs and enforcement, guests have a much better understanding of the issue," says Rob Perlman, who is responsible for all aspects of marketing for the ski area. "Nothing indicates the resort's family demographic is changing."

The newspaper reports sales of $6.8 million worth of recreational and medical marijuana last year in Steamboat, producing $271,901 in sales tax revenue for city coffers. That compares with $745,721 in tax revenues for the city from liquor.

Ophir would prefer a little less detachment

OPHIR, Colo. — Can you have your cake and eat it, too? That seems to be the essential question in Ophir, a town at 2,900 metres in elevation that, of the last census, had 159 people. In good weather, it's about a 17-minute drive into Telluride.

It's remote, and most people seem to like that. But residents would prefer to be more connected to the information highway. Town manager Randy Barnes cannot participate in video conferences. Children, of course, can't watch movies over the Internet.

The problem is the cost of installing broadband cable to so few residents.

"There aren't enough people per mile; the profit margin isn't there for them," Barnes told San Miguel County commissioners at a recent meeting covered by the Telluride Daily Planet.

Ophir has applied for a $10,000 federal grant, and the county commissioners have agreed to match it, provided Ophir succeeds.