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January 02, 2010

Retrospective of 2009 from Aspen Daily News

Some interesting items to note:

Throughout the year, all the usual economic indicators — sales tax revenue, lodging occupancy, skier visits — were down. The Aspen Skiing Co. ended up 8 percent down from the winter before, after predicting anywhere from a 5 to 15 percent decrease. Sales tax collections were off most months by double digits — the city of Aspen expects to be down in the 15 percent range once all receipts for the year are tallied. And occupancy was not only lower than the prior year — 35 percent down for the summer in Snowmass — but room rates were rapidly declining, putting a double hurt on lodge owners...

Real estate and development, long the driving forces of the valley economy, were perhaps even harder hit. Pitkin County real estate sales are on track to be about 20 percent down from 2008, even though the past three, off-season months have been up. Through November 2009 (the latest figures available), $991 million worth of real estate had changed hands, compared to $2.4 billion in the entire peak year of 2006.

Lien filings and foreclosures rose dramatically in 2009 as homeowners, spec home builders and developers struggled to pay bills and loans. More than twice as many liens were recorded in Pitkin County through September 2009 than in all of 2008 — 671 compared to 302 — before the pace subsided in the final quarter of the year. Foreclosures in Garfield County topped 400, as many as the previous four years combined, and in Pitkin County they hit a 25-year high, with 105. High-profile properties were foreclosed on up and down the valley, including two lodges and a commercial center in Snowmass Village and the nearly 300-acre property between Carbondale and Glenwood Springs on which a 1,000-unit development had been proposed...

A record number of property valuation protests — 4,628 — were filed this year in Pitkin County and there are still more than 100 disputes about property values still being contested at the state level or in local binding arbitration hearings.

As required by state law, the assessor’s office valued property in the county for a two-year period from mid-2006 to mid-2008, which turned out to be the height of the biggest real estate boom in the county’s history.

This is a recipe for disaster. Most communities depend on a combination of sales tax revenue and property tax revenue to pay for services. In Aspen's case, sales tax revenue is down as much as 15%. Property valuations are being challenged and this is an avalanche of bad news because even if assessments do not change this year, the drop in values is going to gut property tax revenues for several years or more.

So how do you balance a budget for a town like this when revenues dry up?

Imagine that a lot of pet projects are going to get scrapped. Municipal services will get hit. Expect sales and property tax RATES to rise to try to offset the decrease in collections due to lower activity.

Normally, I would describe the bad effects of raising taxes in a bad economy, but the fact is that because the town is mostly a tourist town, only a nationwide improvement in the economy will have any effect on Aspen.

One thing not to cut in Aspen... Police services. Who else will protect Charlie Sheen's wife when he pulls a knife?

Posted by Justin at January 2, 2010 11:02 AM