State of Tahoe’s economy is complicated
Look around Lake Tahoe and it would seem the region is in the midst of an economic boom.
However, broader economic indicators point toward a lack of progress in recent years. That’s according to a draft of the “Measuring for Prosperity” report sponsored by the Tahoe Prosperity Center (TPC).
“We didn’t really grow. … And we didn’t really expand our other economic clusters,” said Heidi Hill Drum, CEO of TPC, noting the lack of growth in employment sectors.
The report, a collection of economic and societal data, is intended to inform policy decisions with the goal of improving economic vitality in the region.
A caveat to the draft report, and one of the primary reasons it is still in a draft form, is most of the data is through 2015. With Tahoe’s economic vitality hinging on tourism, the effects of the drought are reflected in much of the data. A solid winter in 2016-17 offers hope that there might be stronger improvement in some of the numbers, and TPC is hoping to obtain 2016 data in the next several months, which is delaying the release of a final report.
That anticipated upturn aside, the picture painted in the draft report is one of a region struggling to fully rebound from the Great Recession.
“In any tourism-dependent economy, we feel the bumps early and we come out of the bumps late,” Hill Drum said. “So the recession numbers show we were starting to feel the recession before the rest of the country, and we also came out of it a little slower than the rest of the country.
Economic output, the measure of business sales in a local or regional economy, was flat with a 1.3-percent decline between 2007 and 2015, according to the draft. When inflation is factored in, economic output declined 14 percent — one of the more jarring figures in the draft report, said Hill Drum.
From 2003 to 2015 nearly 7,800 jobs were lost. Perhaps the most depressing point within that number, according to Hill Drum, is the hit to employment clusters outside of visitor services.
While tourism is and will remain the backbone of the local economy, there is general consensus of a need to diversify local employment options to include more higher-paying jobs in sectors such as health and wellness, and environmental innovation.
There was hope that the data would show gains in those sectors. That was not the case.
“Instead we became almost more dependent on [tourism-driven jobs],” Hill Drum said.
NOT ALL BAD
While the draft report states the regional economy has stalled, many in the business community feel optimistic about the current climate. Some even see opportunity.
Count Roger Kahn, a longtime Tahoe resident and the man behind a new co-working space in Incline Village, among those who see opportunity.
For decades Kahn, who serves on the TPC board, ran Porters Sports Lake Tahoe. In 2002, he sold the businesses but the Kahn family kept the real estate. In 2014, Porters closed its last location. The failure of the business triggered a revolving door of tenants at the Kahns’ properties. In particular, a property in Incline Village proved to be a “pain in the neck,” said Kahn.
After years, Kahn said he realized a possible cure for that pain: a co-working space.
“I saw the need,” Kahn said in describing his path to creating Mountain Workspace.
As technology allows more and more people to work off site, Kahn predicts more people will want to live in Tahoe, which he referred to as Northern California’s playground. He cites the success of Tahoe Mountain Lab, a co-working space in South Lake Tahoe, when discussing the need for such work spaces.
Renovations are underway and Kahn hopes to have Mountain Workspace open by early 2018.
Stories like Kahn’s are part of the reason some people are optimistic about the current climate in Tahoe.
While the “Measuring for Prosperity” report and others are important, they don’t always reflect some of the economic intricacies, said Steve Teshara, CEO of the South Shore-based Tahoe Chamber.
“There’s things happening but it’s hard to capture them in a broad report,” Teshara said, adding that the lag time in the availability of data being released poses challenges.
In the past year alone, Crossings at Tahoe Valley has opened up retail space down by the Y in South Lake Tahoe, and in Stateline Edgewood Tahoe completed its new $100-million lodge. Demolition of the Knights Inn started in August. The site is the planned home of a Whole Foods 365 store, along with other businesses that have yet to be announced.
“To say we’re stagnant and not showing growth is not accurate based on what we’ve observed,” Teshara stated.
There is an issue with perception in Tahoe — a phenomenon Hill Drum refers to as “the two Tahoes.” Things might seem to be improving immensely, but the numbers don’t lie, she added.
Economic strength aside, hurdles identified in the TPC report, including employee retention struggles and diminishing affordability in the local housing market, are very real.
Those issues and more will be up for discussion Monday, when TPC hosts its inaugural Tahoe Economic Summit in Incline Village. The day-long event aims to bring together key stakeholders and community leaders from around Lake Tahoe to discuss important economic issues.
“The bottom line is that one event is not going to solve any problem — it’s the conversation starter,” Hill Drum said.
It’s a conversation TPC intends to keep in the spotlight.
Visit tahoeeconomicsummit.org/ for more information on the summit and to purchase tickets.