February 2007

Scenery: priceless; Jobs: hard to find

Leaders struggle to boost the economy of Southwest Colorado

By Gail Binkly

DOWNTOWN CORTEZLast summer, when the Montezuma County commissioners were considering whether to permit a motorcycle rally to take place over Labor Day weekend, organizers for the Rally in the Rockies frequently argued that the county needed the rally because it was “the most economically depressed county in Colorado.”

Turns out that isn’t true. While median household income in Montezuma County is just 67.2 percent of the state average, counties in south-central and southeastern Colorado are far poorer, according to Bureau of Labor statistics. Costilla, Crowley and Saguache counties all make less than 50 percent of the state average median household income, and many other counties make less than 60 percent. (Dolores County’s median household income is 64.7 percent of the state average, La Plata County’s 86.8 percent.)

But, despite rampant residential growth, Southwest Colorado isn’t exactly prosperous, either. While volunteer opportunities abound, paying jobs — especially the kind that offer decent wages and benefits — remain scanty.

A 2006 survey of 61 businesses in Montezuma County found that while the businesses had a median number of 14 employees, only 43 percent of those workers were full-time. And when asked to project employment three years into the future, the companies estimated they’d add 15 percent more workers, but of those, just under one-third would be full-time.

“Frankly, my take is you better bring your money with you if you live here,” commented Kelly Coburn, a retired business consultant in Dolores.

No interstate

Economic development in Southwest Colorado is hampered by several major problems, according to Cortez City Manager Hal Shepherd.

One is a lack of infrastructure to attract sizable manufacturing firms. “It’s so many miles from an interstate interchange and so many miles from a major airport,” Shepherd said. “We just have a three-times-a-day commuter plane. And we don’t have rail. That puts Denver and Colorado Springs in the driver’s seat.”

Of course, Cortez and Montezuma County aren’t really seeking a giant factory to relocate here, Shepherd said.

“We’re not looking for a 2,000-person plant, but we would like to have a 20- to-25-person facility,” he said. “If we had 10 of those that would be great. Diversification is important so you’re not tied to one industry.”

But, again, the lack of infrastructure hurts. “I’ve talked to people who look at us and at Grand Junction. They say, ‘You have a nice place, but I can be on I-70 right away [from Grand Junction]. That four-hour trip our trucks would take just to get to Grand Junction is a lot of employee time and wages and gasoline.’

“And then there’s Gallup [N.M.] to the south on I-40. They’ll take a hard look at both of those locations before they’d look at us.”

Another factor is a lack of industrial park space, pre-zoned, with water and power available. “We don’t have any available in the cities,” Shepherd said. “We need to find some vacant land in the county that would be amenable to a business park.” But that’s difficult, when people can usually make more money selling their land for residential subdivisions than industrial uses.

Still, Montezuma County has “quality of life” to offer, and that intangible factor has proven successful in attracting a few companies such as Tuffy Security. Owned by Shawn Gregory, Tuffy moved from Lakewood, Colo., to Cortez in the 1990s because Gregory and his wife, Dani, are mountain-bikers who wanted to live in an environment with many recreational opportunities.

Shepherd said another man who makes guitar strings moved here from California recently. “He liked the lifestyle,” Shepherd said. “He ships strings by Fed Ex everywhere. If you have an 800 number, a fax, and UPS it’s not hard [for small operations] to locate in places where you couldn’t years ago.”

But other factors impede efforts to attract new businesses, Shepherd said. In a guest column in the Cortez Journal, he called them “the three crises of Montezuma County” – insufficient health care, inadequate support for schools, and lack of a coordinated economic-development effort.

“They’re all intertwined,” Shepherd said.

Civic leaders were dismayed at the failure on Nov. 7 of a proposed ballot measure to increase the mill levy for the Cortez school district in order to make teacher salaries more competitive and improve the curriculum. The state has placed the Re-1 district on accreditation watch because of low student test scores.

Shepherd said a strong educational system is needed to make the area attractive to workers with families.

“I don’t think the hospital is going to get a doctor to come here if the school’s not accredited,” he said.

Access to health care is another ongoing problem in Montezuma County. Seeing a specialist generally means driving 50 miles to Durango or even farther, and primary-care physicians are in short supply, although a new one was recently recruited to a local practice. Attracting retirees and families to an area where basic health care requires driving out of town is an uphill battle, Shepherd noted.

No coordinated effort

The third crisis he sees — the absence of a coordinated county-wide economic-development effort — reflects a long struggle among local leaders to decide who should be responsible for such an undertaking.

A private non-profit group known as the Cortez Development Council was started in the late 1980s. The CDC evolved into the Montezuma County Economic Development Council, which through most of the 1990s was funded by the city, the county, and private memberships. But though the MCEDC managed to recruit a few companies, including Tuffy, it didn’t have the success that leaders had hoped, and struggled to raise private funds.

The county pulled its support, and the city of Cortez took over economic development, hiring Bruce Johnson to seek business opportunities for both the city and county.

But after four years, city leaders became tired of shouldering the financial burden and of seeing few results. They laid Johnson off at the end of 2005, deciding to focus on economic development for the city only, mainly in the form of special-events planning.

“I took the $60,000 a year we were putting into economic development and put it into special events,” Shepherd said. The effort, headed by Ami Fair, works on keeping events such as car shows and crafts fairs happening regularly in Cortez, especially during the summer.

“It helps motels and restaurants, and that’s one kind of economic development,” Shepherd said. “It will help small business and that’s our goal.”

The county launched a transitional economic-development effort of its own, with Carla Harper in charge on a part-time basis. She organized meetings with local leaders and concerned citizens to brainstorm ideas for helping the economy. But that program was dissolved at the end of 2006 in favor of trying to organize a more permanent, grassroots group that would include more private funding.

Shepherd is skeptical about how much the private sector can be expected to fund economic-development efforts that could attract businesses that might directly compete with theirs. “Government has to be the leader,” he said.

Helping small business

Friction hasn’t occurred only between the city and the county, but sometimes between municipalities as well. Leaders for the town of Mancos were incensed when Cortez financed a feasibility study for an aerial tram that would have carried tourists from a site near Cortez up to Mesa Verde National Park. Mancos leaders felt if the tram rides originated from near Cortez, it would pull tourists away from Mancos.

In the end, the study found that the tram wasn’t financially feasible and wouldn’t draw enough riders, but the effort left some irritated feelings on both sides.

No matter who is in charge of economic development, there are still numerous difficulties and questions to deal with.

One question is how many incentives to give for businesses to move here when local entrepreneurs have had to get by with little or no financial help other than loans. County commissioners have expressed reluctance to offer tax breaks to new businesses relocating here.

The city of Cortez did offer sales-tax incentives to Safeway to open a store and, later, to Big R, a farm-goods retailer, which moved into the old Kmart building on Main Street in 2006. “That brought us 30 full-time jobs in what was an empty building,” Shepherd said.

He believes the incentives were worth it and the cost was soon recouped after the businesses opened.

But he said maintaining existing businesses and helping them to expand is also crucial — ”it’s a whole lot easier to do that than get another business to come here. It takes a long time to get retailers and restaurants interested in us.”

Joe Keck, director of the Small Business Development Center at Fort Lewis College in Durango, agrees.

He said financial help for small businesses, beyond loans, is fairly limited. “There’s a lot of hype about grant programs for small business, but it’s 99 percent hype. We have people come in asking about all these grants for getting a small business started, and we try to work with them to let them know there are a few odds and ends but they’re pretty small.

“At some point it might be good public policy for towns to consider giving small business some of the sales-tax rebates or credits that they give to large retailers to come in, espeically if leakage is going on in a certain area, because you want to have retail diversity.”

Keck’s center, however, offers extensive help with creating a business plan or restructuring businesses that may be struggling. And the Region 9 Economic Development District provides communtiy- development services to five counties in Southwest Colorado. Among those services is a revolving loan fund to help small businesses.

Ups and downs

Another key question is how much the local economy should depend on tourism. The Mesa Verde Country tourism promotion program, headed by Lynn Dyer, is widely praised for its effectiveness and efficiency.

“We’ve done an excellent job in the tourism-marketing area,” Keck said. “That’s kind of a model program from what I see in the five counties I cover.”

But jobs tied to tourism tend to be seasonal and low-paying. And tourism is subject to the vagaries of weather, foreign currency values and unexpected events. In the past 15 years, wildfires at Mesa Verde, outbreaks of hantavirus and even the bizarre manhunt for three cop-killers in 1998 have dampened visitation.

Mesa Verde celebrated its centennial year in 2006, and park visitation is expected to slide somewhat after that high point. It’s been on the decline over the years anyway, falling from a peak of 772,000 in 1988 to around 450,000 annually.

Efforts to promote the area for attributes other than Ancestral Puebloan ruins have had mixed results. Some local leaders hope to develop a fullfledged marina at McPhee Reservoir, which is the second-largest body of water in the state. But federal funds for such a project are few, with the Iraq war draining billions out of the budget.

Local restaurateurs and motel owners were excited when it appeared the Rally in the Rockies might bring thousands of bikers to the area over Labor Day 2006, but the county commissioners rejected the event because of concerns that the last-minute proposal did not leave enough time for law enforcement to prepare.

Now, the municipalities and counties in Southwest Colorado are planning a more modest biker rally in 2007, with events spread around the area. “This time there’s no promoter to make all the money and leave,” Shepherd said.

Shepherd sees reason for optimism about Cortez’s economy, noting that sales-tax revenues in the city were up 9 1/2 percent in 2006 over 2005. “Our retail seems to be doing pretty well,” he said.

“Our goal has always been to try and create jobs for the people who live here — not import the people, just the jobs,” Shepherd said.

Agriculture’s role

Another question is how much of a role agriculture, once a mainstay of the area, will play in the future.

A “buy local” grassroots campaign is urging consumers to purchase foods produced by Montezuma and Dolores County farmers, and Dolores County is working to build a biodiesel plant in Dove Creek that would provide a market for sunflower and canola crops. But not everyone agrees that that’s the direction to go.

Coburn, who teaches classes occasionally at the San Juan Basin Technical College, believes agriculture’s role here will inevitably decline. Coburn worked for many years as a business consultant for Accenture, based in Denver. For 18 years, he worked off and on in southeast Asia as a teacher and a consultant for the mining industry.

“There’s a lot of buy-local sentiment here, but I’m just the opposite,” Coburn said. “Part of my job in Indonesia was to help their middle managers understand globalization and embrace it. We have to be prepared for a borderless world.

“If I buy a pound of coffee at [the Dolores Food Market] I would be happy if it came by Fed Ex from China, if it’s better or cheaper. I hold no allegiance to the local economy whatever.”

Coburn said the ag community “really is just a bunch of real-estate speculators, because nobody really makes a profit raising beans or cattle. All their profit comes from the appreciation [and eventual sale] of their land.” He said Americans need to face the fact that most of the world is filled with people who are willing to work harder for less money than they are.

“In Indonesia the minimum wage is between $40 and $50 a month, and unemployment levels, once you include the under-employed, are about 40 percent. You can purchase labor for about 15 cents an hour.”

Coburn said the water in McPhee is an enormous asset, “but what do we do with it? We use it to grow alfalfa, and use that to raise beef. The Brazilians can grow beef cheaper. That water applied to domestic use would support a community of 1 million people, if we want it.”

Coburn said he is not optimistic about the area’s economic future. “I view Montezuma County today as an economic cemetery,” he said.

He called local retail “a disaster” and said too many people open businesses without any thought as to whether they will fill a need. “Look at Dolores,” he said. “Every new business that opens has a 95 percent chance of failing, because it never should have opened in the first place. We have six or seven massage-therapist businesses competing, and three businesses that will sell you something organic.”

A regional trade center

But Keck said data compiled by the Region 9 Economic Development District show that local retail is actually doing fairly well.

The survey looked at sales per capita – adjusted for income – as compared to the state average.

In 2005, Montezuma County had a “pull factor” of 1.06, meaning it saw slightly more sales per capita than the state average (which would be 1), and Cortez had a pull factor of 2.54. The pull factor is derived by dividing percapita sales by the state’s per-capita sales.

“Cortez has higher retail sales per capita than Durango,” Keck said. “That really surprised me.” Durango’s pull factor was 2.37.

Dolores County had a pull factor of just 0.62 in 2005, but that showed steady growth from 1999, when it was 0.37. Keck said Cortez comes out ahead because it has a lower population than Durango, but it draws trade from around the region.

“Much of the city’s trade is driven by folks in the county,” Keck said. “And you have people from Monticello, Blanding, [Utah] and the [Navajo and Ute] reservations who shop here.”

Eighty-three percent of the county’s retail sales took place in Cortez in 2005, the study showed.

Expected sales were also calculated using population, income, and the typical pull factor for towns of a similar size. Under that formula, Cortez sales were 159 percent above what would be expected, Dolores’ sales were 11 percent above expectations, and Mancos’ sales were 23 percent below expectations.

“Cortez is the cash register of the county,” Keck said.

The study broke retail trade and retail service sales down by sector.. Information was not available for categories such as general merchandisers and health-care products, where a few large companies such as Wal-Mart so dominated the sales that the information was considered confidential.

Some of the sectors doing the best in Montezuma County are:

  • Non-store outlets (catalogue and Internet sales, and traveling businesses such as festivals and art shows). They did 379 percent over the state average.
  • Construction, with a 51 percent surplus over the state average;
  • Building materials/gardens, (43 percent surplus).
  • Food/beverage stores (39 percent)
  • Gas stations (37 percent). Areas doing poorly included:
  • Electronics/appliances (96 percent under average);
  • Furniture (78 percent under);
  • Clothing (68 percent under).

Within the city of Cortez, strong performers were motor-vehicle and parts outlets, food and beverage retailers, non-store outlets and building materials/ gardening businesses.

Health/social assistance sectors saw a great deal of “leakage,” meaning people obtain them out of the area, in both Montezuma County and Cortez. So did professional/technical services.

“That really shows some marketing opportunity there,” Keck said.

Cortez’s strong retail sales don’t necessarily translate to flourishing locally owned businesses. Much of the sales occur at Wal-Mart, City Market, and Safeway, all big franchises.

“We had more retail diversity in the ’60s than now,” Keck said. “There were three or four nice sporting-goods stores, more clothing stores. That two to three-block area downtown was really full. I think so much of the market opportunity has been sucked up by the Big Boxes and catalogues and Internet sales. It’s very challenging. A small company really has to have all its ducks in a row.”

Downtown struggles

That sentiment was echoed by Babette Kimble, who moved here with her family in 1962 and later left, only to return again 20 years later.

Kimble said she remembers Cortez’s Main Street in the 1960s as a much more vibrant place. “Back in ’62, Main Street was more dynamic than it is now because it was before the franchises moved into the area. The stores on Main were pretty full.”

Today, downtown Cortez is struggling. Many shops have closed, and although some new ones have opened, there are plenty of vacant spaces.

Kimble herself opened a coffee shop downtown on Main in 2006 but closed it after about six months. She said she’d chosen a poor location – in the middle of a block where parking was limited – and was faced with competition from many other coffee shops.

“Although my business was paying for itself, I wasn’t making any money,” she said. “The work was brutal — it was 12- hour days consistently. I knew all the [coffee] businesses wouldn’t make it, so I was willing to close my doors.”

She said she couldn’t fault the city for a lack of support. “Marcy [Cummins, executive director] with the Cortez Area Chamber of Commerce was very willing to be helpful,” she said.

But Kimble worries about the future of downtown, with Big Box retailers booming on the fringes of Cortez.

“The large franchises moving in — in certain respects they’re helpful to the community but in others they’re very harmful,” Kimble said.

‘Dolores was doomed’

Coburn doesn’t see the franchises as bad but as a natural result of the competitive global economy.

He said for economic development to succeed in Southwest Colorado, leaders need to decide what our competitive advantage is. “What can we do better, faster and cheaper than anybody else? What are we good at? What are our assets?”

Montezuma County would be a great place for an Outward Bound campus, a four-year college or a resort, he suggested, but probably not for large factories or plants.

The area’s main asset remains quality of life – “all the reasons I’m here,” he said. “The recreational opportunities, natural beauty, climate, and all the things we don’t have — traffic jams, crime, gangs. And we have affordability for those who brought their money with them, though not for those trying to make a living.”

Coburn, who met his wife when both were Outward Bound instructors, said when he finished his last job in Indonesia he told her they could move anywhere in the world. “She chose Dolores, Colorado,” he said. Now they are building a solar-heated house in town.

“This is a great place for young retirees,” he said. “It’s a great place to retire when you’re 50 – but not when you’re 80 and need major health care.”

But as people flock here for the quality of life, they will inevitably degrade it with increasing traffic, home prices and crowding, Coburn noted. “We joke that Dolores was doomed when my wife chose it,” he said.

The Coburns moved to Fort Myers, Fla., in 1996, when it was a sleepy retirement community. Soon after, an influx of retirees came. “Today it’s nothing like it was. It’s got the crime and horrendous traffic, and prices of homes have tripled. I kind of expect the same to happen here, but it seems to be happening slower.”

Coburn said in all likelihood, the county will continue to boom with residential growth but not with commercial, he predicted. “When I gaze into my crystal ball, I see more people like myself coming here.

“I see a lot more million-dollar homes with the comfortably retired rich enjoying the good life, unless someone stumbles onto a niche.”

A final question

The county economic-development effort led by Harper in 2006 identified a number of areas of concern. Committees were formed to work on business retention, work-force development and planning for a commercial business park.

Meanwhile, the county continues to try to develop a multi-faceted community- development group with support from all local governments.

But another question remains: How much development do residents want?

In November, voters said no to a number of measures that were considered critical for economic development. They denied the school mill-levy increase, rejected mandatory residential building codes in the county, nixed a minuscule sales tax to improve the county fairgrounds, and said no to a half-cent sales tax to chip-seal more roads.

A number of voters have said that, at least on the road question, they said no because they don’t want to encourage sprawl and development.

Finding the balance between a strong economy and a population boom that erodes quality of life may be the most difficult problem of all to solve.