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Diversifying Tahoe/Truckee’s mono-economy
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Correction: The correct acronym for TTBID is "Truckee Tourism Business Improvement District," not "Truckee Tahoe Business Improvement District."

From timber to tourism, Tahoe/Truckee has always had a mono-economy. Other industries can and have thrived — construction had a heyday following the Olympics, and the last decade has marked the success of more than a handful of local technology businesses and start-ups, but in spite of opportunities for growth in other sectors this area is actually more dependent on tourism than it was 10 years ago.

When the recession hit in 2008, tourism accounted for 42 percent of the regional economy in the Tahoe Basin, but by 2015 that ratio had grown to 62 percent, according to data compiled by the Tahoe Prosperity Center. The center’s CEO, Heidi Drum, said that these numbers likely run parallel to data describing Truckee as well.

“Tahoe will always be a tourist economy. It’s our primary economic driver,” Drum said. “The question is, how do we diversify, grow, and expand other sectors of the economy so we’re less reliant on tourism.”

Diversity is the word of the day. Not only is there a pronounced industrial imbalance regionally, but that imbalance favors a volatile and fluctuating market. Data compiled in the 2016 Regional Housing Study shows that the number of local jobs in the arts, entertainment, recreation, accommodation, and food service sectors plummeted from 8,078 in January 2014 (peak season) to 4,709 in May 2014 (shoulder season). A mono-economy based around tourism is also highly sensitive to national trends. The TPC’s 2015 Measuring for Prosperity Report shows a steady decline from almost 19,000 Tahoe Basin visitor-serving jobs in 2003, to just more than 14,000 in 2013, with a steep dip during the 2008 recession.
While the problem may be evident in every restaurant and storefront during the shoulder season months, the solution can be far less tangible. That has not stopped locals from tackling this issue from any apparent angle, however, and establishing metrics and initiatives to build a more robust mountain economy.

Addressing the Mono-Economy

One treatment for the predictable seasonal fluctuation of the visitor-oriented industry is not to abandon tourism, but to redirect it. Instead of funneling marketing resources toward bringing in visitors during peak seasons, the Truckee Chamber of Commerce has been working with the Town of Truckee to devote Tahoe Truckee Business Improvement District Truckee Tourism Business Improvement District (TTBID) dollars to creating and marketing shoulder season lodging, activities, and events to long term visitors from Reno and Northern California. It should be noted that the chamber’s branding efforts remain cognizant of retaining our peak season market share, due to competition from other mountain towns. The TTBID tax was implemented in 2015 as a 2 percent addition to the Transit Occupancy Tax applied to all short term rentals in the area.
“[TTBID] creates a dedicated fund to bringing overnight guests to Truckee ... in the shoulder season, because we don’t need that help in July, August, January, February, and March,” said Colleen Dalton, brand communications director for the Truckee Chamber of Commerce. “We need to get louder about reasons to come to Truckee in the shoulder season, and reasons to come are activities and events.”
The specification of overnight and long term guests is especially important to note here, as both Drum and Dalton agree that day-trippers add relatively little influx of currency into the area, yet place an added burden on infrastructure.
“Day visitation is not necessarily the best for our town,” Dalton said. “It’s the overnight guest and the year-round middle class. That’s what’s going to sustain us.”

Building Business

Speaking of the year-round middle class, what can we do for this locally endangered species? Besides addressing the obvious barrier of mid-range housing availability — take a look at our 2016 article The Missing Middle — there are a few things that need to happen. One of them is cultivating a diverse and healthy environment for professional jobs to thrive. It’s quality of employment, not quantity, we’re after.

Jim Wilkinson, CEO at Trailrunner International, believes the first step in this process is creating professional jobs. Trailrunner, with headquarters in Truckee’s Pioneer Commerce Center, is a global business with an international portfolio, and Wilkinson said a significant number of his 24 employees are not originally from Truckee, yet they now make their permanent residence here or in Reno. He said those in Reno would like to live in Tahoe/Truckee, but of course the housing crisis becomes evident yet again, affecting even those earning a professional wage.

The second step is making these jobs self-sustaining by instituting a professional growth path. Another issue with the visitor-serving jobs pool is that many of the positions available in this sector offer little opportunity for growth and advancement. Sectors like health and wellness, science, technology, business, and others have potential for advancement, yet according to the Measuring for Prosperity Report as well as the 2016 housing study, all of these sectors have diminished in the region over the last decade, with the exception of the health and wellness industry, which has retained a slow, yet positive, growth.

There is an important side to the professional path that begins at the individual level and has the potential to create dozens of local jobs: entrepreneurship. A prime example wrapped up this fall when six local entrepreneurs presented their companies at the Tahoe Pitch Showcase, after an intensive month-long workshop taught them the nuances of strategy to building a start-up. The program was developed by the Sierra Small Business Development Center in conjunction with Tahoe Silicon Mountain, a networking hub for entrepreneurs and professionals. Jessica Carr, project manager for the Sierra SBDC, said the inaugural event was a pilot program the partners plan to improve and expand.

Hilary Hobbs, management analyst at the Town of Truckee, refers to efforts like this as healthy and crucial for cultivating an “entrepreneurial ecosystem” locally by creating a support network and opportunities for those looking to start their own business. Hobbs said a few other tools to achieve this include having co-working spaces, creating networking and training opportunities, and building funding sources such as the Community Development Block Grants that the Town collaborates on with the Sierra Business Council — parent orginization of the Sierra SBDC — to bring to local businesses. CDBG’s are revolving loan funds of up to $50,000 or $100,000, depending, that the Town awards through the SBC to very small businesses that meet certain income and employment requirements. The first CDBG loan was awarded last December, to a local adventure tourism company.

One of the most important things one can do when establishing a strategy for any project of any size is to take an inventory of your assets. Tahoe/Truckee has many, and they are as crucial as they are unique. I’ve mentioned the region’s primary economic weakness in this article — see, mono-economy — but for a minute, let’s focus on our strengths. This is the approach the Truckee Chamber of Commerce has taken in its recent rebranding, as well as its work with the Truckee Tomorrow initiative.

Ask the Chamber’s Colleen Dalton what our greatest asset is, and the answer is simple: quality of life.

“If quality of life is our greatest natural resource — we don’t have oil, we don’t have gas, but we have quality of life here — we better make darn sure that is not declining, and we can’t improve or watch what we don’t measure,” she said, referring to the chamber’s efforts through the Truckee Tomorrow initiative to measure the local quality of life, first through qualitative analysis — e.g., What importance would you place on accessibility to open spaces? — and later through quantitative analysis — e.g., How many acres of designated protected open spaces exist here?

The hope is that this initiative will target certain socio-economic factors that detract or enhance the quality of life locally so that they can be addressed and create a more appealing area to live. If Truckee was a tech product, picture this phase of Truckee Tomorrow as the research and development phase.

The other side of Truckee Tomorrow is the Business Speaks! project, which utilizes another local asset: community. Sitting in the Business Speaks! investors meeting on Nov. 2, I witnessed an unusual sight: Representatives from more than 30 different businesses, foundations, and special districts were all gathered in the same room with a common desire to enhance and grow the local economy for the benefit of all. The purpose of the meeting was to take direction from the project investors about the best ways to implement the goals of the program, which include facilitating micro-regional meetings for businesses to discuss localized challenges, establish metrics for growth, and eventually collaborating on active solutions. The project is still in its infancy, but much like the recently created Mountain Housing Council, it is premised around unity, even among competitors and entities that may not play well with each other outside of the scheduled meetings. Pam Hobday, CEO of Pamela Hurt Associates and chair of the chamber’s board of directors, said she hopes for the project to become even more inclusionary in the future, with additional entities joining the conversation. Investing in the project requires a minimum of $500, but the scheduled area meetings are open to all. “It’s not pay-to-play,” Hobday said.

Lakeside, a similar effort is being conducted by the Tahoe Prosperity Center to measure quality of life in the Tahoe Basin. The Measure of Prosperity report, mentioned above, was first released in 2015, with a follow-up study to be released to the public in the next few months, according to Drum. Through this report the TPC found that one of Tahoe’s biggest barriers to growth and diversity, besides housing, is infrastructure. Transportation and traffic was one of the key detractors to the perception of quality of life in the Basin. The other detractor, a weakness that systemically burdens both Tahoe and Truckee and makes it difficult to incentivize professional growth, is the snail-like regional internet speed.

Tahoe’s Connection Problem

When I began pursuing this story, I never really considered that internet speed was a major player in the jobs creation game. If you’re reading this article online from one of the many, many, regional homes that have a broadband speed of less than 6 mbps, then you probably consider this a no-brainer. As it turned out, every single person I talked to regarding the barriers to diverse economic growth in Tahoe/Truckee cited broadband speeds as one of the biggies.

“If you use 50 mbps as the goal for high-speed broadband — that basically allows a family of four to all be on their devices at the same time and stream a movie — then more than half of the Tahoe region is underserved,” Drum wrote in an email to Moonshine Ink. Included in this lump are hundreds of homes and businesses with at least 6 mbps, which meets the California standard for high speed, but not the federal standard which is a minimum of 25 mbps. In our modern globalized economy, this puts Tahoe/Truckee at a distinct competitive disadvantage.

The TPC is currently working on a project called Connected Tahoe with the goal of bringing “gigabit level service to the entire Tahoe Basin as means to catalyze economic development, galvanize public safety, healthcare, education and to position the Tahoe Basin to receive the most advanced technologies for internet access now and in the future,” according to the TPC’s website.

One of the main priorities for Connected Tahoe is establishing a “dig once” policy in all of the local jurisdictions. If you are going to tear up the roads for road work — something Tahoe is all too familiar with — it is far cheaper and more efficient in the long run to coordinate the installation of fiber conduits at the same time. Drum said that the six different jurisdictions in the Basin can sometimes make this seemingly obvious practice difficult, but there is progress being made. The State of Nevada recently passed a “dig once” policy for all of its Nevada Department of Transportation projects through SB 53, and Douglas County is currently reviewing the policy and will likely be the first local jurisdiction to adopt it, according to Drum. For now, the California side remains behind the curve.

In the Truckee area, there is little tangible evidence of broadband infrastructure currently being renovated, but an opportunity presented itself during the last year in the form of the Post Road and Rockefeller Foundations. Stacy Caldwell, Tahoe Truckee Community Foundation CEO, said that she had sent some information about the TTCF to one of her colleagues at Harvard, and some visitors from the foundations saw the packet, picked it up, looked through, and chose the Truckee/Tahoe area as a potential candidate for a bit of an experiment.
According to Caldwell, Post Road is looking for three communities nationwide to implement a strategy for communications infrastructure growth that would become models for the rest of the country. There have been three local meetings so far between members from the foundation and TTCF board members, public utility, and business leaders, including a tour of the area and its many districts. The foundation is taking a three-year approach to making their decision, and if chosen, Truckee/Tahoe has the potential for attracting up to $100 million in investments through the foundation.

Room to Grow

Growth. It’s a wonderful and terrifying buzz word that makes investors drool and environmentalists shiver. For Tahoe/Truckee to remain a competitive player it needs to grow, but where, and how?

“I don’t want to misstate this growth issue because I think the economy can grow without physical growth,” said Tony Lashbrook, the recently retired Truckee town manager. “In my 23 years of working for the Town of Truckee the thing I worried about the most was, ‘How do we keep this a real town that people live and participate in?’”

Well, a real town needs real jobs, so the answer may be found in pinpointing what industries have the potential to grow locally without further burdening an already strained infrastructure. According to Lashbrook, one industrial sector that has always been understatedly important to the Truckee economy is the health and wellness sector. “Healthcare is another area where we have a leg up, because our medical facilities are not typical for a community of our size. It is far more advanced and far more significant.”

Paul Haeder moved to Truckee five months ago to fill a position as an orthopedic surgeon at the Tahoe Forest Health System. When Haeder was looking for a place to settle with his wife and three kids, they asked themselves the question, “Where could we live if we could go anywhere we wanted?” He said a small town with access to the outdoors was paramount, and it just so happened that Truckee sat in a region they were drawn to. The kicker, according to Haeder, was the school system.

“Not all small towns are created equal as far as schools go, and opportunities for your kids, but the Truckee school district is fantastic,” Haeder said.

A story about growth would be incomplete without a nod to the construction and development industry, especially because construction represented such a large part of the local economy for decades since the 1970s. There are a number of developments with varying levels of community support at many different stages around the Tahoe/Truckee area — most wrapped up in the environmental review stage, admittedly — but residential construction has certainly slowed down.

Fortunately for the industry, according to a 2016 annual report by the Town’s community development department, there has been a slight rise in housing units built over the last few years, with a 3 to 9 percent growth each year since 2012. Truckee currently only has 5,725 remaining units until build-out, but we’ll have to wait and see if it ever gets there. “It’s not going to go away,” Lashbrook said about local construction. “There are going to be constant remodels, and at least, if my economic education was correct, it will never be built out, it will just slow down.”
According to Hobbs at the Town of Truckee, one major difficulty for construction is its cyclical nature. When a recession hits, construction is one of the first sectors to go and the last to recover. “How do we make sure that we are prepared and we have other sectors in our economy so that if tourism drops off, or construction drops off — or both, depending on what’s causing it — there are other things going on and we’re not leaning too heavily on any one industry,” Hobbs said.

One sector that has opportunity for growth without much physical expansion is the business and technology industry. Clear Capital was one of the first companies in such industries to break out into the area, and a few have followed. bigtruck hats are now distributed around the world, and FiftyFifty Brewing sells its tasty brews in more than 17 states and eight countries. The global communications company Trailrunner International moved into the Pioneer Center in Truckee in May of 2016, and CEO Jim Wilkinson said he chose to establish his business in the mountain town for more than just the fresh air.

Wilkinson recounted that before locating in Truckee he spent significant resources investigating regional and global trends to discover where talent is headed. “There is a massive flow from the coast inward in this country,” Wilkinson said. “From an innovation perspective, it [talent] has shifted up into San Francisco. The second thing is that San Francisco is now unlivable … The third thing is that there has been a fundamental shift in what young people want.”

Wilkinson says that Truckee is now sitting in the middle of the growth region for professional talent. A shift in quality of living, first south of San Francisco in Palo Alto and Silicon Valley, and subsequently in the city itself, has been driving young people with talent further inland. Wilkinson also emphasizes the importance of creating positions with a definable vision and purpose, noting that young talent today is looking for meaningful work, not just a job.

The young generation may be moving in, but now it’s up to us to give them a reason to stay.
“What we need is to help people understand the quality of life here, and to retain existing locals,” Dalton said. “How do we prevent locals from leaving and going down the hill to Reno?”

 
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November 9, 2017