Chapter 11 ECONOMICS I. INTRODUCTION

Transcription

1 Chapter 11 ECONOMICS I. INTRODUCTION Tahoe Regional Planning Agency (TRPA) recognizes that its policies and regulations affect economic conditions for residents living in and visitors traveling to the Lake Tahoe Region. This Economics section of the 2001 Evaluation Report is intended to assist TRPA in monitoring the socio-economic development of the Lake Tahoe Region. TRPA s goals are to monitor economic conditions, develop a framework from which to consider economic impacts associated with policies and regulations, and assist in strategies for economic development and diversification consistent with the established environmental threshold carrying capacities. This chapter describes the Lake Tahoe Region economy and provides consistent and reliable indicators to monitor economic trends and conditions of the Region including: population, housing, employment and earnings, commercial development, gaming, and the economic impacts of visitors. A. OBJECTIVES Specific objectives for this report include: Update the economic description of the Tahoe Basin that was prepared as part of the 1996 Threshold Evaluation. Evaluate progress-to-date, with respect to the recommendations contained in the 1996 Threshold Evaluation. Analyze TRPA policies and regulations as they pertain to economic conditions and trends. Develop a means for evaluating proposals and recommendations to TRPA regarding policy and capital expenditures. B. CHAPTER CONTENTS Following the Introduction, Section II provides a socio-economic profile of the Lake Tahoe Region, analyzing demographic characteristics and trends such as population, age distribution, education level, and household income. Section II also investigates economic measures of employment, earnings, personal income, demand for housing and commercial development, as well as transportation related trends. Section III specifically examines the travel and tourism generated portion of the economy, including both direct and indirect impacts. Sections IV and V focus on the external areas affecting the Lake Tahoe Region (i.e., where most of the visitors live) and the volume of visitor days to the Region. Section VI investigates the influence of TRPA on the Lake Tahoe Region economy, providing an overview common perceptions and perceived economic constraints. Section VII provides a framework by which to evaluate economic considerations related to grant CHAPTER 11 ECONOMICS Page 11-1

2 proposals and capital expenditures. Finally, Section VIII, reviews progress on 1996 recommendations and offers additional recommendations for C. STUDY AREA CONSIDERATIONS For the purposes of economic analysis, it is important to distinguish between two primary areas: Lake Tahoe Region (defined by the TRPA Compact, 1980) and Greater Tahoe Area. Zip codes were selected as boundaries (see Appendix A for a list of zip codes) to define these geographic areas. A further description of each area follows below, with geographic boundaries illustrated in Figure 11-1 on the following page. Lake Tahoe Region The Lake Tahoe Region is intended to represent the area of TRPA management jurisdiction, which encompasses a large portion of the Lake Tahoe Basin. The Region includes portions of El Dorado and Placer Counties in California including the incorporated City of South Lake Tahoe as well as portions of Washoe, Douglas and Carson City Counties in Nevada. (The Carson City portion of the Region is unpopulated and is composed of U.S. Forest Service and Lake Tahoe Nevada State Park lands). Many of the popular ski resorts in the Lake Tahoe Area are located a short driving distance outside the Region. Greater Tahoe Area The Greater Tahoe Area includes the Lake Tahoe Region, as well as the communities and areas surrounding Truckee-Donner, Olympic and Squaw Valleys, Reno-Carson City, and Minden-Gardnerville. The Greater Tahoe Area includes all the Lake Tahoe area ski resorts, as well as other locations for recreation activities associated with Lake Tahoe. The Greater Tahoe Area also includes the primary locations where Lake Tahoe Region businesses and employees are most likely to purchase a significant portion of goods, services and housing. CHAPTER 11 ECONOMICS Page 11-2

3 I. FIGURE 11-1 Lake Tahoe Region and Greater Tahoe Area California Nevada SPARKS GREATER TAHOE AREA TRUCKEE RENO W A S H O E LAKE TAHOE REGION P L A C E R KINGS BEACH DOLLAR POINT TAHOE CITY INCLINE VILLAGE CARSON CITY C A R S O N C I T Y INDIAN HILLS JOHNSON LANE KINGSBURY MINDEN D O U G L A S E L D O R A D O SOUTH LAKE TAHOE GARDNERVILLE KIRKWOOD A L P I N E California / Nevada State Line Source: Dean Runyan Associates CHAPTER 11 ECONOMICS Page 11-3

4 II. SOCIO-ECONOMIC PROFILE OF LAKE TAHOE REGION This section of the report describes demographic and economic conditions of the Lake Tahoe Region including population, sources of employment and earnings, unemployment rate, sources of personal income, and trends in housing, commercial development, and transportation. The bulk of information contained in this section pertains specifically to the Lake Tahoe Region; however, certain data was not available on a sub-county level and is reported for the collection of counties with populations in the Lake Tahoe Region (i.e., Placer, El Dorado, Douglas and Washoe). A. POPULATION CHARACTERISTICS AND TRENDS 1. Population Growth Currently about 56,000 people reside year-round in the Lake Tahoe Region. Table 11-1 shows the current (2000) and projected population (2010) for Lake Tahoe Region in each of the four populated counties. Over the next decade, the population of the Lake Tahoe Region is expected to grow moderately, rising from a current (2000) population of 56,000 to nearly 59,000 by 2010, representing an average annual growth rate of.04%. These projections account for residents and would not include temporary workers or those who own vacation and second homes in the Lake Tahoe Region (see Section 4 for a discussion of vacation and second home ownership). Table Population by County, Lake Tahoe Region, County Douglas 6,115 6,551 6,817 El Dorado 29,652 31,514 32,793 Placer 9,257 9,838 10,241 Washoe 7,567 8,266 8,607 Total 52,591 56,169 58,458 Source: Dean Runyan Associates & US Census Data Compared to the Lake Tahoe Region, the overall population for the four counties Placer, El Dorado, Douglas, and Washoe is expected to grow at a significantly faster rate. The combined population of these four counties is projected to grow from about 780,000 in 2000 to over 1 million by 2010, representing an average annual growth rate of 2.7%. In terms of the number of new residents, much of this growth is expected to occur on the western slopes of the Sierra Nevada along the Auburn/Nevada City corridor and within the Folsom/Placerville area in El Dorado and Placer counties, as well as the Reno-Sparks area in Washoe County. Figure 11-2 shows the average annual population growth rate for the Lake Tahoe Region as compared to growth for each of these four counties, as well as state-level data for California and Nevada. CHAPTER 11 ECONOMICS Page 11-4

5 Figure 11-2 Projected Average Annual Rate of Population Growth, % 3.24% 2.95% 2.25% 1.93% 1.23% 0.40% El Dorado Douglas Placer Nevada Washoe Lake Tahoe Region California Source: US Census Bureau & Dean Runyan Associates 2. Components of Population Change The composition of the population in the counties surrounding the Lake Tahoe Region will influence the profile of visitors to the Region, as participation rates and preferences for specific recreation activities will often vary among certain age groups. Due to close proximity and ease of access, the population within the four counties (Placer, El Dorado, Washoe, and Douglas) will have a strong influence on demographic changes, traffic patterns, and visitor trends in the Region. Some notable changes in the overall composition of the surrounding population are expected to occur over the next decade. While population growth will occur within each of the selected age groups, people aged baby boomers will become a more significant segment of the population (see Figure 11-3). 400 Figure 11-3 Population by Age Group, Thousands Year Source: U.S. Census Bureau CHAPTER 11 ECONOMICS Page 11-5

6 It is also interesting to note that the population growth in the younger age segments will be most prominent among populations of Latino and Asian Americans. These types of demographic changes are likely to influence development and marketing decisions made by businesses that choose to locate in the Lake Tahoe Region. 3. School Enrollment Figure 11-4 shows the school enrollment in grades K-12 for the Lake Tahoe Region (includes Tahoe-Truckee Joint Unified School District). As this figure shows, school enrollment in the Region has grown moderately over the last six years. School- aged children generate demand for day care, after school programs, pedestrian-friendly communities, and opportunities for recreation and cultural activities. When making location and employment decisions, business owners and working professionals with children will consider the opportunities for their youth, as well as the overall economic conditions of the Region. Figure 11-4 School Enrollment K-12 in Lake Tahoe Region, Thousands Source: California Dept. of Education, Nevada Dept. of Education, & Dean Runyan Associates B. EMPLOYMENT AND EARNINGS Employment and earnings provide a measure of the degree to which people living in the Tahoe Region can support themselves and their families. Approximately 49,000 people work within the Lake Tahoe Region. Employment and payroll figures are based on County Business Patterns Data for firms located within zip code areas selected to define the Lake Tahoe Region (see Appendix B). Businesses that depend primarily on travel and tourism lodging establishments, gaming, restaurants, and recreation services provide a major source of employment and payroll in the Lake Tahoe Region. As shown in Figure 11-5, lodging/gaming represents the largest employment category, which accounts for the casinohotels located primary in South Lake Tahoe and other lodging establishments throughout the Region. As shown in Figure 11-6, lodging/gaming establishments also generate a major CHAPTER 11 ECONOMICS Page 11-6

7 source of the Region s total earnings through employee compensation (i.e., wages, salaries, and benefits). It is also interesting to note the business types such as recreation establishments, other services, and finance, insurance, and real estate establishments provide the primary source of proprietor income in the Region. Figure 11-5 Lake Tahoe Region Employment by Major Industry Group, 1998 Lodging/Gaming Finance, ins., real estate Recreation Retail Trade Government Other Services Eating and Drinking Construction Professional services Medical, Legal Education, social services Transportation Manufacturing Wholesale Trade Agric., Forest, Mining Domestic Services Communitions, utilities ,057 3,969 3,658 3,129 2,129 1,586 1, , Number of Jobs (Thousands) Total = 49,513 Source: Dean Runyan Associates and Minnesota IMPLAN Group, Inc. Figure 11-6 Lake Tahoe Region Earnings by Major Industry Group, 1998 Lodging/Gaming Recreation Retail Trade Finance, ins., real estate Government Other Services Eating and Drinking Construction Professional services Medical, Legal Education, social services Transportation Manufacturing Wholesale Trade Agric., Forestry, Mining Domestic Services Communitions, utilities Employee Comp. Proprietor Income $0 $50 $100 $150 $200 $250 $300 $350 Millions of Dollars Total Earnings = $1.3 Billion Source: Dean Runyan Associates and Minnesota IMPLAN Group, Inc. CHAPTER 11 ECONOMICS Page 11-7

8 C. Unemployment Rate The unemployment rate represents the portion of the labor force looking for work. Between the unemployment rate in Lake Tahoe Region fell from 7.8% to 3.5% of the labor force. This trend indicates an increasing demand for labor in the Region (i.e., a fairly tight labor market), which will tend to increase average wages and attract employees to the Region. Over this same time period, statewide unemployment in California and Nevada has also fallen, but remains at a slightly higher rate of 4.9% and 4.4%, respectively. Figure 11-7 Lake Tahoe Region Unemployment Rate, Percent of Labor Force 7.8% 7.2% 6.1% 5.5% 4.5% 3.5% Year Source: US Census Bureau, California Employment Development Dept., Nevada Dept. of Employment, Training, & Rehabilitation, & DRA D. Sources of Personal Income Personal income, a measure of all income earned by residents living in an area, can be described in terms of four primary sources: 1) Local wages, representing wages earned inside an individual s county of residence 2) Transfer payments, including income from sources such as social security, welfare, disability and unemployment 3) Capital payments, including income from sources such as interest, dividends and rental income 4) Commute wages, representing wages earned outside an individual s county of residence. The composition of personal income is highly influenced by the economic and demographic trends for a particular area. The degree to which personal income is composed of sources other than local wages (i.e., capital payments, transfer payments and commute wages) provides an indication of the economic contribution of retirees, commuters and others with primary income generated from sources outside the counties of the Lake Tahoe Region. Income derived from outside the area provides a buffer of protection against local economic shocks, as well as reducing fluctuations in business caused by seasonal trends. In California and Nevada as a whole, local wages make-up a significantly larger portion of personal income as compared to the four counties with populations in the Lake Tahoe CHAPTER 11 ECONOMICS Page 11-8

9 Region (i.e., Placer, El Dorado, Douglas and Washoe). As shown in Figure 11-8, local wages represent about 58% of personal income for the four counties, as compared to about 73% for both California and Nevada. Figure 11-8, Local Wages as a Percent of Total Personal Income, Percent of Personal Income 80% 70% 60% 50% 40% 30% 20% 10% 0% Tahoe Region Counties California Nevada Source: Bureau of Economic Analysis & Dean Runyan Associates E. Economic Measures of Visitor Trends 1. Transient Occupancy Tax Receipts Transient occupancy taxes (TOT), the most direct means by which local governments can collect revenue from visitors, are an extremely useful measure of travel activity in the Lake Tahoe Region. Table 11-2 breaks out room tax receipts by jurisdiction for the Lake Tahoe Region in Table 11-2 Lake Tahoe Region Room Tax Receipts and Rates by Jurisdiction, 1999 Jurisdiction Tax Receipts Tax Rate Douglas County 6,550,871 10% City of South Lake Tahoe 9,194,888 10% Placer County * 3,380,000 10% Washoe County 3,611,834 12% Total 22,737,593 * Placer County tax receipts do not include those collected at Squaw Valley USA and Northstar, which are outside the area of TRPA management. Source: Dean Runyan Associates & local jurisdictions CHAPTER 11 ECONOMICS Page 11-9

10 The transient occupancy taxes collected in the Lake Tahoe Region for the years 1996 through 2000 are shown in Figure 11-9, providing a measure of growth in spending on overnight accommodations in the Lake Tahoe Region. Changes in TOT receipts are influenced by changes in the tax rates of individual jurisdictions, as well as increases in room sales; however, in the Lake Tahoe Region, the TOT growth was due primarily to increased spending on overnight accommodations. Figure 11-9 Lake Tahoe Region, Transient Occupancy Tax Receipts Millions of Dollars Fiscal Year Source: Dean Runyan Associates 2. Gaming Revenue As discussed previously, the gaming industry plays a substantial role in generating jobs and income throughout the Lake Tahoe Region. Gaming revenue for the Lake Tahoe Region can provide a measure of both the strength and direction of economic conditions for the Lake Tahoe Region gaming establishments. The casino establishments in the Lake Tahoe Region include: South Shore North Shore Harrah s Lake Tahoe, Harveys Resort, Bills Casino, Caesars Tahoe, Lake Tahoe Horizon Casino Resort, Lakeside Inn & Casino Hyatt Regency Lake Tahoe, Tahoe Biltmore Lodge & Casino, Crystal Bay Club & Casino, Jim Kelly s Tahoe Nugget, Cal-Neva Resort With the exception of a slight downturn between for South Shore casinos, gaming revenue for the Lake Tahoe Region has held fairly steady over the last decade, amounting to about $378 million per year. Given the high proportion of jobs associated with lodging/gaming establishments, significant changes in gaming winnings would signal a change in the overall composition of the Region s economy. CHAPTER 11 ECONOMICS Page 11-10

11 Figure 11-10, Lake Tahoe Region Annual Gaming Revenue (winnings), $400 $350 $300 Millions $250 $200 $150 South Shore North Shore $100 $50 $ Fiscal Year Source: Nevada Gaming Control Board & Dean Runyan Associates 3. SKIER DAYS Alpine ski resorts in the Lake Tahoe Basin serve as a primary visitor draw attracting large numbers of skiers and snowboarders during the winter months. Although several of the ski resorts in the Lake Tahoe Basin are outside the Lake Tahoe Region (resorts include Alpine Meadows, Northstar, Squaw Valley USA, Kirkwood, Sierra Tahoe, and Heavenly Valley), many of the skiers and snowboards contribute to the Lake Tahoe Region economy through their spending on lodging, eating and drinking, and gaming. The annual number of alpine skier days provides a useful gauge of the economic conditions in the Lake Tahoe Region, particularly during the winter months of the year. As shown in Figure 11-11, total alpine ski days totaled about 3.2 million during the ski season and have grown by about 500,000 since the early 1990s. CHAPTER 11 ECONOMICS Page 11-11

12 Figure Alpine Ski Days in Lake Tahoe Basin, Number of Ski Days (Thousands) 3,500 3,000 2,500 2,000 1,500 1, /94 94/95 95/96 96/97 97/98 98/99 99/00 Ski Season Note: Each ski year includes the Nov. - Dec. period from the previous year. Source: California Ski Industry Association & Dean Runyan Associates F. HOUSING AND COMMERCIAL DEVELOPMENT 1. Residential Construction Construction of new homes significantly impacts the economic conditions of the Lake Tahoe Region. New residents bring income from outside the region into the local economy, helping to generate employment and earnings both directly and indirectly. Construction jobs, a very cyclical sector of the economy, make up a significant percentage of the jobs in the Lake Tahoe Region. Since 1987, the Regional Plan has limited additional residential construction to 300 units per year. As shown in Figure 11-12, demand for permit applications during the last five years has been relatively stable with particularly strong during Permit applications for residential modification exceeded those for new residential construction nearly two to one. It is important to note that through memorandums of understanding (MOUs) residential construction permit applications are also received by each of the four counties and the City of South Lake Tahoe in the TRPA Region. CHAPTER 11 ECONOMICS Page 11-12

13 Figure Number of Residential Construction Permit Applications Received by TRPA Number of Permit Applications New Residential Residential Modification Source: TRPA & Dean Runyan Associates Much of the housing construction appears driven by demand for vacation and second homes from part-year residents. An examination of the addresses reported by owners of Lake Tahoe homes provides a rough indication of the potential number of second homes in the Region. In 1999, 54% of the owners of residential property in Lake Tahoe Region reported addresses with zip codes outside the Greater Tahoe Area. Based on 1990 US Census data, about 9,000 housing units were classified as seasonal, recreation and occasional use, representing about 40% of the total inventory of housing units in the Lake Tahoe Region. Figure Single Family Homes, Condominiums, & Time Shares in Lake Tahoe Region, 1999 Mailing address of Property Owner outside of area 54% Greater Tahoe Area 28% Lake Tahoe Region 18% Percent of Total Source: Dean Runyan Associates & DataQuick CHAPTER 11 ECONOMICS Page 11-13

14 2. Sale Price of Residential/Vacation Home Units Among single-family homes and condominiums in the Lake Tahoe Region, there is a wide discrepancy between average and median sales prices both of which have risen steadily over the last decade. The median is more representative of typical sales prices and provides a better indicator of overall affordability, while the average is influenced more by the sales of very high-priced units at the high end of the market. As shown in Table 11-3, the median prices in the Lake Tahoe Region were $285,000 for singlefamily homes, and $204,750 for condos during calendar year Sales of singlefamily homes outpaced sales of condominiums/townhouses. Table 11-3 Sale Price of Homes in Lake Tahoe Region, 2000 Single- Family Condominiums/ Townhouses Number of Sales 1, Average Price $489,294 $278,349 Median Price $285,000 $204,750 Sources: Dean Runyan Associates & DataQuick As shown in Figure 11-14, the median sales price of both condominiums and singlefamily homes has steadily increased over the last decade. In 2000, single-family homes sold for a median price of $285,000, up from $119,000 ten years ago, representing an average increase of 9.1% per year over the last decade. Median home sales price provides an indication of the affordability of housing, particularly for business owners and employees in the Region. Strong growth in home prices suggests that many of the Region s workers may find it necessary to live outside the Region in order to find affordable housing. Housing is generally considered to be affordable if no more than 30% of a household s gross income is used for rent or mortgage payment. CHAPTER 11 ECONOMICS Page 11-14

15 Figure Median Sale Prices in Lake Tahoe Region, $300,000 $250,000 Condo/Townhouse Single Family $200,000 $150,000 $100,000 $50,000 $ Source: Dean Runyan Associates & DataQuick 3. Nonresidential Construction Trends in nonresidential construction provide an important indicator of the level of consumer demand in the Lake Tahoe Region. Nonresidential construction projects also impact the number of jobs in construction, one of the more volatile sectors of the local economy. Figure shows the total number of nonresidential construction building permits between TRPA distributes commercial allocations of 150,000 square feet for a five-year period among the various jurisdictions based on a variety of land use and environmental factors. It is interesting to note that most of the permit applications were for commercial retail/entertainment with a small portion for lodging/accommodations. CHAPTER 11 ECONOMICS Page 11-15

16 Figure Number of Non-Residential Construction Permit Applications Received by TRPA Number of Permit Applications Lodging/Accomodations Commercial Retail/Entertainment Source: TRPA & Dean Runyan Associates G. Highway Traffic 1. Travel Routes to Lake Tahoe Region Highway traffic counts along primary access routes into the Region can provide an important gauge of overall economic activity and a useful indicator of the seasonal variation related to travel, tourism, and recreation activity. The California and Nevada Departments of Transportation maintain year-round traffic counts along five highways that serve as the primary access routes into the Lake Tahoe Region: California State Highway 89 (a) California State Highway 267 (b) US Highway 50 (c) US Highway 50 (d) Nevada State Highway 431 (e) A large portion of San Francisco Bay/Northern California visitor traffic travels via I-80, then south on California State Highway 89 to the Lake Tahoe Region. Highway 267, which parallels Highway 89, also carries a relatively large volume of traffic into the Region. US Highway 50 provides a primary access to the Lake Tahoe South Shore via Sacramento from the west, and Reno/Tahoe International Airport in Nevada from the east. Nevada Highway 431 provides direct access from the Southern Reno area to Tahoe s north shore and Incline Village-Crystal Bay. These primary highways, along with the location of each traffic counter, are shown in Figure on the following page. CHAPTER 11 ECONOMICS Page 11-16

17 I 80 Figure Highway and Traffic Count Locations (b) California Highway 267 at I 80 South of Truckee (e) Nevada Road 431 (a) California Highway 89 South of Truckee CA 89 CA 267 NV 431 W A S H O E P L A C E R C A R S O N C I T Y US 50 (d) US Highway 50 West of 395 D O U G L A S NV 207 E L D O R A D O (c) US Highway 50 at Sly Park US 50 Source Dean Runyan Associates CHAPTER 11 ECONOMICS Page 11-17

18 2. Average Daily Traffic A common measure used to describe traffic volumes is Average Daily Traffic (ADT), which represents the total count of vehicles at a given location in both directions on a given day. ADT includes counts for all types of vehicles such as automobiles, trucks and recreational vehicles. Traffic related to leisure, tourism or recreation is included in ADT counts, as is commercial truck traffic. ADT counts also include traffic due to local area residents and employees traveling into and out of the Region, going to and from work, shopping or other routine activities. Table 11-4 shows ADT for the five highways in The two parallel routes off I-80 (CA State Highways 89 and 267) account for nearly two-thirds of the total traffic volume. I-80 provides day travelers with limited time the most convenient access to Lake Tahoe, particularly west shore locations. Highway 89 provides access to the town of Truckee, which has grown rapidly in recent years and now accounts for a resident population of about 13,000. Most likely, a significant portion of this traffic volume relates to resident and visitor activity associated with Truckee. US Highway 50, which provides convenient access to the south shore of Lake Tahoe, accounts for about 14% of the total volume. Travel routes from Nevada carried the remaining quarter of the measured traffic volume. Visitors traveling from Reno would use either of these Nevada highways to access the Region. Tahoe-Reno-Express, which offers year-round bus service from Reno, travels along US Highway 50 averaging buses a day. As shown in Figure 11-16, ADT along each of the primary access routes has grown significantly over the past three years. In particular, ADT along California State Highway 89 has increased by nearly 23% the highest rate of increase among the four 1. Over the last several years, the volume of traffic into the Region from the California highways has grown faster as compared to the volume of traffic traveling into the Region from Nevada. Table 11-4 Annual Average Daily Traffic, 1999 Highway ADT Percent of Total California State Highway 89 29, California State Highway , US Highway 50 (at Sly Park) 11, US Highway 50 (West of NV 395) 11, Nevada State Highway 431 8, Historical data for California State Highway 267 was not available. CHAPTER 11 ECONOMICS Page 11-18

19 Figure Change in Average Daily Traffic, Selected Access Points Percentage Change (1997 =0) US Hwy 50 West at Sly Park CA Hwy 89 South Nevada 431, West of US 50 West of Nevada California/Nevada Department of Transportation and Dean Runyan Associates 3. Seasonal Variation Given that each of these highways serves as an access route for visitors to the Lake Tahoe Region, seasonal variations in traffic can provide a useful indication of seasonal visitation patterns for the Region. As shown in Figures and 11-19, monthly ADT data for the five highways show a fairly consistent seasonal pattern with a peak period during the summer months (Jun-Sept). Figure Average Daily Traffic, 1999 California Access CA Hwy 89 South from Trukee(a) CA Hwy 267 South from Trukee(b) U.S. Hwy 50 West at Sly Park (c) Thousands Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: California Department of Transportation & Dean Runyan Associates CHAPTER 11 ECONOMICS Page 11-19

20 Figure Average Daily Traffic, 1999 Nevada Access US 50 West of Nevada 395 Nevada 431, West of US 395 Thousands Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Nevada Department of Transportation & Dean Runyan Associates Table 11-5 shows the percent change from the annual average for each of the highways during the summer and winter months. Overall, during the summer months (Jun-Aug) ADT averaged 29% to 15% above the annual ADT, while winter months (Dec-Feb) averaged 22% to 4% below annual ADT. US Highway 50 shows the most seasonal variation followed closely by highway 89 an indication that visitors to the Region have particularly strong influence on the traffic volume of these two highways. Highways 431 and 267 show significantly less seasonal variation, an indication that visitor traffic volume is less of a factor in the overall traffic volume. Table 11-5 Percent Change in Seasonal ADT from Annual Average 1999 Highway Summer Winter US Highway 50 (at Sly Park) 29% -22% US Highway 50 (West of NV 395) 25% -20% California State Highway 89 22% -19% Nevada State Highway % -9% California State Highway % -4% Figure illustrates the 1999 summer visitor ADT, i.e., the increase above the winter months, for each of the five highways. For example, Highway 89 carried, on average, 29,076 automobiles per day in During the average of the low months (Dec, Jan. and Feb.), it carried 23,588 per day. The difference (5,489) above the average low can be attributed to additional traffic, primarily during the peak summer period. Monthly ADT and increments above or below the average seasonal low are CHAPTER 11 ECONOMICS Page 11-20

21 shown for each of these highways at the end of this chapter in the Supplemental Information section, Appendix B. Figure Visitor Traffic, 1999 (Annual ADT Increment Above Average Seasonal Low) 6 5 Thousands CA 89 US 50 (CA) US 50 (NV) NV 431 CA 267 Source: California/Nevada Dept. of Transportation, & Dean Runyan Associates 4. Commuting Patterns Commuting patterns are another important transportation indicator with potential implications for air quality and traffic congestion both strong influences on quality of life for residents, as well as the level of satisfaction for visitors. Residents and employees commuting into and out of the Region may account for significant vehicle traffic, influencing perceived quality of life factors, as well as environmental thresholds related to air quality. Understanding patterns of commuting can also help identify the extent of the market area in which business owners and employees spend income earned in the Region. Figure Location of Residence, Lake Tahoe Region Employees, 1992 S. Lake Tahoe Placer County Truckee/Alpine/Squaw Minden/Gardnerville El Dorado (uninc.) Douglas County Reno/Sparks/Carson Washoe County Other 0% 10% 20% 30% 40% 50% Percent of Total TRPA 2001 Threshold Source: TRPA Evaluation 1992 Short Range Transit Program Study & Dean Runyan Associates March, 2001 CHAPTER 11 ECONOMICS Page 11-21

22 A 1992 TRPA transportation survey (most recent data available) revealed that approximately 24 percent of the employees in the Tahoe Region are choosing to live outside of the Region. As shown in Figure 11-20, Lake Tahoe Region employees reside in a number of nearby locations including: Truckee, Reno, Sparks, Carson City, Minden, and Gardnerville. Additionally, the survey data reveals that nearly 9 percent of the Region s residents were employed outside the Region, primarily in the areas of Truckee, Alpine and Squaw Valley. These findings illustrate the extent to which residents of these nearby communities are integrated into the Lake Tahoe Region economy. H. AIR TRANSPORTATION The Reno-International Airport provides scheduled air service to Reno, with over 200 daily flights offered by a selection of major commercial air carriers. During 1999, the airport received over 3 million passenger arrivals with approximately 500,000 (17%) of the passengers reporting Lake Tahoe as their primary destination. Rental car, shuttle and limousine service is available at the airport, with about a 1-hour drive to Lake Tahoe via wellmaintained Nevada State Highways. Located in South Lake Tahoe, Lake Tahoe Airport maintains a single runway serviced by a parallel taxiway and six connecting taxiways. The runway is constructed to service intermediate-sized commercial jet aircraft. The Lake Tahoe Airport operates within an environmentally sensitive area, and is required to operate under strict guidelines in particular noise abatement standards that exceed those at the national level. Due to a variety of circumstances, it has been difficult to attract and maintain scheduled commercial air carriers willing to serve the airport. Allegiant Air, which served the airport up until November of 2000, has suspended all flights as a result of financial difficulties. During 2000, the Lake Tahoe Airport received about 21,000 incoming general aviation passengers who flew on private (unscheduled) aircraft. General aviation passengers represent visitors, and do not include the incoming flights made by residents and business owners who may store their planes in hangers at the airport. The City of South Lake Tahoe is working to attract another scheduled air carrier and is committed to the continued operation of the airport and its facilities. CHAPTER 11 ECONOMICS Page 11-22

23 III. ECONOMIC IMPACTS GENERATED BY TRAVEL SPENDING IN THE LAKE TAHOE REGION Previously discussed employment data by industry type shows that many of the businesses that provide goods and services to visitors (i.e., lodging/gaming, recreation, retail and eating & drinking) generate a substantial portion of the jobs and earnings in the Region. However, this industry type data does not provide the detail necessary to examine the unique components of visitor spending by visitor type or by specific activities associated with visitor spending. In addition, it is difficult to describe the full extent of the economic impacts generated by visitor spending since many of the indirect impacts flow through types of businesses that are not directly associated with visitor activities. This section describes the direct and indirect economic impacts of travel spending in the Lake Tahoe Region. Travel is defined as an overnight or day trip that is not of a routine or commuting nature. The purpose of such travel can be for recreation, business, shopping, to attend meetings, to visit with friends and family, or another personal reason. All overnight trips are defined as travel. Day travel is defined as a trip of over 50 miles, one-way, from the traveler s home. Thus, most of the travel that occurs in the Lake Tahoe Region is included in the scope of this analysis, provided that it is not travel by residents of the region, or commuting or other routine travel by persons that reside outside of the Region. A. DIRECT ECONOMIC IMPACTS The estimates are for 1996 through 2000 (preliminary) for the Lake Tahoe Region and the Greater Lake Tahoe area (which includes Truckee, Reno, Carson City, Alpine County, and portions of El Dorado and Placer counties). These estimates of the direct impacts associated with traveler spending were produced using the Regional Travel Impact Model (RTIM) developed by Dean Runyan Associates. The input data used to detail the economic impacts of the travel sector were derived from various local, state and federal sources. The economic impact measurements of travel reported in this section represent direct economic impacts. Direct economic impacts include only the spending by travelers and the employment generated by that spending. Indirect or multiplier effects refer to the additional spending of businesses and employees induced by travel spending, which are also discussed in this section. Direct Travel Impacts are broken out by Spending by Type of Accommodation, Spending by Type of Activity, and Employment Generated by Travel Spending, as well as Total Earnings and Tax Receipts. Spending by Type of Accommodation refers to the total travel spending in the Lake Tahoe Region for each type of traveler. For example, the total spending of travelers staying in a hotel, motel or Bed & Breakfast includes room expenses, meals, recreation, and so on. Spending by Type of Activity refers to the travel spending of all travelers for a particular type of activity such as skiing, gaming, eating and drinking, and accommodations. Accommodations spending includes all expenses attributable to rooms, rents and campground fees. Similarly, accommodations employment includes the lodging staff attributable to room sales, and the realtors and other personnel attributable to the rental and maintenance of vacation homes and condominiums. However, accommodations employment does not include the food service employees that work in a hotel. Those employees are classified in the Eating and Drinking category. Similarly, employees related to gaming activities or skiing are classified in Recreation, even if they are employed by a resort hotel or CHAPTER 11 ECONOMICS Page 11-23

24 lodging establishment. The specific categories of direct travel impacts included in this analysis are identified in the following tables. Impact Category Expenditures Total Earnings Employment Local Tax Receipts State Tax Receipts Description Purchases by travelers during their trip, including lodging taxes and other applicable local and state taxes, paid by the traveler at the point of sale. The earnings (wage and salary disbursements, earned benefits, and proprietor income) of employees of businesses that receive travel expenditures. Only the earnings attributable to travel expenditures are included; this typically is only a portion of all business receipts. Employment associated with the above earnings; this includes both full- and part-time positions of wage and salary workers, as well as proprietors. Point of sale tax receipts (transient occupancy taxes and local sales taxes) collected by counties and municipalities, as levied on applicable travel-related purchases. Property taxes are not included. State taxes attributable to travel expenditures (retail sales, motor fuel, gaming winnings in Nevada), business taxes levied on travel industry firms in California and personal income taxes attributable to travel-generated employment in California. Travelers are classified according to the type of accommodation in which they stay. The types of visitors are as follows: Type of Visitor Hotel, motel, or B&B Rented vacation home or condominium Campgrounds Unpaid Accommodations Day Visitor Description Travelers staying in commercially operated hotels, motels, resorts and bed & breakfast establishments where transient occupancy taxes are collected. Travelers staying in rented vacation homes and condominiums where transient lodging taxes are collected. Travelers staying in commercial or public campgrounds. Travelers using their own vacation home or timeshare, and those borrowing or renting a vacation home, where a transient lodging tax is not collected. Travelers staying overnight in the private homes of friends or relatives are also included in this category A trip by a visitor 50 miles or more, one way, from home that does not include an overnight state at the destination. CHAPTER 11 ECONOMICS Page 11-24

25 Travel Impacts for the Lake Tahoe Region are summarized below. Preliminary estimates for 2000 indicate that visitors spent more than $1.5 billion on travel-related goods and services. This visitor spending generated $435 million in earnings (payroll, benefits and proprietor income) and 22,100 jobs. The tax receipts generated by this spending included $28 million in local transient occupancy and sales taxes, and $89 million in state taxes. The state taxes include sales, motor fuel, gaming taxes (Nevada only), and personal and corporate income taxes (California only). Property taxes are not included in this analysis. Table 11-6 Lake Tahoe Region Travel Impact Summary Travel Tax Receipts Spending Earnings Employment Local State ($Million) ($Million) (jobs) ($Million) ($Million) , , , , , , , , p 1, , Average Annual Change 96-00p 6.1% 5.7% 2.7% 7.0% 3.8% 99-00p 7.6% 7.3% 3.3% 8.6% 6.8% Note: p= preliminary. Source: Dean Runyan Associates More than 80 percent of all travel expenditures in the Lake Tahoe Region was for accommodations, eating and drinking, and recreation, with the remainder going to a variety of retail businesses and local transportation. More than four out of every ten dollars was spent on recreation, including gaming and skiing. Detailed travel impacts for the Lake Tahoe Region are provided in Table 11-7 below. CHAPTER 11 ECONOMICS Page 11-25

26 Table 11-7 Lake Tahoe Region Travel Impacts, p p Travel Spending by Type of Traveler Accommodation ($Million) Paid Accommodations ,046 1,101 1,181 Hotel, Motel, B&B Rented Home, Condo Campground Unpaid Accomodations* Day Travel Total Spending 1,235 1,295 1,380 1,454 1,564 Travel Spending by Type of Activity ($Million) Accommodations Eating, Drinking Recreation Gaming Skiing & other recreation Retail & Other Total Spending 1,235 1,295 1,380 1,454 1,564 Earnings Generated by Travel Spending ($Million) Total Earnings Employment Generated by Travel Spending (Jobs) Accommodations 5,700 5,700 5,900 5,900 6,100 Eating, Drinking 6,200 6,300 6,400 6,400 6,600 Recreation 6,000 6,300 6,700 6,900 7,200 Gaming 2,500 2,600 2,800 2,900 3,000 Skiing & other recreation 3,500 3,700 3,900 4,000 4,200 Retail & Other 2,000 2,100 2,100 2,100 2,200 Total Employment 19,900 20,500 21,100 21,400 22,100 Tax Revenues Generated by Travel Spending ($Million) Local Taxes State Taxes Total Taxes Spending by Type of Accommodation refers to the total travel spending in the Lake Tahoe Region for each type of traveler. For example, the total spending of travelers staying in a hotel, motel or Bed & Breakfast includes room expenses, meals, recreation, and so on. Spending by Type of Business refers to the travel spending of all travelers for a particular type of business activity. For example, accommodations spending includes all expenses attributable to rooms, rents and campground fees. Similarly, accommodations employment includes the lodging staff attributable to room sales and the realtors and other personnel attributable to the rental and maintenance of vacation homes and condominiums. Details may not add to totals due to rounding. *Unpaid accommodations include second homes and visits in private homes where transient occupancy taxes are not collected. CHAPTER 11 ECONOMICS Page 11-26

27 Travel impacts reported by the type of accommodation in which travelers stay reveal the relative contribution of each traveler type to total travel impacts. Overnight visitors to the Lake Tahoe Region spend the night in a variety of accommodations, including hotels, motels, rented homes and condos, homes of friends and relatives, and campgrounds. As shown in Figure 11-21, visitors that stayed in paid accommodations spent three out of every four dollars in the Lake Tahoe Region. This includes $778 million by visitors that stayed in hotels, motels and Bed & Breakfast establishments, $369 million by those that stayed in rented vacation homes or condominiums, and $32 million by those staying in campgrounds. In addition, seasonal visitors who stayed in second homes or personal vacation homes spent about $130 million. Day visitors also made a significant contribution to the Region s economy spending about $253 million. Figure Travel Spending in Lake Tahoe Region by Type of Accommodation, 2000 Day Travel 16.2% Unpaid Accommodations 8.3% Campground 2.2% Hotel, Motel, B&B 49.7% Rented Home, Condo 23.6% Total Spending $1.56 Billion Source: Dean Runyan Associates As shown in Figure 11-22, travel spending is broken out by the type of activity in which visitors make their expenditures. The largest share of visitor spending in the Lake Tahoe Region occurred for gaming. In 2000, visitors to the Lake Tahoe Region spent about $497 million on gaming, most of which occurred in gaming establishments located in Stateline, Nevada on the south shore of Lake Tahoe. Visitors also spent $330 million on eating and drinking, and $286 million on overnight accommodations in the Region. It is important to note that spending on skiing & other recreation includes visitor spending made at ski resorts located in the Lake Tahoe Region, which includes Heavenly Valley, Homewood, and Diamond Peak. Recreation spending at ski resorts outside the Lake Tahoe Region is included in the economic impacts of the Greater Tahoe Area. CHAPTER 11 ECONOMICS Page 11-27

28 Figure Travel Spending in Lake Tahoe Region by Type of Activity, 2000 Gaming Eating, Drinking Accommodations Retail & Other Skiing & Other Recreation Source: Dean Runyan Associates $0 $100 $200 $300 $400 $500 $600 Millions Visitor spending in the Lake Tahoe Region directly supported 22,100 jobs (both full-and parttime) with total earnings of $435 million. Figure shows the distribution of travelgenerated employment in the Region. With the exception of gaming, the direct travelgenerated employment impacts generally correspond to the distribution of travel spending, with more than half of the jobs generated by spending on accommodations and food services. As compared to more service-oriented activities, expenditures on gaming directly generate fewer jobs for each dollar spent. Figure Travel Generated Employment in Lake Tahoe Region, 2000 Eating, Drinking Accommodations Skiing & Other Recreation Gaming Retail & Other Source: Dean Runyan Associates 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Number of Jobs CHAPTER 11 ECONOMICS Page 11-28

29 Comparison with Surrounding Regions Comparing the travel-generated economic impacts for the Lake Tahoe Region with surrounding areas provides a perspective of the degree of economic significance of visitorrelated spending in the Lake Tahoe Region. As shown in Table 11-8 and Figure 11-24, the Lake Tahoe Region accounts for about 30 percent of the travel impacts in the Greater Tahoe Area (includes Reno and Carson City), and 22 percent of the travel impacts for the entire Sierra-Nevada Region (defined in this analysis as 12 California counties and Douglas, Washoe and Carson City counties in Nevada; see list of counties below). Table 11-8 Sierra-Nevada Travel Impacts, 1999 * Travel Tax Receipts Spending Earnings Employment Local State ($Million) ($Million) (jobs) ($Million) ($Million) Lake Tahoe Region 1, , Greater Tahoe balance 3, , Greater Tahoe subtotal 4,878 1,218 60, Sierra-Nevada balance 1, , Total Sierra-Nevada 6,577 1, , * Estimates for year 2000 are not available for Greater Tahoe Area and Sierra-Nevada Region. Source: Dean Runyan Associates The Greater Tahoe subtotal includes the Lake Tahoe Region plus Carson City, and the remainder of Washoe and Douglas counties in Nevada, and Alpine as well as portions of El Dorado, Nevada and Placer counties in California. The Total Sierra-Nevada includes the Greater Tahoe subtotal plus Amador, Calaveras, Inyo, Mariposa, Mono, Plumas, Sierra, and Toulumne counties in California, as well as the remainder of El Dorado and Placer counties. Figure Travel Spending by Location: Lake Tahoe Region, Greater Tahoe Area, & Sierra Nevada Region, 1999 Sierra Nevada balance $1, % Lake Tahoe Region $1, % Source: Dean Runyan Associates Greater Tahoe balance $3, % CHAPTER 11 ECONOMICS Page 11-29

30 The significance of the travel industry for the Lake Tahoe regional economy is further illustrated in Figure below. Almost one-half (43 percent) of all employment in the Lake Tahoe Region is directly generated by travel expenditures. The proportion is significantly lower for the Greater Tahoe Area and the Sierra-Nevada Region which includes Reno and Carson City due to the greater relative importance of non-travel related business and government activities in those regional economies. Figure Direct Travel-Generated Employment as Percent of Total Employment, 1999 Lake Tahoe Region Greater Tahoe subtotal Total Sierra Nevada 0% 10% 20% 30% 40% 50% Percent of Total Employment B. INDIRECT IMPACTS This section describes important indirect economic impacts generated by visitor spending in the Lake Tahoe Region. Part of the money spent by visitors in the Lake Tahoe Region is respent throughout the Greater Tahoe Area by visitor-related businesses, in purchasing services and supplies in the area, as well as the employees that work in those businesses. This section provides a picture of the magnitude and the types of businesses that generate these additional indirect impacts. Indirect impacts are discussed in terms of employment (jobs) and earnings (wages, benefits and proprietor income). For the purpose of analyzing such indirect impacts, the Greater Tahoe Area is the appropriate economic area to consider. As illustrated in the map on page 3 (Figure 11-1), the Greater Tahoe Area includes the Lake Tahoe Region and surrounding areas including the communities of Truckee-Donner, Olympic and Squaw Valley, Reno-Carson City, and Garnerville-Minden. Lake Tahoe Region businesses and employees are likely to purchase some level of goods, services and housing in the Greater Tahoe Area. CHAPTER 11 ECONOMICS Page 11-30