December 1, 2008

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Succession Planning

In early June, the powerful leader of one of Utah’s largest business empires ...Read More

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Washington and Iron Counties

Beating the Economic Heat

Melanie Johnson

December 1, 2008

From public gathering places to presidential platforms, the economy is America’s new buzzword. In these turbulent times, stability is a relished commodity and southern Utah is no different than any other area in Utah. From the new airport to the housing market, the region isn’t looking for a quick fix; they’ve embraced a long-term mentality. And in the midst of an economic downturn, they’ve got a lot to look forward to. Set to Soar Washington County didn’t take a makeshift approach to initial talks about building a new airport. In fact, this multi-billion dollar project was 20 years in the making. With official groundbreaking underway, construction of this 1,000-acre, $170 million airport will take place in three phases: drainage and grading, runway construction and construction of the terminal building. Located southeast of St. George city, the facility, slated to open November 1, 2010, will be four times the size of the current 270-acre airport, and will include a 9,300-foot runway and a 34,000-square-foot terminal building. From the beginning, the driving force behind the airport’s construction was the future economic benefit to the area. “The planning horizon for the airport is 30-years in the future. In other words, we’re not building it for today, but for future generations,” says Marc Mortensen, St. George assistant to the city manager. As Wasatch County approaches 200,000 residents, the need for air service will only increase, and with an estimated 600,000 population for the county by 2050, the service is essential. Currently, air service out of St. George is offered to Salt Lake City and Los Angeles, but additional destinations and larger aircraft will be contingent upon need and supply and demand. Although the airport’s new runway will accommodate a 737 aircraft, a need has to be facilitated—more people need to be using the current service before more will be justified. “No increase in flights will come, nor changes in aircraft from prop to jet, unless we use the service we have right now,” Mortensen says. As a proactive measure, the city is preparing to launch a “Fly St. George” campaign, aimed at surrounding areas. The purpose of the campaign is to encourage those who may otherwise drive to Salt Lake City or Las Vegas, instead of fly there. “Nearly a quarter of population moved here in the last four years and don’t know this service is available in their own back yard, so we’re trying to educate them about their own airport,” Mortensen says. Air service isn’t just needed for travel and tourism purposes, it’s an economic engine. Without rail service as a means of transporting goods and services, the area relies solely on trucks or planes. Enhancing Education Dixie State College and the University of Utah recently announced plans to enhance affiliations. Although the proposition has raised concern for many locals, as losing the Dixie identity is at stake, the proposition looks hopeful. Extensive research and planning have gone into the project, and neither school is going into the affiliation blindly. Both schools created a task force that includes administrators, representatives from the commissioner’s office and the Utah State Board of Regents. The task force made onsite visits to several schools throughout the country that function in a multi-campus system—the same system under which Dixie State College (DSC) and the University of Utah (U) would operate. This was an information-gathering attempt as the force made significant benchmarking efforts. “The purpose was to gather information about the nature of the relationship of each college to its larger university system, including aspects of that relationship which are most beneficial, and aspects that are potentially problematic,” says Steve Johnson, director of public relations, Dixie State College, “The purpose was also to study how individual institutions under the umbrella of a multi-campus system have the ability to maintain a separate mission, identity and accreditation from the other system campuses, which is an essential element for success of any institution.” The task force visited schools with a student demographic similar to that of DSC and the U, and discovered the schools in the multi-campus system preserve much of their independence. These institutions act separately from each other as much as possible, while they draw from the benefits of the relationship. “They design their own degree programs, grant their own degrees, propose their own budgets, run their own intercollegiate athletics programs, have their own school mascots and generally have a high degree of local control over the affairs of their campuses,” says Johnson. “They also create their own campus policies, though often within guidelines created by the system.” Johnson also says the campuses believe that as long as they operate high quality educational programs and serve the needs of the communities well, the system will allow the school a high degree of autonomy. The task force wrapped up the fact-finding and exploratory stage, and now it’s in the hands of both schools’ administrations to determine how to proceed. DSC students, however, aren’t sitting at home in hopes the affiliation will take place; fall semester 2008 was record-breaking as far as enrollment goes. The Utah System of Higher Education (USHE) released fall semester enrollment figures with an 8 percent increase, which can be attributed to several factors, including affordable tuition costs and the addition of new baccalaureate and associate degree programs. Frank B. Lojko, vice president of student services, Dixie State College, is quick to point out the charge from President Dr. Stephen D. Nadauld soon after he took office last spring. “He challenged the Office of Recruitment and the Dixie campus as a whole to set a target of bringing 400 new students to Dixie State for this fall,” says Lojko. “In redesigning some of our existing strategies, we developed a special recipe for success, and as everyone can now see, we exceeded our goal. Now we need to go out there and work even harder and continue to build on this success.” Additionally, DSC added two, four-year degrees: dental hygiene and integrated studies. With 12 bachelor’s degrees offered, this may explain why the institution saw a 36 percent increase in upper division enrollment (up 300 students from last year) to a 1,131 total headcount. “We anticipated that our fall 2008 enrollment would grow due to efforts of building a sound enrollment strategy plan,” Lojko says. “We have begun offering additional two and four-year degree programs, and we are focusing special attention to building a positive college student-life culture on campus for all students.” Lojko added that the college is also experiencing higher upper division enrollments and a lot of work has gone into student retention efforts. Strengthening the Workforce Washington County’s current employment status shows a significant lag, in part because the construction boom of 2003-2004 is coming down as fast as it went up. “Washington County’s employment trough deepened as the market continues to adjust for the excesses of previous years,” says Lecia Parks Langston, regional economist, Utah Department of Workforce Services. “The primary culprit behind this decrease is a 23 percent, year-over decline in construction employment.” With a 3 percent drop in non-farm jobs between June 2007 and June 2008, and a loss of almost 1,800 positions, it seems the region is headed into an employment decline—the first since 1974. Washington County’s unemployment rate measured 4.9 percent in September 2008, as compared to 3 percent in September 2007. “Not surprisingly, job losses have translated into higher unemployment in the area,” Langston says. Although unemployment rates are up across the region, several efforts are being made to support upcoming businesses and entrepreneurial efforts. SEED Dixie (Stimulating the Expansion of Entrepreneurial Development), part of the Dixie Business Alliance, targets new or existing companies that have the potential for providing high wages and sustained growth. “We are focusing on developing organizations and infrastructure to support these businesses that have the potential to create high paying jobs in national markets. In creating the infrastructure, we believe all entrepreneurs will be helped,” says Jill Elliss, director, SEED Dixie. SEED focuses on growing and expanding technology-based businesses, which are considered essential to the area’s future growth, in an effort to offset the past domination of the real estate and construction industries. To emphasize this, SEED Dixie is rolling out the Concept to Company Innovation Awards. The contest encourages those with a business idea who lack the resources to put their idea into action. Participants submit an online proposal in hopes of winning the grand prize of $20,000 for their business. Two $5,000 prizes will be awarded to the runners-up. Housing Troubles With the state and nation’s housing markets, supply is up and demand is down in southern Utah’s residential real estate industry. There’s an extraordinary number of homes on the market; more than 2,000 properties are currently active on the MLS. But, according to a March 2008 census report, St. George is the nation’s second fastest growing metropolitan area. During the height of previous years, Washington County sold 1,000 homes a month. “You couldn’t find a home, because as soon as a yard sign posted, it sold,” says Chad Ferguson, an agent at Keller Williams Realty. “These homes sold for cash in less than a week.” The winds of change have blown through the region; today, only approximately 200 homes are sold per month in Washington County. And, according to a report released by Realty Track, a company that monitors foreclosures, one in every 163 housing units in Washington County is in foreclosure. Despite the gloom, Ferguson sees the glass as half-full. “This is an awesome time to buy, you just have to be smart about it,” he says, adding to not rush in for the hard sell, but rather buy smart. “The reason this is such a good market is because prices and interest rates are low. It is possible to get into a home, you just have to have 5 percent down. In the 1980’s you had to have 20 percent down.” Ferguson explains the Keller Williams’ philosophy as a “tale of two-markets”— 20 percent of the properties in the market are priced where they should be and 80 percent are far out of the market. So the key is to buy in the 20 percentile. “In a lot of cases, prices are back down to where they were before the precipitous price gains of 2004 and 2005,” he says, adding that many people can now afford a home when they couldn’t in 2006 and 2007.
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