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What Happens to Park City Home Prices When Interest Rates Rise?

On Monday, two real estate agents were on KPCW talking about the current market around Park City. One comment caught our attention. It was said that while supply of homes were low, this hadn’t caused prices to increase in some areas of the Snyderville Basin. The example was given that the average home price was about $750K in Jeremy Ranch but there were only 10 homes for sale. They said this was unusual because low supply typically increases prices. The reason that this wasn’t occurring, according to the agents, was that people can’t get a mortgage for more than that amount.

They also said mortgage rates were near all-time lows.

That got us to thinking… what happens when mortgage rates start to rise? Generally when rates rise, people can afford “less house.” If someone buys a $500,000 home, with a 3.5% mortgage rate, that’s a monthly payment of $2,245 (excluding taxes, insurance, etc.). Let’s say they can afford that monthly payment. However, if rates rise to 5%, they can only buy a $419,000 home (if they can still only afford $2,245 a month). Given that scenario, that top-end $750,000 house quoted by the agents would need to be priced at $630,000 for people to afford it.

That said, if wages rise along with interest rates, then perhaps people can spend more and offset the higher rates. If not, it doesn’t bode well for everyone from our real estate agents to our government agencies that depend on property taxes.

The Federal Reserve has said they will stat raising rates in 2015 (most people think late this year). So, it should be interesting to watch how this impacts our area.

Increased Thefts Lead to Call for Jeremy Ranch to Become a Gated Community

It appears some Jeremy Ranch residents have had enough. Over the past few months a number of home robberies have taken place in Jeremy Ranch. However, this week thieves took it to a new level with 10 car break-ins on Monday night (8 reported to the Sheriff and at least 2 non-reported as of now). Tuesday night saw at least one other car break-in.

This has led to a call for gating Jeremy Ranch. One resident said, “I definitely think we need to gate Jeremy Ranch. We are close to I-80 and it is easy for savory characters to come right in. Now we may have commercial development right at the entrances and who knows what that will bring.” Another resident commented, “Our first thought after hearing of the break ins was – we are so close to the freeway. We support an investigation of gating our neighborhood.”

Is a gate in Jeremy Ranch feasible? Likely not. There is too much traffic. There are too many construction vehicles. There is also the entrance to East Canyon that would have to be accounted for. Yet, it will likely become an issue. The Summit County Planning Department will likely hear about it. We could see the Snyderville Basin Planning Commission getting involved. Countless hours will be spent.

What else could be done? Jeremy Ranch has a private security vehicle but people have commented that it either isn’t being used or isn’t a deterrent. The Sheriff could step up patrols. However, on the night of the Tuesday break-in, one resident commented that they saw a Sheriff’s vehicle parked in Jeremy Ranch at 11PM. Therefore, evidently that didn’t work.

So residents are left to contemplate what they should do. Neighborhood watch? Neighborhood patrols? Gates? Surveillance cameras across the neighborhood?

Unfortunately, this is what happens when problems aren’t solved early. They take on a life of their own and you never know where its going to end up.

Where Should Park City Schools Move

Earlier we had written that the Park City School District isn’t considering all ideas regarding rebuilding Treasure Mountain Junior High. We feel that the process is too insular, is not helping solve problems, and isn’t including other parts of government. So, if we were king, what would we do?

We would start by moving the entire Kearns campus. Crazy? Hear us out.

The Snyderville Basin has a transportation problem. You become acutely aware of this as you head into town on 248 in the morning. The School Board’s Master Planning Committee will likely recommend changes that will only increase traffic on 248 during peak periods. As County Council Member Roger Armstrong recently said, having visitors sit in traffic hurts Park City’s brand. It also makes it very painful for us locals. So why do it? Why not follow Summit County’s Community Development Department lead and put the new Treasure Mountain Junior High School (TMJHS) somewhere else?

The natural place is on the open space on the east side of Highway 40. This is currently outside of the school district boundaries (it’s in South Summit School district) and the School Board is worried about taking property taxes from South Summit. However, if TMJHS was placed somewhere between Home Depot and Quinn’s Junction, they could likely expand the boundaries of Park City School District to just this area, without including any homes, and thus not rob South Summit of any tax dollars.

Then consider the concept of not only moving TMJHS there but also moving Park City High School, McPolin Elementary, and the School Districts administrative offices there. The new area would become the Park City School District Campus. What would happen to the 80 acres along Kearns Blvd that currently is owned by the board of education? Park City Municipal could have an opportunity to decide what it wanted its entry corridor to look like. If done right, Park City could zone this land appropriately, the school board could sell this land, and the new campus could largely be built on these funds. What would 80 acres in the heart of Park City sell for? A lot.

The new campus would likely be separate buildings (or possibly wings in a large building) housing an elementary school (McPolin), 7th-8th, and 9th-12th. Resources like gyms, pools, auditoriums, fields, band/orchestra rooms, etc. could be shared. Teachers would have the opportunity to advance and teach a variety of subjects in the age groups they desired (once they were appropriately certified). The school district would benefit from reducing costs through shared spaces and more efficient utilization of teachers. Administration costs would likely be a little lower as well.

The entire school district would benefit from a campus purpose built with tomorrow’s technology and teaching requirements in mind. There would be ample space for concepts like PC CAPS. Teachers wouldn’t be constrained by 1980’s facilities.

The campus should also have room for expansion. As Jeremy Ranch, Trailside, Parley’s Park, and Ecker Hill buildings wear out, the schools could move to the new campus. The land housing the old schools could be sold to fund the additions to the campus. Eventually, all schools would be at the Park City Campus — sharing teachers, facilities, and amenities. It may also be possible to entice an organization like Salt Lake Community College or Utah Valley University to build next to the campus. That would further increase post-high school options in both college and technical courses.

So, what does each party get out of it:

Park City Municipal:

  1. It regains control over its entry corridor.
  2. It likely gets additional tax dollars from whatever is built on the former school district land.
  3. Traffic is reduced on 248.

Summit County:

  1. The county has a lot of land that is slated for development. Building a school campus is likely preferable to almost any other type of development.
  2. It eventually removes school traffic from existing neighborhoods (Jeremy Ranch, Ecker Hill area, Synderville, Trailside).
  3. As additional growth comes to Summit County, schools will be moving out to the campus. The old school land could be appropriately zoned to help control that growth (whatever that meant at the time the school moved).

Park City School District:

  1. A state of the art facility for its teachers and administrators
  2. Reduced ongoing costs through shared spaces and shared teachers
  3. Ability to offer more and better programs
  4. A “planned” campus built around today’s concepts
  5. Ability to attract the best teachers based on working at the best facility in Utah
  6. Could offer speciality classes that may not be financially viable now

Park City Kids:

  1. More classes to choose from throughout their tenure
  2. More exposure to art and music classes than now may be possible
  3. More athletic opportunities
  4. Fewer transitions between schools
  5. A better place to go every day

Teachers:

  1. Lot’s of opportunity to grow
  2. Ability to teach across age groups (given proper certifications were achieved)
  3. Potentially smaller classes depending on classes offered and teacher availability
  4. Use today’s technology tools to enhance education

There are of course obstacles to overcome. The land is toxic and all parties would need to work with United Park City Mines to get this area remediated from mine tailings. Park City and Summit County would likely need to rezone areas to make this all work, as well.

Perhaps most importantly we need to devise the optimal traffic strategy. Do we work with UDOT and the county to build additional roads (and ways) into the campus? Do we make the campus bus-only for students/parents without a special permit? We are sure there are people smarter than us to consider those options. However, we do think a new campus offers the ability to look at transportation in new ways. This land is adjacent to the Rail Trail, as well. How could we use that to our advantage?

While any plan has to overcome hurdles, we think this plan has a number of merits. Is our plan small and easy to implement? No. But If done right, does it offer a 50 year plan for our schools? Yes. Does it reduce transportation issues throughout the Basin? Yes. Is there a benefit to most user groups? Yes.

While we admit that this idea will probably never be considered and the odds are 1000:1 that in 2017 school traffic will be backed up onto Highway 40 – due to a new TMJHS on Kearns, we do think its consideration has merit.

Regardless, we do hope people understand there are creative ideas that can be devised that help our community as a whole. Maybe this isn’t the right plan, but we can’t rely on the same thinking that has gotten us into this mess to get us out of it.

 

You are On Your Own With Your Security of Your Home and Valuables

As long-time readers of the Park Rag may remember, our home was broken into in November. The outcome was that thousands of dollars worth of items were stolen. We actually found a clipboard that the thieves left at our house and provided that to the Sherrif’s office. We even went to the extreme step (we’d call it dumb now) of tracking down our items on KSL Classifieds. We believe we found our laptop and met with the likely thief. Upon recognizing us, the thief quickly left the store where we arranged to meet. The store did get the person on camera.

All said, we had a number of things working for us including fingerprints and a picture of the likely thief. Yet, over two months later there have been no results. The sheriffs department has been diligent in calling every few weeks letting us know where they are and that they keep searching a pawn store database. We appreciate that. We also appreciate the sheriff’s deputy that came the night of the break-in. He did a wonderful job of calming us down.

Yet, it took them almost a month to send the found clipboard to Salt Lake to get any fingerprints off the clipboard. While we wished this would have been faster, we know that only 10% of property crimes are solved and they probably have more important things to do. This isn’t CSI.

The end result is that we never expect to see any of our valuables again. We also never expect the thieves to be caught. We can only imagine at this point a suspect being asked, “where were you on afternoon of November 15th?”

The point of this article isn’t to disparage law enforcement or ask why anything more couldn’t be done. We get it. Yet, we hope others can learn from our mistakes and can also learn from what we have learned. The key take away is that you are on your own. Our county is big enough that it will probably take at least 10 minutes for the sheriff to reach you in the case of an issue (depending on where a deputy currently is). Thieves on average spend less than 8 minutes at a home. Likewise, if you come home later to realize you have been robbed, our experience says you will be lucky to recover anything. Finally, many people we have talked to have commented, “that’s why you have insurance.” We suppose that’s true but didn’t realize that insurance (in at least our case) has a deductible of 0.5% of your insured home’s value. So, if you lose everything, filing an insurance claim is a no brainer. If you only lose a few thousand dollars, you’ll have to decide whether the difference between your loss (valued by the insurance company) and the deductible makes sense to file based on the likelihood your rates will rise.

With that in mind, we heard that 8 cars were broken into in Jeremy Ranch on Monday night. We also have heard that a few homes have been broken into in Jeremy Ranch since our was. Keep in mind that Jeremy Ranch even has a private security vehicle that is supposed to drive around.

That evidently didn’t make a difference. We hope these people’s experience ends up differently from ours, but we don’t hold out great hope. Perhaps our community has always been a target and we just didn’t know it. Or perhaps something has changed. We’re not sure. What we are sure of is that our perspective has changed. We never leave a door unlocked. We don’t leave cars out. We have put various systems in place to make our home harder to rob; however, we know that nothing will prevent the determined thief.

We’ve left the naivety behind that someone else, be it the sheriff, private security, or the insurance company will make it all better. We’ve also left behind the notion that “it won’t happen here” because that’s obviously not true. While it makes us more vigilant it also makes us a little sad. Our little community doesn’t have quite the same feel to us that it did a few months ago.

The Park City School District Should Consider Moving Kearns Campus

As we wrote about in a previous article, Mr Putt goes to School Board, we are surprised and disappointed in how insular our various government agencies are. We have traffic issues. We have environmental issues. We have growth issues. How do we start to fix these things?

Park City Municipal can’t solve these issues on their own. While they are the heart of the Park City area, they only represent 7,000 people out of 22,000 people in the area. Summit County can’t solve these issues on their own. They are in some ways the unwanted step child of Park City. Many people in the Snyderville Basin think they live in Park City, but really don’t, and thus think Summit County has nothing to do with them. The School Board can’t solve these on their own. They generally view their job as providing the best educational experience for our students.

Yet, all three can come together to make measurable impacts when they try. They can also cause significant harm when they don’t realize they are part of the entire ecosystem. Nowhere is this more apparent right now than at Park City School Board Master Planning Committee meetings. This group, responsible for deciding whether to rebuild Treasure Mountain Junior High School (TMJHS), will likely do two things that contribute to more traffic. They will decide to realign grades and rebuild TMJHS on Kearns Blvd. Right now, grades 8th-12th go to school on Kearns. In the new scenario, grades 7th-12th will go to school are Kearns. This will be 400 more students, hundreds of more cars, and a complete disaster between 7AM and 8 AM.

The committee would probably say, “we looked at moving TMJHS to Ecker Hill but traffic there is even worse.” So, this is the only option. But is it? When Summit County Community Development Director Pat Putt asked the Committee about putting TMJHS somewhere else the committee members said they had talked about it but probably not. What they are really saying is there is no choice but the obvious.

We take a different view, and one that we promise isn’t as crazy as it sounds. What should the School District do? We believe they should move the entire Kearns campus. It’s a solution that would need help from Park City Municipal, Summit County, and the School District but that would solve a number of problems and benefit a number of people. We’ll write about our specific plan later today.

Is Park City Ready for the Next Recession?

Historically, recessions have struck the national economy every 6-7 years. Some are weak like in 1969, while others are powerful like the Great Recession of 2008. What is a given, is that they happen.

With that as a backdrop, economic indicators, like orders for manufactured goods, are starting to flash the warning signs of recession. It shouldn’t come as a surprise, since we are 6 years out from the end of the last recession. This doesn’t mean we are in for another Great Recession but it does mean that economic activity will slow down. As a tourist town, recessions likely impact Park City more than the average area.

Why is that? When a recession hits, unemployment increases, people have less money to spend, and vacation trips are reduced. This impacts local business that serve the tourist crowd (everyone from Vail to Redrock and the people that work there). Likewise, as unemployment rises, the almost-rich buy less second homes. The rich typially still buy second and third homes, and in some ways that could help a place like Park City weather the storm. However, the 800 or so real-estate agents in Park City (we heard that number once and have no idea if its true… but if it is, wow), are going to be impacted significantly. It then begins a vicious cycle where the impact flows down stream to where those people spend money.

So, what impacts could arise from the next recession? This is all a guess, but here are some potential impacts:

  1. Vail curtails expansion plans. We’ve been told Vail is going to invest $50 million in PCMR and Canyons. While Vail is probably the best run real-estate ski resort company in the world, a bad winter and then a recession could cause them to reduce the amount of money spent to upgrade the resort. Utah’s winter has not been snow filled and looking at Colorado base snow levels, they don’t look much better.
  2. Local hotels will struggle. Occupancy rates at Park City hotels already often seem low (that’s not news). However, a new hotel (on 224) will likely open this summer. That will increase the available rooms, right into the brunt of the recession. Hotels are resilient, though, so we wouldn’t look for any to fail, but it could impact workers (and owners).
  3. Village at Kimball will lose a few stores. While the name brands likely won’t be impacted (i.e., Five Guys, Zuppas, Smiths, etc.) we could see a few of the stores close down. You probably already know the ones we are talking about.
  4. Some Park City Heights Construction Could Be Delayed. Park City Heights construction appears paused for the winter as you might expect. It will likely resume this spring. If a recession has begun, you could look to fewer homes being constructed in the near term. They could wait to ensure that they didn’t build a glut of homes there too soon. We are pretty sure it will eventually be maxed out, but it could take longer than expected.
  5. The Movie Studio could struggle to continue construction. We saw a TV report on KSL that said the Film studio was near completion in mid January. However, it still looked like a construction zone with dirt floors inside. If they have enough financing to complete the project before a recession was in full steam, they will likely be fine. If not, we may have to wait a while for its grand opening.
  6. The 1000+ units at Silver Creek could be delayed. This project seems to be coming up more and more in conversations. However, we haven’t heard anything formal about it beginning. Construction could be delayed throughout any recession.
  7. Mountain Accord would likely be scaled back. If we are in the middle of a recession, we think you’ll see support for Mountain Accord dwindle. It’s really unlikely any politician would suggest spending hundreds of millions of dollars if we are in the middle of a recession, unemployment is rising, and tax dollars are decreasing.
  8. The bond for Treasure Mountain School could be in trouble. Regardless of what is being said, we are confident that there will be a bond election by the School Board for a new school. This will be for a new Treasure Mountain Junior High and adding on to the high school. We could easily see this bond reach $40 million. It also sounds like teacher contracts are being negotiated. Our gut tells us that the teacher contracts will require increasing property taxes again (note: this is speculation on top of speculation). If taxes are raised, a recession hits, and there is a bond election twice the size of last year’s recent Basin Rec bond, we could see some people say “we just can’t afford this.” That may be enough to put the bond on hold or defeat it at election.
  9. The Governor’s Office would likely cut growth forecasts. If you’ve been following local issues, you know that transportation and growth are at the forefront of discussions. The one thing to know is that when you hear our area is going to grow by X%… that X% figure likely came from a 2010 Governor’s office report on growth. Recessions tend to both keep people from moving and reduce the number of children born. Those are the two drivers of growth in Utah (mostly the latter). The down stream effects of lowered growth estimates will be interesting to watch across Summit and Wasatch counties.

So, where does that leave us? We actually believe it leaves us in good shape. We need to be reminded every once in a while that things don’t grow to the moon. While there is always growth like the Village at Kimball and the Movie Studio, the Park City area could have gone absolutely hog wild in the last few years. The Discovery Core homes in Summit Park could have been built, Silver Creek’s 1000+ homes could be almost complete, the Boyer Tech Park could have been filled up. As they say, the more you boom, the more you bust. In the scheme of things, we boomed but we didn’t BOOM.

We should know whether that’s an accurate assessment in the next couple of years.

Update: A friend also reminded us that the US dollar is rising versus other currencies. This makes is more expensive for people from other countries to visit Park City… further impacting tourism. Or as a friend put it, “All those people living in China that were going to come ski in Park City due to Mayor Williams’ Park City funded China trips are less likely to come now.”

Mr Putt Goes to School Board

One of the best movies of all-time is Mr Smith Goes to Washington. Jimmy Stewart plays an idealistic and naive man who gets appointed to the Senate. When he arrives in Washington D.C. he can’t believe how badly the system actually works. In the end, he launches a filibuster, in a final attempt to make sure land in his home state is used for a worthwhile cause.

We couldn’t help but think back to this movie when Summit County Community Development Director, Patt Putt, attended a meeting of the Park City School District’s Master Planning Committee. The meeting was largely about realigning grades and where ultimately to put the new Treasure Mountain Junior High School (TMJHS) . The conversation had culminated in two ideas, put TMJHS at Ecker Hill or put TMJHS somewhere on Kearns Blvd. The problem, as the committee saw it, was that adding 800 students to Ecker Hill would cause a “traffic nightmare.” The problem with putting it on Kearns is that it would add 400 students (and probably 400 cars) to the traffic problem coming into town on 248.

Mr Putt then speaks up and asks if they have considered putting it on some other piece of land. You see, Mr. Putt has been neck-deep in trying to plan for growth in the Snyderville Basin. He, members of his staff, and the Snyderville Basin Planning Commission have been trying to come up with creative solutions to handling the growth and the traffic that comes with it. He knows what land is destined for development. He knows what the impact of that development will be. He also knows areas that could handle more development. So, his question wasn’t without merit. He obviously had some ideas.

The response he received was that the committee had discussed increasing the boundaries of the school district but that it was complicated because they didn’t want to take tax dollars away from South Summit School District. So, if he could find some land inside the current boundaries, they could talk. Then talk shifted back to the options on the table. The problem with adding schools inside the boundaries is that there just isn’t much open land and it may not be optimal for handling growth. However, there is quite a bit of land outside of those boundaries that may be able to be much better suited for this.

We heard Mr Putt try once again after the meeting concluded. He said something, to a couple committee members, to the effect of, “If there was a way to use some land outside of the boundaries, without impacting South Summit tax revenues, could we pursue that?” The answer was pretty much, “probably not.” At that point, we left. Perhaps, then logic entered the discussion, and Mr Putt was able to convince at least one member of the committee to consider something else. But we doubt it.

This should be the perfect example of organizations working together to solve our collective problems. Everyone knows there is a traffic issue. Yet, it is likely that they’ll put TMJHS on Kearns and realign the grades. That means 400 extra kids will be going to school on Kearns Blvd every day. Add that to the new Park City Heights (200+ homes) and that entry corridor, or should we say parking lot, is going to get even worse. It’s like being 50 pounds overweight, but deciding you’ll eat 3 extra pieces of pie. It’s just dumb.

Frankly, if in even this obvious of a case, our different government organizations can’t work together, we wonder if they ever could. To borrow from another Jimmy Stewart movie, It’s a Wonderful Life, it’s unlikely even a guardian angel could fix this mess. At the end of our movie, instead of little Zu Zu saying “Look, Daddy. Teacher says, every time a bell rings an angel gets his wings,” she’ll say, “I wonder where teacher was today?” Jimmy Stewart will reply, “she was probably stuck in traffic.”