Chelan Mayor: 'The largest and single growth driver in taxable sales is construction'

New home construction in Chelan. Photo courtesy: Realtor.com

New construction has outpaced tourism in Chelan economic growth.

The status of the city of Chelan’s economy was discussed in detail during a more than two hour city council workshop Tuesday night.

It was a meeting of city economic development partners, the Lake Chelan Chamber of Commerce, Historic Downtown Chelan Association and Chelan-Douglas Regional Port Authority, convened at city hall.

"Our growth appears much less balanced than previous years," said Chelan Mayor Erin McCardle from what she described as the city economic situation analysis. "A lot of our recent growth is tied to construction and visitor driven sectors, while the kind of sectors that usually stabilize a small community make up a smaller share than they used to, hospital, education, public administration. This has fallen from 37% to 30% our our employment base. The city's cost pressures are rising faster after you adjust for inflation, raising some budget considerations."

"The largest and single growth driver in taxable sales is construction which is up about $24.8 million," announced McCardle. "Other major gains are in the visitor and property related sectors, including food and beverage, accommodations, specialty trades and real estate."

In a PowerPoint presentation it was shown that, from data collected from a recent Chelan County Tourism Impact Study, visitor spending has increased 30% over the past five years, the median home price is $722,000, a 67% growth since 2020, and the average annual wage is $57,500, 62% of the Washington State average and the unemployment rate is 3.8%, below the state average.

"Job growth in Chelan has been strong," McCardle shared.

The Mayor encouraged the group to think about ways to create a stable a year-round economy for residents, businesses and city of Chelan operations.

"We see a concentration of visitors coming in two to three months, which from a city operation side makes it really hard to deliver services," the Mayor added. "Almost 60% of our revenue is generated in three summer months. That's risky when you have a smoke month or a fire or any other sort of weather related impact."

The Chelan-Douglas Regional Port Authority Trades District at Pangborn Airport in East Wenatchee was looked at as a model for possible uses at the Chelan airfield.

Chelan City Administrator Laura McAloon said their, "(New business) Incubator, helps new businesses start and that's really a key component of developing a more diverse economy."

McAloon wrote in an email, "We will be having this ongoing discussion with council on a quarterly basis.  We know that Chelan historically relies on sales tax revenue from tourism activity to fund a significant amount of our annual operations - sales tax is cyclical and volatile though (just ask any of our local business.)  What the data shows is that we are becoming more reliant on sales tax from construction activity, which is even more volatile than the tourism industry."

McAloon said that Tuesday night's discussion looked at opportunities to diversify the city tax base through diversification of the businesses that drive the economy.

"What industries, or lanes, could Chelan realistically grow?" McCardle asked the group. "Aviation, wildfire response, airport adjacent opportunities. We haven't really dug into what the real economic value that can provide to our community."