News from the Knoff Group

Technology is tweaking the economics of mountain town living.

This is a fantastic article that explains why our area is slated for continued growth and at least in part why we are experiencing the accelerated sales pricing, competitive rental market and pressure on housing that we’ve been experiencing in the Bozeman, Big Sky and greater Bozeman area.

An Economic Crossroads – Technology has broken the barrier of geography that long shielded mountain towns from growth.

BY Claire Cella – Mountain Outlaw Winter 2018

Welcome to the Goldilocks moment of the Greater Yellowstone. Most are familiar with the childhood tale, when a little girl tries to find not too hot or too big, too cold or too small, but “just right.”

The tale serves as a palpable metaphor for the growth seen in mountain towns across the West—including Bozeman and Big Sky in Montana, and Jackson, Wyoming—which is spurred by a subtle shift in American societal values, a migration to where we find meaning. Realizing that access to nature contributes to a higher quality of life and sense of well-being, we’re escaping the sprawl of sidewalks, strip malls and subdivisions to settle in the mountains.

But even here, we still struggle to find, and maintain, “just right.”

“They’ve realized they can build and grow their company almost anywhere, and if their workers live in a place where their quality of life is higher, they’ll have happier, better employees.”

For nearly the past 50 years, rural counties in the West with the highest share of protected federal public lands have shown faster population, employment, and personal income growth on average than counties with lower shares of federal lands, according to Headwaters Economics, a Bozeman-based nonprofit research group that works across the West to promote economic growth.

Which leads people like Brian Guyer to ask, “Can you really blame telecommuters who have the ability to work wherever they want?”

He has a hard time blaming people for coming to live in the mountains, because it’s exactly what he did, too. Guyer, the community development manager at the Human Resources Development Council, which operates in Bozeman and Big Sky, is not alone in following his aspirations to live in the mountains— ask a majority of people who live in Wyoming’s Teton County or Montana’s Gallatin County and they’ll echo their own versions of, We moved here for the lifestyle. Whether it’s the ability to ski out your backdoor, the local hospitality, or the after-work trailhead access, there’s an allure and charm to these former cow towns and villages near iconic ski mountains.

“The secret is out,” says Chris Mehl, a two-term Bozeman city commissioner who in early November was elected mayor. He has had a pulse on the region for almost a decade, and praises the enterprising work of his predecessors in building a Bozeman with a lively downtown, a flourishing tourism and outdoor recreation industry, a growing healthcare infrastructure, and an exceptional school system, supported by the success of Montana State University.

It’s easy to see why there is a desire to live in these places, and this phenomenon is not new (think of 1960s Aspen or Park City over 20 years ago). What is new is the pace at which people are moving and the reasons many are able to: technology.

Technology has broken the barrier of geography that has long shielded mountain towns from growth. Historically, they remained isolated for the simple fact that they were hard to get to. Today, however, daily direct flights connect Bozeman Yellowstone International Airport to 15 major U.S. cities and Jackson Hole Airport with 10.

This makes it easier for local entrepreneurs to fly important clients in, or West Coast-based technology firms to summon remote employees. Advancements in telecommuting technologies, such as cloud computing, video conferencing and high-speed fiber optics, have helped companies take risks on employees who want to work remotely.

“They’ve realized they can build and grow their company almost anywhere,” said Mike Myer, CEO of Quiq, a Bozeman- based business-messaging platform. “And if their workers live in a place where their quality of life is higher, they’ll have happier, better employees.”

In Montana, the high-tech and manufacturing industry was projected to grow seven times faster than the state economy, according to a 2016 report by the Bureau of Business and Economic Research at the University of Montana. Between 2001 and 2015, Headwaters Economics reported that Gallatin County added 2,984 jobs in professional, scientific and technical services—a 56 percent difference compared to other Montana counties—while Teton County added 80 percent more than the rest of Wyoming.

“We’re seeing the development of a critical mass of people who bring diverse skills, like software development, marketing and product management, who weren’t here 10 years ago,” said Lance Trebesch, CEO and co-owner of the Montana-based companies Ticket River and

“And it’s not just the people moving here,” he continues. “There’s also a robust community who have grown up here, grown successful businesses here, and have that savvy to know what it takes.”

Liza Millet, the co-founder of Silicon Couloir, a Jackson nonprofit that connects entrepreneurs with the resources they need to succeed, agrees with Trebesch. She’s witnessed a blossoming entrepreneurial spirit since 2012 and says a majority of the growth she’s seen through her nonprofit’s start- up intensives and pitch days is not from traditional technology, but from locals who have had dreams of building their own companies, mostly related to retail and the outdoors—like Stio, Sego Ski Co., and Give’r Gloves.

Jobs in this industry also pay more than twice the average wage of the rest of the jobs in the state, and for three years, according to The Kauffman Index of Entrepreneurship, Montana was the No. 1 small state for startup activity. In 2017, Montana was fourth. Wyoming was third.
The cost of living in Teton County was 52 percent higher than the rest of Wyoming.

But, there are signs that growth is putting a strain on other aspects of these local economies—most notably in the housing markets. The problem is so acute in Jackson that traditional tech companies struggle to pay their employees enough to live there.

“And, if they can, they can’t find housing,” says April Norton, director of the recently created Jackson/Teton County Affordable Housing Department.

There’s a lack of not only long-term rental opportunities—which are commonly taken up by lucrative vacation listings—but also affordable options for home ownership and a lack of land to build on, says Norton.

In 2016, the average home price in Jackson was $780,000, according to the Jackson Hole Real Estate Associates 2017 Market Report. Rental prices, similarly astronomical, averaged $1,842 for a two-bedroom apartment, according to the Wyoming Cost of Living Index for 2017. Meanwhile, the median household income was $75,325, with per capita income averaging $44,231. The cost of living in Teton County was 52 percent higher than the rest of Wyoming.

Without enough affordable housing—or housing stock in general—for those who make decent incomes by national standards, young professionals live with roommates to make rent, service industry workers camp out in cars, and new families settle in neighboring towns and commute.

Bozeman, too, is “growing so fast that more people want to move here than we’re able to build housing for,” Mehl says. As a result, 17,000 people commute into Bozeman from places like Four Corners, Livingston and Belgrade. In Jackson, 43 percent of workers reside in nearby Wilson or Alpine, or across the state line in Idaho.Well- worn commuting paths clog up Teton Pass and choke the Gallatin Valley—creating an irritation many newcomers thought they left behind in San Francisco or an experience locals have never faced before.

So while people continue to move in pursuit of a higher quality of life, this very pursuit threatens the reason they moved in the first place. Commutes grow longer, cost of living increases, housing developments encroach on open space, and office buildings block views.
Whether it’s the ability to ski out your backdoor, the local hospitality, or the after-work trailhead access, there’s an allure and charm to these former cow towns and villages near iconic ski mountains.

Still, many agree that they’d much rather live in a place that is growing rather than declining. And decline is something these two Rocky Mountain economies know all too well—in the past 50 years, both have felt the devastating effects of heavy reliance on the dwindling and volatile energy industry, and a lack of metropolitan hubs.

That’s why both states have begun to enact long-range plans to bolster economic resilience through diverse industries—technology and entrepreneurship included. In November 2016, Wyoming Governor Matt Mead initiated ENDOW—or Economically Needed Diversity Options for Wyoming—a 20-year plan that, among other things, adds technology as a fourth economic leg to balance against wobbling energy markets.

In Jackson, Mead turned to John Temte to spearhead diversification and support of tech and entrepreneurship as chairman of the Jackson Hole Technology Partnership, which hosts an annual Wyoming Global Technology Summit.

Temte grew up in Laramie, Wyoming, but pursued business management and entrepreneurship in California and started his first tech company in Palo Alto. When he relocated to Jackson in 2012, he brought along strong connections to Silicon Valley and investment firms through his own venture capital fund, Temte Venture Partners, LLC. He now leverages these high-profile relationships to bring entrepreneurial opportunities to Wyoming. The summit aims to connect young Wyoming companies with high-level mentorships, advisors and financiers who are looking to give back to the local community and feed this emerging ecosystem.

In Montana, Governor Steve Bullock released the Main Street Montana Project in April 2014. Pillars include training and educating Montana’s future workforce, attracting and retaining businesses, and nurturing emerging industries and innovation. U.S. Senator Steve Daines—himself a former tech executive at Bozeman’s RightNow Technologies—also launched a biennial Montana High Tech Jobs Summit in 2015, to bring together the nation’s tech leaders with entrepreneurs and innovators to forge opportunities for high-paying jobs and successful business ventures.

“We lose a lot if we can’t have our workforce afford to live here.”

The experiences of peer cities—like Aspen, Boulder, Flagstaff and Park City—offer leaders, community members, company executives and investors the chance to learn from previous mistakes and address growth proactively.

Guyer favors choosing thoughtful growth over a head-in-the-sand approach. And so his organization, HRDC, works throughout the Gallatin Valley to implement creative housing plans and to assist developers, local governments and city leaders, like Mehl, in preserving affordability.

Bozeman and Big Sky are in the process of rolling out various initiatives to do just that: giving architects more flexibility; developing down payment assistance programs to help people take the first steps toward homeownership; offering financial incentives for listing long-term rentals instead of vacation homes; and incorporating inclusionary zoning, in which a percentage of all new residential development needs to be affordable for low- or moderate-income residents.

Everyone has a different perspective on growth though, Mehl says. “So, for instance, yes there might be more traffic, but now there’s also a cancer center in Bozeman. My commute just increased 25 minutes, but there’s a new Thai take-out restaurant.”

Candace Carr Strauss, the CEO of the Big Sky Chamber and Visit Big Sky, would welcome a more robust tech sector in her town as a way to stabilize the seasonality of the tourism and construction-based workforce, and address major infrastructure needs—like spotty cell service and slow internet.

In Jackson, Temte and Norton are also aware of the impact they can have through their positions.

“We want to be a community first … and that needs people living locally,” Norton says. “Locals take cars off the road, they volunteer at the food pantry, they watch out for their neighbors. We lose a lot if we can’t have our workforce afford to live here.”

Temte says he serves on the Jackson Hole Technology Partnership to encourage affordability, so that people who want to live in Wyoming, because they love Wyoming, can, with a decent-paying job.

Mehl knows it won’t be easy to find and maintain “just right,” especially if Bozeman continues to grow 2 to 3 percent each year, as it has for the past few. Jackson’s population swelled almost 10 percent between 2010 and 2016, and Big Sky grew nearly 20 percent in the same timeframe. Mehl can see that these towns might still have the same troubles as the Vails, Aspens and Boulders.

“But we should aspire to learn from them, and have a humility about what can be done,” he said. “This is going to require a lot of attention for a long time to try to get it right.”

Excerpted from Mountain Outlaw Winter 2018 – Exploring Life, Land and Culture from the Heart of the Yellowstone Region