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Tracking the Invisible Citizen


									Tracking the Invisible Citizen: How Does This Phenomenon Impact Local Government?

Aimee L. Franklin and Jos C.N. Raadschelders University of Oklahoma

Primary Contact: Aimee L. Franklin Department of Political Science University of Oklahoma 455 W. Lindsey Ave. DAHT 205 Norman, OK 73071 405/325-5216

Jos C.N. Raadschelders Department of Political Science University of Oklahoma 455 W. Lindsey Ave. DAHT 304 Norman, OK 73071 405/325-6620

Biographical Statement Aimee L. Franklin is an Associate Professor and Director of Graduate Programs in Political Science at the University of Oklahoma. Her research and teaching focuses on improving public management with areas of interest in strategic planning, budgeting, evaluation, performance measurement and ethics. Jos C.N. Raadschelders is a Professor and the Henry Bellmon Chair of Public Service in the Political Science Department at the University of Oklahoma. His writing currently focuses on theories of Public Administration and governance (e.g., Government. A Public Administration Perspective. M.E. Sharpe, 2003).

Tracking the Invisible Citizen: How Does This Phenomenon Impact Local Government?

Abstract: Question: How does a city increase its tax revenues by $3.0M to $23.8M annually? Answer: Increase resident days by 8-40% annually, but limit the increase to 120 days a year. Impossible you say? Not true; just ask cities in the Sunbelt states about the annual migration of winter visitors. This article describes an emerging demographic trend, the invisible citizen, or retired persons who travel extensively seeking a better climate. In this article, we estimate the economic impacts, local government revenue effects and service demands that these temporary residents have on the cities they travel to in the winter. We conclude that the tangible and intangible benefits may exceed the costs, but changes in revenue structures may be advantageous to more closely align who uses and who pays for government services.

Tracking the Invisible Citizen: How Does This Phenomenon Impact Local Government?
In the United States, there is a phenomenon gaining momentum because of an aging population. This phenomenon is an increase in the demographic category of the “invisible” resident (Smith 1984) or citizen. OK, it’s not a real category appearing on Census forms but, in the future, it could be. Just what is an invisible citizen? Like the whooping cranes that migrate to the Texas coast each winter, the invisible citizen is a retired person that migrates from the northern to the southern states when the mercury in the thermometer starts falling and the snowflakes start flying. There is no universally accepted definition for this group of visitors to a city. They are not part of the overall tourist population, since they stay longer than people visiting on vacation or for business (Happel et al. 2003). In a sense, they are part-time residents who are often invisible since no one includes them in population estimates and they do not enjoy the same citizenship privileges and responsibilities as year-round residents. Why the concern with invisible citizens? First, their annual migrations affect the operations of city governments, both in the states that they travel to and through, as well as in the states they leave (where they maintain their permanent residence or mailing address). Cities like Apache Junction, Arizona (population 31,814) and Rockport, Texas (population 7,385), can go from a near ghost town in the summer to a thriving city with hundreds of thousands of temporary residents during the winter. City officials must make sure there is sufficient service capacity to meet seasonal demands. They must also structure their revenue and financial policies to make sure there are funds to pay for these service demands. There is another side to this issue. Increasingly the permanent residence cities that get left behind are being challenged by their part-time traveling residents when they assess yearround charges to people who use city services for only part of the year. For example in Cedar Rapids, Iowa, the city suspended the water, trash, and recycling bills for snowbirds, costing the city $15,400 per year on an annual budget of more than $60M (AP 12/26/2000). In this article, we first describe the basic demographic characteristics of this population. Using this information, we estimate the economic and city tax impacts of the invisible citizens’ spending. Next, we identify the city services they are likely to consume and consider who pays for these services. Finally, we articulate some of the costs and benefits to the city of this temporary population. Estimating the economic and financial impacts and the


costs and benefits of these temporary residents should be of considerable interest to local governments officials who may wish to attract these populations as a form of economic development. Data Sources and Limitations Despite more than a decade of emphasizing the value of performance measurement for government, detailed cost and service performance data is not readily available for city governments. What information we did find was gathered from academic sources; interviews with city and state officials; and documents such as city budgets, Certified Annual Financial Reports, Census data, the Municipal Yearbook, and municipal benchmarks. Other details were also drawn from exploratory focus groups with snowbirds and full-timers, the pilot test of an invisible citizen survey, and university library and Internet searches that returned a variety of sources such as professional associations, newspapers, publications and press releases from other governments (both U.S. and foreign, especially Canada). In this dearth of data, we cobbled together what statistics we could find, and then used financial and performance indicators from Stillwater, Oklahoma. Stillwater has roughly 39,000 residents and a mix of employers: public, private and non-profit. The median household income is more than $25,000, so they would be roughly equivalent to a rural community in a Sunbelt state that would attract invisible citizens. The primary reason for selecting Stillwater was that they report a greater than usual amount of revenue, expenditure, cost, fee and performance data. The city has received many awards for excellence, both in the financial management arena (a regular recipient of Government Finance Officers Association awards for the annual financial report [15 years] and the budget [8 years]), as well as 55 different awards for city services from 1988 to present. Another other important criterion in selecting this city is that it is not already affected by any impacts, positive or negative, of winter visitors on the local economy or on the finances of local government. In the migration patterns of the invisible citizen, Stillwater has yet to be “discovered” making their revenue, expenditure, fee, cost and performance data attractive. To estimate the economic and financial impacts of this population, we have had to rely heavily on unproven estimates and extrapolation from data that may or may not really be comparable, negatively influencing the validity of the findings. However, in all calculations we have used the most conservative estimates we could find, hoping to suggest, at the very minimum, the potential positive impacts a city could experience. The limitations of economic modeling are well documented in the literature (see, for example: Edmiston


2004; Snead 2004; Rickman 2002). There are a few that are particularly relevant to our analysis and deserving of some discussion. First, we must use estimates that aggregate data to derive a statewide multiplier. To be more precise city officials should use a model based on the unique dynamics of their local economy and the spending patterns of actual invisible citizens. Second, we treat year-round residents as having no marginal impact on the local economy or city infrastructure. We justify this based on the assumption that they already reflect the current impacts of residents in the revenue and cost estimates of city government operations. Another effect that this model does not correct for is crowding out, or the consequences of temporary visitors using services and perhaps depleting any excess service capacity and making the same services unavailable to residents. This crowding effect can either drive up the price of services or cause leakage. The concept of leakage refers to a phenomenon where consumer spending expands out into other areas adjacent to the jurisdiction under study. Leakages occur where there is insufficient capacity to absorb economic demands. For example, if all the snowbirds are having lunch at the local diner, the residents may go to the next town’s diner to eat. Thus, the money that the local diner would have made from the residents is “leaked” to the neighboring town. Unfortunately, any model we could create would, by necessity, be based on assumptions that are inexact; all would fall prey to the inherent strengths and weaknesses of economic development claims and economic impact methodologies. We believe that the contribution of this initial attempt to illuminate the invisible citizen phenomenon outweighs the shortcomings of the modeling protocol we employed. Invisible Citizens: Basic Demographic Characteristics To understand this emerging population better, we reviewed literature drawn from a wide range of disciplines. This includes demographics, gerontology, sociology, anthropology, geography, business, economics, political science and public administration/policy. Studies as early as 1954 examined the reasons why people migrate and how they select their destinations (Hoyt). Consistent empirical data specific to this traveling population began to emerge in the mid1970's and this topic has received nearly continuous attention since then. Much of this information is descriptive and often results in a typology of different types of travelers, different reasons for traveling, and estimates of the number who migrate to different locations and their economic impact. Following this organizing scheme, this section describes who the invisible citizens are and how they select the cities they will visit. The section closes with the most recent estimates of economic impact to suggest why cities often seek out this population - even if it is only for a short period each year.


According to Smith (1984), about 64% of seasonal travelers are 55 or older. Most of the estimated 10 million invisible citizens travel from the northern-tier states and Canadian provinces to the Sunbelt states like Arizona, Florida, and Texas (Rush 1980; Smith 1984). One estimate suggests that 14% of snowbirds are from Minnesota, 11% from Iowa, 8% from Michigan, and the remainder come from other places including Wisconsin, Indiana, and Canada (AP 6/5/01). There are two types of migrating seniors. The traditional form of invisible citizen, the snowbirds, leaves their permanent residences to live for an extended period in a Sunbelt state such as Florida, Texas or Arizona. These citizens have a permanent domicile in the home as well as in the guest state, and commute twice a year to one and back to the other. The Tourism Industry of America estimates some nine million U.S. and Canadian snowbirds and one million full-timers (American Demographics 1997). A new type of senior who also maintains two residences is the sunbird, or people that reverse the migration trend, with permanent residences in the southern states and, during the summer months, temporary residences in the northern states. An example is Martha’s Vineyard, where the newspaper circulation jumps 33% in the summer from 12,000 to 16,000 (Sharp 1998). The second type of invisible citizen is the full-timer, or a permanently transient senior who has sold their primary residence and lives instead in a recreational vehicle of some sort, like a motor home, pull-type trailer, or 5th wheel trailer attached to a pickup. Even though the full-timer phenomenon dates back to the 1920s, when they labeled travelers “tin can tourists” (Sloan 2002), there has been a rapid jump in the number of retired persons in this category with a recent estimate of one million people nationwide, traveling an average of 32,000 miles a year Waters 2002). Full-timers travel across North America, following the most desirable climate - north in the summers and south in the winters. They make their homes in campgrounds, trailer parks, and even WalMart and casino parking lots. Full-timers tend to stay in a geographic area (like the coastal area in Texas) for a season, but they are likely to travel around within this area and “see” the attractions (called the hub-n-spoke approach where they park one place and make day trips around the region (Hodge, 2004). Since their dwelling is mobile, they pack up and leave if they do not like the weather, local entertainment or even their neighbors. Not surprisingly, snowbirds and full-timers are primarily retired persons. The estimates suggest this group is primarily white (up to 95%), married, better educated and with a higher socioeconomic status than others in their age group (Smith 1984, 1988). The annual median income for persons over 65 was $23,047 in 2000 (Census 2002),


yet studies suggest much higher incomes for seasonal travelers, from $32,000 to more than $40,000 (The Economist 2002). In 2001, the Texas Department of Economic Development & Tourism reported that 70 percent of winter visitors had incomes greater than $40,000. Typical income sources for the invisible citizens are pension payments, income from investments, and social security payments. Many of these income sources are tax sheltered or tax exempt, giving them more disposable income than most residents. The invisible citizens are usually healthier and look for tourist activities in the host communities (Mullins 1988, McHugh and Mings 1991). Winter visitors choose cities for a variety of reasons. The most frequently cited reason is a pleasant climate (Hoyt 1954 and consistently confirmed in later years Svart 1976, Mullins 1988, and Bean et al. 1994). Amenities or sociability (Hoyt 1954) is another reason often given (Svart 1976). Although less frequently, others have reported cost of living, financial resources (McHugh and Mings 1991), and friendship and kinship ties, [that is locations near others from their state of permanent residence; travelers from northeastern states tend to go to Florida, while Midwesterners tend to migrate to Texas or Arizona] (Roseman 1992 and Marshall and Longino 1988) as factors in selecting a winter destination. A noteworthy comment from a survey of Winter Texans suggests that “I go home to be with my family; I go to Texas to be with my friends” (Texas Economic Development & Tourism, (TED&T) 1997). Non-urban areas with lower population density and crime rates (McHugh and Mings 1991), and word of mouth describing an area/town as winter visitor friendly (Francese 1997) are other important factors when choosing a winter residence. Researchers have found it very difficult to estimate seasonal populations directly. Much of the work relies upon surveys of local travel trailer and mobile home parks, which misses those in second homes, hotels/motels, and public parks and private campgrounds (Happel et al. 2004, Longino and Marshall 1990). Often estimates are based on proxy or indirect measures such as residential electric data, traffic counts, postal deliveries, and retail sales data (Smith 1989). Another proxy measure is the change in church attendance. For example, on the Alabama Gulf Coast, one church jumps from 600 to 3,000 weekly attendees during the winter (AP 2/11/01). A Catholic church in South Carolina reports 1,250 snowbirds attending services during the winter, in addition to their normal congregation (David 2001). More reliable estimates are available. The Tourism Industry of America estimates Arizona’s winter visitor population at 325,000 (Fagan 2002). This is similar to an estimate of 300,000 winter residents in 2003-2004 for


Arizona reported by the Arizona State University Center for Business Research that has been tracking snowbirds since the early 1980s (Hogan and Happel 1993 and 1997; Happel et al. 2004). They understate this figure since it does not include visitors in public campgrounds such as those operated by the state or federal government. The Bureau of Land Management reports that for their public lands in the Quartzsite, Arizona area they issue an average of 8,650 long term visitor area permits annually. Many of these are for full-timers who park in the desert from October to March. For Texas, it is estimated that the Winter Texan impact (non-Texans who visit for an extended stay in the winter) was 16.4 million person days in 1996 (TED&T 1997). This is significant since their Census 2000 population was just over 20 million. The financial impacts of the winter visitors are significant, with estimates of economic effects of $1B in Arizona (Happel et al. 2004). The Texas Department of Economic Development & Tourism (1997) estimates $992M in direct spending in Texas, where an estimated 12% of the snowbird market visits. The range of household spending for winter visitors is anywhere from $1,500 to $4,000 per month (The Patriot Ledger 2002). A 1995 survey of Phoenix area winter residents shows that a “. . . seasonal household stayed for four months and spent an estimated $1,600 per month in Arizona during their stay” (Happel et al. 2003). Different from other studies that look at the social and economic effects of this population, the primary focus of this paper is the effects on cities. The next section begins this endeavor by calculating economic effects. Estimating the Economic Impacts of this Migrating Population The economic impact of the invisible citizen can be estimated by determining the increased spending attributed to this population. To calculate this, we need to know how many additional resident days they contribute and their daily spending levels. The estimates we present here assume that the permanent residents of this city live there 365 days per year. They may travel, but their cost of government does not change during their absence. The main effect of this is that economic impact in daily spending will be overstated; however, the city may have other tourists throughout the year that are not considered in the analysis. This city hosts many special events such as 4th of July, Downtown Halloween Fest, Crazy Days, Easter Carnival and Fishing Tournament, so some level of tourism - even if it is just from the neighboring communities and rural residents - is expected. We divide estimates of the temporary population of visitors to this city into two categories: snowbirds, who


visit a city and stay in a permanent structure, and full-timers, who visit the city in their recreational vehicle or travel trailer and stay in private and public campgrounds and parks. We expect the consumption of city services to vary between these two groups. Snowbirds will tend to consumer city services like residents, but full-timers will spend more on local culture and entertainment since their visit is shorter and they may not be back, so they will try to see the local attractions while they visit. We assume that both snowbirds and full-timers visit a Sunbelt city for 120 days each year (Schrier and Lipman1994; Hogan and Happel 1997). We assume that the winter visitors are 71.5% snowbirds and 28.5% fulltimers. This is drawn from a Texas study showing that winter guests use RV’s at the rate of 28.5% in Rio Grande Valley and 34.9% in Odessa-Midland in the 55-75 age group (Texas Department of Economic Development (TED&T) 1997, 68). There is some variation in the type of lodging the winter visitor chooses. Existing data suggests that Sunbelt cities experience an increase in their population due to annual winter visitor migration in the range of 25% - 200% or more (Van Den Hoonaard 2002). The Tourism Industry of America reports that snowbirds add 22% to the local population in Collier and Lee counties in Florida (on a base of 1.2M residents (American Demographics 1997). Lacking valid and reliable data, we developed two scenarios using the range quoted above. Scenario #1 represents the most conservative change in population, with a 25% increase during the winter months. The other scenario (Scenario #2) estimates the high end of the spectrum with a 200% increase in city population for a 120-day period each year. From table 1, there is an increase in person days of 1,170,000 in the conservative scenario and 9,360,000 in the extreme scenario. In only four months (1/3) of the year, winter visitors increase the annual resident days by +7.6% and +39.7%, respectively. [table 1 about here] Overall, the winter visitors are able to spend more on a daily basis, benefitting the local economy and city government through increased sales and tax collections. One important difference to consider is that the invisible citizens have higher annual income than the median citizen. We use the household median income for Stillwater of $25,432 and an estimate of $40,000 for the winter visitor. Our winter visitors also get preferential tax treatments that increase their disposable income to nearly double that of the year-round resident (see table 2). First, because of their age, the Internal Revenue Service allows them up to $32,000 federal tax free-income each year. Second, their income is not subject to social security tax, an annual savings of 7.6% of income.


[table 2 about here] The amount residents have available to spend in the local economy varies dramatically from that available to the snowbird or full-timer. Using after tax income, the year round resident has $50.17 per day available. The invisible citizens, on the other hand, have $101.70 per day to spend. The actual daily spending figures of invisible citizens are lower, however. Two separate studies estimate a daily spending rate for Winter Texans of $60.60 (TED&T 2003, 1997). The Texas estimates are: Transportation $24.30(40.1%) Shopping Food 11.60 (19.1%) Room (lodging) 4.00 (6.6%) Other

$11.90 Entertainment 3.10

(19.6%) 5.70 (5.1%)


This daily spending figure is conservative concerning the amount invisible citizens could spend ($101.70 per day). We assume the excess is used for maintaining the permanent residence (primary home or RV) or traveling expenses. The estimate is also conservative since seniors understate their expenses for lodging in their winter location. Of the daily expenditure estimates of $60.60, they report only $4.00 per day for lodging expense. This reflects the fact that many winter visitors stay in second homes, mobile homes and RV’s that they have already paid in full. So, survey respondents may only be reporting the cost of utilities, property taxes, etc. (Hodge, 2004). Or, the invisible citizen may be staying on a friend’s property and not paying any lot rent. Certainly the daily expense for mortgage, rent, or campground space would be much higher than $4.00, justifying the conclusion that $60.60 is conservative. Whatever the true level of spending, we can assume that most of these expenditures will be taxable, primarily in the form of sales taxes and user fees but also through property and hotel/motel taxes. These visitors are likely to visit area attractions, shop at local stores and eat at local restaurants. When this happens, from a sales tax perspective, the city wins. Further, if the city owns a golf course, museum, or recreational area, this translates into additional revenue generation opportunities. All these activities suggest an attractive infusion of different tax revenues for communities that are host to these winter visitors. To estimate economic impacts, we start with$50.17 per day spending for residents and $60.60 per day for winter visitors. We multiply daily spending by person days to get the direct spending effects for each type (table 3). Under Scenario #1, invisible citizens will directly spend $70.9M in 120 days. For Scenario #2, the direct spending estimate increases to $1,281.4M! This represents an increase of 9% and 44% in overall annual spending caused by


winter visitors. [table 3 about here]

Using the 1.2 multiplier figure from the Texas IMPLAN Input-Output model (which multiplies direct spending effects to account for indirect and induced spending, TED&T 2004b), the total economic impacts amount to $85.0M and $680.7M, respectively under the two scenarios. Notably, under Scenario #2, the economic impact of winter visitors now approaches the direct spending levels of the year-round residents at $714.2M. So, we can conclude that there are significant positive economic impacts from invisible citizens, not only for the local merchants but also for the city based on increased tax revenues derived from the increased spending in the local economy. Using a rate of 3.5% of increased spending returned to the city from an 8% city sales tax, the city will realize an additional $2,977,884 in revenues under Scenario #1 and $23,823,072 under Scenario #2. This translates to an increase of 22.4% and 179.4% of current total revenues for Stillwater. Of course, there is no such thing as a free lunch; with these revenues come costs associated with increased service demands. To isolate the demand effects on city finances we now consider the city government services that invisible citizens consume. What City Services do Invisible Citizens Consume? Who Pays for Service Provision? The in-migration of invisible citizens will influence the operations of nearly every department in the city. From the time they first drive into the city’s limits, they will affect the streets and roadways. According to the Kansas Department of Transportation (2004), one mile driven by an 80,000 pound tractor-trailer is equivalent to 36,000 miles driven by a passenger vehicle. Now a RV doesn’t weigh as much as a tractor-trailer, but certainly it weighs more than a passenger vehicle! For a “Class A” RV (the ones that look like a bus), the starting weight off the assembly line is 56,300 (Beaver 2004). Add the weight of nearly 150 gallons of gas, over 200 gallons of water and sewer, a 29-gallon LP tank, the occupants and their possessions and then multiple this times a fleet of RV’s traveling around your city for 120 days and you may very well have a roadway that is bearing more weight than estimated in the original design. No matter whether they drive RV’s or cars/trucks, it is safe to say that the invisible citizens will increase the number of vehicle lane miles driven in the city, translating to increased street maintenance costs. Other city departments will experience increased demand as well. Rose and Kingma (1989) suggest that, indeed, seasonal migrants may pose a problem for local service delivery. Invisible citizens are generally the law abiding sort; however, since they are senior citizens they have higher incidences of traffic accidents and medical


emergencies and hospital stays than the general population, resulting in increased service demands for police, fire/EMS and public hospitals. The water and sewer departments in the city will have increased load factors to consider when these visitors come to town for 120 days, as will the senior services and recreation programs since winter visitors favor nature activities, outdoor sports, culture and touring activities (TED&T 1997). They play golf at three times the rate of other non-Texan leisure travelers. “This may be because they have more time to play and it may also be partly because they are better able financially to participate in this sport” (TED&T 1997, 38). Before convening a committee to create a marketing plan to attract the invisible citizen, city officials must first determine whether the city has sufficient capacity to meet additional demands for services. In addition, if new facilities or infrastructure will be necessary to support the winter visitors, then the costs of construction (long-term capital expense) and related operating costs (annual expenses) must be part of the decision calculus. Bottom line, will the revenues and spending generated by this part-time population be sufficient to cover the year round costs in terms of service and infrastructure capacity? Part of the answer will depend on who is paying for the services and how they pay for them, which are considered next. As service demands have grown and governments have faced fiscal crises, there has been a movement to institute user fees or to charge for services based on consumption. Stillwater reports 15 different types of fee-based service activities. Table 4 lists the services currently delivered on a fee for service basis and describes how the city assesses the fees. The third column gives the annual revenue figures for each service activity reported by our model city. The last three columns analyze how these fees are captured by looking at who is paying for the service. Direct payment means that the user pays the fee to the city. Indirect payment means that a third party pays the fee and then passes the expense on to the user (in our model, the snowbird or full-timer). For example, the apartment or campground owners pays the property taxes and then increases the rental fee charged to the invisible citizen to cover this expense. Not paid is noted in the resident column for the hotel/motel tax since the residents do not pay directly or indirectly unless they are consumers of this service. [Table 4 about here] As shown in table 4, there are differences in how the three types of residents pay for city services. Yearround residents pay for most services directly through taxes or fees. The exception is ambulance service where residents pay the direct costs of use and subsidize use by other residents of the city that cannot afford to pay for


service. The city does a fairly good job of capturing costs directly from the snowbirds, except for the special assessment for the storm sewer and property taxes collected indirectly through the rent payment. The full-timer pays indirectly if they stay in a city or privately-owned campground. Both the snowbirds and full-timers can use senior center and emergency services at no cost. Another potential difference when comparing across the three types of residents is the case of the full-timer staying in a county, state, or federal campground. If this occurs, the city will not receive any indirect property tax payments. If the city relies heavily on property tax to pay its expenses, then the snowbird population will be more attractive. If the city relies heavily on sales tax, as is the case in Stillwater, then the subsidization of things like the senior center will not be heavily affected by the snowbird/full-timer mix . From this comparison, it appears that the costs of providing city government services are disproportionately

assessed to residents. This is reasonable since they use a disproportionate amount of city services, as consumers on a year-round basis. Yet residents are also subsidizing a group of service users that constitute between 13% and 23% of the annual population. One example of this subsidization is the city library. Using library computers that have free Internet connections is a popular activity for winter visitors. In our example, the city does not charge for this service. So, even though year round residents are not consuming 100% of the library’s services, they are paying 100% of the costs. Unfortunately, we cannot find any studies documenting the prevalence or incidence of snowbird/full-timer use of city services. We cannot say whether they consume more, less or the same as year round residents. But, we can say that if they consume any city services that the city does not meter, there is a cost to the residents. The question of who uses a service and who pays for the service is an important one. As shown in table 5, Stillwater currently recaptures 33% of their annual expenditures through the user fees, fines and taxes, with the bulk of these revenues coming from the city utility. If the city were to take steps to attract the invisible citizen, they may wish to consider their fee structure to detect where it is possible to assess users for the cost of service directly. For some city functions, it would be difficult (if not impossible) to recapture expenses on a fee for service basis. Functions, such as administration and legal services, are common pool activities that represent indirect and overhead costs. For other service activities, such as the library and senior center activities, there may be an opportunity to charge a nominal fee to out-of-town visitors for their use of city services, thus recapturing some direct service provision costs. There may also be fees that they could increase to more closely match the true costs or market prices for substitute goods, such as camping


fees that are $6.00 per night at Stillwater’s city facility, but $15.00 - 25.00 per night at comparable public and private campgrounds. City officials must be very careful when considering changes in revenue structure. If the mix of full-timers to snowbirds is higher than estimated, it may be inefficient to try to tax this population directly since they have greater ability for tax avoidance. Tucson, Arizona enacted a per space tax for RV’s to generate revenue to attract spring training camps for major league baseball. They estimated a revenue increase of $880K in one year. Unfortunately, invisible citizens found out and decided to skip Tucson and go to other desert locations in Arizona and Mexico. Because of this, the actual increase was only $330K (Hogan 2004). What are the Costs and Benefits to the City of this Temporary Population? The last piece of our analysis considers the costs and benefits of winter visitors to Sunbelt cities. A comprehensive analysis of the costs and benefits of serving this population is beyond the scope of this paper. We can, however, identify a few direct and indirect costs and benefits that a city may experience with the invisible citizen population. Perhaps the most important and visible direct benefit is the economic impact. A Texas study of the Travel Industry concludes that the travel industry generates a high proportion of tax revenue in relations to its Gross State Product. Visitors pay most of these taxes and local government receives many of the benefits, making it a costeffective economic development strategy for local communities (TED&T 2004a, 13). City government gets a direct benefit from the taxes and fees they generate from these visitor activities with an estimated $3.0M of new tax revenue under Scenario #1 and $23.8M under Scenario #2. The direct costs to the city would include the marginal costs of providing services to the invisible citizens. We do not have sufficient information on their consumption patterns to estimate these expenditure effects. If we increase the expenditure figures for those expenses not recaptured through fees directly proportional to the increase in the number of resident days (7.6% and 39.7%), the city could anticipate around $900K - $4.7M in additional general fund expenditures under Scenario #1 and #2, respectively. As for direct costs and benefits, then, the city could anticipate a net increase of between $2.1M and $19.1M from the winter visitors, a population with high disposable income and temporary demands on city services. And we calculate this on a conservative model. You would have to change the number of visitor days to zero, or the daily spending to $18 per day, or reduce the multiplier to .375 (indicating that for each $1.00 spent, the economic benefit


is $0.375, or a negative effect) before the model does not yield any positive financial effects. If the daily spending is higher or the multiplier is larger than 1.2 the city would be in better condition than we estimate. In calculating two scenarios, we have attempted to present one model that is very conservative and one that is, quite frankly, unbelievable (but tempting!) Turning to the indirect costs and benefits, a very significant indirect benefit is the job creation and indirect and induced spending (multiplier) effects from the direct spending of the winter visitor. From the conservative Scenario # 1, this amounts to an additional injection of nearly $14M into the local economy. The city gains another indirect benefit through community involvement. In many Texas cities, the winter visitors will volunteer at the local hospital or in other community activities. This free labor represents cost avoidance for the city or for local merchants and non-profits. Also, the invisible citizen does not directly consume public education services so any revenues captured indirectly through property taxes and sales taxes used for education expenses will have a net positive effect. A big indirect cost emerges if the city departments do not have sufficient capacity to meet additional service demands and is forced to hire additional personnel. Even if they rely on temporary workers, there will be direct expenditure effects. Concerning indirect costs, other items to consider include things like accelerated depreciation of city infrastructure such as roadways and recreation facilities caused by increased utilization; decreased air quality, clogged roadways and higher insurance premiums caused by increases in traffic; and unexpected changes in the morale of the city residents caused by congestion at restaurants, stores, churches, and local attractions should be considered (Franklin 1998; AP ½8/01; AP 7/20/01; AP 3/18/02). Year-round residents of snowbird destinations often complain that snowbirds “. . . do not improve the economy, they just cost the rest of us more to be able to live here. Full-time residents don’t need snowbirds who come in and bring with them their colds and other germs and fill up our hospital, restaurants, golf courses, etc. When snowbirds arrive, prices for residents jump 35 to 50 percent for everything” (Park 2000, A10). Cities are learning from their experiences in this area. Recently Lake Alfred, Florida took action to recognize an indirect cost as a direct cost and to create a revenue stream for these expenditures. Winter visitors to this city currently pay a $10 fee to turn on utility services when they arrive each year. When they leave, they can have their services temporarily interrupted for free, thus paying no monthly utility bills when they are away. Now


the city proposes a “vacation fee.” The water fee will be $8 per month and water and they would charge sewer consumers $22 per month while they are gone. The city’s Utilities Director says “. . . the fees are necessary because of the costs involved to operate the plant when vacationers and winter visitors are not here” (The Ledger, 12/17/2003). Determining the net marginal costs of service provision to these temporary residents is an area for future research. From the model, there is no denying the population and economic impacts of winter visitors. Any city that has a sub population making up 13 - 23% of residents and 16-27% of annual direct spending should consider both the positive and negative impacts of this group. Parallels can be drawn to the economic impact estimates of cultural and sporting events. The Texas Department of Commerce (2004b) reports that an annual multi-day livestock show and rodeo (a Texas cultural event) generates $150M in direct spending. The one-day direct spending related to the annual OU-Texas football game in Dallas is calculated at $13M. On the other hand, the economic benefits generated by sports teams and their facilities is limited (Swindell and Rosentraub 1998). However, different from the megaevents that draw many people from in and/or out-of-state, we are focusing on a phenomenon that considers only visitors from outside the regional area. These are dollars spent in the city beyond those from the residents. There are other semi-permanent populations that local governments serve. For example, college students in a university town (nearly 25% in our university town). Comparisons to these temporary populations are inappropriate since they have little to any excess disposable income to contribute to the local economy. As the income comparison shows, the winter visitor can be very attractive, since they have a higher annual income and more funds available for discretionary spending than the typical city resident. Finally, since they are interested in leisure activities and local attractions, the city can consider restructuring their service provision activities to capture the direct costs of service better. Like any cost-benefit analysis, some will contend that this model has many assumptions, some of them reasonable and some of them just really educated guesses. Without doubt, the reader can challenge our results without too much effort. However, the value of this exercise is that it attempts to provide a balanced model that considers both the costs and the benefits of this temporary, but significant population. Scholars criticize many studies in the economic impact literature for an unbalanced presentation that overstates economic benefits. This study also points to areas where cities do a good job of capturing revenues for service provision and where there


may be room for improvement, suggesting that revenue structures need to be carefully considered in cities that experience this annual migration. Conclusions In this paper we explore the impacts from the invisible citizen phenomenon. This is a retired population with relatively high levels of disposable income that moves based on seasonal climates. They migrate to Sunbelt cities in the winter, increasing annual resident days between 7.6% and 39.7% in the model we develop. Invisible citizens contribute to the local economy and increase local tax revenues, with estimates of net revenues over annual expenditures of between 11.7% and 108.1%. There is a question of who is paying for the services consumed by this temporary population. We examine the user fee structure of one city and speculate that residents may bear a disproportionate percent of expenses based on consumption patterns and existing revenue structures. Beyond who uses and who pays for a service, there are other direct and indirect benefits and costs associated with serving the invisible citizen. We discuss a few of these documented in the literature and conclude that further research in this area is warranted. To shore up the assumptions and determine the true magnitude of the effects to the local economy and city government future research should attempt to document things like the mix of winter visitors and their true spending and city service consumption patterns. Carefully designed research in these areas can overcome the limitations inherent in this presentation. Then, we can better analyze how do these winter visitors pay for services, and if they pay the right amount. From this, better cost-benefit analysis that can signal the relative attractiveness of this population is possible. The contribution of this paper is that we have started the process of delineating what we know from what we suspect and identified what it is we need to know for more informed decision making about this population. References Associated Press. December 26, 2000. Travel News, TX. Associated Press. January 28, 2001. Snowbirds from cold climate compete with locals for bingo seats. Myrtle Beach, SC. Associated Press. February 11, 2001. Snowbirds swell the congregations at Grand Strand churches. Myrtle Beach, SC.


Associated Press. June 5, 2001. Report: Snowbirds bring nearly $1billion to Texas economy. Austin, TX. Associated Press. July 20, 2001. Snowbirds avoiding cities, flocking to rural areas. Phoenix, AZ. Associated Press. March 18, 2002. New tax raises money while tourism stays level. Gulf Shores, AL. Bean, Frank C., George C. Myers, Jacqueline L. Angel, and Omer R. Galle. 1994. Geographic Concentration, Migration, and Population Redistribution Among the Elderly. In Demography of Ageing, edited by Linda G. Martin and Samuel H. Preston. 319-351. Washington, DC: National Academy Press. Beaver Motor Coaches. 2004. 2005 Marquis Weights & Measurements. Accessed on 8/22/2004 at this website Census, American Fact Finder. 2002. Accessed at this website on 8/29/2003. David, Sunny . 2001 (February 20).Gulf Coast sees Record ‘Snowbird’ Migration; Flight from Cold Climes: Northerners are Crowding Florida, Alabama Resort Areas to Mixed Results. The Atlanta Journal and Constitution, 6A, Edmiston, Kelly D. 2004. The net effects of large plant locations and expansions on county employment. Journal of Regional Science 4(2): 289-319. Erickson, Stepanie. (2001 (November 25, from Orlando Sentinel). Florida Hopes Recent Events Won’t Clip Snowbirds’ Wings. The Washington Post, Washington, D.C., A Section pA07. Fagan, Laureen. 2002 (March 19). Fun in the Sun: Michiana Snowbirds Soak it up in Florida. South Bend Tribune, C1. Francese, Peter. 1997 (March). Fly away home. News Release American Demographics, Inc., Ithaca. NY. Accessed on August 29, 2002 at Franklin, Mary Beth. 1998 (December). Snowbirds: How do they do it? Kiplinger’s Personal Finance Magazine 52(12): 82-86. Happel, Stephen K., and Timothy D. Hogan. 2002. Counting snowbirds: the importance of and the problems with estimating seasonal populations. Population Research and Policy Review, 21(2): 227-240. Happel, Stephen; Timothy Hogan, and Katrina S. Walls. 2003. State’s ‘snowbird’ count estimated at 300,000 or more. AZB/ Arizona Business 50(6): 1-3. Happel, Stephen, Timothy Hogan, and Wing-Yan Choi. 2004. Snowbird households add $1 billion to state’s


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Table 1: Annual Population Estimates Scenario #1 (25%) Normal Population With Added Population Resident person days Snowbird person days Full-timer person days Total person days Days from winter visitors 39,000 48,750 14,235,000 836,550 333,450 15,405,000 1,170,000 (7.6%) Scenario #2 (200%) 39,000 117,000 14,235,000 6,692,400 2,667,600 23,595,000 9,360,000 (39.7%)

Table 2: Disposable Income Calculation Resident Federal Tax Rate Annual Income SSA Fed Tax Exempt Federal Tax Liability SSA Contribution (7.6%) After tax income - 7,121 (28%) - 1,933 $18,311 28% $25,432

Snowbirds 36% $40,000 - 32,000 - 2,880 (36%) - 0$37,120

Full-timers 36% $40,000 -32,000 - 2,880 (36%) -0$37,120


Table 3: Economic Impacts Scenario #1 (+25%) Annual Spending: Residents - Snowbirds - Full-timers Total Direct spending from visitors Total spending impact from visitors $714,169,950 50,694,930 20,207,070 $785,071,950 $ 70,902,000 (9.0%) $ 85,082,400 $ 714,169,950 405,559,440 161,656,560 $1,281,385,950 $567,216,000 (44.3%) $680,659,200 Scenario #2 (+200%)

Table 5: City General Fund Expenditures and Recaptured Costs Department Annual Expenditures (in decreasing order) Police $ 4,795,391 Fire Parks Administration Miscellaneous Library Community Development Public Works* Legal TOTAL 3,816,444 2,558,389 2,501,277 1,394,868 901,837 789,505 753,084 183,268 $17,694,063

Recaptured Funds $ 117,140 366,677 143,247

2,897 4,548,122

$5,840,602 or 33.0 %

*(Expenditures are general fund, Revenue is enterprise, then a portion of the excess is transferred to general fund) Table 4: City Revenue Generation Activities Revenues Generated Through Services Normal Fees Utilities - Water - Sewer Trash Storm Electric Golfing Fishing Boating $25.50/month $14.75/month $10.00/month $ 1.00/month Consumption based $30/round w/cart $3/day or $20/year $5/day or $35/year Annual Revenue $ 566,548 41,541 33,473 240,000 3,733,506 21,247 13,000 9,000

Who Pays Resident Direct Direct Direct Direct Direct Snowbird Direct Direct Direct Indirect Direct Direct Direct Direct Full-timer Indirect Indirect Indirect Indirect Indirect Direct Direct Direct


Direct Direct Direct


Camping Recreation Facilities Senior Center Swimming Pool City Bus Ambulance Run (cost GF subsidized) Fire Alarm Monitor Burglar Alarm Monitor E-911 Service Traffic Citations Mowing Vacant Property

$6/day Varies No Charge $2/day $20 for 30 rides $278 + $3.50/mile $6/year (Sr. exempt) $6/year (Sr. exempt) $3/year Varies

12,000 20,000 -032,000 36,000 365,537 1,140 2,140 115,000 154,419 397 Resident Direct Direct Not Paid Direct Direct

Direct Direct Direct Direct Direct Direct + Indirect Direct Direct Direct Direct Direct Snowbird Direct + Indirect Direct Direct Direct Direct

Direct Direct Indirect Direct Direct Direct Indirect Indirect Direct Direct

Direct Direct Indirect Direct Direct Direct Indirect Indirect Indirect Direct

$16.50 Admin fee + cost Revenues Generated through Taxes Property Sales Hotel/Motel Mobile Home Tags Gas - IGR $ 765,000 12,081,154 183,000 2,500 250,000

Direct + Indirect Indirect Full-timer Indirect Direct Direct Indirect Direct


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