Lack of enchantment: Santa Fe's boom goes flat

  Somewhere in the prosperous burbs of our nation's metropoli a well- rested couple sits in a sun-drenched breakfast nook, dabbing French jams on flaky croissants and giggling over a runaway stock market that's made them both paper millionaires.


"You know," Cliff says, "with Athena off at Stanford and the Dow breaking 5,000, maybe now's the time to cash in and get that place we've always wanted in Santa Fe."


"Whoa, lambchop," Leslie balks. "Not Santa Fe. Mark and Sheila are still there, so's that guy with the nose rings who futzed up my hair, Zeno, Zenon, whatever. Half the country club moved there last year."


"I thought you adored Santa Fe," Cliff protests. "The galleries. The piûon nuts. Remember that turquoise concha belt I got you at Indian Market?"


"Yeah," Leslie snorts, "I wore it to the Junior League bazaar last year and they're still calling me Pancho."


"But you always said Santa Fe made you inspired," Cliff argues. "Energized. Closer to the land. Connected ..."


"It does," Leslie sighs. "I mean, it did. It used to. It's ... it's just everybody else is either there already or leaving. Besides, nothing's a bargain there anymore. And remember those Mexican ... er, whatever, Hispanic kids who flipped you the bird outside Coyote Cafe? What was their problem? And that pushy woman mayor. I'm telling you, it's not the same in Santa Fe."


"Well," says Cliff, "what about Telluride?"








And so it is on the refined fringes of Boston, Los Angeles and Dallas that the comfortable class has decided Santa Fe has fallen from grace. The closest thing to a formal announcement came last year when Condé Nast Traveler, whose readers had named Santa Fe their favorite destination in the world in 1992- surpassing even Rome and Venice - published a poll in November listing it in 11th place.


"Santa Fe may very well be one of those tourist destinations," explains John Mariani, food and travel correspondent for Esquire, "that many or most people have gotten to and there's no reason to return."


"It's been a wonderful ride and it will occur again," says Howard Kurlansky of Santa Fe's primo real estate firm, French and French Fine Properties. "(Santa Fe has) ridden its wave of popularity. No place stays popular forever."


Upscale tourism, hotel occupancy and room rates in Santa Fe are significantly down, retail sales are flat, construction starts are off 30 percent, several galleries have closed and the rarified real estate market that once boasted a median Santa Fe home price of about $262,500 - even as a third of the rural county lived at or below poverty level - was about $166,000 in the second quarter of 1995. (For comparison, the Dallas median just topped $103,000; Aspen's has been $1 million.)


Empty stores on and around Santa Fe's three-centuries-old Plaza, where the Manhattan-like rents can reach $90 a square foot and more, are now commonplace, as are empty tables at swank luncherias. Many art galleries, T-shirt shops and Indian jewelry stores are longing for customers, while one 50-merchant indoor market called Santa Fe Mercado closed its doors last summer.


There's more public tension between young Hispanics and whites, more graffiti and gang activity, and increased violence in the much-maligned public schools, where the alarming high school drop-out rate only feeds a growing and poorly skilled underclass. Job cuts of nearly 1,000 employees at nearby Los Alamos National Laboratories and continued shrinking of state government have further squeezed the town's dwindling middle class.


There are a host of socio-economic causes for all this - some unique to Santa Fe, others now rising with the so-called world economy - but the hotel and tourism industry of Santa Fe has isolated its villain: populist mayor Debbie Jaramillo.





Jaramillo, a 42-year-old former city councilor and mother of three grown boys, was elected mayor two years ago over a mainstream Hispanic businessman in an emotional campaign that had the town agonizing over its racial, class and economic divisions (HCN, 8/8/94). Newspapers were filled with letters and guest columns that excoriated the last decade's influx of wealthy white immigrants for isolating themselves from the town's day-to-day problems and fueling resentment from poorer Hispanics.


During her campaign, Jaramillo promised to put developers in their place, demand more affordable housing, clean out deadwood in city hall and discourage the most destructive aspects of tourism.


Funny, impassioned and hard-headed, Jaramillo once said of the new immigrants: "They bring their culture, their values, and we are supposed to assimilate. That has got to change."


She made it clear she thought Santa Fe was being sold to all the wrong people. "We don't need any more (promotional) videos of people getting out of Porsches and women on ski slopes," she says. "And you won't ever see me (like former mayor, Sam Pick) hawking Santa Fe cologne or mixing margaritas on the (Regis and) Kathie Lee Show."


The Santa Fe tourism industry is not amused.


"Since the last election in Santa Fe," says Art Bouffard, director of the New Mexico Hotel & Motel Association, "we have seen an attitude (from Jaramillo) that is anti-growth and anti-tourism. As an industry, we anticipate some dips (in the market), but the situation in Santa Fe is more severe."


Dan Baxter, director of the Santa Fe Lodgers' Association, says Jaramillo's "outrageous remarks' in the national press have hurt tourism. "After that recent New York Times article (Sept. 12)," says Baxter, "we had some cancellations."


Actually, Mayor Jaramillo is never mentioned in that story - written by Times reporter and Santa Fe resident George Johnson.


What is cited are Santa Fe police statistics that show, through last August, 44 robberies, including purse snatchings, in downtown Santa Fe. Two city councilors told the Times that Santa Fe hurts from "mass production tourism" and economic inequality that breeds "resentment."


Although Jaramillo didn't say those things, she is still on the hook. Bouffard and Baxter are angry that Jaramillo won't spend an estimated $1.2 million from the city's lodger tax on tourism promotion. "You must constantly keep the vision, the opportunity, in front of people," says Bouffard. "If you start cutting back on advertising, "fam" (familiarization) tours for the press, and other freebies, eventually it starts to affect you."


Now, Bouffard is delighted that amendments to the Lodgers' Tax Act will be introduced and, he thinks, passed in the current legislative session. They will require using about 60 percent of a community's lodger tax for tourism and promotion. Had this been in place in 1995, Bouffard says, "We could have had an additional $1.3 million for promotion."


Is it possible that no amount of advertising could ever maintain the last decade's level of world-wide fascination with Santa Fe?


"Hogwash," in Bouffard's view. "We've by no means exhausted the population out there. Santa Fe should start looking more to the middle class, and to Canada, Europe and the French. We don't get our fair share of Canadians."


Hearing these charges, the mayor laughs and confesses. "You're damn right that lodgers' tax money isn't going to buy more glossy ads to get rich Canadians and Japanese. These people refuse to recognize what I said three years ago. I said we were at the end of our (tourism) cycle. I said, keep this up and it'll be our downfall. I've always said we can remain popular by being ourselves," she says.








Someone is probably saying (or did say) much the same thing in Aspen, Vail, Jackson, Park City, even Telluride, which is now proudly displaying its handful of new Hollywood celebrities in work shirts and gimme caps. Each town lies somewhere along the boom-bust continuum that starts with rural tranquility and beauty, then moves into hipness, media exposure, land speculation, saturation and eventually, perhaps, decline.


Aspen is the best example of a Western resort town with virtually no middle class. There are the wealthy, and those who serve the wealthy. As in Jackson, Sun Valley and Santa Fe, Aspen's waiters, maids and public employees often live 30 or even 60 miles or more away. While that may be just an inconvenience in summer, the inevitable car accidents caused by twice-a-day commutes in winter, often over treacherous passes, have made the issue of affordable housing one of public safety.


One indication of Aspen's top-heavy nature and current problems came in a recent Wall Street Journal article that reported home sales down 40 percent in 1995. At the end of December, there were some 156 houses on the market priced at $1 million or more.


In Jackson Hole, Wyo., where some 300 Realtors are licensed in Teton County (pop. 15,000), Realtor Doug Herrick says home prices are also declining, but nothing like in Santa Fe or Aspen. What would $150,000 buy in his market? There is a brief silence on the other end of the phone. "Well, there are about three homes in the town of Jackson," Herrick says. "They're marginal, about 1,200 square-feet, 50-by-150-foot lots, between seven and 15 years old. There will have to be a leveling off of this market," Herrick concedes, "just to bring it back to some kind of reality."


It is tempting to see the West's hot towns as interchangeable: Santa Fe, Jackson, Bozeman, Aspen, Sun Valley, Telluride ... But after decline, or bust, these towns may face very different futures. Ski towns, almost always locked into narrow, high-elevation valleys, appear to have little choice: They must remain resorts and second-home enclaves. Their challenge is just how high-end their clientele will be, where their workers will live and what those workers will be paid.


But Santa Fe sprawls, and water permitting, it may grow even more. This small town has become a small city of 60,000 because of high-end tourism. Until recently, that choice served it well.


"Santa Fe blew through a couple of national recessions without even feeling them," notes Eddie Dry, director of the Tourism Management Program at the University of New Mexico. "(In the last decade) Santa Fe has had nothing whatsoever to do with the national economy. And given that they made the choices not to diversify their economy, this is not unexpected.


"About 10 years ago they started down this road of explosive growth with very little planning involved," says Dry. "This has been a rude awakening for them. They are not invincible."


Santa Fe's awakening comes from what had been its twin engines of growth: real estate and high-end hotels. The Santa Fe Association of Realtors reports that sales in the first half of 1995 were down some 35 percent from 1994, which was a record year. Homes in the $300,000 to $750,000 range seemed the hardest to move. "The best bargains," one Realtor confided, "are anything above $500,000. Now, they're all over-priced." Santa Fe Realtors - all 795 of them - are having to relearn some old skills.


"Important Price Reductions," teases an Oct. 8 headline in the Santa Fe New Mexican, offering a three-bedroom, three-bath, 2,635-square-foot home for just $345,000. A few weeks ago it cost $90,000 more.


"Owners are slowly coming back to reality," one land merchant noted as she pointed out a listing for a sprawling adobe "ranchito" north of town, reduced $100,000 to $750,000. On the balcony of a two-story fake adobe selling for $445,000, a Realtor said her calls are picking up. "Everyone wants to bargain now, especially Texans," she said. The Santa Fe shakeout is an "exhilarating time," Coldwell Banker agent Suzanne Field says in one of Santa Fe's many real estate free newspapers, "because it forces us to be more creative."


"My business is probably off 25 percent from last year. But I'm not hurting," real estate agent Ken Ahler reports.


"What's happening is healthy," says real estate heavy and American Indian art connoisseur Christopher Webster, "something that needs to happen."


So, who's buying? "I still get folks in from Southern California," says Ken Ahler, "but nothing like before. It used to be every time they had a good earthquake we'd have a thousand people out here looking for houses. I get "em from Texas and the East Coast. Houston. Dallas. The Texans are wanting second homes, investment property.


"Seven years ago," he says, "people were saying it was a down market. They didn't have any idea what a down market was. We've seen some good size real estate firms - Prudential and Hallmark - hit the road recently."


To visitors not shopping for houses, the more apparent indicator of Santa Fe's evolution is the re-appearance of the vacancy sign. Not only has the once-saturated downtown apartment market shown an 11 percent vacancy rate (second quarter, 1995), but the occupancy rate of hotels and motels dropped to 82 percent last July, nearly 5 percent off 1994's marks, a trend that continued into the winter.


The decline was almost predictable. Surrounding states had reported lackluster summers for tourism. For example, Colorado registered a 30 percent drop in summer visitors, according to a report by the New Mexico state tourism office. Perhaps they felt the pinch from what California tourism officials said was a 10 percent decline in the number of their outbound tourists during the first part of 1995.


Another obvious explanation for Santa Fe's lower hotel/motel occupancy rates is the construction of several new economy and mid-range motels on Cerrillos Road, such as Hampton Inn and Holiday Inn Express. These properties have added nearly 1,000 new rooms over the last five years that can often be had for less than half of the town's average daily room rate of about $127, still among the highest in the nation.








Could this be Santa Fe's future: Growing middle-class tourism living with high-end visitors? The same Condé Nast survey that showed world travelers bumping Santa Fe down the desirable list also showed the city ranking second for U.S. travelers. This trend may soften Santa Fe's fall, but it's hard to see how the city can hang on to both markets. Quick, name a town of 60,000 where world-class opera, museums and pretentious restaurants thrive alongside casinos and Wally World.


It's not that the Wal-Mart crowd can't have a good time watching the rich choose wine; it's that the rich (and their designers, hoteliers, developers, etc.) usually insist their tourism experience be unobstructed by a loud, messy, mall culture. Jaramillo and others would love to see the the current economic downturn force Santa Fe to become a more normal place - one that could withstand the fickle whims of people of wealth. They want it to become a healthy middle-class town that could attract a broad range of tourists, and companies that would pay living wages to 100 to 300 employees.


"But I don't think that will happen because of the cost of land, housing and such," says Dry, of the UNM Anderson School of Management. "They may have lost that window of opportunity to attract that kind of business."


Jaramillo hasn't given up trying, though. She has always championed small businesses and wants to start requiring "economic impact statements' from mega-store operations (such as Wal-Mart and outlet malls) that want to move to Santa Fe. She has pushed for affordable housing, so that the companies she hopes to attract will have a labor pool to pick from. Savvy developers know they had better throw in some low-cost units with their plans or their upscale projects will move like molasses through the permitting process.


But just holding back Wal-Marts and providing affordable housing won't cause a small-business renaissance. New businesses did open at a high rate last year - 125 - from Enchantment Trash Liners to Kokopelli Kaffe and Deli. This would be more encouraging, says graphic designer Vince Foster, owner of Santa Fe's Get Type & Graphics, if the law of supply and demand actually worked in Santa Fe. Foster says hundreds of small businesses that meet no consumer need continue to come to Santa Fe and quickly die, like lemmings leaping into the sea.


"That's why the economy is so skewed," observes Foster, a former magazine photographer from Texas who moved to Santa Fe in the early "80s. "The new guy (business owner) doesn't come in with the knowledge of the guy he replaced. You really see that in galleries and restaurants. You can tell who they are before they've unpacked their Volvo. They've done no research at all."


Santa Fe, which sees 3 million tourists a year creep up the fast-food boulevard of Cerrillos Road, is also beset by competitors nearby. Downtown businesses have been hurt, Foster says, by a sprawling and popular flea market near the Santa Fe Opera, a new casino at the Tesuque Pueblo north of town and a large outlet mall on the way to Albuquerque, off Interstate 25.


Despite the negative signs, city councilor Cris Moore, a 27-year-old Green Party activist, has not given up hope that Santa Fe can create a normal economy, and do it without class warfare.


"We don't need to be on a crusade to get fewer rich people to move here," he says. "We just need more housing under $100,000. But what do you do for a down payment if you don't have a good-paying job? I'm not sure I can name a person in town who has a livable-wage job with a promising career track in front of them."


While efforts continue to attract better-paying jobs, Moore and the Green Party have begun focusing their efforts on getting unions into Santa Fe's service economy - hotels, motels, restaurants. These workers usually make between $5 and $8 an hour, but Moore, quoting data from the Hotel Employees and Restaurant Employees International Union, says that in order to pay for a one-bedroom apartment, health care, food, clothing, transportation and taxes, a Santa Fean needs to make about $12.60 an hour.


"That's how big the gap is between wages and cost of living in this town," he says with a shrug. "Pretty absurd, isn't it?"


Dan Baxter, the Lodgers Association director, says unions will only hurt Santa Fe. "If unions get a foothold (in Santa Fe hotels) that could be dangerous," he says. "Unions aren't necessary here. There is no poor, oppressed class. If you have unions and some of these hotels incur another $100,000 in (labor) costs, they could shut down."


Could hotel maids make a livable wage in Santa Fe?


"Of course not," he said. "They don't anywhere in this country. But the work isn't bad. You get meals. You do have to make beds and clean toilets. They're not abused. They're not taken advantage of. With education and a good work ethic they can get out of those jobs."


And go to what? This is the conundrum for Santa Fe.


A town has grown too expensive for its natives, so people need high-paying jobs. But the companies that have those jobs can't afford to move to Santa Fe because outsiders have driven up the cost of land and housing.


Will the current decline reverse that trend, and provide openings for new economies to take hold? Or will outsiders, even if they're not as upscale as in the past, continue to move to Santa Fe, keeping prices too high for a local economy?


"I don't think this will stop," says Lynda Taylor, who works on border issues for the Southwest Research and Information Center in Albuquerque. "I don't see people in Chicago suddenly saying, "I love these winters." I don't think many communities in the West will escape this migration."





Everyone in Santa Fe has a stake in what happens next. Outrage over the conquest of Santa Fe by affluent newcomers helped elect Mayor Jaramillo. There are many native Santa Feans who will enjoy watching real estate agents, developers and the idle rich get their comeuppance in this declining market. But the gloaters must realize that low-skill but relatively well-paid construction jobs, and well-paying blue-collar work like plumbing and carpentry - jobs that employ many of the town's Hispanic working class - will take massive hits if Santa Fe goes flaccid.


It is easy today for some Santa Feans to look back to the very recent "good old days' that were fueled by upscale tourism and newcomers. In reality, they weren't so good. Then, as now, the town's young people, often poorly educated and embittered, left their homes, families and friends to find work elsewhere. Of those who remain, many experience problems with alcoholism, divorce and family violence.


All this despite a massive influx of wealth and an apparently thriving economy.


It's easy to feel morally superior to Santa Fe and its shameless boosters. How could they have screwed up such a wonderful place? But they are far outnumbered by their victims, and onlookers can only hope they find some miracles and re-invent themselves in a self-sustaining way. n





Bruce Selcraig writes from Austin, Texas. He may be reached by e-mail: selcraig@mail.utexas.edu