IDEATION
Our Solution
While Craig has demonstrated efforts to stimulate rural development, the Moffat County Economic Development Partnership was closed in February 2019. Therefore, the city and county are left without a roadmap to improvement and the support and consultation of the members of the organization. Our hope is to outline a solution that will serve as that roadmap. It includes a combination of public and private investment working in a coordinated manner. Our plan includes the following:
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Promote Opportunity Zone Fund investment to stimulate real estate and business investment
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Access UDSA grant money and loan programs to fund broadband access in Craig
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Maximize opportunities created by Colorado’s Rural Start Up Fund through an incubator located in Craig​​
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Capitalize on new tax revenue to come from recent legalization of recreational marijuana in Craig to fund capital construction for schools in Craig as well as access grants/programs for early literacy, student health professionals, school bullying prevention and dropout prevention
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Stimulate tourism by augmenting natural recreation activities in Craig
1. Opportunity Zones
Basics
As a result of the 2017 tax bill, Opportunity Zones were created to stimulate investment by entrepreneurs and enterprises in economically distressed areas of the country through capital gains tax incentives. According to the Economic Innovation Group, before the incentive, there was $2.3 trillion of untapped capital held by U.S. investors in the form of capital gains. Therefore, the hope was to motivate investors and spur investment and growth in these distressed areas. Unfortunately, the program has not been as successful as anticipated because those areas suffering economically present outsized risk to investors. Additionally, the complexity of the tax reform requires that an individual have access to liquid capital at the end of year 7 to pay the long-term capital gains taxes at that time. The upside is that if the asset is sold for more than the initial purchase price after year 10, there are no additional capital gains due at that time.
It is worth noting that there has been a particularly relevant, successful Opportunity Zone investment in Colorado this year in the community of Montrose, Colorado. Proximity Space, a Montrose-based company that manufacturers software and hardware for coworking spaces, recently announced that it had secured an investment from a qualified opportunity zone fund. Proximity is the first in the state, and possibly one of the first in the country, to receive an investment that stems from being located in an opportunity zone. The bottom line is that, in most cases, Opportunity Zone incentives are not enough to overcome the barriers and risks inherent in investing in distressed communities.
Colorado Opportunity Zones
Colorado has 1,249 census tracts; 531 were eligible for Opportunity Zone designation, but the law only allowed for 126 census tracts in Colorado to be chosen. A majority of the tracts chosen are in rural areas such as Craig, Colorado. The 126 Opportunity Zones in Colorado are outlined in the map on the left and Opportunity Zones in Craig are highlighted in the map on the right.
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One firm in Steamboat Springs called Four Points Funding is primarily focused on Opportunity Zone Investing. They are focused on unlocking value in communities such as Craig. The close proximity and network of people allows them to better understand Craig, which reduces the risk.
Colorado Opportunity Zones
Source: Colorado Office of Economic Development and International Trade
Craig Opportunity Zones
Source: CoStar
2. USDA Programs to Fund Broadband Access
Because private providers are unlikely to earn enough revenue to cover the costs of deploying and operating broadband networks in Craig, it is unlikely that private investment alone will bring service to Craig. Fortunately, there are currently four ongoing programs that have been established to incentivize and subsidize broadband infrastructure investment in unserved and underserved rural areas, which Craig can capitalize on. These include the following:
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ReConnect Program Rural Broadband Access Loans—provides grants and loans to fund the costs of construction, improvement, or acquisition of facilities and equipment needed to provide service in eligible rural areas.
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Community Connect Grants—funds broadband deployment into rural communities where it is not yet economically viable for private sector providers to deliver service.
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Telecommunications Infrastructure Loans and Loan Guarantees—funds the construction, maintenance, improvement, and expansion of telephone service and broadband in extremely rural areas with a population of 5,000 or less.
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Distance Learning and Telemedicine Grants—principally funds end-user equipment to help rural communities use telecommunications to link teachers and medical service providers in one area to students and patients in another.
As of October 2019, $152 million had been invested by the USDA in 19 rural broadband projects across 14 states. Colorado also passed a law in 2018 to commit $100 million over five years to bring high-speed internet to unserved rural areas in the state. The funding comes from a 2.6 percent “high-cost support” fee on Colorado phone bills.
According to Department of Transportation statistics, the average cost of laying fiber is $27,000 per mile. Steamboat Springs, 42 miles from Craig, has broadband access provided by CenturyLink. Therefore, it would cost approximately $1,134,000 to bring broadband to Craig. Grant and Loans programs available through the USDA and Colorado provide access to the capital needed.
Broadband access is essential to the success of the solution because so much of the economy is dependent on access to high-speed internet. Improving access to the internet also allows people to work remotely from Craig, which would help grow the educated professional population in Colorado without the requirement of all jobs being local. Craig could even consider launching a program similar to Tulsa Remote to motivate successful, educated professionals who already have full-time employment and have the flexibility to work from anywhere to relocate to Craig and work remotely.
As explained on the Current Approaches page, Colorado has a Rural Start Up Fund with $9.1 million dollars of capital to put to work. Greater Colorado Venture Fund is responsible for deploying the capital and began making investments in the summer of 2018. The program will assist businesses that have “have raised less than five hundred thousand dollars of third-party capital and are able to provide non-state matching funding equal to at least one-third of the grant award.” The grants are capped at $150,000 per early stage rural business per year.
As of May 2019, they had made six investments, which include Victims Service Tracking, a healthcare software company in Mancos; Rever, a motorcycle travel app based in Eagle; MuniRevs a Dolores-based paperless licensing and tax remittance service that was founded by the former finance director for Mountain Village in Telluride; Western Rise, an outdoor apparel company in Telluride; and Felt, a digital greeting card software company in Telluride.
Educating local community members about this fund can inspire entrepreneurs to grow their business in Craig, which will greatly benefit Craig. There are also loans and grants available through the USDA to fund micro entrepreneurs called the Rural Micro-entrepreneur Assistance Program. Details of this program are explained here.
4. Legalization of Recreational Marijuana
On November 6th, 2019 Craig voted to legalize the sales of recreational marijuana. Steamboat Springs, the closest town where recreational marijuana sales were legal before November 6th, has collected over $300k each year since 2015 for a total of over $1.7 million as of 2018. Craig will now benefit from similar tax dollar benefits in years to come, which will fund much needed improvement to the schools as well as teacher and student programs.
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Voters also approved of all types of subsequent marijuana related businesses in Craig, including grow operations, testing facilities, courier operations, and others. This will not only bring tax dollars to Craig, but it also allows for multiple new marijuana business ventures to start in Craig, which will increase property values as warehouses and factories are converted into cultivation/manufacturing facilities and create additional jobs.
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Craig is 1.5 hours away from both I-70 and I-80, two major interstate highways. Rifle, Colorado also has legal recreational marijuana sales, which is on I-70. However, Craig is the closest community with legal production in route to I-80. While transportation across state lines is currently illegal, that regulation will likely change once marijuana becomes federally legal. At that point, the opportunity for exportation is immense.
Warehouses—the most prominent asset type in the industry—are particularly accommodating for conversion to cultivation/manufacturing facilities because they are large enough to hold thousands of plants and can be modernized to be climate controlled. According to CoStar, there are 18 industrial properties in Craig for a total of 112,000 square feet. Occupancy is currently at 74%, which means there is an immediate opportunity for grow houses to occupy the vacant space. Also, as the leases on the occupied space become available, there is an opportunity for property owners to seek marijuana-focused tenants and increase rental rates. For example, a CBRE found that Denver warehouse leases signed for use by the marijuana industry from 2014 to 2016 exceeded market rents by two-to-three times. And a study done by University of Mississippi estimates that on average legalizing retail marijuana in Colorado increases housing values by approximately 6 percent, or $16,500 per property
According to the 2019 Cannabis Jobs Count report from Leafly and Whitney Economics, it is estimated that the cannabis industry employed 165,000 to 230,000 full and part-time workers across the United States in 2017 and a recent study done New Frontier predicts the nationwide legalization could generate 1.1 million jobs by 2025.
5. Stimulate Tourism
Craig already has a handful of tourist events in the summer, but there is room for many more given the abundant recreational amenities in Craig and in Moffat County. The events hosted by the town now include: Grand Old West Days, a rodeo, concert, carnival, crafts event, the Whittle the Wood Rendezvous, a competition for chainsaw artists, and the Moffat County Hot Air Balloon Festival, Octoberfest!, the Historic Ghost Walk, the Great American Horse Drive, and the Where the Hell is Maybell? Bike Ride. There are opportunities for other weekend festivals such as a Rubber Ducky Race where tourists would race their rubber ducks down the Yampa river, which floats through town, for prizes. Additionally, given the romanticized appeal of the western cowboy, organizing additional cattle and livestock drives could be very beneficial.
Moffat County is also called the Elk Hunting Capital of the World because two of North America’s largest migratory elk herds are found in the area. Mule deer and Pronghorn population are also robust. There are also many small game hunting opportunities. Many hunters come to Craig already from late August, when archery season starts, through November 17th when the last leg of rifle season ends, but there is certainly room to increase the business opportunities. The Craig Chamber of Commerce reports that more than 375,000 hunters come to Moffat County every year.
Other tourism opportunities in Moffat County include golfing, fishing, hiking, 4-wheeling, rafting, touring, camping, birding. Steamboat Springs also has some of the best skiing in the state and can be easily accessed by car from Craig. This provides an opportunity to capitalize on the winter tourism revenue in Steamboat by creating luxury accommodations in Craig with full-service ski shuttles to Steamboat. Lastly, Craig is surrounded by working sheep and cattle ranches, which provides facilities to start dude ranches to give city dwellers access to experience the cowboy way of life. There are possibilities of creating experiential activities for tourism that involve working livestock in addition to riding horses.
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The potential economic impact of additional tourism efforts is most easily understood by looking at Moffat County compared to Routt County, which contains Steamboat Springs. As stated above, roughly 475,000 tourists visit Moffat County every year, whereas 700,000 tourists visit Steamboat Springs every year. The total revenue spent by each tourist in Moffat County in the 2014-2015 time period was $84.28 whereas tourists visiting Steamboat Springs spend $281.75, or 330% more than Craig. Capturing a small percentage of the visitors and revenue from Steamboat could have a substantial economic impact on Craig.