Wine, tourism, casino give valley bright economic outlook

By Nora K. Wallace Santa Barbara News-Press, Calif.McClatchy-Tribune Regional News

Jun. 7--Fueled by the economic triad of the wine industry, tourism and the Chumash Casino, the Santa Ynez Valley's economy is on track to fare better this year than much of the rest of Santa Barbara County.

That's the assessment from the UCSB Economic Forecast Project's 2007 economic outlook for the Santa Ynez Valley. The report was delivered to an audience of community members, business owners and elected officials Wednesday night at Santa Ynez Valley Union High School.

"The risks to the California economy are high costs resulting from high home prices, regulations, the state budget and energy and water supplies," the report indicated. "Santa Barbara's economy will be weaker than California's or the United States The South Coast's slow growth has been previously documented. Because of the wine industry, the Chumash Casino, and related tourism, the Santa Ynez Valley's economy will perform somewhat better than much of the rest of the county."



Those behind the forecast state that The Valley has its own "idiosyncratic economy," and the economic impact of the casino "has exceeded our expectations."

They also predict that the overall U.S. economy will grow at a modest pace for the remainder of this year, and that California's will even surpass that growth. "We expect the Santa Ynez Valley's economy to be relatively robust in comparison to its neighboring communities," the forecast summarized.

Some of that economic engine is driven by tourism, as visitors come to the area to do wine tasting in the dozens of valley tasting rooms or gamble at the Chumash Casino. Hotel and motel room sales grew in Buellton by 11 percent in 2006, a jump of 2 percent from the previous year. Solvang's room sales grew 20 percent in 2006, after a growth of just 5.9 percent in 2006.



Part of that increase is being attributed to the popularity of the movie "Sideways," which was filmed in The Valley and created a wave of fans wanting to visit the sites shown in the movie.

Though the wine industry tends to be cyclical, the report stated that the "tourism associated with it is likely to be less cyclical as the industry in the Santa Ynez Valley matures."

Hotel and motel visits and occupancy rates in The Valley have held steady at the 67 percent range reported in 2005 and 2006. That may drop a bit, the report noted, as newly approved Hotel rooms are added to the area.

Among the new Hotels in the works is the already approved Bach Hotel in Buellton which would add a four-story Hotel with 106 rooms on Avenue of the Flags.

Though the tourists are coming, it doesn't appear they're spending much at the area's retail offerings. Both Buellton and Solvang witnessed a retail sales decline in 2006 -- Buellton dropped 6.5 percent; Solvang 5 percent.

"We forecast a gradual resumption of retail sales growth in Buellton but continued softness in Solvang " the report noted. "Buellton's expected relative strength is due in part to the anticipated construction of new retail space in the Village Specific Plan that is currently in the planning process."

Previously called Oaks Springs Village, the Village Specific Plan is a 22-acre mixed-use Center proposed for the corner of McMurray Road and Highway 246, with 9 acres of retail. The plan has not yet been approved.

In the housing market, single-family sales volumes for the state were down 24 percent, and the valley's all-home sales volumes were down 29 percent, according to the report. The forecast predicts another 4 percent decline in The Valley with sales volumes recovering slowly in 2008 and beyond.



Despite the decline, the report noted that the valley's median home prices "have remained relatively resilient, with 2006 prices down only 1 percent.


The report forecasted a 2007 increase of 1.4 percent and an increase of 4.2 percent next year.

The assessment of the valley's top employers has not changed much from the previous year. The Chumash Casino Resort is on top, with an estimated 1,550 employees. Rounding out the top 10 are: Alisal Guest Ranch, 285; Santa Ynez Valley High School District, 145; Buellton Union School District, 134; MedSeek, 132; Santa Ynez Valley Marriott, 129; Solvang Lutheran Home, 128; Firestone Vineyards, 125; El Rancho Market, 120 and Dunn Schools, 105.

The valley's job growth rate increased slightly in 2006: having seen a 0.6 percent decline in 2005, it increased the same amount in 2006. The job growth came in the areas of construction, non-durables manufacturing and services.

"The Santa Ynez Valley's job growth rate will increase gradually starting in 2007," the report noted.