From his front-row seat as a coastal millworker, Delbert Phelps watched 10 years ago as Oregon’s timber industry spiraled downward.
Phelps, of Florence, decided to look for something with more of a future.
He huddled with relatives and came up with an idea of a gated subdivision for retirees with a clubhouse, swimming pool and tennis court.
In 1989, Phelps and his family formed Florentine Estates Inc. and took an option on 67 acres of brush-covered land in north Florence.
They got approval for a 92-lot planned unit development of manufactured and modular housing.
“We sold 60 lots the first year,” Phelps remembers. “We were amazed. We put an ad in Trailer Life Magazine and got 800 responses.”
But that was just the beginning. Florentine Estates is now in its ninth addition with 422 lots spread over 180 acres. Some 375 are sold, 10 more are planned in the immediate future, and Phelps hopes to convince the city to annex 80 adjoining acres for future expansion.
“We offered a lifestyle where they could plant their roots but feel comfortable about taking extended vacations, leaving their things safely at home in a gated community,” Phelps says.
Florentine Estates is just one example of how businesses have profited by the wave of affluent retirees that has swept the Oregon coast in recent years.
Phelps says 290 homes have been built in Florentine Estates, with an average home costing about $175,000 for a contribution of more than $50 million to Florence’s property valuation. Phelps says newly arrived retirees usually have about $225,000 in savings, so he figures Florentine residents put more than $65 million in local financial institutions.
“From an economic standpoint, it’s great,” he says.
New businesses have sprung up to serve the retirees, and others have expanded.
New on Highway 101 within the last five years are fast food franchises such as McDonald’s, Taco Bell and Kentucky Fried Chicken, a Pay-Less Drugs store, a U.S. Bank, a multiplex cinema and a Les Schwab tire store. Safeway has doubled the size of its old store.
Shops and restaurants on Florence’s Old Town now number about 60, more than double the number eight years ago. Pending developments in Florence include a 40-store factory mall and a Fred Meyer store.
Nearly $80 million worth of commercial and residential construction has occurred in Florence and Dunes City during the last five years.
Developers can make such investments, Phelps says, based on a certainty that customers will have a steady source of income from pensions and investments not subject to the booms and busts of resource-based industries, such as timber and fishing.
“In effect, it (the retirement boom) is an export industry,” says Brad Angle, an economist with the Oregon Employment Department. “They’re bringing in income from outside the area.”
Many of the retirees who come to the coast have discretionary income to spend on luxury items, and that’s why retirement towns such as Florence have a bigger selection of merchandise than most other small cities, says Bruce Bjerke, a broker for LPL Financial Services in Florence.
Hans Radtke, a coastal economist in Yachats, says the dollars spent by retirees have a multiplier effect, generating about 65 cents worth of additional economic benefits for every dollar spent. It takes one to four retirees, depending on their affluence, to create one service job, Radtke estimates.
And with 20 percent of the coastal population now age 65 or older, that accounts for a lot of jobs. According to a formula developed by Radtke, retirees at the coast generate about 16 percent more income for their communities than would be found in an area with an “average” number of retirees.
In the hottest retirement spots on the coast, he figures the effect is much higher. Radtke estimates Curry County retirees, for example, generate income 31 percent above the average. He puts coastal Lane County at about 25 percent higher than average.
One criticism, however, of relying on what Radtke calls “the silver-haired economic base,” is that many of the jobs created by the senior influx offer low wages, similar to employment in the tourism industry.
But unlike tourism, the jobs are not seasonal.
“And in a very well-off retirement community some of these service jobs can be quite well-paying,” says Angle, the Employment Department economist.
Jim Barnhart, administrator of Florence’s Peace Harbor Hospital, says that when the retirement boom started in the early 1970s, Florence had three general practice physicians. Now the community has 22 full-time doctors, many of them specialists, and a new hospital and medical office complex.
PeaceHealth Siuslaw Region, which operates the hospital and clinics, generates $27 million in annual revenue and employs 325 people. The regional organization’s annual payroll is $9.1 million, and the average salary is $28,000.
But there’s another side to the medical demands of an older population.
Older people have more serious and expensive illnesses, Barnhart says, and Medicare does not always cover the full cost of treatment.
That means unless new treatment strategies are devised, medical facilities in high-retirement areas such as the coast will face financial problems if Medicare payments are reduced, as some expect.
As more affluent retirees arrive, builders are putting up homes at lightning speed — expensive houses, for the most part. That creates a dilemma at a time when the retirement boom and tourism are creating more and more low-wage jobs.
The problem was noted by a University of Oregon graduate student, Sarah Summers, in a 1993 study of the effect of retirees on Florence and Bandon.
“These (housing shortage) circumstances are beginning to create an economic division between the haves and have-nots — between retirees and wage earners,” she said.
From the years 1988 to 1994, the cost of an average quality, approximately 1,000-square-foot home in the Florence-Dunes City area increased more than 80 percent to more than $80,000, according to a study by Florence appraiser Bill Kennedy. Kennedy said the average value remained about the same in 1995 and 1996.
Many coastal community leaders believe the advantages of the coastal retirement boom outweigh the negatives.
Phelps predicts that as the retired population grows, more businesses will be attracted to the coast, expanding job opportunities.
