J. OF PUBLIC BUDGETING, ACCOUNTING & FINANCIAL MANAGEMENT, 19 (4), 488-513
WINTER 2007
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON
IMPACT CITY GOVERNMENT?
Aimee L. Franklin and Jos C.N. Raadschelders*
ABSTRACT. This article introduces an emerging demographic trend, invisible
residents, or retired persons who travel extensively seeking better climates
during the winter. In this article, we articulate the costs and benefits these
temporary residents could have on cities they visit in four areas: economic
development, local government revenues, city service demands and indirect
and intangible effects. We conclude that changes in city revenue structures
may more closely align who uses and who pays for government services.
However, the dearth of empirical evidence prohibits making strong
conclusions about the relative attractiveness of this population to cities.
Future research documenting this age-based phenomenon, currently
estimated to include 10 million persons, is warranted as competition to
attract these visitors heats up between Sunbelt cities.
INTRODUCTION
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).
OK, it’s not a real category on Census forms but, in the future, it could
be. Just who are invisible residents? Like the whooping cranes that
migrate south to the Texas coast each winter, invisible residents are
-------------------------------* Aimee L. Franklin, Ph.D., and Jos C.N. Raadschelders, Ph.D., are an
Associate Professor and Director of Graduate Programs, and Professor and
Henry Bellmon Chair of Public Service, respectively, Department of Political
Science, University of Oklahoma. Dr. Franklin’s research and teaching focus
on improving public management with areas of interest in strategic
planning, budgeting, evaluation, performance measurement and ethics. Dr.
Raadschelders’s research currently focuses on theories of Public
Administration and governance.
Copyright © 2007 by PrAcademics Press
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
489
retired persons who migrate 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, Hogan, & Walls, 2003). They are not part of the resident
population, because they retain residency in their home state while
they travel. In a sense, they are part-time residents of a city who are
invisible, since they are not included in population estimates and do
not enjoy the same citizenship privileges and responsibilities as yearround city residents.
Why the concern with invisible residents? First, their annual
migration affects the operations of city governments, in the states
they travel to and through. Cities like Apache Junction, Arizona
(population 31,814) and Rockport, Texas (population 8,469), can go
from a near ghost town in the summer to thriving cities with
thousands of temporary residents during the winter. City officials in
these destination cities must make sure there is sufficient service
capacity to meet seasonal demands. They can also structure their
revenue and financial policies to produce funds to pay for these
enhanced temporary service demands.
In this article, we first introduce the invisible resident
phenomenon by describing basic demographic characteristics. Next,
we articulate some of the costs and benefits to the city of this
temporary population by identifying the city services they are likely to
consume and considering who pays for these services and how.
Exploring the economic, financial, service and indirect impacts should
be of considerable interest to local government officials who may
wish to attract these temporary residents for economic development
in their city.
INVISIBLE RESIDENTS:
BASIC DEMOGRAPHIC CHARACTERISTICS
To better understand this emerging population, we reviewed
literature drawn from a wide range of disciplines. This includes
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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, 1954). Consistent empirical data specific to this traveling
population began to emerge in the mid-1970s and this topic has
received nearly continuous attention since. 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
migrating to different locations and their economic impact. Following
this organizing scheme, this section describes who invisible residents
are and how they select cities to visit. The section closes with the
most recent estimates of economic impact to suggest why cities often
seek out to attract 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 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 (“Report:
Snowbirds Bring,” 2001).
There are two types of migrating seniors. The traditional invisible
residents, the snowbirds, leave their permanent residences in the
winter to live for an extended period in Sunbelt states like Florida,
Texas, or Arizona. These travelers have a permanent domicile in the
home and in the guest state, and commute twice a year, first to one
and then back to the other.
The second type of invisible residents are the full-timers, or
permanently transient seniors who have sold their primary residence
and live instead in a recreational vehicle of some sort, like a motor
home, pull-type trailer, or 5th wheel trailer pulled by a pickup. Even
though the full-timer phenomenon dates back to the 1920s, when
they labeled these travelers “tin can tourists” (Sloan, 2002), there
has been a rapid jump in the number of retired persons in this
category. Traveling an average of 32,000 miles a year (Waters,
2002), full-timers wander across North America, following the most
desirable climate - north in the summers and south in the winters.
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
491
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, personal correspondence,
March 28, 2004). Since their dwelling is mobile, they pack up and
leave if they do not like the weather, local entertainment, or even
their neighbors. The Tourism Industry of America estimates some
nine million U.S. and Canadian snowbirds and one million full-timers
(American Demographics, 1997).
Not surprisingly, snowbirds and full-timers are mostly retired
persons who are primarily white (up to 95%), married, and better
educated. Invisible residents are usually healthier and look for tourist
activities in the host communities (Mullins, 1988; McHugh & Mings,
1991). They have 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 annually (“On the Road to Heliopolis,” 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 invisible residents are pension
payments, income from investments, and social security payments.
Many of these income sources are tax sheltered (no FICA payments
for a savings of 7.6% on income) or tax exempt (no income taxes on
the first $32,000 of Social Security), giving them more disposable
income than the permanent residents of the cities they visit.
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, see Svart, 1976; Mullins, 1988;
Bean, Myers, Angel & Galle, 1994). Amenities or sociability (Hoyt,
1954) are other reasons given for city selection (Svart, 1976).
Although less frequently, others have reported cost of living, financial
resources (McHugh & Mings, 1991), and friendship and kinship ties,
that is locations near others from their state of permanent residence;
i.e., travelers from northeastern states tend to go to Florida, while
Midwesterners tend to migrate to Texas or Arizona (Roseman, 1992;
Marshall & Longino, 1988), as factors in selecting a winter
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FRANKLIN & RAADSCHELDERS
destination. A noteworthy comment from a survey of “Winter Texans”
(non-Texans who visit that state for an extended stay in the winter)
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,
p. 10). Non-urban areas with lower population density and crime rates
(McHugh & 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, Hogan & Choi, 2004; Longino & 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 around 300,000
Arizona winter residents consistently reported by the Arizona State
University Center for Business Research which has been tracking
snowbirds since the early 1980s (Hogan & Happel, 1993; 1997;
Happel, Hogan & Choi, 2004). These researchers acknowledge that
this figure is understated since it does not include visitors in public
campgrounds such as those operated by the state or federal
government (T. D. Hogan, personal correspondence, March 24,
2004). For example, 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 was
16.4 million person days in 1996 (TED&T, 1997). This is significant
since the Texas population was just over 20 million in the 2000
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
493
census, meaning that the winter visitors added an extra day for nearly
every permanent resident of Texas.
The range of household spending for winter visitors is anywhere
from $1,500 to $4,000 per month (“Recreation on Wheels,” 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, Hogan &
Walls, 2003, p. 4). Two separate studies estimate a daily spending
rate for Winter Texans of $60.60 (TED&T, 2003; 1997; Hodge,
personal correspondence, March 28, 2004) which include the
breakouts as shown in Table 1.
Given these levels of daily spending, the financial impacts of the
winter visitors are significant, with estimates of economic effects of
$1 billion in Arizona (Happel, Hogan & Choi, 2004). The Texas
Department of Economic Development & Tourism (1997) estimates
$992 million in direct spending in Texas, where an estimated 12% of
the snowbird market visits annually.
With these demographic characteristics in mind, the discussion
now turns to illuminating impacts that can be expected in cities that
host these winter visitors. Unlike studies that look at the macro level
social and economic effects of this population on a state, this paper
considers the costs and benefits to city government from this
temporary population.
ESTIMATING THE COSTS AND BENEFITS OF THIS MIGRATING POPULATION
To better understand the impacts of winter visitors on city
governments, we compare two Texas cities of similar size, Robinson
TABLE 1
Winter Residents’ Spending Rates
Types of spending
Lodging & Transportation
Shopping
Food
Entertainment
Other
Daily Spending
$28.30
$ 11.90
$11.60
$5.70
$3.10
% of Total
46.7%
19.6%
19.1%
9.4%
5.1%
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FRANKLIN & RAADSCHELDERS
(population 8,711) and Rockport (population 8,469). Robinson is a
city located in central Texas that is not already affected by any
impacts, positive or negative, of snowbirds or full-timers, so it is used
as the “control” city to estimate impacts that could be expected from
an influx of winter visitors. Rockport, on the other hand, is used to
illuminate the differences that currently exist in revenues and
expenditures between two similarly sized Texas cities. Rockport, in
contrast to Robinson, is located on the “Texas Riveria,” the gulf coast
approximately 30 miles northeast of Corpus Christi. In Rockport, city
leaders make special efforts to attract Winter Texans to replace
revenue drops when the summer beach crowd leaves. Abbreviated
demographic profiles and selected descriptive information on the
financial structure and condition of each city are identified in Table 2.
Comparison of the Two Cities
As previously described, each city has roughly the same
population. They have also experienced similar growth since the
2000 census. Reviewing other demographic information reveals that
citizens in Robinson are younger and less educated with slightly lower
incomes than in Rockport. The median housing values in Rockport
are higher than in Robinson, but this city also experiences a much
higher vacancy rate at 30.4%; reflecting the presence of second
homes owned by winter and summer visitors that stand vacant for a
majority of the year.
Both cities use the council-manager form of government and
provide basic city services, with each relying on contracts for
municipal court and sanitation activities. Each has an enterprise
activity unit for the provision of public utilities. In addition, Rockport
has enterprise activities for a beach park and community pool. There
are a few interlocal agreements in each city with Robinson
cooperating on emergency services and Rockport participating in
shared emergency and law enforcement dispatch services.
Despite the demographic similarities, we see dramatic
differences in the tax and fee structure in place in each city. Robinson
has a higher property tax levy (.35520/$100 AV v. 2650/$100 AV)
and relies more on property taxes (44.2% v. 41.2%) for general fund
revenues. Notably, however, Rockport generates a much higher
amount of property taxes at $2.1M v. $1.1M. Rockport also fares
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
495
TABLE 2
City Government Profiles
Robinson
Demographic Characteristics
Median Age
Population w/Bachelor’s degree
Per capita income
Median value single-family home
Housing vacancy rates
Government Activities
Selected Taxes & User
Amount
Fees
Sales taxes
$695,406
Property taxes
$1,068,561
Hotel/Motel taxes
0
Franchise fees
$367,962
Charges for services
$283,111
Total
$2,415,040
Selected General Fund
Amount
Expenses
General Government
$705,892
Public Safety
$975,218
Public Works
$ 297,205
Culture & Recreation
0
Tourism
0
Interest & fiscal charges
$122,696
Total
$2,101,011
Rockport
38.9 years
16.1%
$21,680
$78,400
3.9%
% of ∑
28.5%
44.2%
0.0%
15.2%
11.7%
100.0%
% of ∑
33.5%
46.4%
14.1%
0.0%
0.0%
5.8%
100%
45.9 years
24.5%
$25,135
$103,600
30.4%
Amount
$1,400,557
% of ∑
27.3%
$2,114,864 41.2%
8.2%
$421,125
$567,342 11.1%
$623,080 12.2%
$5,126,968 100%
Amount
% of ∑
$905,631
19.1%
$1,873,033 39.6%
$1,067,201 22.5%
5.9%
$280,460
5.8%
$273,010
7.1%
$335,779
$4,735,114
100%
Note: * Robinson’s city property tax rate of = .35520 per $100 assessed
value.
** Rockport’s city property tax rate = .2650 per $100 assessed value.
Source: Data drawn from the 2004 Annual Financial Audit for each city and
telephone interviews with the finance directors in Robinson and
Rockport.
better in the area of sales tax. Despite the Rockport sales tax rate
being ½ % lower at 1.0% than in Robinson, which receives 1.5% of
sales taxes generated, and actual sales tax revenues being lower as a
percentage of general fund revenues; there is again a dramatic
difference between the amount each city generates in sales tax:
Rockport receives more than two times the amount of sale tax
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FRANKLIN & RAADSCHELDERS
revenue than does Robinson. The results are similar when comparing
three other primary revenue sources. There is no Hotel/Motel tax
revenue in Robinson, a city with no hotels or motels, and amounts
received from franchise taxes and charges for services are
significantly higher in Rockport.
Looking at patterns of expenses, the first noticeable difference is
the lack of any governmental spending for Culture & Recreation or
Tourism activities in Robinson. The city has been considering the
development of its first public park on land to be leased from the
school district; this project is still in the planning stage and no funding
for the project has been identified. The only area of similarity in
expenses is in general government expenses with roughly similar
dollar amounts and comparable percentages of total expenses. For
the other governmental activities, the actual expenses are
significantly higher in Rockport, especially in the area of public works,
reflecting the various infrastructure activities ongoing in this city.
There are also differences in the monthly city cost rate comparison
with Robinson being higher at $147.81 per month versus $135.57
per month in Rockport.1
With this comparative information, we can now examine the
differences in costs and benefits that will accrue to each city
depending on the level of snowbird and full-timer migration each city
experiences. We identify and discuss four areas where the city will be
impacted (Table 3).
Economic Development Impacts
Perhaps the most important and visible direct benefit to the city of
the invisible resident population is the economic impact. A Texas
study of the travel industry concludes that visitors generate a high
proportion of tax revenue relative to the Gross State Product. Visitors
TABLE 3
Benefits and Costs Brought to Cities by Winter Residents
Benefits
Costs
Economic Development
Crowding out & leakage
Tax Revenues
Infrastructure depreciation
User Fees
Increased service demand
Indirect, intangible benefits
Indirect, intangible costs
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
497
pay most of these taxes and local governments receive many of the
benefits, making it a cost-effective economic development strategy
for communities (TED&T, 2004a).
Cities have other events, cultural and sporting events, that are
not exactly the same as the invisible resident phenomenon, but are
suggestive of what can happen with temporary populations. The
Texas Department of Commerce (2004b) reports that an annual
multi-day livestock show and rodeo (a Texas cultural event) generates
$150 million in direct spending. The one-day direct spending related
to the annual University of Oklahoma and University of Texas football
game in Dallas (THE rivalry sporting event between the two states) is
calculated at $13 million. On the other hand, the economic benefits
generated by professional sports teams and their facilities are limited
but still positive (Swindell & Rosentraub, 1998). Different from the
mega-events that draw many people from in and/or out-of-state,
invisible residents are a phenomenon that considers only visitors
from outside the regional area. These are dollars spent in the city
beyond those drawn from existing residents or periodic cultural and
sporting events.
There are other semi-permanent populations that local
governments serve. For example, there are the students in a
university town (nearly 25% in our university town). Comparisons to
these temporary populations are inappropriate, since they have little
if any excess disposable income to contribute to the local economy.
Winter visitors, by comparison, can be very attractive since they have
higher annual incomes and more funds available for discretionary
spending than the typical city resident.
The economic development benefits of invisible residents can be
estimated by determining the increased visitor days and related
spending attributed to this population. To calculate this, we first
determine the increase in resident days from this population. Using
length of stay figures reported by Schrier and Lipman (1994) and
affirmed by Hogan and Happel (1997), we assume that both
snowbirds and full-timers visit a Sunbelt city for 120 days each year.
We assume that permanent residents live in the city for 365 days per
year. They may travel, but their cost of government does not change
during their absence. The main effect of this assumption is that
economic impact in daily spending will be overstated.
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Existing data suggest 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). Using the lower estimate
of 22%, there could be an increase in person days of 229,920 for
Robinson if they were to actively seek invisible residents for their
community. In only four months (1/3) of the year, this influx of winter
visitors increases annual resident days by 7.2% (see Formula 1).
FORMULA 1
Increases in Annual Person Days
Formula:
Increase in Annual Person Days =
Annual Winter Visitor Days
Annual Resident Days
Where:
Annual winter visitor days = Permanent population x Percent
population increase attributed to winter migration
Annual resident days = Permanent population x 365
Calculations (Using Robinson Data):
7.2% =
229,920
3,179,515
Where:
Annual winter visitor days = 3,179,515, which derives from 8,711
X 365; and
Annual resident days = 229,920, which derives from 8,711 X .22
X 120.
How do these additional person days translate in terms of
economic development? We have already established that the winter
visitors have higher disposable incomes because of preferential tax
treatments. 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 and its merchants win. Most of the
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
499
winter visitor expenditures will be taxable, directly in the form of sales
taxes, hotel/motel taxes, and user fees but also indirectly through
property taxes. 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 types of revenues for communities hosting these winter
visitors.
To estimate economic impacts we start with the $60.60 per day
spending for Texas winter visitors (TED&T, 2003; 1997). Multiplying
daily spending by the increase in person days to get the direct
spending effects, we find that invisible citizens contribute $13.9M to
the local economy over the course of 120 days (see Formula 2). Using
the 1.2 multiplier figure established for Texas in an IMPLAN InputOutput model (which multiplies direct spending effects to account for
indirect and induced spending) (TED&T, 2004b), the total economic
impact of this temporary population would amount to $16.7M.2
FORMULA 2
Winter Visitors’ Economic Contributions
Formula:
Winter Visitors’ Economic Contributions = Direct spending effects x
Regional multiplier*
Where: Direct Spending Effects = Daily Spending for Winter Visitors
x Winter Visitor Person Days
Calculation (Using Robinson Data):
Winter Visitors’ Economic Contributions = $16,719,782, which
derives from $60.60 x 229,920 x 1.2*
Notes: * Regional multiplier, which is1.2, derives from Texas’s
IMPLAN Input-Output model.
Of course these economic development benefits are not free.
There are certain costs that must be considered alongside the
benefits. The first cost 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
permanent residents. This crowding out effect can either drive up the
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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 when there
is insufficient capacity to absorb economic demands. For example, if
all the Winter Texans 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. Or, crowding out may translate into increased
levels of dissatisfaction of the permanent residents as they compete
for limited and “pricey-er” goods and services. Year-round residents in
winter destinations have complained 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, p. A10).
To summarize, when we consider the economic development
impacts of winter visitors, we find that the city can increase the level
of spending in the city, but there may be a danger of crowding out or
leakage caused by the increased temporary population. How this
upswing in economic activities affects city coffers is considered next.
Tax Revenue Impacts
The increases in spending brought about by the temporary
residents will benefit the city by increasing sales tax revenues.3 As
shown in Formula 3, using a rate of 1.5% of sales tax revenue to the
city from the sales tax, the city will realize an additional $208,997 in
tax revenues from an increase of $13,933,152 in local spending.
This translates to an increase of 30.1% of 2004 sales tax revenues
and a respectable 8.7% of revenues overall. Add to this direct and
pass through increases in property tax and hotel/motel tax revenues
associated with Winter Texans and you have an attractive source of
tax revenue enhancement for the city. Compare the property tax rates
which are .35530/$100 AV and .2650/$100 AV, in Robinson (control
city) and Rockport (Winter Texan friendly city), respectively, and you
have the potential to drop the rates charged to permanent residents
and offset the reduction with sales tax revenues.
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501
FORMULA 3
Marginal GF Revenue Increase (as Percentage)
Attributed to Winter Visitors
Formula:
Increased sales tax revenues = Increased direct spending x City sales tax
rate
Increased sales tax revenues
Marginal sales tax revenues increase (%) =
Sale tax revenues
Marginal GF Revenue Increase (%) =
Increased sales tax revenues
Current GF revenues
Calculation:
Increased sales tax revenues = $208,997, which derives from $13,933,152
x .015
Marginal sales tax revenues increase (%) = 30.1% = $208,997
$695,406
$208,997
Marginal GF revenue increase (%) = 8.7%, which derives from $2,415,040
While the tax benefits may be attractive, it is also important to
consider the changes in city government activities caused by this
temporary population. The in-migration of invisible citizens will
influence the operations of many city departments. From the time
they first drive into the city’s limits, they will impact 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 pounds
(Beaver, 2004). Add the weight of nearly 150 gallons of gas, over 200
gallons of water and sewer storage, 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. Cities may very well
have roadways that are bearing more weight and serving more
vehicle lanes miles than estimated in the original pavement design.
No matter whether they drive RV’s or cars/trucks, winter visitors will
increase the number of vehicle lane miles driven in the city,
translating to increased street maintenance costs.
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Other city departments may experience increased demand as
well. 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 tourism
activities (TED&T, 1997). They play golf at three times the rate of
other non-Texan leisure travelers. TED & T concludes that Athis 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, p. 38).
Rose and Kingma (1989) suggest that seasonal migrants may
pose other, more nuanced, problems. Invisible residents are generally
the law abiding sort; however, since they are senior citizens they have
higher incidences of traffic accidents, medical emergencies and
hospital stays than the general population, resulting in increased
service demands for police, fire/EMS and public hospitals. In fact, it is
apparent that Rockport, a city which actively hosts Winter Texans,
does bear significantly larger expenses in the areas of public safety
and public works, $2.9M versus $1.3M in Robinson which does not
currently experience the enhanced infrastructure demands of this
temporary population. Not only will there be infrastructure
deterioration concerns, there will also be increased service demands.
To isolate the demand effects on city finances, we now consider the
city government services that invisible residents consume and
potential revenue structures cities may consider to capture the true
cost of service provision.
User Fee Impacts
One way that a city can mitigate the costs caused by increased
service and infrastructure demands is to structure their revenue
activities to assess true costs to users to the greatest extent possible.
How well do cities do this? When considering charges for services, we
again see differences between our two Texas cities. Robinson had a
total of $283,111 in charges for governmental services in 2004,
while the amount was 2.2 times higher (or $623,080) in Rockport for
2004. The charges levied by Rockport more than cover the amounts
expended by this city for Culture & Recreation and Tourism at
$280,460 & $273,010, respectively (or a total of $553,470), two
activities which are absent in Robinson.
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503
We expect the consumption of city services will vary between
permanent residents and winter visitors. In fact, there can even be
expected to be differences between the two types of guests,
snowbirds and full-timers, as shown in Table 4. First, there is variation
in the type of lodging the winter visitor chooses. Snowbirds stay in a
permanent structure while they are visiting and pay property taxes
(directly or indirectly) or hotel/motel taxes (directly). Full-timers, who
visit the city in their recreational vehicle or travel trailer, stay in
private and public campgrounds and parks or on the beach or in
parking lots. At best, the city will be able to tax them indirectly
through the property tax. Next, if snowbirds stay in hotels or motels,
they will directly pay a tax used for tourism promotions, while
permanent residents and full-timers will not. Third, in the enterprise
activities, there is more user equity, with the exception of the utilities
where the full-timers can only be taxed indirectly if they stay in public
or private campgrounds.
In Table 4, 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 (the snowbirds or full-timers).
For example, the apartment or campground owner pays the property
taxes and then increases the rental fee charged to invisible residents
to cover this expense. Another potential difference when comparing
the three types of residents is the case of the full-timer staying in a
TABLE 4
City Revenue Generation Activities
City Government Activity
General Government
General government
services
Tourism
Enterprise Activities
Utilities [Water, Sewer,
Trash]
Recreation Charges:
[Swimming, golfing, fishing,
boating, camping, city bus]
Revenue
Source
Resident Snow
bird
- Sales
- Property
-User charges
Hotel/Motel
- Direct
- Direct
- Direct
Not paid
Consumption Direct
based
Consumption Direct
based
Full-timer
- Direct
-(In)direct
- Direct
Direct
- Direct
- Indirect
- Direct
Not paid
Direct
Indirect
Direct
Direct
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FRANKLIN & RAADSCHELDERS
county, state, or federal campground. If this occurs, the city will not
receive any indirect property tax payments unless they have tax
sharing arrangements.
The utilization of and payment for city government services is an
area that should be closely considered since heavy property tax
reliance in Robinson and Rockport may result in inequities between
year round residents, snowbirds, and full-timers. For example, using
library computers that have free Internet connections is a popular
activity for winter visitors. Even though year round residents are not
consuming 100% of the library=s services, they are paying 100% of
the costs if the city does not charge for this service. 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 borne by year-round residents in the form of
property taxes paid into the general fund to pay for city services.
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
opportunities to charge a nominal fee to out-of-town visitors for their
use of city services, thus recapturing some direct service provision
costs. If city officials were to take steps to attract invisible residents,
they may wish to consider the fee structure to determine where it is
possible to assess users directly for the cost of service. There may
also be fees that they could increase to more closely match true costs
or market prices for substitute goods. For example, winter visitors
may find it more attractive to pay for a library card than to buy books
or to rent movies from private vendors.
Destination cities are learning from their experiences in this area.
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. 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
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
505
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 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 ongoing costs involved to operate
the plant when vacationers and winter visitors are not here” (“Fee for
Interrupted Services…,” p. 23).
There is evidence that Rockport, as a city that seeks to attract
winter visitors, has been more creative in terms of identifying areas
where user charges can be assessed to match consumption patterns.
There may be other opportunities, such as charging a small annual
fee to winter visitors to participate in senior center activities while at
the same time not assessing a fee to permanent residents. There are
other things a city should consider in terms of revenue structure and
promoting equity in who uses and who pays for a service. One area in
particular is the mix of the winter visitors. In this case, if the city relies
heavily on property tax to pay its expenses, then the snowbird
population will be more attractive since it is difficult to capture
property taxes from full-timers. If the city is more reliant on sales
taxes, then higher rates of full-timer visitors will still yield financial
benefits and the subsidization of things like the senior center will not
be heavily affected by the snowbird/full-timer mix.
Consider this example. A Texas study suggests that winter guests
use RV’s at the rate of 28.5% in the Rio Grande Valley and 34.9% in
Odessa-Midland (TED&T, 1997). There are over 3,600 RV spaces in
10-12 local RV parks; parks that rely heavily on revenues from Winter
Texans and have 90-100% occupancy rates during the peak season.
Assuming 100% occupancy there would be more than 3,600 fulltimers (assuming just one person rather than two people per RV
which is more the norm). This is equivalent to an increase in winter
residents of 42.5% in full-timers only- not including the snowbird
population. This is nearly twice the 22% used for the estimates in this
paper. At the higher rates, the economic and tax impacts would be
dramatically higher!
City officials must be very careful when considering changes in
the structure of the different taxes and fees. 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
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FRANKLIN & RAADSCHELDERS
generate revenue to attract spring training camps for major league
baseball. They estimated a revenue increase of $880K in one year.
Unfortunately, full-timers 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 (T. D. Hogan, personal
correspondence, March 24, 2004).
Indirect and Intangible Impacts
Before convening a committee to create the marketing plan to
attract invisible residents, city officials must first determine whether
the city has sufficient capacity to meet additional demands for
services. Other factors that will occur in the long-run or that are not
easily measured and monetized must be considered as well. For
example, a very significant indirect benefit is the job creation and
indirect and induced spending (multiplier) effects from the direct
spending of the winter visitor. As noted before, there is the danger
that these may be different and perhaps overstated in our estimates.
The city gains another indirect benefit through community
involvement. In many Texas cities, 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 nonprofits. But, it may also represent job displacement. However, there is
no evidence of this. Also, invisible residents do not directly consume
public education services, so any revenues captured indirectly
through property taxes and sales taxes used for education expenses
in overlapping jurisdictions will have a net positive effect.
A big indirect cost emerges if city departments do not have
sufficient capacity to meet additional service demands and are 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
(Franklin, 1998; AP, 1/28/01; AP, 7/20/01; AP, 3/18/02).
If new facilities or infrastructure will be necessary to support the
winter visitors, then the costs of construction (long-term capital
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
507
expense) and related operating costs (annual expenses) must be part
of the city official’s 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?
CONCLUSIONS
In this paper we introduce the invisible resident phenomenon, an
age-related demographic trend that needs to have more attention in
the public finance literature. The invisible resident phenomenon
currently numbers 10 million retired persons who have comparatively
higher levels of disposable income and who move based on seasonal
climates. They migrate to Sunbelt cities in the winter, increasing
annual resident days, contributing to the local economy through their
daily spending, and increasing local tax revenues through taxes and
user charges. For this reason, there is evidence of a growing
competition between cities in Sunbelt states who seek to attract this
part-time population. To initiate a discussion of the economic and
financial impacts of these migrants, this article explores the costs
and benefits of this population in four different areas: economic
development, revenue generation, city service utilization, and indirect
and intangible impacts. Using two similarly sized Texas cities, one
that experiences no impact from Winter Texans and another that
purposefully seeks out this temporary population, we compare
government activities, revenues and expenses to better understand
the net effects of these visitors on a small city. It is evident that there
are dramatic differences in revenues and expenses despite sociodemographic similarities. The differences can be attributed, in part, to
the economic and financial impact of winter visitors.
Scholars criticize many studies in the economic impact literature
for an unbalanced presentation that overstates economic benefits. In
response, this article 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 should be
carefully considered in cities that experience this annual migration. It
also articulates costs, direct and indirect and tangible and intangible,
that must be considered in decisions regarding the attractiveness of
this part-time population. Future research should determine the true
magnitude of the effects to the local economy and city government to
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FRANKLIN & RAADSCHELDERS
more elaborately model the costs and the benefits of this temporary,
but significant population.
While this research is limited to consideration of this
phenomenon from the local government perspective, additional
research to document impacts to states and even nationwide effects
is also desirable. There are two additional impacts from seasonal
migration that are emerging that future research must study as well.
This first is the impact to the cities and states that winter visitors
leave. The permanent residence cities that get left behind are being
challenged by their part-time traveling residents when they assess
year-round 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,
9/20/2000). And, secondly, a new type of senior who also maintains
two residences is the sunbird, or people that reverse the migration
trend. They have permanent residences in the southern states and,
during the summer months, temporary residences in the northern
states (Sharp, 1998). The contribution of this paper is that we have
started the process of delineating what we know from what we
suspect and have identified what it is we need to know for more
informed decision making about the economic development potential
to cities of these seasonal migrating populations.
NOTES
1. Calculated as the city taxes/month on a $125,000 home,
residential water bill for 20,000 gallons monthly usage and a ¾”
meter and a sewer bill for 10,000 gallons usage per month.
2. The limitations of economic modeling are well documented in the
literature (see, for example: Edmiston 2004; Snead 2004;
Rickman 2002). For example, estimates 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.
However, the limits are minimized by the fact that this model was
developed for Texas and is applied to actual data from a Texas
city.
TRACKING INVISIBLE RESIDENTS: HOW DOES THIS PHENOMENON IMPACT CITY GOVERNMENT?
509
3. In these estimates, there is the danger of double counting of
benefits. Increased economic activity will lead to increased tax
revenue and will have financial impacts, but the reliance on
different data sources makes it impossible to determine if double
counting has occurred. If the estimates do suffer from double
counting, then the effects will be overstated.
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