After skyrocketing during the pandemic, used car prices across the board are softening, with the average annual decline running 3.6% in Denver and 5.1% nationally as of October, according to a study from online car shopping site iSeeCars.

For used electric vehicles (EVs), prices are down by about a third nationally in the past year. And if that trend continues, it is only a matter of time until used EVs will not only cost less to power and maintain but also to buy.

“Used electric vehicles are facing a combination of lower prices for new models and consumer reluctance to try a new, more expensive technology when inflation and interest rates are both high,” said Karl Brauer, iSeeCars executive analyst, in an email.

The declines reflect basic economics. Supply has outstripped demand when it comes to EVs, which are now taking three times as long to sell as they did last year. Tesla, the leading maker of electric vehicles, cut the price of its new cars, including a $21,775 decrease for the Model X, $18,596 for the Model S and $14,716 for the Model 3.

That not only deflated the price of used Teslas but forced many other manufacturers to cut their prices.

In Denver, the Chevy Bolt EV suffered the biggest decline, going from an average of $30,169 last October to $20,089 this October. The Nissan Leaf fell from $29,386 to $19,864, while the Tesla Model 3 dropped from $47,958 to $34,167.

Although they have come down sharply, used EV prices remain higher than gasoline-powered alternatives. In October 2022, used EV prices averaged a 60% premium over the rest of the market — $52,821 compared to $32,627. But by this October, the gap was down to 13% — $34,944 versus $30,972.

Brauer suspects that consumers, facing the prospect of job cuts as the economy slows and struggling under the weight of inflation, are less willing to buy EVs than they were just six to 12 months ago.

“These same pressures are also pushing the price of traditional used cars down, but not nearly as much as EVs because gasoline models already cost less than used EVs and consumers are more comfortable with them,” he said.

Brauer said demand for new EVs has hit a plateau at the same time that automakers have been ramping up and pushing out a bunch of new models. Unsold EVs are piling up on dealer lots, which should continue to keep downward pressure on prices.

“It suggests there’s a threshold of market share for EVs that has been hit, making it tough to further increase their sales numbers,” he predicted.

Consumers who have been waiting to buy an EV will find more affordable options, especially with the help of favorable tax credits. Once limited to new car purchases, federal tax credits have expanded to used EVs as well.

New cars and trucks as a whole still command a premium, selling for 8.4% above the MSRP. That premium drops to 7.1% on new EVs. Dealers in Denver have been most willing to bargain on the new Hyundai Ioniq 6, Volkswagen ID.4, and Hyundai Ioniq 5, taking around 9% to 10% off the sticker price.

The big drop in used EV prices shouldn’t be seen as a rejection of cleaner alternatives in general. Of the 10 fastest-selling new cars nationally, seven are hybrids, including the Ford Maverick, Kia Sportage and Toyota Grand Highlander. Used prices in that category are down 9.6%.

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Buyers closed on 2,664 homes and condos last month, a 15.9% drop from the 3,169 homes sold in October. November closings were down 14% year-over-year and through the first 11 months of 2023, with the overall sales volume is down by nearly a fifth.

Properties took longer to sell last month, with the median number of days a listing spent on the market shooting up from 16 in October to 22 in November. A year ago, the median was 21 days.

There were 6,684 active listings available to buyers at the end of November, which is down 10.7% from October’s 7,482 and up 6.9% from the inventory available a year earlier. At the current pace of sales, the market has about 2.5 months of supply of listings.

In one of the bigger declines in the report, new listings, a signal of how motivated sellers are, dropped 29% from October and they are flat with November 2022 levels.

“It’s not that sellers don’t desire to sell their current home and move, it’s that they don’t desire to part with a low APR rate on their current mortgage and trade it for a rate that could be three to four times higher,” said Susan Thayer, a member of the DMAR Market Trends Committee member and area Realtor, in comments accompanying the report.

“Sellers who desire to sell and price their homes accordingly will find there are still plenty of buyers out there – even in the top price range of our market,” she said.

The median or mid-point price of a single-family home sold in November was $625,000, which was down 3.1% from the median price of $645,000 in October. Even with that decline, the median sales price remains up 1.6% from a year earlier.

For condos and townhomes, the median sales price was $418,475, down 1.14% from October’s sales price of $423,300. Measured annually, the median sales price remains up 2.1%.

Libby Levinson-Katz, chairwoman of the DMAR Market Trends Committee and an area realtor, said that a drop in interest rates last month helped spur activity and that continued drops will boost demand going forward.

“Depending on where rates trend, we may see bidding wars return before we know it,” she predicted in comments accompanying the report.

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“It is a slower-growth story. There are positive nuggets in there. We aren’t forecasting a recession and we expect a continued abundance of job opportunities for people,” said Brian Lewandowski, executive director of the Business Research Division at the University of Colorado Boulder Leeds School of Business, which puts the Outlook together each year.

The Outlook, based on input from 130 individuals across a variety of industries, as well as a sophisticated computer model, forecasts employers in the state will add 42,000 nonfarm jobs. The state’s unemployment rate will average 3.4%, not far off the 3.3% rate reached in October.

Adding 42,000 jobs translates into a job growth rate of 1.4%, below the 2.2% growth rate estimated for this year. Initial employment reports through October put Colorado at a 1.1% annual pace, so reaching the expected rate will depend on some big revisions.

“We went from being roughly a top 10 state to being a bottom 10 state for job growth. How could we be so wrong and do we need to revise down our employment numbers?” Lewandowski said of the questions the Outlook panel asked as it tried to prepare its 2024 forecast.

The team essentially did the equivalent of throwing a red flag in football and challenged the initial statistics, which are based on employer surveys and later adjusted based on the actual headcounts reported in quarterly unemployment insurance premium reports.

Other indicators were showing a much stronger economy than what the job numbers were suggesting. And helping with that decision, Ryan Gedney, a senior labor economist at the Colorado Department of Labor and Employment, has consistently argued employment growth this year will end up much stronger than initially reported. Revisions for the first two quarters so far are backing up his view.

That said, layoff announcements have been rising in Colorado as the year comes to an end. DISH Network, which has been expanding rapidly to build out a new national cellular network, last month announced it would let go of 499 workers in Littleton and Englewood.

Broadcom announced it would cut about 2,800 jobs at VMWare following an acquisition of the company. That includes 184 workers in Broomfield, according to a letter filed on Nov. 27 with the Colorado Department of Labor and Employment.

VF Corp., a sportswear and footwear maker behind several top brands, said at the start of the month it would let go of 500 employees, including just under three dozen at the company’s headquarters in Denver.

Some of the strongest hiring this year has come at local governments and at hotels and restaurants, which aren’t the highest-paying places in terms of wages, said Richard Wobbekind, an associate dean and a senior economist at Leeds.

The strongest job gains next year are forecast to come in professional and business services, where positions are mostly on the upper end of the pay scale. Education and health care should contribute to employment growth, and governments are expected to keep hiring, aided on the local level by higher property taxes.

Higher interest rates, however, will remain a major headwind for the economy and are expected to contribute to job losses in construction, finance and real estate. Manufacturing and information, which includes tech, are also forecast to see declines.

Wobbekind isn’t in the camp of economists expecting a sharp drop in interest rates next year, saying they will stay elevated for longer than expected. Homebuyers holding out for a 5% rate on a 30-year mortgage should be looking for things to stay closer to 6%.

A huge reckoning continues in commercial real estate, and while it is playing out slowly, loans made under now unrealistic assumptions will have to be reworked. Banks continue to tighten their lending standards as they try to build up their reserves against losses, and venture capital remains scarce.

Yet the economy can continue to move forward as long as consumers hold in there, which they have shown a willingness to do.

“Our committee members are expressing optimism in a slow environment,” Wobbekind said. “We will be resilient. We will continue to have growth.”

But Wobbekind also concedes the Outlook, which calls for U.S. GDP to gain 1.4% next year, is among the more optimistic ones out there. On Monday, the National Association for Business Economics forecasted that U.S. economic growth would slow to 1% by the fourth quarter of next year. About three out of four of its economists surveyed put the odds of a recession next year at 50% or lower, which was an improvement from the sentiment in the October survey, but still not a ringing endorsement.

Marcel Arsenault, CEO of Real Capital Solutions, offered a more dire view of what is coming, shaped in part of his understanding on what is going on in commercial real estate, which was the focus of a keynote panel that followed the Outlook forecast.

“In our shop, we are worried about a recession,” Arsenault told the crowd gathered at the Grand Hyatt Denver. He predicted Colorado would likely lose jobs next year and that the vacancy rate for apartments, which are being overbuilt, could reach 15% next year, or triple the current rate.

Consumer spending, which accounts for about 70% of economic activity, will be key in determining how quickly the economy slows next year and whether it tips into a recession. And inflation, both real and perceived, could influence the willingness of consumers to spend.

The Outlook calls for consumer inflation in the Denver area to average 3.2% next year, which is below the 5.4% annual rate measured in September. But views diverge on how quickly inflation can get below the 2% level the Federal Reserve is targeting, which would allow it to start lowering interest rates.

Inflation in metro Denver has run substantially hotter than in the country as a whole, driven by larger jumps in rents and other housing-related costs, which account for more than 40% of the weighting in the Consumer Price Index. More volatile gasoline prices in the region are also causing consumers in the region to fork over more money.

Ron Throupe, an associate professor of real estate associate professor at the University of Denver’s Daniels College of Business, said the way the federal government calculates housing inflation contributes to a long lag that distorts the overall inflation number.

Shelter in inflation, as reported in the CPI for Denver, was running 8.4% in September. But other rent indices were capturing much smaller increases this fall. Apartment List, for example, has Denver apartment rents down nearly 1% over the past year through November. Eventually those declines will make their way into the official CPI numbers, Throupe said, causing them to show sharp decreases.

“We are going lower as far as I can tell,” he said, even raising the possibility that deflation could emerge. He expects the Federal Reserve could start cutting interest rates next summer, sooner than what many economists expect.

Two other economists speaking on the same panel as Throupe on Monday argued for more persistent inflation going forward.

“Let’s get to 2% before we start talking about deflation,” said Gedney, who noted that an aging population and tight labor market are likely to keep upward pressure on wages well into the future.

Even before the recent surge of inflation coming out of the pandemic, labor shortages were causing wages in Colorado and elsewhere to surge above the long-term trend, Gedney said. He estimates that average weekly wages in Colorado in 2022 were about 20% higher than would have been the case if they had followed the trend that existed between 2000 to 2016.

Wage gains have mostly kept up with inflation, but so far this year workers are behind by 1.7% in real terms, in part because of the higher inflation rate in the region.

“Above 2% in 2024 and probably again in 2025,” said Emily Dohrman, an economist with the Colorado Legislative Council, adding that a negative rate would likely require a big downturn in the economy.

Arsenault argued people should prepare for the scenario the Outlook calls for — slower growth with no recession — while also being ready for the possibility of a more severe downturn.

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The project represents a vote of confidence in downtown Denver at a time when office vacancy rates have soared above 30% and remote work has left the future of central business districts uncertain.

And it conveys a degree of faith by Amacon, the Canadian developer behind the project, that Colorado’s litigious environment around construction defects won’t come back to bite it once it completes the city’s largest condo project since 2009.

“We have been visiting Denver for years and over time we fell in love with the city and realized early on there was a need for and shortage of homes,” said Stephanie Babineau, vice president of sales and marketing with Amacon, which is based in Vancouver, British Columbia.

About 70% of residents in central Denver are renters, and only 30% are owners, she said, and Amacon expects to find a willing market for its luxury condos with their high-end finishes and central location.

The company has lined up its insurance coverage, is confident in its quality control measures and is pushing toward a 2025 completion date for its 38-story and 32-story towers, which will include structured parking and ground-floor retail.

“This is what we do all day — build condos. It seems like there weren’t that many developers willing to take on that risk,” Badineau said.

That wasn’t always the case. Before 2007, about one in five homes built in Colorado were condos, and many of those targeted first-time buyers transitioning from renting, Ted Leighty, CEO of the Colorado Association of Homebuilders, said during a panel on construction litigation reform hosted by the Denver Metro Chamber of Commerce on Nov. 8.

Currently, condos are running closer to one in 20, or about 3% to 6% of the total. Most of the condos getting built are high-end, like what Amacon is building in Denver. Although there was a brief spike in condo construction following defects litigation reforms in 2017, that quickly faded.

In 2005, there were more than 4,000 permits pulled for condos, according to a white paper on the lack of condo construction in the state, by Peter LiFari, a housing fellow at the Common Sense Institute and CEO of Maiker Housing Partners, a developer and operator of affordable housing based in Adams County.

Last year, there were only 515, despite the new rules in 2017 that required a majority of homeowners in an association to vote in favor of pursuing a lawsuit rather than just the board. The change was designed to make sure homeowners understood the road they were taking when they moved to litigate.

It isn’t that developers have shifted their focus away from multi-family to single-family. For every new condo built in Colorado, there are 14 new apartments built. In the ’00s, before the housing crash, that ratio was close to 1 condo for every 1.25 apartments, LiFari found.

Viewed another way, condo construction from 2018 to 2022 ran 76% lower than what it was from 2002 to 2008. Buyers are desperate for entry-level condos when they do come up on the resale market, a sign that new ones would also be snapped up if they were built.

Litigation, however, has greatly reduced the number of insurers and developers alike who are willing to tackle new condominiums. From 2007 to 2022, the number of condo developers in the state has dropped from 146 to 23, LiFari found.

While the housing downturn and financial crisis wiped out a large number of developers of all types, construction levels for single-family homes and apartments have rebounded. That isn’t the case for condos.

“This stark decline underscores the significant impact of construction liability litigation laws on the willingness of developers to engage in condominium projects,” he writes.

Kevin Walsh, an attorney with Brownstein Hyatt Farber Schreck who has both pursued and defended construction defect cases, said Colorado’s system is designed in a way that drives up costs without always resolving problems.

Plaintiff attorneys are paid primarily on a contingency basis with fees typically about 35% of damages. They are incentivized to scour for every defect possible once a case is opened and get the highest settlement or judgment possible.

They also bring in third-party contractors who charge 30% to 50% above the going rate for repair work. One reason contractors overcharge is that they fear being sued themselves and need to cover future liabilities. Colorado’s defects litigation system remains so broken that it has scared away insurers.

“There is only one insurance carrier in Colorado willing to cover condos,” he said during the chamber panel.

That contributes to much higher premiums than what a competitive market would generate. Given all the other escalating costs developers face from land to labor to soaring interest rates, higher insurance costs can make a project untenable and the fear of litigation makes them unpalatable.

Insurance premiums now account for 5.5% of the “hard” costs of building a condo compared to rates of 1.1% to 1.6% for apartments and other multifamily rental projects, LiFari estimates.

Whatever changes the state has made to address the construction defects litigation issue haven’t been enough in the eyes of insurers, and because of that, it isn’t enough for developers.

“It has driven us out of the market we are not alone. We have to make a change,” said Carl Koelbel, chief operating officer at Koelbel and Co.

Developers are fully aware that entry-level condos are desperately needed, and that they would sell quickly if they were built, benefitting people.

But because of insurance costs and fear of litigation, Koebel said his company will no longer touch them. The cheapest townhome the company can build in metro Denver right now is in the low $500,000s and that is hardly entry-level.

Resolving construction defects litigation is important but there are other roadblocks that need to be addressed, Koelbel said. Zoning restrictions and the lack of available land work against condo construction, and so does what Koelbel refers to as  “bureaucratic gumming up.”

Even a use-by-right project, considered the easiest to get through the planning process, took more than three years for his company to get approval, he said. There was nothing expedited about the process.

What is needed

LiFari, in his white paper, doesn’t argue for repealing the existing Colorado Construction Defect Action Reform Act (CDARA), which was passed in 2001 and modified in 2003. The act tried to push disputes more toward arbitration or mediation, but many cases are still ending up in the courts.

He argues for the implementation of a “strategic series of incremental reforms” that balances the protections offered to homeowners and developers. One would involve creating a statewide warranty standard that would provide developers who meet specific quality levels of construction established by the state extra legal protections.

Another reform would require individual parties involved in the construction process to take specific responsibility for their expertise. A licensed plumber or electrician, any subcontractor for that matter, would be responsible for the work they do, rather than the developer, who is almost always at the center of defect disputes. Likewise, contractors wouldn’t get dragged into litigation that is the developer’s fault.

He also argues for stronger language to allow a right to remedy, meaning the responsible party has a right to fix a defect promptly or assign a qualified third party to fix it. One model could follow the state’s “lemon laws” where a car manufacturer is allowed to fix a defective car or if they can’t, a third-party vendor can be brought in.

“We can’t build perfect homes,” Leighty said, adding a way needs to be found that addresses defects when they do arise that won’t do long-term damage to either side and to Colorado’s housing market as a whole.

Denver attorney Chad Johnson, who represents homeowners and homeowners associations, said impacted property owners typically only consult an attorney after they have failed to get a contractor or builder to resolve a problem. It is not something they take lightly.

“They have spent more time trying to vilify homeowners and HOAs for discovering their defects than they have been to tighten up their own practices. I haven’t seen any difference in construction practices. We are busier than ever,” he said.

Of around 1,000 requests he has filed under CDARA to request mediation or arbitration and avoid costly legal battles, none have been honored, Johnson said, adding that insurers encourage their clients to stretch out and delay cases rather than resolve them by making satisfactory repairs.

“I have had brand-new homes that have collapsed, where that builder and that insurer should know they will have to pay. They will do everything in their power to drag it out. It is a game of delay,” he said.

Johnson said many of the reforms builders have sought in the past failed because they don’t get to the core of the problem: bad construction practices. He disagrees that separating out liability among different parties is an answer. Owners often don’t know what specific contractors were involved in building their condos and homes and can obtain that information only from the developer or builder.

“A builder is 100% responsible for what they build. That would be a big mistake for a lot of reasons,” he said of separating out liability. Also, developers have contractual relationships with their subcontractors and can go back and sue them because of their shoddy work.

Changes made in 2017 requiring a majority of owners in a community to approve defects litigation also didn’t stem the tide, because builders were offering inadequate solutions when problems arose and losing the votes, he said.

He agrees that insurance is an important part of the equation and argues that solutions can be found. But he said insurers need to provide more information about the claims they are paying out, how they determine premiums, and why they are averse to lower-cost solutions like mediation.

“Immunity from defects won’t solve the problem,” he said. “You are just passing on the cost of fixing these builder mistakes.”

They either relocated to the state or boosted hiring after receiving assistance from Job Growth Incentive Tax Credit program, which the General Assembly approved in response to the Great Recession, which cost the state 137,600 jobs in 2008 and 2009.

From the first award in 2009 through this summer, employers have contracted to provide up to 48,000 jobs in return for up to $788.4 million worth of state tax breaks. So far, those 169 awards have generated $242 million worth of state tax credits tied to the creation of 21,000 jobs, according to a Denver Post analysis of numbers provided by the Colorado Office of Economic Development and International Trade.

“From the state’s perspective, the direct positive fiscal impact comes from job creation, from workers paying state sales tax and state income tax,” said Jeff Kraft, director of business funding and incentives at OEDIT. In return for each job created, the state provides employers a credit against corporate income taxes tied to half of the payroll taxes generated.

The program has made a big difference in attracting companies more focused on hiring than making big capital investments, which the state’s once-dominant incentive, the Enterprise Zone program, emphasizes, with several of the companies recruited now fixtures in the economy. However, the businesses associated with the JGITC have mostly set up shop along the Front Range, and the influx of higher-wage workers may have exacerbated the sharp rise in housing costs, something the state is trying to remedy so it can remain competitive.

The first “mega” deal the JGITC helped bring to the state in 2009 was DaVita, a kidney dialysis company that relocated from El Segundo, Calif. The company has established a large presence in the Central Platte Valley, while also drawing its share of controversy over the years.

DaVita was awarded $5.3 million in state tax credits in 2009 in return for bringing 500 jobs to the state, a promise it delivered on. The company came back in 2014, winning approval for another $3 million tied to the addition of 215 jobs, of which 94 have been added and $918,000 in tax credits claimed.

It applied again in 2015, winning an award of $12.7 million tied to the addition of 800 jobs. The company reported adding only 438 of those jobs and has claimed $6.1 million of that award.

Charter Communications has been awarded and claimed more Job Growth Incentive Tax Credits than any other company, using them to support a major employment hub in metro Denver despite the state not being a major market for its Spectrum cable services.

The company, based in Stamford, Conn., received approval for $59.1 million in job growth incentives between October 2013 to March 2017 and has claimed $52.9 million following its creation of 2,200 jobs, which works out to $24,300 per job.

Companies can only claim credits based on the jobs listed on the initial application. Charter created 3,300 jobs tied to those three awards, putting the state’s payout closer to $16,030 per job. And it has continued to grow, with 5,500 employees located in the state.

“This powerful incentive has helped us rapidly grow two dynamic organizations at Charter in an extremely competitive tech employee marketplace: Our product and technology team, which drives innovation in broadband, video and the fastest-growing mobile service in the country, and our network operations group, which is responsible for fast, reliable and secure connectivity for more than 32 million customers across 41 states,” said Adam Falk, senior vice president of state government affairs at Charter, in an email.

Comcast, another cable provider, also turned to the JGITC between January 2012 and January 2016 as it expanded, receiving approval for $26.6 million in awards tied to the creation of 1,693 jobs. The company claimed $14.5 million in tax credits tied to the creation of 1,058 jobs in its first two awards, but nothing in its third in 2016, which was for a customer call center in Fort Collins.

“Comcast didn’t collect any of the tax incentive credits for this project because it did not meet the job requirement threshold for any of those incentives,” said Leslie Oliver, a spokeswoman for the company.

Fidelity Investments was looking to add 400 jobs in Denver when it requested $8.1 million in incentives from the state. It added those, plus another 681 beyond that initial request.

“We currently have about 2,400 associates in Colorado,” said Kacey Brister, a senior manager of external communication at the Boston-based money manager.

Jobs over capital

The JGITC was designed to offer an alternative to the Enterprise Zone program, which for years was the state’s dominant economic development incentive tool. That program rewarded substantial capital investments but was hit or miss when it came to job creation.

Installing a natural gas pipeline or a wind farm are both capital-intensive projects typically located in rural areas, the kind of investment that aligns well with the Enterprise Zone program.

They require a lot of labor on the front end but can be operated by a handful of people over time, reducing the payback the state, not to mention taxpayers, would receive. Also, over the years the enterprise zone boundaries expanded to cover 70% of the state, diluting the original mission of the program to help economically distressed areas.

A Denver Post analysis found that in 2010, companies that claimed $75 million in enterprise zone tax credits had only created 564 jobs, which works out to a cost of $133,00 per job. The state regularly gave incentives to companies that ended up downsizing and shrinking the tax base.

The JGITC offered an antidote. Companies only receive a tax break if they create and retain the job pledged. And the payout per job so far is roughly $11,547, a fraction of what the Enterprise Zone program cost per employee in 2010.

The credit has also proven to be far more attractive to capital-light service and technology firms that have become a bigger part of the economy, and whose workers are more likely to want to live in the heart of the action rather than in a sparsely populated or distressed area.

Kraft said the JGITC program also shows “breakage” all along the way, which has reduced the state’s obligation. Of the 351 awards granted, only 170 have resulted in signed incentive contracts with the state. And of the $788.4 million granted in incentives under those contracts, companies have requested only $242 million in tax breaks.

More recent awardees are just starting their hiring programs, so some of that gap comes down to a timing issue. Some companies simply don’t hit their hiring targets and fade away, while others lose track of the incentives they are eligible for or don’t bother to claim them.

And a tax break only works if taxes are due. The incentive isn’t of much use to startups and other companies losing money. Companies are more likely to lose money in a recession, which lines up with when the state would prefer not to give out tax breaks.

Because of the privacy rules around tax returns, Karft said OEDIT doesn’t know what share of the $242 million granted in tax credits has actually been used to offset taxes. Estimates that upward of half of the credits earned, already a fraction of those awarded, are claimed to offset any state income tax liability.

Because of the breakage that happens all the way along the program, Kraft said the JGITC program is estimated to generate about $2.20 in additional tax revenues to the state for every $1 ceded in a tax break, meaning it pays for itself and then some.

How the incentive works

In its current form, the Job Growth Incentive Tax Credit provides qualified employers a state tax credit equivalent to 50% of the payroll or FICA taxes they generate for each job created and retained for a year. The amount of the initial award is based on how many jobs are expected to be created and the average annual wage those jobs pay.

Wages must be equal to or higher than the average for the county where the jobs are being located. That threshold was lowered in 2014 from the original hurdle of 110% in an attempt to speed up the job recovery.

The situation must be competitive, meaning that employers must be considering at least one other state or country besides Colorado. And the employer applying can’t have already committed to a location in Colorado, say by signing a lease, buying real estate or hiring new staff for the new project.

“They (applicants) push hard to get a sense if it is viable for them to locate in another state. We want to make sure they are in a competitive situation,” Kraft said.

As the economy improved last decade, OEDIT became pickier about what industries it would consider for credits, and as the economy has shifted over time, the program has continued to maintain its appeal to different industries.

When tech companies were relocating out of California or expanding out of countries like Israel and New Zealand, applications came in from that direction. With software in a downturn and battery cell and semiconductor manufacturing getting a boost from federal tax incentives, more manufacturers are now filling up the pipeline.

Sean Gould, deputy director of financial analysis, business funding and incentives at OEDIT, said a lot of screening takes place on the front end, noting the application itself can be arduous, with 60 to 70 questions and a competitive analysis of other locations required.

Most companies that start down the path of an application complete it. And with some rare exceptions, applicants who come before the Colorado Economic Development Commission win approval. But the follow-through after approval is a mixed bag.

Of the 351 JGITC applications that the commission has approved from 2009 through this summer, eight were inactive, 32 were in limbo, and 57 chose another state or decided to not pursue hiring plans.

About seven in 10 of the approved applicants, or 254 going back to the start of the program, were active and chose to hire in Colorado. But of that group, 170 had entered into incentive contracts with the state, and those companies had only claimed a third of the tax credits available to them.

Some of that is a timing issue. Recent recipients are still in the hiring phase and haven’t claimed credits. Other times, executives want to show they obtained the best relocation deal possible, and the award represents more of a psychological triumph than a financial one.

And events can overtake the best-laid plans.

In November 2019, Southwest Airlines was approved for $12.5 million in job growth incentives tied to the creation of 1,013 jobs. Four months later, the pandemic grounded airline travel. Airlines were looking at furloughing and firing, not hiring. Southwest hasn’t reported any jobs added under that award.

Chekr, a tech company that provides background checks, received approval for $27.8 million in JGITC incentives in March 2019 based on a plan to create 1,472 jobs in Denver for a second headquarters.

The award was one of the largest made, but so far Chekr isn’t reporting any jobs created, even though the company maintains a Denver office, according to its website.

About a year after it won its incentive award, Chekr faced lawsuits tied to allegations it approved background checks for ridesharing drivers who assaulted their passengers. Its growth plans didn’t pan out.

An argument against incentives

Because of its popularity, the JGITC program has created imbalances that the state has tried to address by creating other incentive programs. Despite a concerted effort to distribute the awards more evenly across the state, most of the jobs created under the JGITC have been concentrated in a narrow corridor from Fort Collins to Colorado Springs.

The program normally requires a minimum of 20 jobs to qualify for credits, but that threshold goes down to five if the jobs are located in an Enterprise Zone. That hasn’t been enough to spread out the awards, which skew larger and urban.

To boost hiring in more sparsely populated areas, the state launched the Rural Jumpstart program in 2016. It is an incentive program on steroids, providing multiple tiers of state and local tax breaks.

Although it is hard to prove a one-to-one correlation, the influx of higher-paying jobs likely contributed to the region’s disproportionate rise in rents and home prices. Natives found themselves increasingly priced out as workers from California and other higher-cost states moved in to claim higher-paying jobs that could support the higher housing costs.

OEDIT, in its focus on bringing jobs to the state, wasn’t as focused on where those workers would live until that became a problem in recruiting. To address that, the state has rolled out the Innovative Housing Incentive Program to support firms developing innovative construction techniques and providing modular and other affordable housing options.

Whereas a homebuilder or general contractor might have had trouble accessing the JGITC early on, they are now being welcomed with open arms. On Thursday, the state approved $4.9 million in job growth credits to a construction firm based in Greeley looking to add 589 new jobs, most likely Hensel Phelps.

Greg LeRoy, executive director of Good Jobs First, which describes itself as a watchdog on state and local incentives, said incentive programs gloss over the fundamental question of whether they “cause something to happen that wouldn’t happen.”

One way that manifests is when local companies with decades of history in the state and no intention of ever leaving apply for credits under the JGITC program by threatening to take their headquarters elsewhere. That said, they may also be put off that state tax breaks are supporting out-of-state companies moving in, while they are excluded.

LeRoy said that payroll-based incentives shift more of the tax burden from corporations to individuals and reduce the revenue stream of state governments. Colorado, which offers a 50% payroll credit, isn’t the most egregious, but it was bad enough to be included in a 2012 study the group did on the topic.

In the aggregate, state and local taxes constitute only 1.8% of corporate spending, LeRoy said. Other costs, such as labor, energy, real estate and transportation weigh much more heavily on the bottom line when it comes to determining where jobs will be located.

And yet states continue to battle each other, essentially engaging in job piracy and bleeding out potential revenues to snag jobs that may have come their direction anyway based on more important considerations, like a skilled workforce, he said.

“It is microscopic to the companies, but not to the state budget,” he said regarding the diverted taxes.

Kraft counters that Colorado tries to avoid being on the high end of the scale when it comes to incentives. But it has to be competitive, and the JGITC program has provided a way to do so without throwing cash from state coffers on the table.

“It is a way of showing a company you want them there and it really gets some of them to come. And you aren’t using scarce General Fund dollars,” said Kraft.

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Employers in the state added 1,500 net new jobs last month, but governments did the heavy lifting, adding 1,700 jobs. One of the biggest surprises in the report came in downward revisions to September job counts, which turned an initial gain of 1,500 jobs into a decline of 100.

“The weak data for October was not a surprise; however, it was disturbing that the September data, originally up 1,500 workers, was revised downward by 1,600,” said Broomfield economist Gary Horvath in an email.

Private-sector employers shed a net 200 jobs last month, with the biggest losses coming in construction, down 1,400 jobs, and trade, transportation and utilities, down 900 jobs. Private sector gains were strongest in leisure and hospitality, where employment rose by 1,500 jobs.

For the past year, employers in the state have added 33,100 non-farm jobs, with governments adding 20,100 jobs and leisure and hospitality adding 17,000.

The number of unemployed workers rose by 2,400 last month on a seasonally adjusted basis, which helped take the state’s unemployment rate from 3.2% in September to 3.3% in October. Colorado’s rate remains historically low, and it is below the U.S. unemployment rate in October of 3.9%.

Colorado ranks in the middle among states, tied with Louisiana, Mississippi and Tennessee for the 25th-lowest unemployment rate, said Ryan Gedney, a senior labor economist with the state.

Job hunters tend to gravitate to states with tighter labor markets. Colorado isn’t the strongest state when it comes to unemployment — Maryland is. Nor is it the weakest, a title that Nevada claims.

Private-sector job losses are tied mostly to higher interest rates, which are key to the Federal Reserve’s strategy of trying to fight inflation by cooling the economy. Firms in finance, real estate and construction are getting hit especially hard.

“We have been seeing declines in construction over the past year of 3.9% or 7,200 jobs lost. A lot of that is being driven by the interest rate environment,” Gedney said.

The state continues to see strong employment gains in professional, scientific and technical services, where wages tend to be higher, and the leisure and hospitality sector, hotels and restaurants, continues to rebound from the beating it took during the pandemic.  Public-sector hiring, mostly by local governments and schools, is filling in the gap.

The companies include manufacturers of rare-earth magnets, semiconductor production tools, large-scale batteries, and consumable goods, as well as a Greeley-based general contractor. While construction is not manufacturing, it does fall under the category of “goods” rather than services.

The largest award, worth $7.6 million, went to Project Solitaire, the code name assigned to a maker of semiconductor fabrication tools that is looking to bring 631 jobs to metro Denver. The positions, which include managers, technicians, engineers, R&D professionals, and sales associates, have an average annual wage of $123,018.

The company behind Project Solitaire received an award in July 2021 under the code name Project 14er
for a facility to improve battery storage for vehicles and mobile devices. However, the company had to forfeit the award when it failed to sign an incentive contract with the state in the 18-month window allowed.

Of the company’s 100 employees, 90 work in Colorado, where the company is looking to build a large clean room and semiconductor equipment manufacturing plant. It is also looking at New York and North Carolina. The commission conditioned its award on the company showing proof by year-end that it raised $27.45 million in capital needed to help build the plant.

The federal CHIPS Act has set aside $200 billion for scientific R&D and commercialization related to semiconductors and another $39 billion for semiconductor manufacturing, setting off a wave of semiconductor investments in Colorado and other states.

Colorado also continues to see strong interest from battery manufacturers, who are being incentivized under the Inflation Reduction Act to locate plants domestically. The Center on Global Energy Policy at Columbia University estimates the act has generated $70 billion in investment in U.S. battery supply chain capacity.

Colorado landed the Amprius Plant, a 775,000-square-foot facility in Brighton, earlier this year and one of the applicants approved on Thursday, Project Hawk, is looking at Colorado Springs, Aurora or Fort Collins for a facility to make lithium iron phosphate batteries to supply energy storage systems and electric vehicles in North America.

Project Hawk, which received approval for just under $2 million in incentives, expects to create 178 new jobs at an average annual wage of $75,938, which is slightly above the state average. Electricians, technicians, marketing, sales, and engineer positions are included. None of the company’s 350 employees are based in Colorado.

An award of $3.9 million went to Project Earth II, a U.S. maker of rare-earth magnets that are used in aerospace, defense, auto, and energy industries. It is looking to build a 25,000-square-foot pilot plant that could eventually expand to 150,000 square feet or more depending on demand.

The plant is expected to be staffed by 250 workers making an average annual wage of $85,036 a year. None of the company’s 15 employees are currently working in Colorado, which is competing with Texas and North Carolina for the new facility.

A global manufacturer is looking to invest $600 million in a new plant in Aurora expected to employ 500 workers earning an average annual wage of $89,349. Project Waterfall, the name assigned to a company that is also looking at the Interstate 35 corridor in Texas and northern Florida, received approval for $4.5 million in state incentives and Adams County and local governments extending another $12 million.

What Project Waterfall would make in Aurora wasn’t disclosed, other than it would be a consumable and a carrier device and would be the primary production facility for the product in North America. The company has 80,000 employees worldwide but no presence in Colorado.

Project Treadstone, a construction company based in Greeley, received approval for nearly $4.9 million in incentives in return for the creation of 589 new jobs. The jobs would pay around $80,051 a year on average. Nashville, Phoenix and Austin, Texas, are the other locations under consideration.

To accommodate those new employees, as well as more than 600 already employed in Greeley, the company is looking at adding 107,000 square feet of new space. Although a name was not disclosed, the only general contractor based in Greeley of the size described would be Hensel Phelps.

Companies must create the jobs they are seeking incentives for within an eight-year window. The incentive provides a break against state taxes owed equal to half of the payroll taxes associated with the new jobs.

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Time will tell if the slowdown is temporary, as state demographers predict, or the start of a new trend. But Colorado’s ability to attract newcomers carries huge implications for its economic future, from filling open jobs to providing care for the surging number of older residents.

“If we don’t see population growth, if we don’t see that net migration, we will absolutely have a decline in our working-age population,” said Colorado State Demographer Elizabeth Garner at the 2023 State Demography Summit, which was held this month in Littleton.

Colorado gained 26,442 residents in the 12 months through July 1, 2021, and another 27,710 through July 2022, according to the demography office’s Vintage 2022 Population Estimates. Last decade, population gains averaged above 70,000 most years with a peak gain of 98,939 in 2015.

“We are seeing the lowest growth rates on record for Colorado,” said Cindy DeGroen, the state’s projections demographer.

Over the last two annual counts, the rate of population growth in Colorado has been running closer to 0.5%, under a fifth of the 2.5% rate averaged in the 1990s. But DeGroen expressed optimism that growth would rebound, getting back above a 1% rate in the middle of this decade and holding there until at least 2035.

“We do anticipate an increase from those record low rates back to where we would have been prepandemic,” she said.

For that to happen, net migration will need to rebound and stay strong for the remainder of the decade. Migration is needed because not enough children will be born in the state to compensate for the rising number of deaths expected in the decades ahead.

Between 1970 and 2020, net migration, the difference between those moving in and those moving out, averaged 40,000 people a year in Colorado’s favor. Between 2022 and 2032, the demography office forecasts that it will average 42,000 people a year before slowing due to slower population gains both nationally and internationally.

Net migration in Colorado last year was 14,924, but international migration drove that. Colorado lost 9,324 people to domestic migration, the movement of people from state to state.

Colorado still is attracting Californians, with a net gain of 13,243, and continues to hold the upper hand in drawing residents from New York, Idaho, Illinois and Virginia.

It lost residents to all adjacent states — Wyoming, Utah, New Mexico, Oklahoma, Kansas, Nebraska and Arizona — as well as many southeastern states, including a net outflow of nearly 10,000 people to Florida.

Forecasting international migration, which is tied to conditions in the countries that send out migrants, as well as immigration and border policies that can change from administration to administration, can be complicated.

“The number one factor of uncertainty is the international migration number,” Garner said. The flow of refugees to the state has increased from places like Afghanistan and Venezuela.

Colorado is a second-tier state, meaning it isn’t a typical entry point for those arriving from abroad like California, Texas, New York and Florida are, she said.

Forecasts of a rebound in net migration assume Colorado can maintain strong job growth, which the state has struggled to do this year. Advances in automation and artificial intelligence have the potential to displace large numbers of workers in higher-paying fields. But more manufacturing is returning to U.S. shores, which could boost growth.

The forecast also assumes Colorado retirees age in place and don’t cash out the huge pile of home equity they have built up in recent years and move to somewhere warmer and more affordable.

Higher housing costs make Colorado less attractive to young adults looking to relocate to start their careers as well as the companies looking to hire them. And it hinders the ability of those transplants, not to mention natives, when it comes time to start a family.

Colorado is now home to the four most expensive metro housing markets outside a coastal area — Boulder, Denver, Fort Collins and now Greeley, according to the real estate research firm Zonda. But one upside of slower population growth is that the state has chipped away at its housing deficit, which fell from around 127,000 units in 2019 to 101,141 in 2021, according to a study from the advocacy group Up for Growth.

“We have been on a big bull market (in construction) since we came out of the Great Recession. Did we sell so many homes between 2017 to 2022 that we borrowed from future demand?” asked Ted Leighty, CEO of the Colorado Association of Home Builders, while speaking on a housing panel at the demography summit.

When it comes to categories like luxury apartments in downtown Denver, too much supply might be a short-term problem. But Phyllis Resnick, executive director and lead economist of the Colorado Futures Center at Colorado State University, argues housing demand could remain strong for years to come, preventing home prices and apartment rents from getting aligned with incomes.

Millennials, the largest generation in the state, are aging into homeownership, with just over half owning a home, contrasted with a homeownership rate of 74.1% for Gen Xers and 81.2% for Baby Boomers. Millennials are starting families and buying homes at a later age, which will provide a source of home-buying demand for years to come.

And although it doesn’t get discussed as much, high housing costs have also pushed more households to double up. There are about 680,000 unique households hidden within primary households, Resnick estimates.

“We have folks in this state who are really stressing. They are living on the edge of economic stability and are the ones struggling the most to be stably housed,” she said.

Another important trend remains the aging of the population. Assuming migration can get back on track, over half of the population gains expected this decade will come among those aged 65 and over. The next biggest surge will be among those aged 25 to 44. The number of residents aged 0 to 17 is expected to fall.

If high home prices and a lack of jobs keep young people away, then almost all of the state’s population gains this decade will come in the 65-plus category. In the next five years, 200,000 workers in the state are expected to retire and Colorado will need new workers to fill those vacancies, on top of the jobs being added as the economy expands.

Jefferson County provides a foreshadowing of impacts on what the state’s aging population might look like. Although counties across the Eastern Plains have long struggled with population losses, they have now shown up in heavily populated Jeffco, which has lost an estimated 7,000 people since 2020.

Although out-migration can explain some of the shrinkage, Nancy Gedeon, a demographer with the state, said the county has an older population, adding point blank that deaths are driving the decrease.

The municipalities adding the most residents last year were Windsor, Colorado Springs, Erie, Castle Rock and Boulder.  In percentage terms, Keensburg was the state’s fastest-growing municipality with a 19.4% rate of growth, followed by Mead, Deer Trail, Severance and Tinmath,

Greeley and Commerce City, despite being much smaller, both added more residents than Denver, which had a 0.2% growth rate.

DeGroen predicts that the state’s current population of 5.8 million will reach 7.5 million by 2050. Starting around 2030, the state will begin to see a rapid decline in its natural increase, or births minus deaths, leaving it even more dependent on migration.

Of the 1.7 million people the state is forecast to add between 2020 and 2050, 1.5 million will be located along the Front Range, with 54% of population gains going to metro Denver and Boulder; 26% to Weld and Larimer counties, and 20% along the southern Front Range, primarily El Paso County.

The Western Slope is expected to gain 170,000 residents by 2050, with Mesa, Garfield and Eagle counties the biggest gainers.

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“The first employee separations are expected to occur during the 14-day period starting Jan. 7, 2024,” Kaylee Hyman, a senior corporate counsel with the company, wrote the Colorado Department of Labor and Employment in what is known as a Worker Adjustment and Retraining Notification ACT, or WARN, letter.

Of the employees being laid off, 566 will be dismissed starting Jan. 7 and another 33 starting Jan.8, according to the two letters filed with the state.

Among the positions being let go are 19 account executives, 17 staff accountants, 16 business intelligence agents, 13 social media associates and five assistant corporate counsels, according to the letters.

DISH had roughly 6,000 employees in Colorado as of August, with about 2,000 of those focused on wireless. At the time, the company said it had 700 open positions, of which 250 were on the wireless side.

Shares of DISH Network plunged to a 25-year low on Monday after the company announced an unanticipated loss in the third quarter and the resignation of CEO Erik Carlson effective Nov. 12, which was earlier than expected.

DISH shares fell from $5.49 at the close of trading on Friday to $3.44 at the end of the day on Monday, a decline of 37%. After rebounding on Tuesday, they closed again at $3.44 on Thursday.

DISH reported a loss of $0.26 a share, down from the $0.65 a share gain reported a year earlier and badly missing estimates of a profit.  Revenues also missed estimates, falling nearly 10% to $3.7 billion versus $4.10 billion a year earlier.

Pay-TV subscribers decreased by about 64,000 in the third quarter, compared to a net increase of approximately 30,000 in the quarter a year ago. The company had 8.84 million pay-TV subscribers at the end of the quarter, with 6.72 million at DISH TV and 2.12 million at SLING TV.

The company also lost 225,000 wireless subscribers in the third quarter, despite a big push this summer to market its Boost Infinite cellular plan to Amazon Prime customers, ending the quarter with 7.5 million subscribers.

“Are we doing a great job of marketing?” DISH Chairman Charlie Ergen asked on a call with analysts Monday. “The answer is no. The messaging didn’t have quite the desired effect. … We’re not hitting on all cylinders there.”

The company is in a tight spot financially as it tries to switch its dependence on the fading satellite TV business over to wireless. It recently sold some of its wireless assets in the Caribbean to raise cash and is merging with its sister company EchoStar, which has a stronger balance sheet.

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Littleton-based DISH shares fell from $5.49 at the close of trading on Friday to $3.44 at the end of the day on Monday, a decline of 37%. Shares climbed 2.3% on Tuesday to close at $3.51. Over the past year, DISH shares have lost three-quarters of their value.

Analysts had expected the company to report positive results in the third quarter, but DISH instead reported a loss of $0.26 a share, down from the $0.65 a share gain reported a year earlier. Revenues also missed estimates, falling nearly 10% to $3.7 billion versus $4.10 billion a year earlier.

Pay-TV subscribers decreased by about 64,000 in the third quarter, compared to a net increase of approximately 30,000 in the quarter a year ago. The company had 8.84 million pay-TV subscribers at the end of the quarter, with 6.72 million at DISH TV and 2.12 million at SLING TV.

The company also lost 225,000 wireless subscribers in the third quarter, despite a big push this summer to market its Boost Infinite cellular plan to Amazon Prime customers, ending the quarter with 7.5 million subscribers.

“Are we doing a great job of marketing?” DISH Chairman Charlie Ergen asked on a call with analysts Monday. “The answer is no. The messaging didn’t have quite the desired effect. … We’re not hitting on all cylinders there.”

DISH continues to search for ways to fund the build-out of its 5G network and recently sold assets for its Spectrum network in Puerto Rico and the Virgin Islands, as well as accounts for 120,000 mobile subscribers in that area, to Liberty America for $256 million.

Another way the company is trying to make itself more attractive to investors is via a merger with its satellite communications sister company Echostar, a deal that is expected to be completed on Nov. 13. The departure of Carlson, a longtime veteran of the company, will allow EchoStar CEO Hamid Akhavan to oversee the combined companies.

DISH earnings weren’t the only ones that disappointed investors. EchoStar saw its net income in the quarter fall to $532,000 from $19.5 million the year prior. Shares of the company fell from $15.44 on Friday to $10.61 at the close of trading on Monday and they stayed at that same level on Tuesday.

A depressed stock value will make it more difficult for DISH Network to raise capital as it tries to complete its buildout of a new 5G network which it is counting on to attract new customers and cash streams as the satellite-TV business fades in popularity.

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