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Waves of wealth swamp Rocky Mountain West

In an era when the rich are the only income group getting richer, ever-larger waves of wealth are spilling in from the coasts and swamping the resort valleys of the Rocky Mountain West.
Jackson Hole Forest Fire
A multimillion dollar home once owned by actress Heather Thomas sits in Jackson Hole, Wyo., in July 2001. Smoke from the Green Knoll fire can be seen in the background.Jonathan Adams / Getty Images file
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

In an era when the rich are the only income group getting richer, ever-larger waves of wealth are spilling in from the coasts and swamping the resort valleys of the Rocky Mountain West.

The rich are coming not just to ski, mountain-bike or build imposing second homes. They are coming to stay -- or, at the very least, secure permanent resident status for tax purposes. The moneyed invasion is driving population growth rates that are among the highest in the nation.

From Aspen to Jackson to Squaw Valley, high-net-worth individuals fill sleek restaurants night after night to eat $30 plates of freshly flown-in fish. They donate generously for the arts, wildlife conservation, and preserving forest and farmland near their custom-built homes.

And with millions of well-to-do baby boomers nearing retirement, the Rocky Mountain resort forecast is for years upon years of the incoming rich -- seeking big sky, big houses and the comfort of others who can afford to live large.

"The herd instinct is as strong with multimillionaires as it is with any two- or four-legged animal," said Bob Graham, 69, a real estate agent here for three decades.

Graham has marveled -- and profited -- as this well-heeled year-round herd has grown thicker in the past 10 years. "It has been a wonderful blessing," he said.

Not everyone feels that way.

Simmering resentment
The rich have collectively inflated real estate to prices that are far beyond the means of those who serve them supper, take their blood pressure or police their gated subdivisions. The service workers -- professionals and blue-collar alike -- tend to live in adjacent valleys and commute.

There is simmering resentment of the rich. Before a tour of pricey houses here last year, vandals stole 40 signs and changed the name of the tour from "Parade of Homes" to "Parade of Wealth."

For seven consecutive years, Bloomberg's Wealth Manager has declared Wyoming the best state for the tax-averse rich to establish residency. Wyoming has no income tax, and most other taxes are either low or absent.

Along with everyone else in the state, the rich are spared the burden of taxation because of soaring receipts from taxes on oil and natural gas extraction. (Other states in the Rocky Mountain West have income taxes, but the rates are low compared with those on the coasts.) A household making $500,000 a year would have paid $53,921 in local taxes in 2004 in the District of Columbia but just $6,809 in Wyoming, according to Wealth Manager.

"Your accountant will tell you that if you move to Wyoming, the house will build itself," said Angus MacLean Thuermer Jr., co-editor of the Jackson Hole News & Guide.

Most millionaire newcomers are building their houses here in Jackson Hole (the name refers to the valley that lies in the shadow of the Teton Range and encompasses much of Teton County). They have made it the richest and fastest-growing part of the state.

Vice President Cheney has a home here. So do actor Harrison Ford and former World Bank president James D. Wolfensohn and Christy Walton, widow of Wal-Mart heir John T. Walton, whose wealth was estimated by Forbes at $18.2 billion and who died after his home-built aircraft crashed last year near Jackson.

There are several thousand others in Teton County (population 19,000) who are not famous, but merely extremely rich. They tend not to draw attention to themselves, driving pickups instead of Porsches and wearing blue jeans to four-star restaurants.

Their money, though, shows up rather spectacularly in tax returns. Since 1999, Teton County has ranked first or second among the nation's 3,140 counties in adjusted household income, according to the Internal Revenue Service. Most of the income comes from investments, not salaries.

As an engine for growth, the rich -- together with their demands for high-end housing, elaborate landscaping, upscale shopping, fresh food and assorted highbrow diversions -- have all but taken over this resort town and several like it in the Rockies.

'Lifestyle economy'
In the 1990s, despite a decline in tourism and skiing in Jackson Hole, per capita income multiplied at about five times the national rate, unemployment all but disappeared and the Latino population grew rapidly to fill service jobs.

"We used to be a tourism economy; now we are a lifestyle economy," said Jonathan Schechter, executive director of the Charture Institute, a local think tank, and an economic analyst who studies resort towns.

The Internet, FedEx and private jets have made it possible for the rich to live here year-round while keeping an active hand in their businesses back on Wall Street, in Hollywood or in Silicon Valley. Schechter said consumption patterns of the rich have come to dominate the economies of many resort towns in the Rockies.

Local governments are struggling to rein in their power. Many have passed laws capping the size of "monster houses." In Colorado's Pitkin County, which includes Aspen, the maximum is 15,000 square feet. Teton County limits them to 8,000 square feet.

The restriction has opened a new door -- for high-end houses that are hugely expensive, even though they are not huge.

"We call it 'monumental specification,' which means that everything in the house is literally one of a kind," said Steve Ankeny, a builder who is putting the finishing touches on a four-bedroom house on six acres here.

The house took 11 years to design and build, and it is on the market for $17.9 million. It features half a million "grain-sequenced" pieces of rift-sawn white oak, as well as custom fittings on everything, including door hinges, heating registers and light fixtures.

"If some wealthy person wants to show off, there is now only one way to do it in Teton County -- square footage that is outrageously high-end," said Ankeny, who, with his brother, worked on Ford's compound.

Philanthropy 'a social norm'
Besides spending buckets of money on their houses, the rich have been extraordinarily willing in recent years to give money away.

"It is craziness -- every year there is just more and more and more," said Clare Payne Simmons, who until last year was president of the Community Foundation of Jackson Hole, which has raised nearly $39 million for local charities since 1997.

Teton County has become one of the most philanthropic places in the country, as measured by tax-deductible donations per household, IRS figures show. Households here gave away about $9,000 a year in 2002, nearly nine times the national average.

"What happened was that there were a number of influential individuals who created a social norm that mandated philanthropy," Simmons said. "Social engagements were all centered around giving."

Charitable giving, however, has not altered what many local residents agree is the fundamental social problem of Jackson Hole: unaffordable housing for the un-rich.

"The future is locked in -- it can only get richer," said Brian Grubb, planning director for Jackson.

Federal, state and local governments own 97 percent of Teton County. Large tracts of undeveloped private land have been locked up by land trusts in conservation easements. Much of the money for these trusts came from wealthy homeowners.

There are only about 2,500 lots available for construction in rural Teton County, Grubb said, adding that houses are likely to be built on large tracts and would cost several million dollars for the land and structure.

Grubb, who makes $75,000 a year, lives in a subsidized apartment owned by the town. He said he cannot afford a single-family house anywhere in Jackson Hole and is looking to buy in the town of Alpine, about 45 minutes away.

"Many of the wealthier residents are content to have workers commute in," he said.