Chelan growth shows new strains as city, Port and Chamber weigh economic future

CHELAN — Chelan’s economy is growing, but not in the way city leaders say it needs to.

That was the central takeaway from an April 7 workshop that brought together the Chelan City Council, the Chelan-Douglas Regional Port Authority and the Lake Chelan Chamber of Commerce for a detailed look at how the city’s economic picture is shifting.

Mayor Erin McCardle led the presentation, walking council and regional partners through a slide-by-slide analysis that, she said, represents the city’s first real attempt to move beyond high-level indicators and examine underlying trends.

“We’ve never really taken a deep dive into economic data in the city of Chelan,” McCardle said. “Tonight’s meant to be probably just the start of much more and longer conversations that we need to have around economic development in the city.”

Chelan has seen measurable growth over the past decade. Inflation-adjusted general fund revenues have increased, retail sales tax is up, and job growth has climbed by more than 40 percent over the past nine years. Business license activity has also expanded, pointing to continued small business formation.

But that growth is increasingly concentrated in a narrow set of sectors.

Construction now accounts for roughly 21 percent of Chelan’s taxable sales base, making it the single largest driver of growth over the past decade. Other gains are concentrated in visitor-related industries such as food service, lodging and real estate.

At the same time, sectors that tend to stabilize small-town economies have lost ground. Healthcare, education and public administration have declined from about 37 percent of Chelan’s employment mix to roughly 30 percent, even as total jobs have increased.

“Chelan’s grown, but our growth appears much less balanced than previous years,” McCardle said.

Tourism remains central, but the data shows it is also becoming more volatile.

Nearly 60 percent of Chelan’s lodging tax revenue is now generated in just three summer months, with more than a tenfold difference between peak and off-season collections.

“That to me is a little bit terrifying that we’re seeing so much more concentration in our summer months,” McCardle said.

At the same time, total visitation has declined by about 12 percent since 2019, even as the average visitor stay has increased slightly. Fewer visitors are coming, staying longer, and concentrating their spending into shorter periods of time.

Comparisons with Leavenworth underscored the shift.

In 2014, Chelan generated about $250,000 more in retail sales tax than Leavenworth. By 2024, that margin had flipped, with Leavenworth bringing in roughly $300,000 more. Over the same period, Leavenworth has built a more consistent year-round tourism base, with a far smaller seasonal swing between peak and off-peak months.

Chelan’s reliance on construction adds another layer of risk. A return to pre-pandemic construction levels could mean tens of millions of dollars in reduced taxable activity.

From a budget perspective, the city’s general fund is keeping pace with expenses when adjusted for inflation, but only narrowly. On average, Chelan is left with about $126,000 in real annual surplus, limiting its ability to absorb major capital costs or revenue declines.

When McCardle opened the discussion, regional partners began to connect those trends to broader economic questions.

Jim Kuntz, chief executive officer of the Chelan-Douglas Regional Port Authority, asked what the city has done in the past to address seasonality.

“What has the city looked at in the past to stretch the season?” Kuntz said.

Chelan County Port Commissioner Richard DeRock pointed to demographic shifts that could reshape the local economy in the coming years.

“One of the things that you have to remember is the baby boom is all retired,” DeRock said. “That second home purchase marketplace is going to shrink radically over the next 10 years.”

Council member Tim Hollingsworth said the data highlights the need to look beyond city limits when evaluating economic trends.

“A lot of this data is very city specific,” Hollingsworth said. “I think it’s important to understand how the city fits in with the valley as a whole.”

McCardle said the presentation is only a starting point.

“This is really just scratching the surface of the conversations that we really need to have,” she said.

The workshop did not result in formal decisions, but it signaled a shift toward closer coordination between the city, Port and Chamber as Chelan considers how to balance continued growth with long-term economic stability.

Andrew Simpson: 509-433-7626 or andrew@ward.media