Charlie Mitchell is in charge of economic development for Grants Pass, and by many measures his city of 23,000 residents nestled along the Rogue River is booming.

Housing prices are escalating. New restaurants are opening downtown. Monthly art walks are well attended. With unemployment at relative lows, it appears that the former mill town is humming again. The new industry? Retirement.

The 2000 census showed that Josephine County, where Grants Pass sits, has the third-highest population of people 65 and over in the state and retirees continue to flock to the city. Signs are everywhere of an economy increasingly oriented toward seniors. The Three Rivers Community Hospital, opened in 2001, is already gearing up for an expansion. Tidy neighborhoods are under construction. New assisted-living homes are opening.

Mitchell readily admits that Grants Pass' reputation as a retirement destination has happened more by accident than design. To some extent, the town's popularity is an extension of the Rogue Valley's reputation among Californians as the Sonoma Valley of yesteryear. And it's been in the sights of several retirement publications. "We've gotten onto all of these lists as being a good place to retire for budget-conscious seniors," Mitchell says with a shrug.

He points out the economy of Grants Pass — a town named for Civil War general Ulysses S. Grant and one-time home to a dozen plywood mills — is closely linked to that of its civic neighbors in Jackson County. But unlike Medford, 26 miles down I-5, Grants Pass doesn't have any big-city aspirations, Mitchell says. Instead, he fancies it the next Ashland.

In many ways, it's an apt comparison. Grants Pass is embracing the arts, working to play up its natural beauty by casting itself as the headquarters of the Rogue River. And, like Ashland, its population is becoming increasingly gray.

Ashland's wealthy graying population is bidding up the town's real estate, making it a tough place to live for working-age adults. In Grants Pass a similar trend is beginning, but there's no denying that the influx of retirees and their bank accounts has brought new life to a mill town.

"The timber industry went away and was replaced by the service and retirement economy," says Sal Esquivel, a Republican state representative from Medford. "The timber industry was king. It's like taking a .400-hitter out of the lineup and replacing him with a .165 hitter. It's just a fact of how it is."

But a careful consideration of gray-town economics is warranted by the demographic shift on its way for all of Oregon and the nation when millions of baby boomers begin retiring.

A BANNER STRETCHING ACROSS downtown Grants Pass advertises: "It's the climate."

At 10 a.m. outside the Bluestone Bakery on Sixth Street, the cycling group from Spin Cycles bike shop has just completed a thrice-weekly ride and the mostly gray-haired cyclists are pulling chairs around tables to leisurely kibitz about their houses, gardens, volunteer work and sports.

At the next table over, Willow DePew and Pat Soles pore over three-ring binders, preparing for an American Association of University Women retreat they are organizing for the coming weekend. Both retired teachers, they each moved to Grants Pass from California within the last three years.

"It's affordable," says DePew, who moved from Sonoma Valley. "We liked the small-town feel. We felt like we could make a difference here."

"There was less congestion," says Soles, who moved from San Jose. "We loved the environment. We visited here and kind of fell in love."

Their first visit was in June, so Soles and her husband returned in December just to make sure. "We wanted to see it at its worst," she explains. Before leaving, they made an offer on a tidy 5 1/2- acre property in Colonial Valley.

DePew and Soles have seen changes since their arrival. The streets of downtown are busier. (Funny thing, though, more so in the late morning than during rush hour.) Soles reports that the Newcomers Club has swollen to 470 members — she'd guess 85% are from California.

"Everybody's doing something," says DePew, who helps out in her granddaughter's classroom and sings in two different choirs. "They're not as expert as the ones in California," she says of the singing groups. "But I don't mind."

ATTRACTING RETIREES such as Depew and Soles is nothing short of a recipe for growth in some communities. The retirement set is a traded sector of sorts, coming to town with money earned elsewhere and spending it locally on homes, goods and services.

Mark Fagan, a professor at Jacksonville State University in Alabama, wrote Retirement Development: A How-To Guidebook and is frequently asked to speak at economic development conventions.

Fagan's take is that the cresting wave of baby boomer retirements — which will play out over the next 30 years — creates some new opportunities for small-town America. "Once believed to be cornered by three states, [the retirement business] has jumped the borders and spread throughout the Sunbelt and beyond," he writes. "It is responsible for a massive redistribution of wealth and income. Retirement migration is increasingly seen as the clean, growth industry of the future for rural counties."

Pulling out a map in his office in Alabama, Fagan locates the Southern Oregon towns that dot the I-5 corridor north from the California border: Ashland, Medford, Grants Pass. "The area looks about the right size for this type of activity," he pronounces over the phone. "Most of the towns are large enough to provide access to services like cultural events, transportation and health care. But they're small enough that they're not fast-paced and they don't have crime and noise pollution."

Retirees are desirable citizens, Fagan posits, because they pay more in taxes than they gobble up in services. Plus, their incomes — coming from pensions, Social Security and long-term investments — are recession proof. "Those checks keep coming, even in economic downturns," Fagan says. "They take their money and they spend it locally."

Charlie Mitchell doesn't dispute Fagan's point, but he also recognizes that the retirement boom is a double-edged sword.

He doesn't have kids in school just yet, but Mitchell is keeping a watchful eye on the city's K-12 enrollment figures. "That's a big canary in the coal mine for me," he explains. "When you start seeing that decline in K-12 enrollment, that's a serious community issue. I keep a close eye on that because if it declines, we have a problem. Beyond a social issue, it's an economic issue."

Rising housing prices are also quickly outstripping incomes. The median home price in Grants Pass was $244,000 in July — higher than in many areas of Washington County, the heart of Silicon Forest. There, the median income is around $52,000, while in Josephine County it hovers close to $31,000.

Unlike the cities to the south of Grants Pass, there aren't really any bedroom communities — no Eagle Point, Central Point or Talent — to provide more affordable housing options. Developers in Cave Junction, nearly 30 miles from Grants Pass up a stretch of two-lane highway, are working to build a distant bedroom community, planning some 400 new housing units — including some age-restricted homes for seniors — over the next five years,

The higher proportion of older residents in Grants Pass has left some employers scrambling to fill jobs — a problem that's only magnified when potential workers can't afford housing.

"It's a deep hole we've yet to climb out of," Mitchell says. The attraction of a great climate and lots of green trees will only go so far. "Where is the future workforce going to come from?" Mitchell asks. "It keeps me awake at night."

It's becoming enough of a problem throughout Southern Oregon that the Rogue Valley Council of Governments is planning an all-day summit on Feb. 21, to shine a light on what local officials are calling the workforce housing crisis.

Michael Cavallaro, executive director of the Rogue Valley Council of Governments, says that Southern Oregon leaders will have to consider some drastic measures to turn things around, such as special homebuyers assistance, a land trust, or a transfer tax on real estate with the money going toward affordable housing.

"I don't think people will continue to like this valley if it continues in this direction," Cavallaro says.

FOLLOW I-5 SOUTH past Medford to the leafy streets of Ashland and find a well-developed example of a community changed by an influx of retirees.

"Retirees started moving here and it started a steamroller effect," says John McLaughlin, the former director of community development for Ashland who took a job this summer as the development chief in Truckee, Calif. "I don't think anybody expected it to go as far as it did. We lost our opportunity to attract families."

Downtown Ashland, thanks in part to its cultural gem the Oregon Shakespeare Festival, is bustling. Home prices continue to rise at a breakneck pace. The population in town is much older and richer than it used to be. Two elementary schools have closed in the last two years. The city's efforts to provide affordable housing have been largely fruitless. Employees in city posts and even professors at Southern Oregon University are forced to commute from elsewhere in the valley.

McLaughlin recently reminisced with a restaurant owner about how Ashland used to be a place where the young and restless came to live. "We decided the town's new motto should be: Ashland — where old, rich liberals come to die."

Despite encouraging some comparisons to Ashland, Charlie Mitchell is hoping to skirt a similar future for Grants Pass. "I'm not against retirees," he says. "What I'm advocating is balance." The goal: building a city that's also family friendly.

But sheer demographics are working against him.

Across the country, baby boomers are not only aging, they're living longer. "Forty-five percent of people 65 or older are expected to live until they're 90," says Don Bruland, who is in charge of senior services such as the meals on wheels program for the Rogue Valley Council of Governments. "People who were born in 1900 had an average life expectancy of 47, but people born in 1960 have an average life expectancy of 85."

Meanwhile, the government is picking up less of the aging tab, putting more of a strain on senior services. The Rogue meals on wheels program sees a 10% increase in requests for home-delivered meals each year and is leaning more on fund raising to keep up with demand.

As 80 million baby boomers hit retirement age, the working-age population will shrink. In other words, the age makeup of Josephine County, with its proportionately higher concentration of retirees, is a model of what the nation's population makeup will be in 30 years.

Which means there's likely to be a lot more Charlie Mitchells in smaller cities across the country, keeping a wary eye on the indicators and wondering where their future workers are going to come from.

[SIDEBAR]
LEADING THE WAY
Grants Pass isn't the only town in Southern Oregon that's been discovered by the retirement set, of course. Down I-5 in Medford, the Rogue Valley Manor perches on a bluff overlooking the highway and its own manicured grounds.

A shimmering nine-hole golf course blankets one hillside and, in the opposite valley, bright green grass is growing in on a second 18-hole course, built on the site of a former pear orchard and designed by John Fought of Scottsdale, Ariz. Two towers house 279 specially designed apartments and more than 200 "cottages" dot the surrounding acreage.

With 963 residents and 559 employees, "The Manor" as it's known throughout Southern Oregon, is a strong economic force and a vivid emblem of the growing retirement population across the valley.

Life at the manor, which features country-club cuisine, water volleyball tournaments and unlimited access to the lapidary shop, doesn't come cheap: a hefty entrance fee — $223,000 for a two-bedroom apartment in the newer Skyline Plaza building — is followed by monthly rents tied to the size of the residence and the level of care. Pacific Retirement Services, the manor's nonprofit parent company, pulled in revenue of $35 million last year and is among the top landowners in Jackson County.

"We're like a magnet for seniors," says Tom Becker, CEO of Pacific Retirement . Becker is quick to point out that for every three residents added at the manor, the company hires another employee.

Aggressive marketing by the manor in the late '80s and early '90s put Southern Oregon on the map for the senior set. Where to Retire magazine picked up the message and the region has been making best-places-to-retire lists ever since.

If you have comments about any articles you've read in Oregon Business magazine, e-mail us at feedback@oregonbusiness.com.

Copyright 2005 Oregon Business magazine