The Conched Republic

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There's trouble in paradise-primarily the fact that no one can afford to live there any more.

Property values throughout South Florida have boomed, but here in Key West, they've gone supernova, according to John Dolan-Heitlinger, CEO of KEYS FCU.

"The average price of a home down here is $950,000, so basically no one who is a working person can afford to move here," he told The Credit Union Journal. "We have a crisis on our hands, and it is exacerbated by three things: our geographic isolation, an aggressive and restrictive regulatory environment that is imported from outside the area, and an increasing number of homes are being purchased by part-time residents, making Key West even more seasonal than it already was."

If the situation continues unabated, Key West will find itself in a similar situation to another island far to the north. "If you look at Martha's Vineyard, no one actually lives there any more, people just visit there," Dolan-Heitlinger asserted. "It's no longer a community. Schools vanish, churches disappear. Everything that makes a community a community goes away. That's what we're facing, and it is already happening. It's really rather tragic."

But what about the people who have lived on Key West for years, if not generations?

"A lot of the local people are getting wealthy by selling their homes, which is a great thing for them, but they don't then buy another home here, because they can't. They head for the mainland," he explained. "Little by little, places die. We'll be living in a town that's not really a town-like living at EPCOT."

To highlight just how crazy the property values are in Key West, Dolan-Heitlinger pointed to the most affordable home for sale in the Lower Keys (defined as anything south of the Seven-Mile Bridge). "The least expensive home for sale in the Lower Keys last year was a 27-year-old single wide trailer-and it wasn't on the water, it was just in a regular trailer park: $368,000.

The problem for KEYS FCU isn't simply that its membership is pulling up stakes and leaving Key West-it's also that the credit union can't hire anyone.

"No one can afford to move here," he related. "We had a position open in our phone center for almost a year, and we just couldn't fill it."

Getting back to the Martha's Vineyard example, Dolan-Heitlinger noted that the people who work on Martha's Vineyard don't actually live there-they're flown in from other areas.

"We realized we couldn't bring staff down from Miami, so we're looking at a couple of different options," he reported. "We have opened a call center in Fort Lauderdale. We have four employees there. We were able to hire tremendous people, and it's been working out well."

With the success of the call center that is based more than four hours away from Key West, KEYS is looking to progressively move as much of its back-office operations to the mainland as possible.

"We will always have branches here," Dolan-Heitlinger asserted. "But we will progressively move our back office out of the Keys."

Another option the credit union is exploring: building housing for its employees on land the credit union already owns. "It'll have to be on-site because we can't afford to buy land elsewhere," he noted.

KEYS isn't the only employer looking at taking such measures. The local school board is also considering building housing on school property, because no teacher can afford to buy a home in Key West. The local power company is doing the same thing, and the city of Key West is entertaining plans to build dormitories for service workers.

And it's not just mortgages where KEYS is feeling the pain. "We've been very effective in indirect auto lending and have a 30% to 40% marketshare in the Keys, but because the population is shrinking, the number of car sales is going down," he observed. "Look, this is a real problem, it is a crisis. But I also know there are worse things in the world. My mailing address could be Camp Fallujah."

It remains to be seen if the slow death of the community can be reversed by these and other measures. In the meantime, KEYS FCU better hope Dolan-Heitlinger remains healthy for a good long time to come.

"I am a very well-paid president. The credit union does a very good job of paying its people, and I am taken good care of," he commented. "That being said, based on the price of homes here, I could not be recruited to come here today."

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