Ski towns prepare for lean winter

BRECKENRIDGE – Ski towns and resorts continue to batten down the hatches, preparing for a rough go of it after a number of years on easy street.

In Breckenridge, bookings for winter through the Breckenridge Resort Chamber are down 17 to 20 percent. Collections from the real estate transfer tax are also down – something that didn’t happen even after the slowdown of 2001-02. Even then, notes theSummit Daily News, the real estate economy remained somewhat strong.

Real estate construction has slowed, and in cases stopped. A year ago, planning for 1,700 new housing units on former mining lands in a triangle between the towns of Minturn, Red Cliff and Vail were hurtling forward. Now, things can wait.

“There isn’t any urgency,” said Bill Weber, senior vice president for the Ginn Co., the developer. The land was annexed into Minturn earlier this year, and now the company has three years to submit final development plans. Also proposed are a ski area, a golf course, and a gondola connecting the two.

Go-slow is also the story in Steamboat Springs. There, commercial development at the base of the ski area built during the 1970s is in the process of redevelopment. Several buildings have been demolished with the expectation of new shops and condominiums plus a street design that is both more pleasing and functional.

But an agency of city government has postponed its planned issuance of $20 million in bonds to pay for new pedestrian area walkways and other public infrastructure improvements to complement the private sector work. Without that bond issue, city officials tell The Steamboat Pilot & Today, nothing is likely to happen next year in upgrading public areas.

What will happen in the private-sector work remains to be seen. A major developer, The Atira Group, admits uncertainty, but retains hope that high-end real estate will not be as deeply affected.

“We’re definitely in a challenging time for the next few months … But it’s not as much of a concern with a higher-end project,” said Mark Matthews, a vice-president with Atira.

But Lou Antonnucci, the president of the Steamboat Springs City Council, said he fears the original timetable for a completed redevelopment within three to five years might be impossible.

“It’s almost like our worst nightmare came true,” he said. “The fact is, we’ve got a wasteland up there.”

Steamboat’s improved future, he continued, “really depends on there being buyers out there who are willing to buy a second home in Steamboat.”

 “Make no mistake – this is big, it’s bad and it’s broad-based,” Nariman Behravesh, the chief economist for Global Insight, told an Eagle County gathering. At a conference held at Beaver Creek, he said he expects the effects of the government rescue program could be felt in the next four to six months.

James Chung, president of Research Advisors, which monitors resort economies, told the same gathering that the Vail-Beaver Creek area may suffer, but not as much as some other resort areas.

Vail and the Eagle Valley have a 12-month backlog of unsold homes. The national average is 41 months, he said. And one unnamed resort area has a 112-month backlog.

Chung makes the argument that most ski areas should not expect a continued demand for second homes, such as has been experienced during the last 20 years. People tend to be less interested in winter sports starting at about age 47, he noted. That, he added, is also the prime age for buying vacation homes.

Ski areas are also bracing themselves for fewer visits. A stock market analyst for JMP Security told the Vail Daily that he expects Vail Resorts will see a 9 percent drop in skier visits and a 7 percent decline in mountain revenue at the company’s five ski areas.

The good news, as always, will be good snow. Snow still counts more than all else. However, a bad snow year on top of a struggling economy could spell disaster.

Carbon offsets could pay for forests

TRUCKEE, Calif. – Can people with forests make money from the emerging market for carbon offsets?

That has been a tantalizing prospect for the U.S. Forest Service, which has a lot of forest to manage and not much money. Wildfire expenses are up, timber revenues down, and the federal budget is being squeezed by the two wars in Asia.

Younger, growing forests actually suck in carbon dioxide – a major greenhouse gas – from the atmosphere. The thinking is that forests can be managed in ways that ultimately result in trees diverting more C02 from the atmosphere.

If so, that has consequences in California, which leads the North American continent in trying to create a market-based framework for carbon emissions and work that reduces emissions.

Now, a group called the Sierra Business Council, has launched a cooperative that attempts to funnel money to forest management. The Sierra Nevada Carbon Cooperative will, according to one official with the project, allow owners of various properties to pool resources in earning revenue for forest management that is considered effective in reduction of atmospheric carbon.

A test case, reports theSierra Sun, is a 1,500-acre ranch in the Martis Valley between Truckee and Lake Tahoe. The land was originally projected for real estate development. Instead, it is to be conserved. But that requires money. The hope is that at least a little money can be earned in the carbon-offset program.

Just how good is the science behind all this?Forest Magazine in its spring issue probed the question of carbon offsets for forest management, studying research projects in both Colorado and California. It’s clear, one scientist told the magazine, that reforesting areas that had been previously logged or burned contributes to a reduction in atmospheric carbon. However, the evidence is “squishy” that forests can be managed in other ways to reduce carbon in the atmosphere.

Jackson credits Bush administration

JACKSON HOLE, Wyo. – U.S. Vice President Dick Cheney, who maintains his permanent home in Jackson Hole, defended the tax cuts of 2002 against criticism that it would result in major deficits and eventually harm the U.S. economy. Ronald Reagan, under whose presidency the U.S. national debt grew at a staggering pace, proved that “deficits don’t matter,” said Cheney.

Jonathan Schechter, who writes for theJackson Hole News&Guide, points out that tax cuts for the rich under the Bush administration have positively benefited Jackson Hole’s economy – although, in fairness, the boom began well before George W. gained the White House.

Teton County, which is where Jackson Hole is, ranked third in the country for income generated from investments during the first five full years under Bush. The result was “extraordinary amounts of money being invested into the community in the form of charitable donations, new infrastructure, improved services and the like,” Schechter says.

Going forward as a nation, Schechter foresees stormy weather. But locally, he sees continued good fortune – so long as panic does not set in.

Old-timer bemoans part-timer growth

CANMORE, B. C. – Bob Sanford is lamenting the changes in his hometown of Canmore, located at the gateway to Banff National Park, and other mountain towns set amid beautiful surroundings in the North American West.

His new book,The Weekender Effect, describes what has been going on at Canmore. It has more amenities, from brewpubs to golf courses. But these recreational and other amenities are accompanied by what the late historian Hal Rothman called the “Devil’s Bargains.”

“Terms like ‘amenity migration’ do not describe what happened in my town,” writes Sanford. “In my estimation, it is an outrage to characterize what is happening to the West in such egregiously simple terms. We did not experience ‘amenity migration’ in the town I live in. What was experienced was downright dispossession.”

Canmore is located an hour west of Calgary, a boom town now because of Alberta’s fabulously rich economy of oil and gas. It is located at the eastern entrance to Banff National Park.

While the population of Canmore has doubled since 1990, most significant has been the increase of part-timers, who now compose 30 percent of the total population.

Sanford maintains that “when a mountain town approaches 40 percent part-time residency, the sense of community begins to implode.” What is now under way is “nothing less than a complete transformation of landscape and culture.”

Intrawest reportedly strapped for cash

STEAMBOAT SPRINGS – Is Fortress, the parent of ski-area operator Intrawest, strapped for cash? That was the report last week by London-basedFinancial Times.

The newspaper on Friday reported that Intrawest has $1.68 billion in debt due Oct. 23. Intrawest’s debt has been trading at less than 70 cents on the dollar. As such, Fortress has approached potential and existing lenders to discuss a refinancing involving $1.4 billion in senior debt.

The newspaper said “people familiar with Fortress” said there is a low probability Intrawest will file for chapter 11 bankruptcy protection.

Intrawest operates a variety of ski areas in Canada, including Whistler and Blackcomb, and also three areas in Colorado: Copper Mountain, Steamboat Springs and Winter Park.

Similar problems were cited with another Fortress company, Gagfah, a German residential real estate group.

TheSteamboat Pilot & Today, in investigating theFinancial Times report, could find no new evidence about the Fortress story, but did recall a report in September that Keefe, Bruyett and Woods, an investment research firm, had recommended that Fortress Investment Group shares be downgraded from expectations that it would out-perform the market.