Vail Renaissance allows area to compete on world stage
Publisher’s note: This is the first of four days of stories about issues pertaining to Vail. Lake Tahoe News reporters spent the first week of January in Vail – skiing, eating, walking, talking, and observing. Today through Jan. 23 we share some of those experiences and insights with readers of Lake Tahoe News. The point is not to say Lake Tahoe should be Vail, but to point out what another ski town is doing. And with Vail Resorts now owning two ski resorts in Lake Tahoe and at one time wanting to be a player in the would-be convention center project in South Lake Tahoe, what Vail is doing very much pertains to Lake Tahoe.
By Kathryn Reed
VAIL – Lots of money exchanges hands each year among people who like to travel and those with a place to stay the night. The vacation rental market is a $24 billion a year business in the United States.
The town of Vail, Vail Resorts and people in the Vail Valley want their share and then some of that chunk of change.
The mountain and the town of Vail blend together. Photos/Kathryn Reed
With travelers having more options these days because every town seemingly is able to capture a bit of the tourist dollar, the status quo doesn’t work. Vail looked around about a decade ago and realized it wasn’t top dog in the ski destination market. The Deer Valleys and Whistlers of the world were cutting into their profitability. (Lake Tahoe is not a threat – never has been, according to Vail officials.)
“We saw other resorts, specifically Beaver Creek and our competition in Aspen and other places that were doing new and interesting things. The traveling public is pretty sophisticated and they like new, shiny things and up-to-date accommodations. Things we had, but not enough quantity,” said Ludwig Kurz, who has been in Vail since 1966 and was on the town council from 1998-2003.
To get back in the game Vail underwent what it calls the Renaissance over the course of about 10 years. With the Four Seasons opening a month ago, and the Ritz-Carlton Residences coming online in 2010, the Renaissance is complete.
The meandering Arrabelle opened three years ago this month. It’s so monstrous it seems to take over the entire Lionshead area. The Solaris Residences in Vail proper is also hard to miss, though it is a mixed use complex. It had owners moving in last May.
The Renaissance amounted to about $250 billion in redevelopment, according to the town manager.
Kurz said intellectually people understood the need for change, but emotionally it was a harder sell to get rid of the old and build something new.
“We are lucky we didn’t have half completed buildings or holes in the ground,” Stan Zemler, Vail town manager, told Lake Tahoe News. “A lot of stuff here was controversial. One went to the public for a vote.”
Height and density concerns were some of the biggest hurdles.
The Vail Homeowners Association, a group of mostly second homeowners who united in the early 1990s to be proactive in how the surrounding neighborhoods would be impacted by development, had major reservations about the various aspects of the Renaissance.
“Most of it dealt with planning and zoning, master planning,” Jim Lamont, director of the homeowners group said of the numerous meetings. “Redevelopment was again a bitter pill for a lot of these people to swallow. But what we did was wed solving the community’s original sins with swallowing the bitter pill of more density.”
He added, “Vail was so crappily built in the first place.” (The ski resort came first, then the town.)
It took a couple years for the Lionshead master plan to come together.
“To me, master planning takes time. It’s painful, hard, (and involves) a lot of debate. But it sets the table for what you want. It creates a path for what you want and people go down that path,” Zemler said.
Lamont said his group was able to get heated streets, which he said is a must for an aging population. The VHA also was instrumental in how truck-loading docks functioned. Parking and transportation were issues they raised, too.
These urban renewal areas create tax increment that in turn pays for public improvements like streetscapes, lighting and transit.
“We raised enough issues about each new redevelopment project that things were pretty well vetted before they went under construction,” Lamont said. “The emphasis was put on rebuilding.”
Kurz believes the area was successful with the Renaissance because “we were somewhat tenacious and kept after it.” He also points to a sophisticated town staff who could handle the work involved in dealing with the public-private dealings.
“The risk comes in my mind when a developer who is an out of town person and wants to develop and doesn’t understand the community,” said Rod Slifer, with Slifer Smith & Frampton Real Estate. He’s seen it all. In 1962, the year Vail ski resort opened, Slifer was the town’s first and only real estate agent.
He is not a believer in hiring consultants to make recommendations about development or redevelopment projects.
“At least in Vail and most other ski areas I’m familiar with, the local real estate community and local government know what is needed and what would work,” Slifer said.
Sampling of properties
Vail Resorts has several subsidiaries, all with large bank accounts. This helps when it comes to remaking the town. RockResorts and Vail Resorts Management Company are two major players in the area. Much can be self-financed so bankruptcy isn’t likely.
The Arrabelle, the lodging property owned by RockResorts, is huge. It has walkways that lead from one area to the next. It’s hard to know where it ends or begins. Some people think it’s too tall because it casts a shadow on businesses that before were bathed in sunlight.
The Ritz Residences had its grand opening in November.
Kyle Denton, broker with Sotheby’s International, told Lake Tahoe News while on a tour of the property two weeks ago 18 of the 71 whole ownership units are under contract. They range in price from $1.75 million to nearly $9.2 million. The square footage is 1,500 feet to 4,500 feet.
Pre-sales were brisk in 2007 on the $111 million property, Denton said, with 2008 and 2009 being dead, and now things picking up.
Wendy Mallas, homeowner association manager for Vail Resorts Hospitality at the Ritz Residences, said more international buyers have been inquiring about the property – predominately South Americans and Mexicans. New Yorkers and Californians are the biggest domestic markets, along with Texans and people from Chicago. (These demographics parallel where skiers come from.)
The Ritz Destination Club has 45 units, with Marriott International handling the resale. (A Marriott is next door.) It is managed by RockResorts.
When the Four Seasons opened its third mountain locale at Vail in December (the others are Whistler and Jackson Hole), it was able to boast of having the largest suites in the Vail Valley. The 121 rooms are not ski-in, ski-out, but the heated ski area is next to the Vista Bahn lift for convenience.
In the first three weeks the 49-unit Ascent condo project was on the market 26 contracts had been written – this as of Jan. 7. The project is in the town of Avon at the entrance of Beaver Creek.
Prices range from $350,000 to $1.1 million. Even though they are moving, the original asking price in 2008 was more than 50 percent higher.
Inspirato is a company launched by Brent Handler, co-founder of Exclusive Resorts. Members have access to 40 luxury residence in ski destinations like Vail, Beaver Creek, Aspen, Snowmass and Dear Valley.
He has found a niche market for those who can pay a $9,500 initiation fee, $2,500 renewal fee and market prices each night. People want luxury accommodations, the amenities that go with them and flexibility in where and when they travel.
What’s next?
Ever Vail, a Vail Resorts proposed development, is wending its way through the regulatory process, with the possibility of being permitted this year. At $1 billion it is the single largest development ever proposed for Vail.
The multi-faceted project would cover about 12 acres – about the same size as the hole in South Lake Tahoe where the convention center project sits in foreclosure. This also compares to Lionshead and Vail Village that are each about 55 acres.
Literature from the company says, “Our fiscal analysis estimates Ever Vail will generate one time revenue of more than $30 million for the town of Vail, as well as $7.6 million at build-out in ongoing annual revenue that includes nearly $5 million from tax increment financing.”
Kristin Kenney Williams, spokeswoman with Vail Resorts Management Company, acknowledges the large amount of inventory in the Vail Valley that is not sold and how some believe the area is overdeveloped.
“We can’t rest on our laurels,” she said sitting in the members’-only bar at the Ritz Residences. She said the company is putting itself in a position to be ready for when the market fully turns around.
“We don’t want to cannibalize Vail Resorts or others that are here,” Williams said.
She says it will be like creating a new neighborhood.
She anticipates the soonest construction would start on buildings would be three years. Moving the frontage road that splits the property and cleaning up the toxics from the former gas station need to be handled first.
The plan is for a 102-room RockResorts hotel to be part of the mix. A gondola to service this area is also on the books. More than 400 residential units will also be part of it.
Williams estimates Ever Vail will bring about 2,000 new visitors a day to the area, with about half of them being skiers.
“That will in no way encroach on the mountain,” Williams said.
(One reason Vail does not have six-pack chairlifts is so fewer people at once are disembarking from a lift, so it keeps the flow on the mountain more manageable.)
How Ever Vail will impact travel on Interstate 70, the main artery to Denver, remains to be seen. Williams said it is a concern all parties are looking into.
Other things about Vail
Like South Lake Tahoe, about 70 percent of the homes in Vail are not occupied by the owners. They are second homeowners.
Eagle County unemployment was at 9.55 percent in October. Vail does not keep those stats. South Lake Tahoe’s unemployment topped 17 percent in November.
Vail’s population is about 5,000 people. South Lake Tahoe’s is close to 25,000.
The Vail Valley is about 35 miles long. The closer the property is to the slopes, the more expensive it is. People commute from the outer reaches, much like driving from the Carson Valley or Carson City to Tahoe.
Beaver Creek, a Vail Resorts ski mountain, expects to have the draft environmental impact statement of its improvement plan released in the first half of this year. The mountain needs beefing up before it hosts the World Championships in 2015.
The ski resort owned much of the land in Vail. Land for the hospital was donated by the resort, with a deed restriction so it remains a medical facility.
The focus of Vail Resorts is on the destination visitor, ideally who flies into the Eagle County airport and never needs a car. The Vail Homeowners Association is pushing for an international terminal at Vail Eagle airport.
Vail ski resort is in Eagle County, not the town of Vail. But all the development is in the town.
Parking is an issue in town. Since 1973, the town has spent $21 million on garages with 2,400 spaces. About 6,000 vehicles use the garages each day, according to Transportation Manager Mike Rose. The town is responsible for another 400 free spaces in the area.
Parking is free after 3pm, with other incentives.
One issue is people must use the garages at $25 day when there is vacancy or else face a $60 ticket for parking on the free frontage road.
Vail Resorts is responsible for about 90 percent of marketing in the winter. The town through a dedicated lodging tax has about $1 million to spend on summer special events. The town of Vail has a Special Events Commission to handle that. Events are geared toward locals and tourists.
I did not see any large holes must have missed that part
I’m not sure why Whiteface Mountain doesn’t make the list. It’s got the highest vertical in the east and its been host to, count ’em , TWO, Winter Olympics. Lake Placid has a lot going on. The mountain has put on more World Cup events than most of the areas that are on the list. In regard to best powder, I have to give that to Snowbird and Alta.It’s biblical stuff. In north America, when it comes to vertical drop, no one can deny Revelstoke. But when it comes to scary vertical drop, Chamonix, France off the Aiguille du Midi tram, pretty awesome at around 10,000 feet! Squaw Valley, although just shy of 3000 feet of vertical, makes up for it by sheer diversity. And a real skiers hill, is Telluride. For overall skiers ski areas, the Tahoe basin is tough to beat. Himalayas ? …anyone?
With all due respect to Mr. Slifer, there are both valid and invalid relevance to Tahoe in his comments, especially with regards to “out-of-town” developers who “don’t understand the community”.
In noting the early and late 50’s, Bill Harrah and Harvey Gross obviously kept investing in their infrastructures by building hotels (Harvey’s in 1963 and Harrah ten years later) and continual improvement of the “product” they offered; that in turn allowed Safeway to expand, sequentially building not one, but three new markets here.Understand the market.
Heavenly (Valley) also grew and improved their market with the Tramway (Dave Gay 1962)and by reorganizing their local focus with the consolidation of Hugh Killibrew’s ownership.
As mentioned elsewhere, South Lake Tahoe does not really have anyone that “understands the community” in ways that build upon those traditions. Instead, we seem to have evolved into a place which, by virtue of it’s earlier created cachet, attracts those willing to bring to bear what they believed they knew about Tahoe, but without much regard for what earlier successes might mean for any future, let alone any immediate one.
For example, the ten-year lapse between Harvey’s and Harrah’s hotels was due primarily due to Harrah’s loyalty to the existing lodging community. He realized that his own sales floor had more “amenities” than his own number of rooms could support, therefore wanted to rely on the additional rooms that the ‘complex’ at Stateline and those further down the road offered by way of accommodations and customers.
The originals here in town knew the importance of a strong community around them; the corporate emphasis now is not as sure-footed in that way, as there is always a ‘turnstile’ of ever-ambitious management, willing to move on to the next promotion elsewhere.
South Shore in particular is now in a position where they need to re-orient themselves, as Kae alludes to, with serious ‘brainstorming’ as to what they really want to look like (again, as Kae alludes to), because we have been victimized by misdirection, mixed messages, and ineptitude, brought about by the very lack of understanding that Mr. Slifer mentions as locally important.
Mr. Slifer also mentions that Vail was “crappily built”, which has its’ parallel in South Lake Tahoe in summer cabins being built not to be occupied in winter, the Tahoe Keys being built by Kaiser in the mid-60’s without too much regard for the lake’s most important input, the Truckee River. These mishaps and other things are responsible for the over-regulation today, both in regards to the TRPA and its’ ongoing nemesis and symbiotic partner, the League to Save Lake Tahoe.
Regulation is a function of poor design.
Other areas have similar situations, except that Tahoe seems to have fostered a ‘cottage industry’ of folks who deal with TRPA by ‘knowing the ropes’ of dealing with them, but seem to be absent the very innovation and creativity now deemed necessary to being ‘change agents, not just appeasers of TRPA.
Whistler is the only one of the ‘3’, Tahoe and Vail being the other two, that included both the ski area and the community from the get-go. It is therefore not hard to imagine why Whistler-Blackcombe is always at the top of ski experiences in North America – thinking things through is a decided advantage when possible, as it was in the Fraser Valley, British Columbia.
Comparing Tahoe and Vail is, at best, difficult, except to note that Vail also hopefully sees something in Heavenly beyond its’ obvious undervalue (i.e. a great buy. Leadership here is overvalued, needing as it now does a reorientation to its’ own values, not to mention hopes and dreams.
These will now involve vision, which is very hard to do when your view is clouded by all the things now having to be redone, renegotiated, or rebuilt, after being ill-considered, not well thought out, or ‘compromised’ into oblivion.
In the alternative, South Lake Tahoe can consider itself to be in a perfect condition to reinvent itself, from a standpoint of sustainable economic development – which Whistler did with benefit of their 2000 Olympic bid. Their continuing success will be based on ‘being together’ with their master plan of the mid-60’s, while Vail and Tahoe have to make do with more significant infrastructural improvements as they go.
“How does it get paid for ?” is always the refrain – but if done right, it more than pays for itself – the hallmark of great sustainable development. That’s why one way is an investment, while the other is merely expense.
One is to be desired, the other avoided.
One is a ‘solution-multiplier’, while the other may merely be a ‘money pit’.
Revitalization can come no other way…
Satori….Wall Street financiers say they are going to put the Whistler Blackcomb resort up for sale while the facility is hosting Winter Olympic events next month.
Back-country skiers descend Blackcomb Mountain. (Randy Lincks/Associated Press)
Creditors who have lent $1.4 billion US to the ski resort’s owners, Intrawest ULC, have effectively seized control of the company and are attempting to auction off its assets.
Whistler Blackcomb, one of numerous ski resorts Intrawest owns in Canada and the U.S., is set to host major ski events at the Olympic Games next month.
On Tuesday, a notice of a public auction to be held Feb. 19, 2010, was published in newspapers in Canada and the United States, soliciting bids for a membership interest in Intrawest Holdings. Among the assets in the notice were “partnership interests in two resort properties located in Canada (Whistler and Blackcomb).”
In 2006, Wall Street hedge fund Fortress Investments LLC bought Intrawest in a $2.8-billion US deal. Fortress recently missed a $524 million debt payment connected to that purchase.
The primary lender on the Intrawest deal in 2006 was defunct investment bank Lehman Brothers. New York debt managers Davidson Kempner and Oak Hill Advisors also helped finance the deal, and a source familiar with the process told CBC News the major creditors are united in pursuing the auction process.
‘It’s business as usual.’— Intrawest CEO Bill Jensen
Typically, lenders are willing to work with borrowers to avoid foreclosure. But the lenders’ inability to move the debt repayment plan along seems to have spurred this week’s unexpected developments.
“What the lenders are saying is that we want to get this process going,” bankruptcy lawyer Richard Jones said.
Jones, who worked on the high-profile restructurings of Air Canada, Olympia & York and Cadillac Fairview, suggested an application for creditor protection under the Companies’ Creditors Arrangement Act could be the next step in the story, as Intrawest works to get its financial house in order.
A source familiar with the process told CBC News that the Games are not being used as a bargaining chip, since the auction will not happen until after the Games begin.
“There’s always a chance, but it’s a very minuscule chance,” Dan Doyle, vice-president of the Vancouver Olympic committee, said Wednesday of the possibility a new owner could interfere with Olympic events.
Indeed, while the possibility exists of an owner refusing to host Olympic events, it’s extremely unlikely to unfold, Jones said.
“One way or another that’s not going to be allowed to happen,” he said.
The issue is further complicated by a New York Post report that claims Vancouver Olympic organizers are considering pulling their financial backing of Intrawest as a result of the kerfuffle.
In February 2009, the City of Vancouver came under fire for agreeing to bankroll the $1 billion price tag to construct the athletes’ village after Fortress backed out of that project because of cost overruns.
Fortress CEO Wes Edens believes he has a legal right to keep the Games from taking place at Whistler if Olympic officials withdraw their financial backing for Intrawest facilities now, the Post story says.
Three-month stock chart of Fortress Investments on the NYSE. (CBC)
For its part, Intrawest poured cold water on the notion that the resort’s participation in the Olympics is in doubt.
“We have a 2002 agreement with VANOC to host the Winter Olympics and have every confidence that VANOC will honour its financial commitments,” Intrawest CEO Bill Jensen said. “Intrawest is looking forward to a successful Olympic Games.”
Jensen confirmed Intrawest is in discussions with lenders regarding refinancing.
“Our company is generating strong cash flow from its resorts,” Jensen said. “It’s business as usual.”
Calls to Fortress Investment Group LLC were not returned. A spokesman for Lehman Brothers had no official comment.
Behind-the-scenes efforts expected
Bill Singer, a securities lawyer with RRBD Law in New York, predicted efforts will be made behind the scenes to avoid foreclosure, at least until the Olympics are over, given the amount of money invested in the Games and their high international profile for Canada.
“I can’t imagine that it will ultimately mean much,” he told CBC News, “because I would assume between [Canadian] government interest and the Olympic Committee there would be something that would be accomplished just to forestall [this.]”
“What do you do with a ski resort in this economic market?” Singer said. “Who would be envisioned as likely becoming a buyer for these distressed properties, when the reports all over the United States as well as in Europe and other areas where there’s skiing is that … traffic to both golf and ski resorts is down?”
“Careful guys, your Media Monitoring credibility is seriously in question. Your boss in the Premier’s Office isn’t going to be pleased – time to sharpen your ‘spin’. Here’s a little hand up:”
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What we’re witnessing here is a concerted effort to providing misdirection to the news of Intrawest’s probably collapse in the hope doing so will slow what is expected to be a dramatic decline in both Intrawest’s sale value and Whistler real estate. Especially Whistler real estate values. Intrawest is worthless and everything about Whistler is overrated and overpriced. I’ll be outstandingly surprised if there isn’t a stampede of properties for sale immediately after the Olympics. It’s bail out time.