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Real Estate Q&A
"It Will Be Amazing"
Q: We have been second homeowners in Mammoth for the past 16 years. We bought before Intrawest came on the seen and we watched all the fanfare and hoopla when they arrived and started developing, but they appeared to lose real interest in Mammoth over time. How come?
A: Without transparency, which seems increasingly difficult in everything these days, it is really hard to know for sure. The exact reason(s) may be known to only a few insiders and I'm sure they're not talking. But maybe a review of some of the circumstances can give us insight.
Intrawest's marketing machines went to work shortly after their arrival here in Mammoth in early 1996. The first grab at everyone's emotions ("selling is the transfer of enthusiasm") was a 13-minute video used to introduce "Project Sierra." They played the video over and over again at their sales office dubbed the Discovery Center and included copies (pre-DVD) in marketing packages sent to potential buyers. The video was titled "On the Shoulders of Giants" and put Dave McCoy on a pedestal with John Muir and Ansel Adams and made them the pioneering visionaries for how Intrawest would transform Mammoth. "It will be amazing, amazing, amazing…on the shoulders of giants" is how the video concludes.
Intrawest executives came to town and made comments like, "the best ski mountain in the United States" and "the greatest opportunity in mountain resort development" and the media spoke to "the biggest resort makeover in the history of skiing" and "the $1 billion facelift" and on and on. And we all believed it to be true. After all, these were the biggest and most successful resort developers in the world. And we believed Mammoth was worthy.
But things got sideways shortly after the ball got rolling. The first wrench in the works was the wrangling, and ultimately the protracted litigation, over the airport. Today we see that the airport and daily air service can work. Imagine if we were a good six to eight years into the program. My bet is that our local economy would be significantly different. We wouldn't be "addicted to the heroin of development." The other wrench was losing the opportunity to do a redevelopment district in North Village. That was more litigation and delay. Ironically, Andrea Lawrence was quoted in the Nov. 2001 issue of SKI magazine that the redevelopment plan "would have bankrupted the rest of Mono County within 20 years", and today's news is that the (relatively) financially healthy County is looking at ways to assist the financially strapped Town.
And ten years ago last month, Mountain Sports and Living magazine (now defunct) reported on the redevelopment controversy in a story titled "Intra-Town Squabble." Then Town Council member Kathy Cage was quoted, "We were not able to attract Intrawest here without the promise of redevelopment…if we hadn't done it, we would be sitting in the same financial and economic spot we were in five years ago." Ironically again, those of us that remember the "financial and economic spot" we were in during the early 90's are seeing many similarities to now.
Beyond the troubles with the airport and redevelopment, there were other problems. I remember the day I went to lunch with one of my former associates who was the sales manager for Intrawest. He had just come from an important meeting with "corporate" and they were cutting sales budgets and commissions because the development costs here in Mammoth had become so high. (Anybody who has ever built anything here knows this to be true.) Intrawest had apparently watched their profit margins squeezed hard by building in this altitude, with the snow load and engineering requirements, and California and Mammoth regulations. They told their sales staff that it was not like anything they had experienced in any other resort.
One thing I've thought plenty about, because I'm such a believer in Mammoth, was how Intrawest viewed Mammoth as real competition to their trophy Whistler/Blackcomb. Face it, Mammoth as envisioned with a functioning airport right here (better access) and quality service levels and exciting amenities would be real competition. When we recruited Mike Vance from Whistler to be our Planning Director we knew that the climate was an issue. (When I had met him years earlier he told me, "What Mammoth has Whistler will never have––the sun.") Maybe they came to realize that if Mammoth became "amazing" the customer would like it better. And understanding that destination skier/snowboarder numbers are relatively finite, this alone could be enough to make them ditch Project Sierra.
And there is another, more real estate and development specific topic to discuss. The original boys at Intrawest proved to have uncanny vision, foresight, and timing (just look at the timing and valuation of their sale to Fortress Investment Group). Two of their BIG (and most profitable) business models, the condo hotel and the resort "Club", have taken serious beatings in the global marketplace in the past couple of years. These models are unlikely to see any real resurgence for many years to come. Did they anticipate that? One would think so based on their actions. Again, proving uncanny foresight and timing. And that would be another reason to lose interest (especially with a buyer knocking on the door).
And something unresolved in my mind, I think Intrawest lost respect for Mammoth after negotiating a very sweet development agreement with the Town in the Village. Those "in the know" still believe we left so much money on the table that it was obscene. They may have looked at us as being so unsophisticated in this realm that we were theirs for the taking: do a "good enough" job while grinding out profits, commit as little to the community as possible, and sell out of the deal at a high price when the timing was right. Unfortunately, it's all water under the bridge. Responsibility doesn't seem to matter any more.
So here we are. The brilliant minds that built and drove Intrawest are gone (and probably toasting to us all the time). The remaining Intrawest ownership under Fortress is an uninterested fraction of the Ski Area, unsold units at the Westin and Woodwinds (although the bank probably really owns them), the un-transparent and disinterested ownership of the Village commercial through CNL, and the Rodeo grounds in June Lake (now basically worthless?). I'm sure I'm missing something, but it's all like a small scrap in a forgotten doggy bag after the best meal of your life.
So why did they lose interest in standing on the shoulders of giants? I'm sure it had to do with money and likely one (or more) of the aforementioned conditions. Or maybe they simply didn't like us Californians hanging out in the sunshine. Meanwhile, we'll just have to remain content and inspired while playing in the shadows of giants.
Paul Oster is Broker/ Owner of RE/MAX of Mammoth. A recent archive of his past Q&A columns and other writings, as well as the ability to make comments, can be found at www.Mammoth-Real-Estate-Blog.com. For legal, accounting, construction, etc., advice, seek out the appropriate professional
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