Thursday, October 14, 2010
Too Good to Be True When the Tamarack Ski Resort in Valley County, Idaho opened back in December of 2004 no less a newspaper of record than the New York Times lavished praiseworthy ink on the place. "When the work is done in 10 to 15 years," the Times enthused, "Tamarack will be a $1.5 billion destination resort with 62 runs, 7 chairlifts, at least one 18-hole golf course, a medical clinic, a fire department, an amphitheater and some 34 stone and wood buildings in a base village area that will merit its own ZIP code. Property owners will have access to exclusive resort benefits: unlimited skiing, unlimited golf, early-bird 'fresh-tracks' chairlift services on powder days, the best tables in the best restaurants and catering services." Reading those words almost hurts today, particularly when you realize the hype over Tamarack was always better than the business plan. Tennis stars Steffi Graf and Andre Agassi were going to invest in a five star hotel there. The resort would rival Sun Valley as an Idaho destination. Politicians couldn't get enough of the place. George W. Bush, at the behest of then-Gov. Dirk Kempthorne, visited for a mountain bike ride. As a U.S. Bankruptcy judge tries to decide this week whether to give the interests trying to keep the kaput resort on life support - the "last clear chance" their attorney called it - it seems worth contemplating whether Tamarack, and Valbois before it, don't fit comfortably in the long tradition of speculative real estate development in the American West that, in retrospect, should have been seen for what it was - just too good to be true. If the bankruptcy judge authorizes a loan to buy time to try and find a new owner, the money could get ski lifts running this winter and "would pay for a $250,000 state land lease...the winterization of unfinished buildings and bankrolling of a chief restructuring officer in efforts to complete a sale." The federal bankruptcy trustee called the idea an "exotic remedy" that amounts to "substantial overreach." In other words, a fourth down and 40 yards to go Hail Mary play that could continue to leave creditors holding bags of unpaid debts. When the resort idea was originally hatched back in the late 1980's, cooler heads asked some all-too-obvious questions. Does the location actually work? Is the transportation infrastructure in place to support tens of thousands of visitors? What are the environmental trade-offs associated with Cascade Lake? Are the pockets deep enough? As it turned out the original Valbois, also bankrupt, soon morphed into the newly-born Tamarack and a speculative real estate development continued for years to masquerade as a ski resort. Eventually the logic of the obvious questions got lost in the flood of glowing PR like this from the one-time chief promoter Jean-Pierre Boespflug, who told the Times back in 2004, "Rome wasn't built in a day. We have a project here that's only slightly smaller.'' If the Valbois-Tamarack history ever gets written, it will likely be noted that the pivotal event that pushed the development forward as the agreement by the state of Idaho to provide that long-term lease of state land. Developers had struggled for years to secure federal approvals - never an easy task with a ski resort - but the state, eager for dollars and even more eager to believe the hype, gladly made a deal. ''When Tamarack came to us with a proposal, I thought, 'How can we make this work?' '' Kempthorne told the Times in 2004. The newspaper went on to note that Kempthorne, "wearing Harley-Davidson motorcycle boots and standing in the snow near the resort's summit on opening day," said, ''we now have another world-class resort, not just a ski area, that adds to the pulse of Idaho. It's a long story, but it has a happy ending.'' Not so much. The Story of the Decline and Fall of Tamarack came about a good deal faster than the fall of Rome, but with analogous consequences. As of this week, Tamarack, the speculative real estate scheme that once went to market with $500 million in property sales, had $57,000 in the bank. Tamarack is a cautionary tale of how irrational exuberance can stampede common sense. Unfortunately, lots of people are now living with less than a happy ending and lots of other people should have known better.