Three Colorado companies are digging deep on the shores of California’s Lake Tahoe, pumping more than a billion dollars in the last several years into resorts and communities that are elevating the nation’s “other” ski destination.
Lake Tahoe is probably the most bustling region in the continent’s ski resort landscape, thanks largely to investments and plans by Denver’s private equity firm KSL Capital Partners, Avon’s East West Partners and Broomfield’s Vail Resorts, who together control four of Tahoe’s seven larger ski resorts with big plans for development.
“It’s really the last bastion of undercapitalized, undermanaged and undermarketed grouping of resorts in North America. There is no place like Lake Tahoe for opportunity,” said Andy Wirth, the former Steamboat and Intrawest marketing boss who now captains KSL’s Squaw Valley and Alpine Meadows ski areas.
The executives behind each company go a bit breathless when relating the upsides of Tahoe, which boasts a total of 14 resorts that draw about 4.1 million skier visits a year. Colorado, by comparison, has 26 resorts that log about 12 million annual skier visits.
Reno’s big-city airport is “just 42 minutes down the road,” said Wirth, whose KSL acquired Squaw in late 2010 and promised $50 million in capital improvements before quickly forging a deal to become majority owner of neighboring Alpine Meadows ski area.
“It’s just a huge market with the Bay Area and I think the San Francisco-Silicon Valley market will continue to be one of the most vibrant markets in the country,” said Harry Frampton , who developed Beaver Creek and is managing partner of East West. The company has spent more than $250 million on two golf-course communities and employee housing near Truckee and close to $1 billion — alongside Northstar ski-area owner CNL real estate investment trust — on lodges and a Ritz Carlton hotel in the area’s base village.
The nine counties in the Bay Area include some of the most affluent in the nation, and Santa Clara County’s Silicon Valley again is bubbling with sudden wealth.
“It’s a booming market right now,” said Rob Katz, chief of Vail Resorts, which owns Heavenly, operates Northstar and last week acquired Kirkwood. “Tahoe is behind Colorado in terms of infrastructure, sophisticated marketing and season-pass programs. I think people are looking down the road saying, ‘Hey, this offers some opportunity.’ I know we are.”
Add it all up, and Colorado’s top resort developers are fueling a second gold rush in California as they till Tahoe for the next era of ski-resort development.
It’s no easy task, requiring hundreds of millions if not billions in capital improvements designed
to marry high-end real estate with modern-day resort expectations. It’s a bit of a gamble, with players rolling their development dice in a heavily regulated and scrutinized environment that has largely limited development for the past several decades.
With the economy hindering large-scale development and building regulations growing even more complex, going big in Tahoe has never been more difficult.
“The development climate is certainly troubled right now … but if you look at the spectrum of players who could embark on big, long-term projects, these guys are certainly on the list of qualified entities able to do that,” said Paul Habibi, a Southern California real estate entrepreneur and real estate professor at the UCLA Anderson School of Management’s Ziman Center for Real Estate.
(Tahoe is already drawing the eye of smaller yet equally vibrant Colorado developers. Carbondale’s Timbers Resorts, for example, is working with Placer County to develop a rare lakeside destination to join its collection of international resorts.)
Colorado developers like Vail Resorts and East West are no strangers to building under scrutiny. But even though most of the resort land around Tahoe is privately owned, as opposed to Forest Service-owned slopes in Colorado, that doesn’t mean the environmental and community-guided regulations are more lax in Tahoe than in Colorado.
“In some ways, it is more difficult here,” said Michael Johnson, director of the Community Development Resource Agency for Placer County, home to all of East West’s Truckee-area projects and the Squaw Valley, Alpine Meadows and Northstar ski areas on the northwest shore of Lake Tahoe.
With strict county regulations protecting community values and both the California Environmental Quality Act and the federally designated Tahoe Regional Planning Agency safeguarding the region’s sensitive environment, Johnson said the environmental and local rules surrounding development demand quality work.
“The Colorado companies have shown that you can build successful projects that are compatible and harmonious with the local environment,” he said. “They bring the entire package. It’s not just land development but how it fits into the landscape here.”
In addition to water and environmental concerns, the companies — including Avon’s Booth Creek Ski Holdings, which owned Northstar from 1996 to 2007, when it sold the resort to CNL — are well-versed in addressing community needs. East West, for example, delivers $5,000 to a local open-space fund for each unit it sells, donated two $10 million parcels to Truckee for a park and school and spent $12 million to build a 96-unit employee-housing lodge at Northstar.
The companies, Johnson said, embrace the county’s mission to keep development corralled between swaths of open land.
“Even though there are opportunities for them to build in more remote locations, they have been very successful in working with the county’s desire to bring development into specific areas so the balance of the land can be preserved as open space,” Johnson said.
Jason Blevins: 303-954-1374 or firstname.lastname@example.org
Colorado’s annual skier visits at 26 resorts
Annual skier visits at the Lake Tahoe area’s 14 resorts, along the California-Nevada state line
Article source: http://www.denverpost.com/business/ci_20042333