In Idaho, Ski Resort's Promise Fades (WSJ)

From Boom to Bust. Sigh. I remember mentioning this two years ago in happier times. Here's the story from today's WSJ. That link will probably work til July 15 or so, if not here's the story below.
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In Idaho, Ski Resort's Promise Fades
By JUSTIN SCHECKJuly 7, 2008; Page A3
DONNELLY, Idaho -- The real-estate downturn is taking Western locales like this tiny mountain village down a familiar path: from boom to bust.
Tamarack
Construction halted at Tamarack village in Donnelly, Idaho after financing for the ski resort dried up.
A half-century ago, timber brought prosperity that ended abruptly in the 1990s. This time, a luxury ski development called Tamarack Resort has whipsawed the town's 158 residents.
Tamarack gained headlines in 2003 when it became one of the few new ski resorts to be approved in the West in two decades. From 2004, when its lifts opened and the first homes sold, through last year, buyers committed more than $500 million for condos, houses and building sites. Fancy homes brought a rush of money, with newcomers buying land for stores and restaurants. Landlords tripled rents.
Then, last winter, building all but stopped. While Tamarack's lifts continued to run, motel occupancy plummeted. Rustica, a gift shop, closed down this year. McPaws, an animal shelter, endured a funding crisis. According to state estimates, the May 2008 unemployment rate was 6.1% in Valley County, where the town lies -- nearly double the year-earlier rate. Idaho's May statewide unemployment was an estimated 3.6%.
"This place just quit," says Gordon Cruickshank, a Valley County commissioner.
The luxury-resort boom brought windfalls to once-sleepy towns throughout the Rockies, as developers planned resorts with secluded homes and memberships to golf and ski clubs. Banks such as Credit Suisse Group, which syndicated nearly $1 billion in loans to luxury developments in the West, fueled the boom.
A resort's success was often staked to real-estate sales: As a Tamarack lender recounted in recent court filings, the resort had a business model in which "operating expenses would exceed revenue and the primary source of profit would be generated by the sale of real estate."
When the bust came, Donnelly was hit hard. It didn't have much of an economic base before Tamarack. The town, 95 miles from Boise, had thrived on lumber until federal restrictions gutted the industry in the 1990s. A succession of developers failed to build a ski resort on Donnelly's West Mountain. Valley County had one of Idaho's highest unemployment rates.
Mexican developer Alfredo Miguel Afif began planning Tamarack in the late 1990s. He brought in Jean-Pierre Boespflug, a former executive at Cisco Systems Inc., as chief executive. Mr. Boespflug helped persuade Idaho's governor to support Tamarack's development plan, which got final approval in 2003.
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Real estate in the area quickly boomed. Tennis stars Andre Agassi and Steffi Graf agreed to develop a Fairmont Hotel as part of the resort. Mr. Boespflug personally wooed prospective buyers, leading hiking tours. Construction attracted workers who spent at hotels, restaurants and bars. Idaho Gov. C.L. "Butch" Otter last year declared April 27 "Alfredo Miguel Afif Day."
Things abruptly changed in June 2007, Mr. Boespflug says, when he traveled to the East Coast to meet with another investor in Tamarack's planned Fairmont Hotel. Buyers had just committed more than $100 million for an initial offering of Fairmont condos, so "we were hoping to be greeted by big cheers and a check," he says. Instead, the investor, who had already put up money for the hotel, said, "'We don't have the money,'" Mr. Boespflug says.
The investor confirmed his group has decided not to put up any more money for the hotel, but wouldn't comment in detail because of legal proceedings.
Funding shortages forced the resort to slow construction on the base village and hotel. With Tamarack in danger of missing a payment to Credit Suisse, Mr. Boespflug arranged a $118 million credit line with French bank Société Générale.
But in February, amid weakening real-estate prices squeezed by the credit crunch, the bank withdrew the line "due to market conditions," says Société Générale spokesman Jim Galvin.
Tamarack went into default on its Credit Suisse payments. Business entities owned by Messrs. Boespflug and Miguel, which hold a majority ownership stake in Tamarack, filed for Chapter 11 bankruptcy in February. Credit Suisse followed with a foreclosure suit, seeking to take over Tamarack's majority-ownership stake, according to state and federal court filings.
Donnelly's boomtown air is gone. Tamarack and its contractors have laid off many. Jerry Frank, a Boise contractor who is part of the Tamarack Club -- $60,000 a membership, at current rates -- says he closed his Tamarack office. Mike Pannell, a developer who bought the Little Firefly Cafe this spring, says breakfast business is down about 40% from last spring.
Lani Anderson, who manages the local Long Valley motel, says occupancy has fallen at least 65%. "All I'm catering to now is the weary traveler, and there's not a whole lot of them with gas prices," she says.
Locals lament the town's fleeting promise. Lorie Mauk had moved back to the Donnelly area last year for a Tamarack job, having left the area years ago. But Tamarack laid her off in February, and she says the town's job situation is back to how it was before the resort brought prosperity.
Tamarack's base village is unfinished. The area slated for a Thai restaurant is roofless. The ski shop and pub are in plastic tents.
Home sales have withered, says Judy Land, a local real-estate agent. In 2006, 1,250-square-foot Tamarack cottages sold for more than $900,000, the resort says; Ms. Land says she recently sold one for $650,000.
The resort is continuing visitor operations over the summer, with lifts running for mountain bikers, and expects to run ski operations this winter. Ms. Land expects the resort to recover. But for now, she says, the few potential buyers "want to get away from the depression, from a resort that's in trouble."