Local Ski Biz Bets It'll Beat Global Warming

UW scientists predict brown mountainsides.

La Niña is coming with her bountiful promise of snow in the Cascades, if the forecasts prove correct. But one good season won't change the underlying--and rather discouraging--facts facing local ski areas and skiers. First, the baby boom only has so much cartilage left in its knees. The miracles of orthopedic surgery and fat, shaped skis (which are easier to turn) can only extend a boomer's recreational life so far. Average yearly ski-ticket sales are down over the past 10 seasons. Second, climate experts at the University of Washington are projecting warmer, wetter winters in the Cascades--our sad sideshow in the theater of global warming.

Despite this, the "big three" ski areas that serve Seattle are all in varying stages of expansion and investment. Crystal Mountain just added a lodge and new $3 million lift, with further improvements planned. The Summit at Snoqualmie expects U.S. Forest Service approval by next spring to add several lifts and increase the number of skiers it can accommodate per day by almost 40 percent. And Stevens Pass, the sole locally owned operation of the three, is now embarking on its own Master Development Plan (MDP), a slow-moving process that typically takes a half-dozen years or more to churn through government and environmental review.

All three areas are privately owned and don't have to disclose the price tag of their plans. Crystal's MDP has been reported as $22 million—if the whole thing gets built. (The prevailing business logic in dealing with the government seems to be: Ask for the stars, then build the moon.) But why invest millions more now, when greenhouse gases could turn the lower slopes brown in our lifetime?

Demographics trump global warming, according to the Pacific Northwest Ski Areas Association. "All of these areas are well aware of the trends with the climate," says the association's Scott Kaden. Nonetheless, "they expect visitation to grow. The demographics are so favorable to us."

The echo boomers (aka the millennials) are coming online. By 2030, Washington state projects a 33 percent population increase to about 8.6 million. The bulk of those 2 million new residents will be concentrated in Western Washington—especially wealthy King County. As a result, Kaden says, the ski areas have to be ready for even bigger "peak-day visitation," meaning the crowds who show up on a holiday weekend right after fresh powder has fallen.

Nowhere is the warming-vs.-demographics equation more critical than at Snoqualmie, which had more than 600,000 ticket buyers last season. It's the closest hill to Seattle, with the best highway access for families introducing their kids to the sport. It's also the lowest compared to sea level: Snoqualmie's base is just over 3,000 feet—versus Stevens at 4,000 and Crystal at 4,400.

Snoqualmie area manager Dan Brewster says, "The projected demographics for the Puget Sound region over the next 20 years are very strong.Three out of five of ourbest years for skier visits have occurred in the past five years."

When it comes to climate change, he says by e-mail, "Our main concern in the near to moderate term (next 20 years) is a possible increase in weather extremes.We may experience more variability, both in a single season as well as from one season to another." Even so, he says, "modern grooming has helped our ability to operate with a lower snowpack." By grooming, he means those tractors that use rollers and scrapers to compact and preserve the snow.

In contrast to Stevens and Crystal, however, there are no provisions for additional artificial snowmaking in Snoqualmie's MDP—largely because it wouldn't work at such a low and increasingly warm elevation.

Unlike your Vails, Aspens, and Tellurides, our Northwest ski companies are purely snow farmers without any real estate to sell. (Their properties are mostly leased from the Forest Service.) There's no ancillary business in summer golfing or marketing condos and vacation homes, no revenue cushion in a drought year, but also no risk of a real estate bubble and market meltdown (as has recently occurred with some large resort corporations). The companies basically sell lift tickets, cheeseburgers, and beer, making them extremely market- and weather-sensitive operations. If there's no snow, people don't go.

That vulnerability to warming was the subject of a 2000 study by the UW Climate Impacts Group, which was commissioned by the Seattle real estate company Harbor Properties, owner of Stevens Pass. Its conclusions included the following: Snoqualmie's average season length could decline by 28 percent by 2025; areas on the west side of the Cascades would be most affected by warming; and "revenues could decline substantially on average as global warming progresses due to shortened ski seasons and increases in the likelihood of rain." The north-lying Stevens isn't exempt from this trend, nor is Crystal to the south (though its weather is often associated with Mount Rainier).

This seven-year-old report is still pertinent, says one of its authors, the UW's Alan Hamlet, "because it's based on historic data. You would not see anything different in that study if you did it now. There were some pretty major impacts just with a relatively minor amount of warming. The west slopes of the Cascades is one of the most sensitive areas in the West. Projecting forward into the future is the same story."

Still, the study found that Stevens was "quite a bit more robust" than Snoqualmie, Hamlet observes; it was only projected to see a 14 percent decline in average season length. Here's where investment levels meet rising snow levels. Harbor Properties, controlled by Seattle's old-money Bullitt family, paid for the UW study before filing its MDP, while Snoqualmie's was already in process.

Declining to specify costs, Stevens Pass manager John Clifford describes a targeted MDP: "We aren't expanding our boundaries in a significant way. And I think each of the other two resorts did. And that takes a fair amount of time." He hopes for Forest Service approval in three to four years, allowing three new lifts, additional parking and restaurant seating, and 31 percent more skier capacity.

Harbor Properties has owned Stevens since 1976. Snoqualmie—which comprises what some still call Alpental, the Summit, Ski Acres, and Hyak—has consolidated and changed hands repeatedly. Earlier this year it was purchased for an unknown price by a Florida real estate investment trust (or REIT), CNL Income Properties. The area is now managed by Boyne USA Resorts, which bought Crystal from local investors in 1997. (Some kind of joint marketing effort from Crystal-Snoqualmie is expected but hasn't yet been announced.)

The timelines for these investors may be the real key to why they seem to laugh in the face of inconvenient truths. "Certainly for some of the more recent private-equity deals, the hold period is as short as three, or as long as seven, years," says Chris Woronka, an analyst with Deutsche Bank in New York, who follows REITs such as CNL. "The climatology thing—who knows where it's going, but it's probably not going to have an incredibly high impact in the near term. By the time you might see an impact, these guys probably don't own it anymore."

Furthermore, having an MDP pending enhances Snoqualmie's near-term value, says Woronka. "You get the approval, and then you sell it. All you have left is the execution risk. It's not uncommon for smaller companies to do that." Indeed, with $16 billion in assets, CNL's corporate parent is much larger than the prior owner, so implementing the MDP would be pocket change. "They think that'll drive higher visitation and maybe give them above-average pricing power on lift tickets," says Woronka. (Higher lift prices!?!) "They're not really worried about the climatology or demographic issues. Their playbook is buy these things, invest, add value, then sell them to someone else in five years."

New ski areas are almost unheard of in the United States, because of environmental restrictions and federal land ownership. As they say about waterfront property—they're not making more of it. Other than Crystal, founded in 1962, Seattle residents are basically skiing at the same areas as we were in the 1930s—the two mountain passes accessed by highway. To go any higher, above future snow lines, requires a helicopter or hiking.

And while a small number of U.S. ski areas have gone nonprofit or become co-ops (Vermont's Mad River Glen being the most notable example), that scenario is unlikely in a big-city market so proximate to the Cascades. The Forest Service permits upon which our three main areas depend are like vintage cars—you drive them as long as you can, adding new paint and tires every decade or so, never mind the hubcaps falling off.

For now, the investment horizon is looming much nearer than the weather horizon. You'd think ski areas and resorts across the U.S. would be consulting the UW's climate group about how warming will affect their operations and spending, but Hamlet says otherwise: "I think the general public wants to know. But I'm not sure the industry wants the public to know."

bmiller@seattleweekly.com

 
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