boon or bust?
Bitterroot Resort Economic Analysis Discussed in Lolo
By Peter Metcalf, 3-12-08
The proposed Bitterroot Resort would have a “significant economic impact” on Missoula and Ravalli Counties Dick King, president and CEO of the Missoula Area Economic Development Corporation told a crowd of about 75 people gathered at the Lolo Community Center Tuesday night, but the reaction from the public was decidedly cautious.
King presented the final draft of the Bitterroot Resort Economic Impact Analysis report for public review during the Lolo Community Council’s regularly scheduled meeting. The report, which was prepared by the Portland-based consulting firm ECONorthwest, analyzed the potential economic impacts to Missoula and Ravalli Counties of both a small and big version of the proposed Bitterroot Resort south of Lolo.
The big version would be a four-season destination resort which would include residential development, commercial sites, a convention center and two golf courses on developer Tom Maclay’s former ranch south of Lolo. The big version would also include a ski area that would extend from the valley onto adjoining Forest Service land on Lolo Peak and the Carlton Ridge Natural Area. Maclay has yet to receive approval from the U.S. Forest Service for this controversial proposal.
If Maclay cannot win approval to operate a ski resort on public land, he has said he will build a smaller private or semi-private resort on his 2,900 acres of private land, the smaller version analyzed in the report.
The report, which does not take a stance on whether or not the resort should proceed, included factors such as construction jobs, tourist visits, consumer spending, residential development and seasonal employment in determining the resorts economic impact for ten years and 20 years after development begins.
Under the larger of the two proposals, the resort would account for 3.2 percent of the study area’s 2007 economy by year ten. By year twenty, total economic output would exceed four billion dollars and be one of the five top employers in the two county region.
The bigger resort would have a significant job-growth impact on areas outside the immediate resort, such as the City of Missoula. New job creation in these secondary areas is expected to exceed 2,000 in the first decade and exceed a total of 3,500 new jobs by the end of the second decade. Approximately three quarters of these new positions will be in the service and retail sectors, King said
The tourists and other visitors to the region are expected to drop a lot of cash outside the resort. These guests, which could increase by over 712,000 visitor days annually to the region by year 20, are projected to spend between $50 and $80 million annually outside the resort. Approximately two-thirds of these revenues would go to the retail and service sector, King said.
Local governments would experience an annual revenue gain in the neighborhood of $3.8 million by year ten and $6.2 million by year 20.
The report, however, did not analyze any potential costs to existing services and of building new infrastructure. Nor did the report assess less quantifiable data like environmental costs or quality of life impacts.
Critics noted that the report relied heavily on data supplied by the Bitterroot Resort to base its projections of visitors and thus generate its economic data.
That fact should not diminish the report’s usefulness as an educational tool, King said. “The methodologies used here are accepted by economists across the country.”
Attendees voiced concerns over the resort’s potential impacts on existing infrastructure such as roads, how improvements to existing infrastructure would be financed, impacts on property taxes and general quality of life issues. Some of these impacts might be mitigated by impact fees paid by the developers to the city, county or state, King said.
“The question here is: Is the revenue created by the resort sufficient to cover the cost of these services?” King said. He noted that much of the residential development in Missoula County does not pay for the services it requires. According to King, the proposed resort supports impact fees.
A number of people said they feared the resort being built and their property values rising beyond their ability to pay property taxes.
The report’s comparisons of other resorts in places like Utah and Idaho demonstrated that their development raised existing property values. But the impact of new development on area taxes is not something the report quantified, King said. He added that due to Montana’s tax code, rising property values associated with new development do not automatically correlate to an increase in property taxes.
Several people questioned the need for new recreational development in the area, citing the fact that many of the additional amenities the resort intends to offer, like hiking and horseback riding, are already available for free on public land.
“We have the last best Bitterroot Resort all along this river,” one woman said.
But at least one person believed the resort would enhance the areas recreation and economic opportunities.
“I hope it goes through because I am a skier,” said Jeff Hutton, a long-time Lolo resident who lives next door to the Maclay property and skis regularly at Snowbowl. Hutton believed the analysis highlighted some of the positive economic benefits this “clean industry” would bring to the area and called it a good starting point for further evaluation.
MAEDC and the Missoula Area Chamber of Commerce commissioned the report jointly to help businesses, governments and the public at large reach a better quantitative understanding of the economic impacts of the resort on the local region, King said. The MAEDC has not taken a position on the resort’s proposed development.
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So, basically, the impacts on quality of life, on the quality of air and water, and on health and safety of the citizens got ignored.
Plus, the distributional equity of who benefits and who suffers the impacts is not clearly spelled out.
Loloans were not only cautious, they were skeptical of these plus-side-only, pie-in-the-sky projections of millions and billions at the expense of an intact wild ecosystem and economic uncertainty (if not economic catastrophe) for themselves. King said it himself--what makes this scheme unique is that it is so close to an urban center--10 miles from Missoula. Seems to me that is all the more reason it should remain wild.
Basically giving away public lands (including, as you point out, a roadless area adjoining a Wilderness and a biologically significant Research Natural Area) so that a large, private landowner and select business partners can make hundreds of millions of dollars (could it even be billions?) off high-end development is a terrible idea and certainly sets a dangerous precedent as far as public lands management is concerned.
To say nothing of the fact that it would forever change the Missoula and Bitterroot Valleys. The fact that this presentation didn't even include any mention of this profound trade-off is disingenuous if you ask me.
Mr. Maclay is free to develop his own land, as he has been doing, within the bounds of current regulations. These unique and special public lands around Lolo Peak belong to everyone in the country, not just the guy who happens to own land next to them.
If this special use permit is granted, I will still be able to hike to the top of Lolo Peak or Carlton Ridge just as I can today. The Bitterroot Resort will never own these lands because they will always belong to the publec. The fact that your twisting the facts is disingenuous if you ask me.
Beyond that, the resort will improve public access to Lolo Peak and allow more people to enjoy it. Not just the few who have the abilities to hike the long distances to get there.
BESIDES- there is isn't that much snow falling in the Missoula area and surrounding mountains these past winters- it takes a lot of water to make man-made snow- just a waste, that resort, a great big waste! I don't want it near Missoula. An unbiased economic statement is the only statement one can trust. let McClay develop his own land. LEAVE the public's alone!
The flaw does not stem from a lack of expertise in the report's compilation but because MAEDC curtailed the study's scope. Scenarios considered are only cursorily examined for plausibility and the outcomes reported are delivered without context.
The trouble lies in the way study was structured.
First, predictions about the future should consider a range of potential inputs and measure the variability among the results, especially when dealing with something as fluid as a regional economy. During the presentation of the draft report, the consultant said the work he was doing was tougher than rocket science. Indeed, the systems in question are subject to myriad influences that can’t all be accounted for in a deterministic calculation such as the one made for this report.
Second, the quantitative results lack necessary context or perspective. A comparison with existing major employers, for instance, could put the $4 billion net impact number that sums up the quantitative analysis in perspective. An even more troubling error (one obvious to any Econ 101 student) is that the streams of projected income from the resort are presented as lump sums rather than discounted cash flows. As presented, the study equates the value of a dollar twenty years following the beginning of construction with the value of a dollar just after construction has begun -- violating basic rules of financial analysis. Finally, without a no-build alternative among the scenarios no consideration is given to what, if any, growth can be expected in the absence of development.
The economic impact research question seems tailored to avoid betraying implausibility among the assumptions input into model. Still, the report itself struggles to discuss many of the factors excluded from the quantitative analysis. And yet the report is structured in such a way that the $4 billion number can be easily taken out of context for the purposes of public discussion (e.g. the presentation in Lolo). It is critical this not be done if Missoula County is to make an informed decision about the desirability of the Bitterroot Resort. A more robust quantitative analysis would facilitate an informed public discussion.
Postulating a $4 billion impact without examining the likelihood of such an impact would be inadequate as the basis for an investor’s decision-making process. Missoula and Ravalli counties will be asked to do much for the Bitterroot Resort under either building scenario and this analysis seems tailored to generate a promising-seeming number under a rubric of independence without putting the number in a context that would lend it credibility.
I expected, on first reading the report, to be challenged by a well-reasoned examination of the plausible economic impacts of the Bitterroot Resort. Instead, MAEDC and its partners really only commissioned a wistful extrapolation from assumptions the consultant could only endorse in his presentation as “not laughable.” The exercise in question-begging strikes me, regrettably, as a failure of due diligence.
Don't be fooled, these guys are bad news. Any golden-tongued hustler can pitch a line of goods as the panacea to the area's long term economic sustainability, we all know what it really is all about. As for Lolo Peak, and Carlton Ridge remaining with the people if the forest service (forgets the people are depending on them to have a spine) and gives into McKlay and his development corporation -- all you have to do is look at Ajax, Vail, Teton Village, et al to see that the only people on those mountains are people willing to shell out $80+ a day to ski and board on them. And those mountains have a distinct advantage to the proposed Bitterroot resort -- that being a lot more annual snowfall. The thing you never hear being brought up about this proposed resort is that even if it were to be developed, it would never be able to compete with the already established world-class destination resorts that are in no short supply around the globe. Let's get real and stop being deluded by a fantasy brought on by cadre of short-sighted, money-hungry second-tier development people. We deserve better.
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