BC Business
It doesn’t take a Bob Rennie or Donald Trump to understand why Don Simpson loves Revelstoke.
Simpson first visited the town back in the mid-’80s, one of many pilgrimages north for this Denver-based millionaire developer with an appetite for powder snow. Immediately, the 62-year-old American was struck by a place that seemed to have it all: affordable real estate, proximity to boundless outdoor recreation possibilities and an attractive sleepy ambience. Never mind the fact that nearby Mount Mackenzie had the high altitude, vertical drop and terrain that the powder pundits were saying could keep it operational when other ski hills were being washed away by climate change.
In 2004 Simpson first learned of plans for an A-list resort in one of his favourite ski towns after being approached by Hunter Milborne, managing partner of Sotheby’s International Realty Canada (BID), who, along with developer Robert Powadiuk, is a founding partner in Revelstoke Mountain Resort (RMR). Simpson smelled a winner and less than two years later signed on to the project and opened a Canadian subsidiary, Simpson Property Group Canada, to handle the resort’s property development.
The trio wasted no time demonstrating they were in town to do business. In January 2007, with residents in giddy anticipation, they summoned the media to unveil the future of Mount Mackenzie, and in the following frantic eight months the developers installed a high-speed gondola, a quad chairlift and a base lodge; they also snapped up Selkirk Tangiers Heliskiing and CAT Powder Skiing, creating a one-stop shop for lift, heli- and snowcat-skiing for a total initial capital outlay of $80 million.
Over the next 15 years, RMR plans to pour an estimated $1 billion into a resort that will include more than 20 lifts servicing 1,829 metres of vertical (which will be the highest in North America), 5,000 housing units and 500,000 square feet of commercial and retail space.
In little more than a year, Sotheby’s, the firm handling real estate marketing for RMR, has already sold 190 luxury units – just part of an orgy of speculation that’s been going on in Revelstoke for more than five years. Market values have tripled since 2003, with the median price of a detached single-family house now hovering at around $463,000 and rental vacancies sitting at a paltry two per cent. Though the real estate rush has made the town of 8,000 one of the most hyped resort developments in B.C., injecting life into a sagging heartland economy, it has also plunged the town into an identity crisis as Revelstoke transforms from funky, affordable mountain town into pricy “world-class” resort. Suddenly, any young person or family of limited means who was enjoying the mountain lifestyle has awoken to discover their town slipping beyond reach.
From Vail to Fernie to Whistler, the story’s the same: resort property development has invigorated towns and propelled real estate into the stratosphere, while leaving politicians and citizens scrambling to find ways to keep their towns diverse and affordable to people other than jet-setting resort investors. The question expert observers and locals alike are asking is, Why was Revelstoke caught snoozing at the steering wheel?
On a warm spring afternoon, Simpson, slightly built with a healthy tanned complexion, ambles down the hallway of RMR’s corporate office in downtown Revelstoke, fresh from a day of heli-skiing in the Selkirk Mountains. He greets me amicably but with a slightly impatient edge, like somebody who’d rather be skiing or dealing real estate than talking to a journalist.
Getting into the ski resort development game in Canada was an unexpected retirement diversion for Simpson. Several years ago, he had cashed out of the family firm, Denver-based Simpson Housing Inc., which was started by his father in the 1940s and grew into a multibillion-dollar apartment development powerhouse in the American southwest. Nowadays Simpson spends roughly half his time in Canada, helping to steer RMR onto the international resort road map.“My sons tell me they’ve never seen me work this hard,” Simpson says as he settles into a swivel chair. “But you know, I realized right away that this could be the No. 1 resort in North America.” While Simpson acknowledges the concerns about housing, and the underlying sense among some locals that they’ve lost control of their town, he’s confident that Revelstoke can remain a livable, authentic town. “There’s no question that housing will be more expensive. Part of the problem is these things get studied to death,” Simpson says, pointing out that RMR’s master plan targets 10 per cent of its housing units for employee accommodation. “Look, our goal is to keep the small-town vibe. Whistler and Vail didn’t even have towns before the resorts were built.”[pagebreak]
Wedged between the Selkirk and Monashee mountains, Revelstoke has always had the kind of naturally rough-hewn historic character resort planners would go grey trying to replicate. Hundred-year-old Victorian brick buildings and two-storey wooden houses are gathered near the confluence of the Columbia and Illecillewaet rivers, and on clear days sunshine glints upon their characteristically steep tin roofs (built this way to shed winter’s heavy load of snow). Shortly after Major A.B. Rogers surveyed a perilous railroad route through the Selkirk Mountains in 1881, the Canadian Pacific Railway and ensuing logging activities formed the foundation of the young town’s economy. Massive hydroelectric dam construction in the 1970s and ’80s brought boom times, but by the mid-’90s Revelstoke’s fortunes began to flag and the economy stalled. Houses were selling for under $50,000, and those who still held down jobs snapped up second and third homes. The dream of a big ski resort, though, has long hovered above the town. Ever since 1890, when Ole Sandberg first used skis to commute between his mineral claim and town, Revelstoke seemed destined to become a winter tourist destination. Though its lower slopes have been occupied by a ski hill in some fashion or another for at least 90 years, big development dreams for Mount Mackenzie came and went like a spring rain squall. Fifteen years ago, ski enthusiasts formed a non-profit society to keep the hill – then known as Powder Springs – afloat, and as part of the life-support operation the city assumed ownership of the hill’s rickety assets. In 2004 RMR, with provincial government approval for its $1-billion plan in hand, entered into an agreement to purchase these assets for $2.2 million – which included roughly 27.6 hectares, existing buildings and some antiquated, rusty equipment – and the town was again buzzing with rumours of a resort. Four years later, Barb Little is one local resident not exactly feeling the excitement. For the past six months, Little has written a column in the local weekly, the Revelstoke Times Review, documenting a litany of housing woes: single mothers forced to vacate after speculative landlords renovate and jack up the rents, folks with jobs but unable to find a roof to rent and forced to seek shelter out of doors. Just the sort of social decay and quality of life crisis Little never thought she would live to see in her beloved somnambulant Revelstoke.
Back in 1908, her grandmother emigrated here from England and promptly did what many a young woman of the time would have done: marry a railwayman. That’s why the scrappy 60-year-old activist assumes an almost spiritual ownership of Revelstoke. She lives in a trailer park on a rented pad, spitting distance from the ice-cold Illecillewaet River, and loves skiing and mountains as much as the next person. But Little believes firmly that isolation and a steady-but-unspectacular economy have forged the soul of Revelstoke – an attractive community in a breathtaking location where young families and folks like her could afford to sink their roots.
“I think the speed and pace of the development was too much. There were ads in the New York Times hyping real estate around here, and the city got blindsided,” says Little, who helped form a group called Renters’ Voice to advocate for affordable housing. Little says RMR should have built some of the promised employee accommodation before the existing supply of rental housing hemorrhaged. As for the folks down at city hall, she calls them naive, blind or both. “I think we’ve lost control,” says Little. “People were complacent in thinking that our city fathers would look after us.”
The downside of resort development is well documented. A 2007 American film, Resorting to Madness: Taking Back Our Mountain Communities, portrays some of the stark realities faced by U.S. ski resort communities relating to housing prices. In an interview for the film, Daniel Glick – an author who has written extensively about the Vail experience – describes the flagship resort of Don Simpson’s home state as a place where “even the professionals, the firefighters and the teachers, have to go further and further from the resort area” to find a place to live.
Tim Wake, a councillor for the Resort Municipality of Whistler and former manager of the Whistler Housing Authority, says that Revelstoke – which he calls “the poster child for what not to do” – doesn’t have to look to the U.S. for precedents. In March, Wake published an Affordable Housing Toolkit for Smart Growth BC, an organization that promotes responsible development. The report recommends special zoning, incentives for developers to build low-cost housing, the creation of a housing organization, and banking municipal land for non-market development.
Wake took an avid interest in affordable housing after witnessing Banff and Canmore grapple with runaway real estate. The pattern is familiar. Property prices spike as resort developers hype real estate to attract wealthy investors. Newcomers snap up vacation homes, while renters or workers are squeezed to the economic margins. Meanwhile many vacation homes sit empty for much of the year in a phenomenon Barb Little calls “black window” syndrome. Consequently, the social diversity of a town is diluted, and the people emotionally invested in a community – the ones who volunteer at the food bank, sit on civic committees and coach little league sports teams – eventually pack up and leave in search of affordability.
“A lot of the things Revelstoke is doing now should have been happening two years ago,” Wake says. “These problems don’t sort themselves out; they only get worse and then you start to lose the core of your community. It’s easy to point the finger at city council and say they should have done more, but it takes a community effort.”[pagebreak]
Over coffee one day in March at the Main Street Cafe, Mayor Mark McKee ponders the rapid changes underway in Revelstoke as he nears the end of his second and final term. McKee is a classic small-town politician, a fixture in the local business establishment who glides through the pubs and streets of Revelstoke with the confidence of a banker. When he’s not absorbed by the often-thankless world of civic politics, he’s busy running a couple of retail clothing stores. He’s also a commercial landlord. RMR’s corporate offices are housed in the top floor of a heritage brick building that he owns – a coziness that makes people like Barb Little wince.
The mayor readily admits that the sudden influx of resort investment comes with its share of headaches for renters and first-time homebuyers, as well as for small-business owners struggling to find and retain employees. Indeed, not even city hall is immune to the changes: in a strange twist of irony, Hap Stelling, the city’s planning director, tendered his resignation in April after just two years on the job, explaining that Revelstoke was a town he couldn’t afford. Still, McKee says he prefers the challenges of prosperity to the old ones faced by the community – like how to keep young people from buying a one-way ticket out of town for lack of jobs. “For 15 or 20 years, our economy has been on a downward slide. Now it’s going up big time.” And as the mayor bluntly states, “selling real estate and making a profit are not dirty words.”
The municipality has, to its credit, slowly begun to respond to Revelstoke’s housing crisis, establishing the Affordable Housing Society last year and making available close to six hectares of municipally owned land for a price-controlled development still at the conceptual stage. It’s also tweaking zoning bylaws to legitimize illegal rental suites and hopefully encourage the building of new ones. A so-called inclusionary zoning policy will require developers, as a condition of obtaining a desirable rezoning, to provide one housing unit at cost for every five units built for the market. Unfortunately, none of these measures has so far put a dent in the problem.
For those who can afford the resort lifestyle, RMR is peddling a mix of ostentatious properties from the granite floors of the former Molsons Bank in downtown Revelstoke. Inside the small showroom, glossy brochures and a plaster model depicting the development at full build-out tempt potential investors, with resort real estate ranging in price from $400,000 to $2 million. “We’re selling site-unseen to people who are familiar with places like Vail, Aspen and Whistler,” says Sally Carmichael, director of sales and marketing for Sotheby’s Revelstoke office (and a former Whistlerite and Intrawest employee). “Yesterday we spoke to someone from the Cayman Islands and we’ve had calls from expats working as far away as Afghanistan.” Sotheby’s has sold more than $145-million worth of resort properties to date, with posh single-family chalets starting at $695,000 and homes equipped with private helipads starting at $1.1 million, for owners who might want to summon a chopper for a day of heli-skiing. So far the market of buyers has been divided 50-40-10 among Canadian, U.S. and U.K. buyers, and Carmichael says that RMR hasn’t even begun to tap the continental market of investors weary of the increasingly moribund European winters.
Whatever the social ramifications, there’s no doubt that this influx of international money is having a huge impact on local businesses. Down at the Woolsey Creek Cafe, Sophie Fortin polishes wine glasses prior to the evening dinner rush. The Quebec City native loves travel, rock climbing, backcountry skiing and mountain biking. When Fortin, 34, tired of the nomadic lifestyle, she settled in Revelstoke and dove into the food business, purchasing Woolsey Creek with a childhood friend. Three years ago the culinary entrepreneurs moved into this larger building on the corner of Second and Garden streets. As they plunged further into debt, they also wondered how long they could pull the all-consuming long shifts of restaurant ownership; after the bills were paid, there wasn’t much left in the till.
Those worries have since vanished, with Fortin claiming business has tripled between the 2006-07 and 2007-08 seasons. “The resort has brought a lot of fresh blood and new energy, and this town needed an injection of life,” she says as the first diners arrive. “This year gave us a new lease on life. We finally looked into the hole and saw some light.”
Around the corner at Mt. Begbie Brewing Company, owner Bart Larson can’t brew beer fast enough to fill his orders, which are up 80 to 100 per cent over last year. Larson, 45, has charted an unconventional career path. He was born and raised in Revelstoke, left in his late teens to attend university and ended up doing a post-doctorate in nuclear physics, but eventually he pined for the small-town life. After returning to Revelstoke 12 years ago with his wife, Larson translated a passion for brewing beer into a thriving microbrewery. “I was looking for a place where you could afford a house,” he says, chuckling at the thought of the current bullish real estate market, which sent his own house assessment skyward by $100,000 last year alone.
He sees the resort development as a double-edged sword. “It’s good for my business but not necessarily so good for the reasons I want to live here – for the small-town character, for a place where I want to raise my daughter,” he says, sitting on a stool at a yet-to-be installed beer-tasting bar. “Of course the resort says they’re going to preserve that small-town character, but I’m not sure how they’ll do that.”
For all its current successes, RMR may face an uphill battle over the long term. The credit crisis and slumping economy in the U.S. have heralded a dramatic slowdown in the local real estate market, with the B.C. Real Estate Association predicting MLS residential sales will drop nine per cent this year over 2007. The baby boomers who fuelled a big expansion in skier visits during the 1980s and 1990s are starting to hang up their ski poles. And Revelstoke, though geographically central in southern B.C., is distant from any major metropolises and can only be accessed from the east and west by a highway that can be treacherous in winter, with frequent closures due to avalanches.
There’s also stiff competition for resort-tourist dollars. Since 2004 alone, the B.C. government has green-lighted five ski resort master plans, including Mt. Baldy, RMR, Crystal Mountain, Saddle Mountain and Whitewater, not to mention Kicking Horse Resort that came on stream eight years ago. And the contentious Jumbo Pass ski resort in southeastern B.C. is a few handshakes away from clearing the final hurdles before work can begin. Still, RMR management is chalking up its inaugural season as an overwhelming success, exceeding its projected skier visits by 44 per cent, according to president Paul Skelton. Two new lifts are currently being installed, trees are falling for new runs, and earth is being moved for subdivisions. For-sale signs sprout from the ground like mushrooms from the forest floor.
Down in the valley, it’s spring-like, but high on the mountain – which is where I’m headed with Skelton, whisked 1,000 metres skyward aboard a yellow gondola car – winter perseveres. Skelton, a quick-witted Aussie and former general manager of Whistler Blackcomb, is living his dream: helping to grow a ski resort from the ground up. “A few years ago, I literally walked around this mountain with a GPS unit and topo map flagging out potential ski runs,” he says with the giddiness of a kid cut loose in a chocolate shop. He tells me the run beneath our gondola is named, in reference to an inside joke, Kill The Banker. Nobody – not Skelton, not Don Simpson – fosters any illusions. RMR will need a lot of investment from bankers and other well-heeled resort dwellers to drive the real estate machine forward and allow its 15-year master plan to manifest.
When we off-load from the top chairlift, we spot Simpson energetically hiking, with skis slung over his shoulder, to the pyramidal summit of Mackenzie. In minutes Simpson and his buddies disappear into a swirl of white clouds, while Skelton and I point our boards downhill. Far below, the Columbia River meanders indolently past the shiny tin roofs of downtown Revelstoke – a place in the throes of a metamorphosis, where realtors drive around in newly leased luxury cars and longtime locals are wondering what’s happening to their town.