LAKE TAHOE'S WINDS OF CHANGE

At the turn of the millennium Tahoe resorts are making 21st century improvements.

As Pacific storms roll into the Sierra Nevada they drive strong winds down from the mountains across Lake Tahoe and into Nevada. Old timers call this wind the "Tahoe Zephyr." Not since the post Olympic years of the 1960 Squaw Valley Winter Games has this zephyr signaled such powerful winds of change for the Tahoe area.

During ski season,Tahoe has always offered abundant natural snow, magical views, bluebird days, and richly varied terrain accessed by more chairlifts than in all of Colorado. Once known for their lack of high-end luxuries,Tahoe ski resorts are now redefining mountain hospitality. At the turn of the millennium, a fruit basket of nearly $1 billion in proposed development is expected to launch the historically laid-back sanctuary into the upper tier of international winter playgrounds.

Few financial soothsayers from the early 1990s' drought-stricken years would have predicted that, as the century wound to a close, Tahoe mountain resorts would become such a hot commodity. But then, hardly anyone forecasted that Tahoe would enjoy four successive years of record snowfall that would draw record visitation. During the '98-'99 season alone, 3.3 million vacationers flocked to the area's six major resorts - Squaw Valley, Alpine Meadows, Northstar, Sierra-at-Tahoe, Heavenly, and Kirkwood. The financial success of recent years has bred rose-colored optimism. Together, tourism growth and the robust U.S. economy have fueled an upsurge in Tahoe real estate. With lifestyle enthusiasts spending enormous sums of stock-market wealth on new Tahoe homes, area real estate has soared to pricey highs. Two years ago there were 400 homes available on the South Lake Tahoe real estate market. This year there are less than 100. Homes or sale average a mere 168 days on the market before being purchased

"There are several dimensions happening at once at Tahoe," says Bob Roberts, head of the California Ski Industry Association."The economy is strong, the weather has been cooperative, and families are searching more and more towards recreation experiences. At the same time you have companies with strong managerial concepts and deep pockets."

Part of South Shore's attraction is a $500 million project by the South Lake Tahoe Development Plan surrounding the installation of a downtown South Lake Tahoe gondola, a Heavenly resort on-mountain 273-unit hotel, and a town center "Heavenly Village," complete with 70,000 square feet of upscale retail restaurants, cineplex, and outdoor ice rink.

"Lake Tahoe's coming into its own, with major redevelopment in the area, not just the ski resort. We¹re no longer just a ski resort, but a community on the slopes," says Heavenly spokesperson Monica Bandows. The transformation has even enhanced the appeal of the area's recreational properties. More than 100 families placed deposits on Heavenly's future time-share Grand Summit Hotel in the first week of presales.

Few resorts are poised on the brink of such momentous rebirth as Kirkwood. In the past Kirkwood's ambiance was cozier than a neighborhood tavern. Amenity-free, nightlife was relegated to watching videos in the condo.

All that has changed. In the midst of a 10 year real estate driven $250 million project, Kirkwood has completed a Mountain Village complemented by a quarter-ownership $18 Mountain Club condominium hotel, three other superb lodging complexes, and a subdivision of individual single family homesites. Guests are supported by a newly developed village that includes a heated plaza full of retail shops, restaurants, and something new to Kirkwood: an energized nightlife. Other attractions soon to be built are an ice rink, swimming pool, and recreational complex.

"What we want to do is maintain the integrity of what got us here the last 27 years, a sense of space. At the same time the Mountain Village will contain numerous attractions," says Kirkwood Resort President Tim Cohee. "We believe at the end of the day a certain high percentage of people who want to be part of a resort community don't want to be around crowds when they come to the mountains. There's going to be no other place like Kirkwood," says Kirkwood Resort president Tim Cohee.

Other resorts are banking on similar real estate driven projects. Celebrating 50 years, Squaw Valley USA continues to be a work in progress. Two seasons ago the Olympic resort completed the installation of North America's first Funitel, a revolutionary aerial enclosed uphill transportation system. But Squaw's future lies in the Canadian development company Intrawest, which is converting Squaw Valley's parking lot into a 14-acre alpine-themed pedestrian village at the base of the resort's immense mountain. The project features 120,000 square feet of shops, restaurants, and nightlife, underground parking and 640 condominiums. Intrawest's acquisition of Squaw Valley land represents a total investment of $250 million at build-out. In April, 2000, Intrawest announced the sell-out of its first mountain homes to be developed in The Village at Squaw Valley. Within six hours all 139 homes available were sold for a total of $73 million.

"The people who love Squaw Valley dreamed of the day when a world-class, ski-in, ski-out village would compliment this world-class setting," says Greg Ashley, senior vice-president Resort Development Group for Intrawest. "That time has arrived with the overwhelming response to the Village at Squaw Valley. This success has also accelerated our planning for Phase Two of the Village."

Although resort development hopes to improve vacation standards and better the ski experience, for many the ski villages high in the Sierra Nevada are no longer the easy-going, intimate enclaves they once were. These days, while the well-to-do leisure class sit in their over-priced second-homes, making small talk over cappuccino and cognac - bartenders, cooks, dishwashers, waiters, and housekeepers scurry about earning $7 and $8 an hour. Tahoe has a near-vacancy rate, and few workers can afford what space there is. The downwardly mobile, noble Tahoe ski bums of yesteryear don't feel so mobile as they have begun to get pushed down valley.

Housing shortages in the Tahoe area were brought on by a combination of greed, glut, and well-meaning efforts to keep development under control. Slow growth ordinances backfired when property prices screamed out of control. To make way for the new money baby boomers, apartment units, trailer courts, and duplexes that housed year-round residents came down, and expansive second homes and vacation condos went up for out-of-towners and real estate speculators.

Housing prices shot through the roof.

"It's like Charles Dicken's 'A Tale of Two Cities. It's not the best of times for a lot of people," says Tony Lashbrook, Community Development Director for the town of Truckee, a historic working-class burg located 11 miles north of Squaw Valley. "It's gotten so bad in Tahoe City that there's been proposals for a tent village for summer raft employees. People who once lived at the Lake are moving out to Truckee and even beyond. They commute to work everyday."

Lashbrook explains that the Intrawest project calls for 700 employees. Although the Placer County General Plan, under which Intrawest is governed, calls for any resort project to provide 50% of housing, whether on -site or elsewhere, Lashbrook states that Intrawest hasn't included any housing opportunities in their plans. Instead, they have paid a $2 million mitigation fee.

"You have to have real housing put on the ground to mitigate significant employees. Unfortunately, developers are so intent on building their projects they seldom address this project with a lot of concern," says Tony Lashbrook. "Housing should be part of a resort infrastructure just like an access road or chair lift."

Lashbrook mentions that only down the road, when keeping employees becomes difficult for business, will resort operators take hold of the issue.

For many Tahoe residents the influx of growth has come as a rude awakening. Local communities long prided themselves on being all things to all people, where the rich and the not-so-rich, joined by a collective independent spirit, happily rubbed shoulders and reveled in the beautiful wonders of nature. As wealth has seeked altitude, Tahoe ski towns have become more like prerevolutionary France: a gate-house community.

"A lot of these baby boomers like their scenery 'medium rural.¹ They want to see the cows, but not smell them," concedes Larry Baldwin, a 25 year resident of the north shore. "A typical example is of this guy near Sunnyside Resort. He builds a palatial lakefront then puts up high steel fences with roaming guard dogs just in case to keep us white trash out."

Even the South Lake Tahoe Development Plan has not been without its critics. Although support for the massive makeover of thirty-four acres along South Lake Tahoe's main drag is widespread throughout the community opponents can be found. City Councilman Bill Crawford believes the city has taken on too much debt, culminating in a $33 million loan to acquire private property in the redevelopment district, and is apprehensive of the American Skiing Company's ability to develop property. They are, he says, flat broke. The small clutch of forced out businesses within the project's eminent domain have had a tough time relocating. Several of the businesses have been offered to move into the new development, but they must go 18 months without income during construction and then pay significantly higher rents.

"They want $4 or $5 a square foot," explains John Thomas, co-owner of Paul Kennedy's Steak House, who currently pays $1.16. "I can't make a living at that rate."

Taking a vision and molding it into a realty is a lofty task requiring skill, perseverance, and a great deal of faith. What the Tahoe area seems to have gained is a shared vision, a consensus of progress with efforts towards year round, real estate driven destination resorts surrounded by pristine wilderness. With a bright future and strong fiscal backing, the resorts surrounding Lake Tahoe are becoming more and more protected from the winds of the Tahoe Zephyr.

"Change is difficult for a lot of people," says Dave Myers, director of Kirkwood's Mountain Operations. Once a resident within the resort, Myers now lives with his family in Woodford, 24 miles away. " But the mountain experience is getting better and it is being fueled by mountain development. To realize the resort's potential the ski company has to be profitable and the only way to success is to generate a larger bed base. The place may take on a new look, but the mountain doesn't change, and there¹s still quite a bit of passion for mountain life. It¹s only getting better. I really look forward to the future."