ISSUE #27: Sun Valley Resort Expansion Could Cost Ketchum Locals Big $$$
A Look at the Math of Tourism Expansion and its Cost to Current Residents
If You Think Ketchum Has Learned from Bluebird…You Are 180 Degree’s Off The “Plan”
Ketchum just hosted some focus groups in the process of getting an increase in LOT taxes dedicated to making more…Bluebirds. The Troika will stop at nothing to get this done.
If you think I am being dramatic, ask the Mayor or any member of the Ketchum Housing Department. They will probably tell you that they have no higher priority for Ketchum than “community” housing. That not all of it will go to Bluebirds, but they will not commit to none of it going to Bluebirds.
While some of it may go to Lease for Locals or for buying units to put into deed restrictions, if you look at the Housing Action Plan, the vast majority of the money will go into large scale, income-restricted apartment buildings. One is slated for Lift Tower Lodge. One is slated for the Y (that looks like it may be coming next). And the 6th/Leadville parking lot is on the working list for replacement by a Bluebird as part of the Troika program to replace parking with people.
In other posts, I have explained why this is the wrong kind of housing to address Ketchum’s workforce housing needs. I have also revealed how the Housing Action Plan redefines homelessness to include people who commute to work and redefines a working person to include a person who doesn’t work (see page 7 of that plan).
I have written about how Bluebirds are a form of corporate welfare, which is the catalyst for this blog post. I read the Sun Valley Company’s expansion plan, and the lightbulb went off that they will be able to take advantage of the Ketchum taxpayer subsidies to house their workers in the Bluebird program.
How is that good for Ketchum locals?
Free Riding off of Ketchum Residents
The City of Sun Valley isn’t really a city in the complete sense of the moniker. It can exist without a downtown, schools, water system, hospital, or really any public services ONLY because the City of Ketchum provides most of those for Sun Valley Residents.
On the flip side, the residents of Ketchum get…Sun Valley Company (“SVC”). We live near all the resort amenities, which are pretty darn nice if you have the money to patronize them.
I’ve said it before, and I will repeat it: the people running SVC are geniuses at getting Ketchum locals to provide them with corporate welfare. They are hard at work figuring out how to squeeze more juice from our lemon.
Take, Take More, Then Take Some More
As I have addressed in other posts, Sun Valley Company occupies an unusual position in Blaine County. They get significant corporate welfare from Ketchum1 taxpayers:
subsidized flights into SUN (FSVA),
subsidized marketing and promotion support (VSV),
subsidized transportation for guests and employees (Mountain Rides)
subsidized taxpayer-funded events to amuse their guests (Wagon Days, Ketchum Alive, and now the World Cup),
philanthropically funded entertainment for resort guests (Sun Valley Music Festival, Sun Valley Museum of the Arts, The Argyros, The Sun Valley Writers Conference, etc.)
taxpayer-subsidized housing for their underpaid employees (SVC promotes that to their workers)
free irrigation water from the Ketchum Water Treatment Facility for the Elkhorn golf course.
they even get a say in how Ketchum taxpayer money is spent — they have votes on FSVA and VSV, which are channels for funneling taxes to subsidize tourism.
The Holding era won’t last forever. As they say on Game of Thrones, “Winter is Coming.” SVC will be looking for ways to make a greater return on its assets before its eventual sale, which will have implications (mostly negative) for all of us.
Almost doubling the price of season passes for local kids in a single year was a hint of what is to come. Another step is hosting the World Cup (SVC will “own” the event). Keep your eyes peeled for other indications. I hope they give a local syndicate the option to buy the resort when it goes up for sale rather than doing a deal behind our backs with Vail or Aspen.
Before a Sale, Grow Your Revenue and ROI To Maximize the Price
The current move to increase ROI is the resort expansion discussed tomorrow at the City of Sun Valley P&Z meeting. You can read the public plan here.
The plan is full of flowery language and typical developer BS about preserving green spaces, etc. There is very little informational content in it.2 The bottom line is that they plan to make A LOT MORE MONEY via the following actions:3
rebuild the Village area to make it more commercial and add retail capacity,
add more capacity to host conferences, and
add 75% more lodging units to fill up the stores and conference facilities.4
The whole point of the plan is to increase ROI by attracting more tourists to stay at Sun Valley Resort, capturing more of their spending within the Resort, and reducing resort guest spending leakage to Ketchum’s commercial core.
The one nice thing about the plan is that they will do most of this development within their existing resort zone.5 But there are some not-so-nice implications of the expansion, which will hit every resident and taxpayer of the Wood River Valley, with a disproportionate impact on the residents and taxpayers of the City of Ketchum
75% Increase in Workforce Housing Demand; 0% Increase in Workforce Housing Supply
“Where will they live?” was a caption to a Mountain Express cover page photo in the 1980s (I think?) with a guy walking a camel down Main Street in Ketchum. Ketchum has ALWAYS had a workforce housing shortage. That’s why it is so painful to watch The Troika of Bradshaw/Breen/Hamilton waste so much of our scarce money, land, and town character on things like Bluebird (and the three others they are working on) that don’t address the fundamental problem.
Sun Valley Company’s plan to expand from 480 to 840 lodging units (+75%) will drive up the demand for workforce housing—probably by 75%, no? They plan to increase the workforce housing supply by 0%. Read that again. 75% increase in demand, 0% increase in supply.
The usual staff-to-room ratio for a five-star hotel is a minimum of 2.5:1. 360 more rooms is 900 more staff. SVC doesn’t mention that in their plan. I wonder why they left that out? WHERE WILL THEY LIVE? Will SVC depress its wages so its workers can qualify for the income caps at Bluebird? Sun Valley has an employee webpage that instructs it workers on how to apply for public housing benefits.
Guess who will be left holding the bag? The people of Sun Valley? Ha! It will be the taxpayers of Ketchum, Hailey, and points south. SVC will need the equivalent of nine Bluebirds to house all these new employees.
How Will 75% More SVC Guests Get Here? At Our Expense
There are only two ways for tourists to get to Sun Valley: drive on a two-lane highway almost three hours from Boise or fly into SUN (either commercially or privately).
Which do you think the increased volume of tourists will pick when spending $400+ per night?
The Resort currently sleeps 1200 people per night.6 75% more means an incremental 900 people. The Embraer 175 that Sky West flies into SUN for Delta and United has 76 seats, and they run those flights at a 75% load factor (that’s 56 people per flight). That means getting these 900 people to Sun Valley will require an incremental 16 flights per week.7
Guess who subsidizes flights to SUN? Well, the guest pay for a lot of it via their contributions to LOT for AIR. But so do YOU whenever you go patronize a bar, local retail store, or restaurant. Why are you paying the “tourist” tax?
And what about the employees? 900 more employees. Sun Valley has no housing for them. Ketchum has no housing for them. That means they will drive to work. Up to 900 more cars on the daily commute. Do you think we have rush hour traffic now?
And where will those employees park? The Plan says that SVC has 1,008 spots in the Plan area, which are adequate for current operations but does not address employee parking demand growth.8
SVC is Smart. City of Sun Valley is Smart. Why is Ketchum…So Not Smart?
If you live in Sun Valley, you might be excited about this expansion. It will mean more taxes to spend on things like providing toilets and paving over part of Festival Meadows. It will cover the costs of the new roundabout at Sun Valley and Saddle.
But if you live in Ketchum, what’s in it for you but more corporate welfare for Sun Valley Co? More of your taxes for more Bluebirds. More of your taxes for more flights to SUN. More traffic from the 900 new employees. More competition for scarce housing resources. More challenges in finding parking.
What is the City of Ketchum doing to protect the quality of life for Ketchum residents in the face of a 75% increase in Sun Valley Resort? It’s not—it’s doing the opposite. It enables this with our tax dollars and projects like Bluebird that let companies like Sun Valley take advantage of us and depress wages so their workers can qualify.
In the end, SVC has the right to do this. The only avenues available to locals as mitigants are to repeal the LOT for Air, raise the LOT on Lodging, and fix the zoning so that it would require SVC to house all of its incremental workers on its property at its own expense.
Why would you do any of that if you were the City of Sun Valley Council?
If you are the City of Ketchum, you should be getting fired up that the City Council of Sun Valley will determine the SVC workforce housing requirement yet has no incentive to hold their feet to the fire. There is no workforce housing in Sun Valley once they fill up the SVC dorms.9 The first place SVC employees will look is Ketchum. Bluebird is perfect corporate welfare, given SVC’s wage scale.
What Can the Ketchum City Council Do?
A lot more than they are doing! Adopting a policy not to subsidize the tourism industry with taxes on locals would be a good start.
Beg the City Council of Sun Valley to require SVC to house its workers on its land at its expense. They won’t do it, but you should at least ask. If I were on the Ketchum City Council, I would attend every Sun Valley Council meeting and do everything I could to shame them into putting this burden on SVC. Guess how many of those meetings The Troika will attend?
Stop the Bluebird program in Ketchum. This is an excellent example of how dumb it is. Focus Ketchum’s scarce money, land, and town character resources on building workforce housing for Ketchum’s essential workers, not Sun Valley’s, and do it outside the retail core. I’ve laid out how to do it multiple times. Tourism industry expansion in Ketchum is non-economic without taxing us for more Bluebirds so the exploiters can depress wages.
Repeal LOT for AIR. It may have been needed “back in the day,” but the fact that it could be cut shows that it is corporate welfare, and FSVA and VSV know it. The airlines charge almost double to fly to SUN vs BOI—on the same planes. BOI doesn’t pay the airlines a penny (it charges them!).
Remove SVC from all public boards that allocate Ketchum taxpayer money. This is just basic good governance.
Find out what the Ketchum taxpayer subsidy to Mountain Rides is to shuttle SVC guests and take that money back from Mountain Rides. SVC can pay to move its people.
Renegotiate the water treaty between Ketchum and Sun Valley. Why are the people of Ketchum footing the bill to increase the water supply to Sun Valley Co?
Instead of bearing a portion of the costs for the World Cup, SVC should reimburse Ketchum for those costs. SVC will host this event, one way or another; Ketchum residents do not need to pay for it. Why won’t the Council stand up for us?
Guess how much of that the City of Ketchum is doing right now.
To be clear, it’s not just from Ketchum taxpayers. Almost all WRV residents get to help subsidize SunValley Co. directly through the LOT for Air and indirectly through what they pay to subsidize affordable housing units for SVC employees.
What the heck does this mean? “improvements to incorporate accessibility and universal design concepts to provide and enhance usability” (p.40). That's an example of what I mean by BS.
NB: I love how they have plans to accommodate Uber/Lyft drop-offs, which we don’t have (yet), but no plan for e-bikes (of which we have more every day).
NB: this is just what they plan to do around the village core. Don’t forget their plan to add 100+ condos across from Dollar Lodge. What is a ski resort worth without a real estate play?
And yet, they won’t say this. They aren’t goals per the Master Plan Objectives on page 20. I really dislike developers taking locals for fools.
Zero plan to put any workforce housing units within the plan's footprint.
https://www.sunvalley.com/about/#:~:text=in%20the%20U.S.-,Accommodations,a%20total%20of%20480%20rooms.
Assuming the average stay is one week. If it’s less than that, they will need more flights.
Plan page 44.
SVC charges employees $600/mo to live in the dorm in a bunk bed, four to a room with shared bath. SVC is getting $2400/mo for the equivalent of a studio apartment. They are geniuses.
This comment came in by email:
""building low income housing smack dab in the center is a ludacris use of resources when we have a bus system and Hailey/Bellevue so very close." - L. Moore
Hailey and Bellevue are now disasters financially as a consequence of being converted into SACRIFICE AREAS by the north valley with an airport which clearly needs to be relocated and a malignant growth agenda with officials and staffs replacing a legitimate development analysis and review process with "rubber-stamp" approval of every real estate development proposal. A complete absence of coherent planning from north to south in this valley for the malignant growth being accommodated by a corrupt local establsihment has destroyed this place making many working families and retirees on limited fixed incomes already operating under a cloud of financial insecurity and struggling with property taxes pay for the privilege. Such is the nature of the TOXIC GENTRIFICATION intentionally engineered by the corrupt local establishment.
Again Perry, thank you for your due diligence in exposing the PROFIT PRIVATIZED, RISK SOCIALIZED corporate welfare program unethically foisted on the community under cover of Covid.
Citizens MUST REJECT any future proposals for additional funding until the size of the MASSIVE FUTURE UNFUNDED LIABILITIES created by both the corruption and incompetence of local officials promoting this malignant growth agenda can be accurately determined."
Perry, I think you are somewhat off base regarding the SVCO.
First and foremost, SVCO is the economic engine for the WRV. Without the vision and motivation of the three owners, both Ketchum and Hailey would have remained small, farmland support towns. There would be some outdoor recreation, mostly fishing, but certainly no significant winter sports. Employment would be minor and limited to low paying opportunities. We should all celebrate the three benevolent owners who intentionally did not develop the many open acres of land that they could have. One only need to compare SV with Aspen Ski Corp and Vail Associates developments.
Throughout the history of the resort there has been constant investment and renewal. The facilities on Baldy are the very best in the country. Both the lifts and the restaurants. Those improvements continue today. I suggest that it's the desire of the to maintain the finest facilities in the industry that drive these investments and not simply dressing up the asset for sale. We do not know the ultimate disposition of the resort, however, I truly doubt that the driving force behind these current investments is to dress the asset up for sale. Fact is, from a financial perspective it's probably a poor, unnecessary investment if the goal is truly a sale or "harvest."
I believe that the SVCO houses most of their seasonal employees in their dorms. The surrounding area provides the bulk of the employees housing, as it does with most "company towns". This means the area benefits from the employment base and opportunities - and the tax base to support the infrastructure.
The bottom line here is that the local governments have failed to keep up with the growth of the SVCO - the roads, utilities, and so on. The damage to the area, the demise of the character of Ketchum, the LOT applications are all the responsibility of the local governments. That is what is needed to change, not, in my opinion, the SVCO.