As Whistler gets ready to celebrate its 40th anniversary, pique explores how Shrewd planning, political awareness, and timely government help, got Whistler through the recession and raised a renewable economic resource
You could spend that on a house in Whistler today, but in 1978 it was $10.5 million of federal and provincial money that launched construction of Whistler Village and set Whistler on the path to becoming an international resort.
The money came from the Travel Industry Development Subsidiary Agreement (TIDSA), forgivable loans for tourism development. Of the $25 million in TIDSA funds allocated to British Columbia, $10.5 million went to Whistler and became the working capital for the village development: $2.5 million for underground parking, $2.4 million for a road access and a bridge across Fitzsimmons Creek to Blackcomb, $300,000 for Arnold Palmer's golf course design fees, and $5.3 million for a multi-purpose Resort Centre that included an ice rink.
There has always been a perception — perhaps resentment isn't too strong a term — among some that Whistler has been subsidized, bailed out and favoured by senior levels of government. There is no doubt governments have played a major role in the resort's development, and continue to benefit from its prosperity. But shrewd planning has also been key to Whistler's success.
For instance, when the TIDSA program was announced in October 1978 Whistler had its application in the next day. That was because Doug Sutcliffe, of the village project management team Sutcliffe, Griggs and Moodie, had heard about TIDSA while it was still being formulated. Whistler was working on its application before the program was even announced.
The TIDSA money was important for Whistler, but so was the corporate structure set up to develop the village.
After the location was decided, and as the design was being finalized, the province proposed that its housing corporation be used to develop the village, using the sale of single-family lots to finance the project. Whistler council objected.
A workshop was held with representatives from Aspen, Vail, various developers and financial experts. The conclusion was that a municipal development corporation should be established to develop the village. The argument was persuasive as Municipal Affairs Minister Hugh Curtis approved the creation of the Whistler Village Land Company (WVLC), with all shares in the company owned by the Resort Municipality of Whistler.
On April 7, 1978 WVLC was incorporated and took title to the 58 acres of Crown land that the village now sits on. The deal included controls and provisions for repayment to the province as the land was developed.
An official ground breaking ceremony for the village was held on Aug. 21, across the street from the original Myrtle Philip School. Invitations to bid on the first 12 parcels, including Tapley's Pub, the Hearthstone and Rainbow buildings, the Blackcomb Professional Building and the Fitzsimmons condos, went out shortly thereafter. The scale, dimensions and specific use of each building were prescribed in the covenants that were part of each parcel.
WVLC received more than 100 bids for the first 12 parcels, which formed Village Square. The bids were mostly local, from Whistler or Vancouver; people who skied and believed that a weekend ski area could grow into a destination resort. Intrawest, and other large development companies, were not involved.
Construction began in earnest in the spring of 1979 and by the summer of 1980 the village was a major construction site. That winter, 1980-81, Blackcomb opened. Lifts were also carrying skiers up the north side of Whistler Mountain for the first time. It wasn't a great snow year, but that allowed an early resumption of village construction in the spring of 1981, including initial work on Whistler's grandest hotel, Peter Gregory's Mountain Inn, later known as the Delta Mountain Inn and today operating under the Hilton brand.
But the warning signs of a slump in the economy were growing. Interest rates were climbing and many were growing cautious with their spending.
In November 1981 the federal government ended the Multiple-Use Residential Building program of tax credits. MURB provided investors with a tax shelter as soon as a foundation was poured. The Whistler Village plans called for multiple-use residential on the second and third floors of every building. With the economy showing clear signs of trouble, some parcel owners poured their foundation and then stepped back and waited. Consequently, during its second winter Whistler Village showed lots of rebar sticking through the snow, but few additional buildings or businesses.
Twenty-seven village sites were "under construction" in the winter of 1981-82 but everyone was keeping their money close. WVLC offered another eight development parcels in February and there was no interest at all.
The land company's position became more tenuous as the recession deepened. WVLC had debts of nearly $8 million and liabilities (the forgivable TIDSA loans, the unfinished Resort Centre — now called the conference centre — and the unfinished golf course) totalling $30 million. Its only assets were land, and nobody was interested in buying.
The feeling in Whistler was if the Resort Centre could be completed it would provide an opportunity to build year-round business, and perhaps the fledgling resort could work its way out of the recession. The Resort Centre needed another $5.5 million to bring it to completion — less than the cost of many Whistler houses today. But as a measure of the times the municipality's capital budget went from $1 million in 1981 to $650,000 in 1982. As well, all municipal staff took a 2.5 per cent pay cut and staff was asked to work three days of the year without pay.
The RMOW's financial situation became more serious on July 2 when only about 60 per cent of property taxes were paid on time. Under provincial law, municipalities were not allowed to charge more than 10 per cent interest on late payments, but the prime rate was already well above 10 per cent — and climbing — so the penalty was moot. The municipality's cost of borrowing money to make up for the late payments was estimated at up to $70,000.
By the end of June 1982 WVLC had laid off most of its staff. With no sales all year, a line of credit due to expire at the end of July, payments of $80,000 per month to service its debts and owing the Whistler Resort Association $75,000 in assessments the land company was being squeezed to death.
In July, WVLC operations were transferred to the municipality and the few remaining staff laid off. Mayor Pat Carleton became president of WVLC, but he insisted the municipality was not responsible for the company's $8 million debt.
At this point Concerned Citizens for Whistler started a petition to legalize gambling and suggested a casino would provide the municipality with tax revenue and attract investment. Meanwhile the Whistler Ratepayers Association demanded a public investigation of the holdings of WVLC and the municipality.
In September of 1982, Carleton — the only mayor Whistler had had since its incorporation in 1975 — announced he would not seek re-election. He did so with the belief that the sale of nine village parcels was imminent. A Vancouver investment group was rumoured to be looking at all nine parcels, at a price of about $8 million — which would just cover WVLC's debt. The timing was critical because the Royal Bank was about to call WVLC's loan.
"They pulled the pin and the land company was technically bankrupt," recalls lawyer Garry Watson, who has lived in the resort since the '60s, logging five years as an alderman on the first three Whistler councils while juggling his Vancouver law practice.
"As directors, we promoted and accepted an offer from a private party to buy all the remaining lands at a price which would have been sufficient to pay off the debt. But we accepted the offer subject to the approval of the provincial government, because they had a stake in things. And we lobbied the provincial government."
While the WVLC directors were working behind the scenes in Vancouver and Victoria there were lots of questions being raised in Whistler. But not at the all-candidates meeting that fall. Carleton asked that no questions about WVLC be allowed because negotiations were at a sensitive stage.
Then, five days before the election, Ruth Lotzkar and Denver Snider, candidates for council and two of the strongest critics of WVLC and the municipality, called a press conference after receiving leaked unaudited financial statements of WVLC. Their reading of the statements raised more questions but no indication of wrongdoing. Their gambit didn't resonate with voters; neither was elected.
Mark Angus succeeded Carleton as mayor, and assumed responsibility for WVLC.
The province steps in
The various dramas of 1982 were surpassed on Jan. 6, 1983 when the province announced a new Crown corporation, WLC Developments, was being formed to take over the assets and liabilities of WVLC. Very few knew that the municipality had gone to Victoria part way through 1982, cap in hand, and asked the provincial government to get involved.
The province sent Chris Gray to Whistler to assess the situation. Gray, the then assistant deputy minister of Lands, Parks and Housing, confirmed the debts and obligations of WVLC and developed a rescue plan to present to cabinet. All of it was done behind closed doors.
"He was able to go in and sell a bill of goods to cabinet that Whistler was going down the tubes — I mean really down the tubes — if they didn't come in and backstop the deal," recalls Drew Meredith, who was mayor of Whistler from 1986 to 1990. "I mean, that's the political way, you paint the worst possible scenario you can to get people's attention."
In retrospect, Watson, Meredith and others feel WVLC was grossly under-financed from the beginning.
"I've always said that when the government gave us the TIDSA money, $10.5 million, they gave us just enough to hang ourselves," Meredith says. "The allocation of funds was not right in that in any new venture there's going to be huge amounts of money at start up for marketing."
"It was all borrowed money, and the economic downturn of 1981-82 was so profound it just stopped everything," Watson recalls. "At 20-per-cent financing you can't develop real estate, or build confidence that somebody could come in and start the kind of businesses that we needed."
Whether it was under-funded or not, Whistler needed rescuing. The Royal Bank wasn't going to accept anything short of a provincial government guarantee on its money. Whistler wanted to see the village plan it had worked so hard to develop maintained, rather than the remaining parcels sold off to one developer who might screw up the plan.
And the province needed to see Whistler succeed.
While the deal brought a massive, collective sigh of relief from Whistler, it was largely condemned elsewhere. An editorial cartoon in a Vancouver newspaper depicted Premier Bill Bennett in a rocking chair under a caption reading "Whistler's Mother."
John Johnston, deputy minister of Lands, Parks and Housing, defended the deal, saying: "Whistler does create jobs, it does create revenue. We think Whistler has a good multiplier effect." He also predicted profits of $5 million-$10 million for WLC Developments over seven to 10 years.
"Certainly it's assistance," Angus said, "but I wouldn't call it a bailout. It's a firm and fair business deal which in the long run will prove to be a great investment for the province."
WLC Developments borrowed $21 million to complete the golf course, Resort Centre and various other bits and pieces of the village. The province guaranteed the bank loan and the municipality was back on solid ground.
But it took a while to convince Gray and later the board of directors of WLC Developments that Whistler's plans for the village could lead to a recovery.
"Chris Gray came in, you know, and said, 'You guys are a bunch of pot-smoking hippies, you've screwed up terribly and we're coming in to clean it up,'" Meredith says. "And then he got to the point where he said, 'Well gee, you know, there really is something here. I see where you're coming from.' It took a while to get them infected.
"Chester Johnson was even worse. He was a black and white kind of guy. He came in — they wanted to take Village North, buck it up into quarter acre lots and flog it out the door."
Chester Johnson was the president and CEO of West Fraser Timber when Bill Bennett asked him to be chairman of the board of WLC Developments.
"I'd known Bill Bennett for 35 years and he asked me to go up there and clean up the mess — because it was a mess," Johnson recalled when interviewed in 2000. "When I first went up there I had to basically get a feeling of what the problems were and where they were. It didn't take me very long. The conference centre was just a pile of dirt, basically. It just wasn't what they needed up there."
Johnson and his board came to understand the merits of the village plan but found fault in the execution. One of the first things they did was re-program the Resort Centre to a conference centre.
"I said to one of the directors of the land company, 'This isn't a conference centre, it's a play thing. You're going to put an ice rink in here? Who's going to pay for it?'" Johnson recalled.
Without talking to anyone in Whistler, Johnson hired a convention business consultant and a Los Angeles architectural firm to rebuild the Resort Centre as the Whistler Conference Centre.
"You needed to have a year-round facility," Johnson said. "We finished the golf course, the conference centre and then we started to look into all the problems we had there, and everywhere we looked there was a problem. The buildings were half built... Gradually we got the problems put aside and began selling the land."
"They appointed an independent board of people who had no involvement in Whistler," Watson recalls of WLC Developments. "That's fine in the sense they had no conflicts, but they didn't understand the total resort concept very well. They were well connected Socreds, and fine, they took the job. But they completed that conference centre at a cost of $18.5 million — big bill. They recovered that but... at least they bought into the potential for the resort. They saw that a conference facility would be a major contributing factor, bringing in conventions."
It was the largest chunk of the $21 million the province borrowed to get Whistler turned around. But it worked.
As the economy slowly recovered private investment began to trickle in. One by one the foundations that had been abandoned in 1981 and '82 were bought and hotels built. Importantly, skier visits continued to grow each year throughout the recession.
"Once WLC had stopped the bleeding — got rid of the debt and got the conference centre moving and the golf course happening — then they turned their attention totally and completely to Village North," Meredith says. "That was the payoff."
Right from the day in 1982 when Whistler first approached the province for help, the Village North lands were always seen as providing that return on investment. The province now owned the lands but the municipality controlled the zoning. Negotiations on the Village North lands, the return of the golf course and conference centre and several other pieces of land began in 1986.
"We never really discussed the conference centre or the golf course going in," says Meredith. "It was just an assumption that because it was part of the package or part of the deal that ultimately we would work out a solution to make sure those facilities were available to the public.
"It got quite scary in the late '80s when the province decided that maybe they were going to sell those assets to the private sector. It may have been a ploy on their part to get us moving — and it got us moving."
Johnson said there was never any serious consideration of selling the golf course or conference centre to private interests. Regardless, negotiations over the return of the two facilities were complicated, in part because the golf course makes money and the conference centre operates at a deficit. The final deal had to include a formula for covering the conference centre's operating debt.
And even though Johnson had been convinced of the merit of Whistler's plans, when it came to negotiations on the Village North lands his boss, Kevin Murphy of B.C. Place Corporation, had to be persuaded.
"I remember one incredible situation for me was when Kevin Murphy came in and said, 'We're just going to take Village North, bring the corps. of engineers in here and buck it up into quarter acre lots,'" Meredith recalls.
"We went, 'Whoa, you can't do that.' I actually ended up phoning Eldon Beck and said 'Eldon you've got to help me here, you've got to talk to this guy. We're not getting anywhere trying to convince him of, you know, the dream.'"
Beck, the architect of Whistler Village, sat down with Murphy and Murphy became a believer.
"That was really, really important," Meredith says. "I mean, they were still pounding away on density all the way through Village North, in terms of they wanted more density, more units, more of this, more of that. That was a continual fight because their interests were not our interests. We wanted a scale of village that was in keeping with what we had and looked good. None of these people had any experience with multi-use integrated development. They were used to buying a parking lot in Vancouver and building a high-rise."
While negotiations were continuing with the province, there was also a realization that by 1987 the corner had been turned and Whistler had to start planning if it wanted to take the next step to becoming a year-round, destination resort. Whistler council and key staff members made a tour of resort towns in Colorado and brought back several ideas.
"What impressed everyone on that tour was the importance of the village and of parks," says Mike Vance, a planner who had worked for WVLC, became the municipality's first director of parks and recreation and for many years was director of planning.
It was decided that one of the first steps to making Whistler a summer destination would be to expand and enhance the municipal parks. The problem was the municipal taxation system didn't generate enough revenue to pay for more parks. The solution, from Whistler's point of view, also came from Colorado, where towns such as Aspen and Vail have a resort-wide sales tax. But in order for Whistler to get taxing authority the province had to be convinced.
In September of 1987 a delegation from Whistler appeared before the cabinet committee on economic development. Their multi-media presentation was called Whistler Inc. – A case study of an exceptional enterprise.
"Our message was you can't support the resort, in the quality people expect, based on the existing municipal tax regime," Meredith recalls.
The presentation described the Whistler Resort Association as a network of partnerships, "All 350 businesses divisions of Whistler Inc." It showed the committee Whistler knew what it was doing, where it had come from and where it was going. And the presentation stressed that Whistler had reached a plateau and needed to build summer business.
The provincial government didn't like the idea of a tax that applied to everything when it was only needed to pay for resort amenities. Municipal Affairs Minister Bill Vander Zalm suggested the tax be applied to hotel rooms.
"It was one of those snap political decisions which don't get made very often anymore," Meredith says. "It paid for an incredible amount of stuff throughout the municipality. Without it we would have had roaring high taxes or we would have had all kinds of battles and feuds, because we couldn't maintain the facilities here at the normal municipal taxation level."
Ultimately, the two-per-cent hotel tax granted Whistler was a key to the province returning the golf course and conference centre. The conference centre's operating deficit was one of the sticking points in negotiations. The municipality and the WRA agreed that a portion of the hotel tax would go to the WRA to cover the deficit. At the same time the province passed a bill making the golf course and conference centre tax exempt, as long as they are owned by the municipality and managed by the resort association.
Negotiations for the Village North lands were even more complex.
"We had to create separate parcels for each and every building, which meant you really had to define the building plan," Vance says. "We went into volumetrics and parcel-specific design guidelines and really took the level of detail on each building and moved them into the actual negotiated agreement."
Underground parking, easements and maintenance responsibilities also had to be worked out.
"Then we had to actually prepare the wording in all the agreements for execution," Vance continues. "I believe it was the largest single deposit in the land registry office's history. It's an amazing number of documents. It took us almost a day to sign them all."
By August of 1989 Whistler and the province had reached an agreement. A detailed, overall plan had been hammered out for Village North and Whistler was ready to adopt zoning bylaws for the land. Terms and conditions for returning the conference centre and golf course to the municipality were agreed upon and the province had consented to relocate Myrtle Philip school — which was on Village North lands — to a piece of Crown land on Lorimer Road.
"By our calculations the debt is paid tonight — with interest," Mayor Drew Meredith said on Aug. 14, after council voted 4-2 in favour of zoning bylaws for Village North.
On Nov. 27, 1989 the transfer of the golf course and conference centre to the municipality were completed.
Village North was originally expected to be a 7 to 12 year development project, but with Whistler's winter and summer profile increasing, visitor numbers climbing every year and a strong economy, the market for the Village North parcels was hot. By the mid-90s WLC Developments had sold virtually all of the parcels and work was underway on most of them. WLC Developments had recovered the money it put up in 1983 and turned a healthy profit.
"You know, although the government put up that money, they got all their money back ten-fold," Chester Johnson said. "That $21 million that Bill Bennett put up for us was paid back in spades."
"The moral of the story in my mind is they got all their money back and then some," Meredith says. "And they got this incredible renewable resource here which has been pouring tax revenue into Victoria ever since."