Expensive Living, by Design

Life in a ski town can be expensive, with real estate being a prime component of the expense. Sometimes the topographical features of the area don't give much room suitable for development. In addition, skiing and snowboarding, being expensive activities on their own, tend to attract people with disposable income with which they can bid up housing prices.

But the biggest reason for elevated housing prices, at least in some areas, may be the law. Government ownership can take a lot of land out of circulation, or at least subject it to an extra layer of scrutiny and thus, make development more expensive. For example, nearly 80 percent of Gunnison County (home to Crested Butte Mountain Resort) is owned by the U.S. Government. In Cook County, Minnesota (home to Lutsen Mountains), roughly 90 percent of the land is owned by the state or federal government.

Aside from owning land outright, governments have the power to regulate what happens on private land. As we've seen in the housing bubble of recent years, government policies can affect the demand for land as well. The Cato Institute, recently addressed the role of regulations in Truckee, California, a town close to the Northstar-at-Tahoe resort.

The town of Truckee, CA is an upscale community nestled in the Sierra Nevadas near Donner Summit off I-80. Housing is expensive. Truckee’s origins were as a railroad town, so there is older housing. In Truckee, however, downscale is funky and comes with upscale prices. The Truckee Town Council has decided to provide "downpayment assistance" with loans at interest rates as low as 2 percent.

Those who work in Truckee often cannot afford to live there and the Truckee Town Council hopes to make housing affordable for them. The program is thus paved with good intentions, but we know where that road leads. Cato's Randall O'Toole and Hoover's Thomas Sowell have shown that land-use restrictions and zoning are principal causes of high-priced housing. The recent housing boom and bust demonstrated how efforts to make housing "more affordable" largely made it more expensive. And they ended up putting many into homes that they could not ultimately afford.

There are no reports that the Truckee Town Council is planning to ease land-use restrictions. So they have done nothing to address the problem of pricey homes. It's supply and demand, and the Council is working the wrong side of the equation.

Of course, if you have, through birth or the outlay of money, found a way to live in such a location, you may prefer that sort of arrangement, since it tends to keep the area undeveloped.

Your personal playground in the snow

It's good to be king of snowboarding. One of Shaun White's sponsors created a private playground for him near Silverton, Colorado, and dubbed it the Red Bull Project X.

The web site for the project has a number of videos, including those of four breakthrough tricks that White worked on in the built-for-him halfpipe. For those who understand the lingo, they were 1) a front double cork ten, 2) a switch back 900, 3) a double back rodeo, and 4) a cab double cork ten. No, I don't quite get them all, but at an abstract level I know that there's a lot of skill and athletic ability at work.

While I watched the videos of the tricks, I found some of the other videos more interesting, or at least easier to grasp. In something that borrows from cable TV shows "Mythbusters" and "Ice Road," a crew in the Lake Tahoe region built an 8,000 metal container (think of an oversized Dumpster). They transported it to Colorado, and used two pieces of heavy equipment and skids to move it next to the end of the halfpipe. They filled the container with foam blocks, giving White a safe landing zone as he practiced different tricks. As I said, it's good to be king.

Perhaps the most interesting video described the building of the pipe. For day after day, they set off avalanches, which caused a sufficient amount of snow to accumulate in one spot. Then they used a pipe cutter to shape the snow.

You may wonder why Shaun White deserves all this attention and the money spent on his behalf. If you remember your Econ 101, there's a three-word answer: "supply and demand."

Millions of people want to see highly skilled snowboarders strut their stuff. That's "demand." Only a few, including White, can perform at the highest level. That's "supply." When you've got many people with a demand and only a few who can supply the demand, those who can supply will clean up financially and in other ways. Often in sports (and this is the case with White), the payment doesn't come directly from fans, but from advertisers who want to reach those fans.

One of the videos showed White in street clothing, with an open shirt and his famous locks draped around his neck. He could remind you of any number of other entertainers. "Hair metal bands" from the 1970s and 1980s come to mind. So too does someone who was popular when snowboarding wasn't even born, David Cassidy, aka "Keith Partridge." Enjoy the video below.

NASJA DAY 1: Capitalism, Continued

Today I had two more experiences that relate capitalism (commerce, business, free enterprise, if you will) and winter sports.

First, I had several conversations about the development of Snowmass, which is perhaps my favorite mountain to ski or ride at. Snowmass is one of four mountains owned and run by the Aspen Ski Company. The SkiCo is, as far as I know, an enterprise that hopes to make a profit. And it's their profits that enable them to continually upgrade lifts and facilities on and off the mountain.

Earlier this morning, however, we heard a talk from a gentleman who conducted a workshop for some people who came early to the NASJA convention. They learned how to make old-fashioned skis. As in skis made out of birch, shaped by hand tools. They replicated designs of hundreds or even thousands of years ago.

Good for them. I'm sure the two or three-day workshop was an enjoyable experience.

But the speaker struck me as being anti-business, anti-profit, anti-market, and in favor of both personal and micro-community self-sufficiency.

I believe he said he lives in a hut (or something like that) he constructed by hand. Good for him.

Most people, however, don't want to live like that. I certainly don't. If my housing was limited to what I could do by my own ingenuity, design, and skill with respect to building construction, I would be consigned to living just a few steps above poverty.

If we observed the ethic of the speaker, we would, I fear, be stuck with experiencing the alpine environment with skis that are more experience or less equality (or both) than what is available today. For example, if you're skiing on ice or hardpack, metal edges are essential. Steel, or whatever is used for ski edges, isn't something that people can create in their back yard. The same for p-tex, the stuff on the base of skis and snowboards that makes them glide. Meanwhile, modern, synthetic wax is better for assuring a smooth glide than anything farmers of yore could make.

In short, pursuing self-sufficiency, or even getting everything within your county of 5,000 people (the population, roughly, of the county in which I am sitting) is a prescription for poverty, limited variety of goods, and stagnation of product design.

It's easy to decry the involvement "big business" in designing skis, snowboards, clothing, and all sorts of things involved in skiing. You can mourn the fact that the "soul" of skiing and riding is violated by the involvement of corporate America in the sport.

Only the human activity of business, with division of labor, profit-seeking corporations, overseas manufacturing, business plans and dull corporate meetings, focus groups, accountants and revenue projections, can provide us what we expect today: A variety of goods; an evolution of product design; improvements in product quality over time; and reasonable costs.

So this snowboarder says ... Long live capitalism.

NASJA Day 0: Capitalism and the Life of Sport

If you listen to some skiing and snowboarding enthusiasts, business sucks the soul out of their sports. But at last night's reception at the annual NASJA meeting, I was reminded that business--the organized, disciplined pursuit of an activity organized with the aim of making a profit--is key to our sports.

For example, I talked with Art Bowles, who, if memory serves, oversaw the installation of the first high-speed detachable quad lift in North America, at Breckenridge. He's at the NASJA meeting to receive an award, and deservedly so. Such lifts make it possible for skiers and riders to get many more laps in during a day.

Did Bowles do this work because of his love for skiers? Not exactly, though I'm sure he loves the sport. He did it because he was employed, and his employer wanted to make a buck by satisfying customers. They decided that getting people up the mountain faster would solve a pressing problem of the day, and lead to a more satisfying skiing experience. And more satisfied customers means repeat business. Co-ops are fine, but they usually lack the capital to pay for the latest and best in goodies (chair lifts, snowmaking equipment, etc.) that we take for granted.

I also spoke with some representatives of Boyne USA, which has been involved of late in some interesting deals with CNL Properties. CNL is a real estate firm that has bought several mountain areas, such as Sugarloaf USA. CNL then gives a lump sum to Boyne, which in turn makes operational improvements to the resorts, and operates them. One company works on developing real estate; another runs the daily business of grooming, food and beverage service, ski patrol, lift tickets and lift operations, and so forth. All very much in line with the division of labor described by Adam Smith.

The Origins of Snowboards

Should you care which country supplies your snowboard gear? Shayboarder has some thoughts.

Here's a comment I left:

As for China, well, yes, there are some serious problems there. Consider though that more people there have left extreme poverty in a shorter amount of time than in any other era in history.

As for environmental standards, they cost money. In the early industrial history of the US, we were desperate for development (as are most Chinese today), so we put up with stuff (air pollution, for example) that we wouldn't put up with today. So we're willing to suffer a bit. China is already feeling the need to clean up the air.

As for human rights, we should press for China to follow agreements they have made, but also keep in mind that, say, we had child labor well into the 19th century (sort of where they are, economically). So press the point but don't be self-righteous about it.

Resist the temptation to feel bad about buying gear that isn't made in the USA. Money you save by buying stuff made elsewhere is money that you spend on stuff and services that employee people here in this country.

As for what's in my gear bin, the most interesting thing I've found is that my board (Salomon Special) has "Made in Tunisia" imprinted on the base. China, I would expect. Tunisia, not.

Have a Favorite Snowboard Instructor? Too Bad

If you have a favorite snowboard instructor that you'd like to return to this winter, you may be out of luck. Why? The politics of immigration have made it much more difficult for U.S. ski areas to hire instructors from other countries.

Here's an article I wrote on the subject


WHERE THE IMMIGRATION DEBATE MEETS MY SNOWBOARD INSTRUCTOR
Saint Paul Legal Ledger
September 18, 2008
John LaPlante

Last summer the big national issue was immigration reform. One side said "build a fence and enforce the law." Another said "create comprehensive immigration reform that includes making a way for undocumented workers to become citizens." The debate ended in an impasse. It was for me yet another debate "out there" until a fellow snowboard instructor told me that some ski areas were having trouble finding adequate instructors.

Immigration, like most areas of government, is an alphabet soup of laws and programs. Foreign ski and snowboard instructors come to this country through a seasonal work visa called the H-2B, which is for non-agricultural work. A business that wants to use this visa must fill out paperwork that is reviewed by the state department of labor as well as three agencies of the federal government. It’s likely that Pablo, who gave me one of my first snowboard lessons in Colorado, came to this country through this kind of visa.

Only 66,000 H-2B visas are granted each year. Thanks a special law, workers who had obtained a visa in a previous year were exempted from the cap if they wanted to return. In fiscal year 2007, some 69,000 foreign workers used this provision. But it expired during the immigration blow-up, effectively cutting the number of visas by more than half, and Congress never came close to reauthorizing it.

The returning-worker law was doomed by the larger issue over immigration, which included debates over agricultural workers, high-tech workers, economics versus politics and a proposal that businesses verify the legal status of everyone they hire. The Hispanic Congressional Caucus opposed piecemeal laws such as the returning-worker rule, favoring comprehensive reform and a new paths to citizenship. Union advocates such as Rep. George Miller (D-Calif.), meanwhile, argued that the H-2B program required more vigorous enforcement of worker protection laws and the visa’s "prevailing wage" requirement.

On the other side, U.S. Rep. Tim Bishop (D-NY), wrote that absent the returning-worker law, "many family-owned businesses that depend on such employees will be without the workforce they need to stay in business." Sen. Barbara Mikulski (D-Md.), keeping mind the folks who harvest crabs in her state’s waters, said that without the exemption, "many businesses would be forced to limit services, lay off permanent U.S. workers or, worse yet, close their doors."

Since the legal supply of H-2B workers has been halved, businesses have adapted in a lot of ways. Some, I suspect, simply flout the law. That puts companies that hew to the law at a competitive disadvantage.

Customers may see changes, too. If I return to Colorado and want to take a lesson with Pablo, there’s a good chance he won’t be there. As gas stations did years ago, businesses that depend on low-wage workers will find ways to shift some of the work onto consumers, and call it self-service.

Some ski and snowboard instructors hope that the law will improve their own conditions. After all, their pay is typically low (high-priced Vail, for example, proposed in its visa application to hire instructors at $9.06 to $18.05 an hour) and housing costs in resort areas are high, due to limited land for building. Other instructors, however, are pessimistic. After all, there’s a limit to what even well-healed skiers will pay for a lesson, meaning that raising instructor pay—one obvious way of attracting more U.S. job applicants—could simply price some instructors out of a job.

Ski towns and ski areas, which use the H-2B program for lift attendants, retail clerks and housekeepers as well as instructors, are scrambling to adjust. The timetable laid down in immigration law puts ski areas at a disadvantage: By the time they are able to submit their applications, much of the quota has already been filled.

So they’ve ramped up efforts to recruit U.S. workers by holding job fairs and advertising on Facebook and other social networks. Copper Mountain, a well-known Colorado resort, has advertised for experienced instructors on Craig’s List. According to one Denver-based snowboard instructor I know, that’s the first time Copper has had to recruit experienced instructors. I expect, though I haven’t read this yet in industry publications, that the larger, better known resorts will be able to poach some employees from their smaller brethren. No surprise there—regulations that make it more difficult to do business usually give the bigger boys an advantage.

As for Minnesota and the Midwest, a few ski areas have dabbled in foreign workers, but at least for day areas such as Afton Alps, the dispute has no impact. They’re able to hire local workers.

Instead, the businesses most affected are landscaping and lawn care services, nurseries, golf clubs, and summer resorts. Fran Regan of the Minnesota Department of Employment & Economic Development (DEED) told me in an e-mail that in fiscal year 2007, DEED transmitted 95 H-2B applications from Minnesota employers to the U.S. Department of Labor. In turn, that department certified a total of 75 applications for a total of 2,125 workers. So even if they never leave the state for a ski trip, Minnesotans may see the impact of the restrictions, too.

Women Golfers and Adult Snowboarders

Do companies that neglect market niches leave money on the table? It all depends on the niche, the market, and the company. But I suspect that when it comes to snowboarding, the answer is yes: Snowboarding-related companies aren't doing enough to talk to the adult market.

I see an analogy with the market for women golfers.

The Golf Blogger reports that the magazine Golf for Women is ceasing publication. He blames it on a lack of advertisers, and in turn, companies missing an opportunity to tap 40 million women baby boomers who could be golfers.

The golf company that takes these women as seriously as they take the men can really position itself. And that doesn’t mean taking a man’s club, making it a little lighter and coloring it powder blue or pink. It means starting from scratch, and putting the same effort into research and development as they do with the men. Then they need to market that equipment—clubs, balls, bags, pull carts, and so on—with the same aggressive stance that they do with the men.

To their credit, some snowsports companies are coming out with gear designed for women, gear that takes into account the fact that women are not small men, but have (for example) calf muscles that are differently shaped than those found on a man.

What alterations would be useful for adult riders? Flows, K2 Cinch bindings, and other bindings help, by reducing or eliminating the need to bend over or stand up, heelside, after having sat down to adjust bindings. Other than that, I'm not sure what other adjustments to gear are necessary. But there are plenty of adjustments that can be made to marketing materials. In brief, offer some grown-up graphics and text.

Answer: Millions and Millions

Question: How much money does it take to upgrade a ski resort?

The Industry Report says that Boyne Resorts will spend $14.5 million in upgrades at Sunday River and Sugarloaf USA will get $5 million in new snowmaking equipment. The company has already put a couple million dollars (at least) into Loon Mountain. The Michigan-based company purchased the right to operate (and in some cases, own) each of the New England properties last year.

Why do lift tickets cost so much? It takes a lot of money to run a ski operation.

Later Opening Date, Later Closing Time

Since we're in the days when just a few lift-served areas are open, I'm sympathetic to the argument advanced by Scott Willoughby in today's Denver Post.

He notes that most ski areas in Colorado are now closed, despite having record snowfall. For example, "Despite ample remains of the second-snowiest winter of all time in Vail and the deepest ever next door at Beaver Creek, those two areas are shut down until summer, with resort officials citing a lack of staff and interest to keep lifts running even on weekends."

I suppose if you've had the opportunity to ride and ski all winter, and especially if you live within driving distance of the mountains, you're going to say after a while "No, I think I'll go golfing today," no matter how much snow is left on the mountains. For you see, feeble customer demand closes many lifts before lack of snow cover does. For those of us who travel to the mountains for a visit, that is an especially sad state of affairs.

Though he may be--to toss in a summer metaphor--swimming upstream, he suggests that ski areas address their staffing problems by starting their seasons later, and running the lifts later in the spring.

"If," he says, "the large ski resorts are in such a bind to find even a skeleton crew to man the mountains while there still is so much snow on the slopes, they should consider providing what most ski resort employees seek in the first place — more skiing, not less."

The problem, he says, is that the calendar is out of whack.

"Ultimately, it amounts to timing, and a bit more flexibility on the corporate skiing front. As it now stands, the big-league resorts are all about opening days surrounding the Thanksgiving holiday — when snow is unreliable at best. It makes more sense to push the opener back into December — as Mother Nature forced many to do this season — and target a conditions-warranted closing date for at least a few lifts of, say, Cinco de Mayo, that will send employees off to mud season in Mexico with a bona fide fiesta. If the snow arrives early, skiers and staff will only be champing at the bit."

I detect an anti-corporate feel to the article, which highlights the love/hate relationship that is easy for riders and skiers to have: deep pockets such as Intrawest and Vail Resorts install plenty of high-speed lifts to get us to the top of the mountains, but the accounting department rules the roost: not enough profit? Shut down the lifts.

Should there be a calendar shift? I'd like to see it. But unless "the market"--that is, the collective decisions of millions of riders and skiers--expresses an interest and more importantly buys the late-season tickets that are available, it won't happen.

A Sign that the End of the Season is Near

Here in the flatlands, the season for snowboarding and skiing is coming to an end. It's hard for the areas to stay open until St. Patrick's Day, let alone later.

This morning my driveway was more than half uncovered.



People at ski areas have a hard time convincing the public that even if there's no snow at home, it is on the slopes. They're right, of course, at the beginning of the season, when cold nights and snowmaking equipment combine to make sliding possible.

But towards the end of the season, their job may be even more difficult, as thoughts turn to golf, tennis, cycling, gardening and other outside activities.

Dealing with "A Glut" of Luxury Stores

For those of us who live in the flatlands, mountain towns can be a bit unusual. Consider Aspen, Colorado.

According to the January 23, edition of the Wall Street Journal, Aspen now faces "a glut of luxury stores downtown."

Walk through the mall and you'll find high-priced merchandise, to be sure. It's a tail-end-of-the-bell-curve kind of place, as far as the prices that people pay. (Then again, you can buy ordinary stuff at Carl's pharmacy or the grocery stores a few blocks away.)

Is this a problem?

The Journal says that the city is considering a law that would require "new commercial building projects set aside a percentage of space at affordable leasing rates."


(Main Street, Aspen)

Now that's an interesting situation for economists to ponder. Presumably luxury goods stores can pay higher rents than those that sell mass merchandise--though whether luxury goods sell at a higher margin is an empirical question, not one that can be answered ahead of time.

In any case, what would such an ordinance mean for visitors? It all depends on one's chosen activities. For non-shoppers, not much.

There would be a logic of bifurcation that would reinforce itself, though. Here's what I mean: assume that you own some land suitable for retail. The city council says you must rent one-third of it at below-market rates. So what do you do with the rest of our land? You rent it out (market conditions permitting) at an even higher rate, in hopes of offsetting the lost opportunities imposed by the mandate.

How Much for a Quad Lift?

Wonder what those expensive lift tickets are for? As a business, ski resort operators hope to make a profit. But don't forget the expenses, including snowmaking and lifts.

For this last season, Wolf Creek, Colorado, spent $3.4 million on a high-speed quad, which replaces a two-seat lift.

One Old Guy Who Won't Be Annoyed, Sorry

Image isn't everything, but it can help sell the goods.

I thought of that as I read through this profile of Danny Kass, a 24-year old snowboarding phenom turned businessman.

Kass started competing in skateboarding and then snowboarding events at a young age. By 17, he had a sponsor to pay some of his bills.

He started his own snowboard-themed company, and being a bother to adults was part of the plan:

Kass turned his love of a sport that annoys the grown-ups into two Olympic silver medals, a bunch of X-Games medals and his own company, Grenade Gloves, whose products, from outerwear to goggles to gloves, are sold in 25 countries, 600 retail outlets in the United States and online at www.grenadegloves.com.

Kass’ elder brother, Matt, is the company’s CEO, and Kass is the vice president. They do their own designs, with the object, he laughed, being to scare the adults.

This year, he said, it’s “loud, vibrant colors all mixed together like a paint spill.”

Actually, I'm not sure whether "annoying the grown-ups" is part of Kass's plan, or if it's simply the words of a reporter going back to a cliche.

To be truthful, I couldn't pick Kass's clothing from out of a pile of stuff at a sports shop if I had to. But if it is designed to annoy or scare the adults, I have this to say: so what?

I respect the enterprise of business, and everyone in business has to find some comparative advantage. If annoying the adults is the advantage that some business owners seek, well, that's the way it is. Just don't expect me to go along. The sport is too great, the mountains are too big, the rides are too sweet, to let anyone else's attitude, or business plan, get in my way of enjoying a ride.

(Source: "Mike Celizic," Danny Kass is living the good life, Straus Newspapers, February 22, 2007)

NASJA 4: Where do all the Employees Live?

Mountain resorts, much like beachfront property, becomes more expensive as the population and the economy grow. Why? "They don't make them anymore." A rising national income affords more people the option of buying resort property. Increased demand and a fairly static supply sends prices in one direction: up.

Generally, people who go skiing and snowboarding at destination resorts have above-average incomes. And people who work at destination resorts--lift operators, retail clerks, hotel employeess--don't have above-average incomes.

So where do they live? Sometimes elsewhere. To take one extreme example, the Aspen Ski Company released a marketing video this year that has profiles of a dozen or so people who live and work in the region.

One fellow, who works in a restaurant, rides a bus from somewhere "downvalley," for about an hour each way. I believe that he is from Mexico, which means that even at $8 an hour (or whatever he makes), putting up with that commute, on a bus, is a winning proposition.

In the case of Crested Butte, I suspect that the problem is not so severe. The base of the resort is actually in the relatively new of Mt. Crested Butte. It's got lots of condos. Crested Butte, the longstanding down, is a few miles away. I don't know if it's any cheaper there, though some non-spectacular houses could be seen.

Perhaps some people commute from Gunnison. As I've said before, it looks like a low-rent district.

How can resorts fill low-wage jobs in a high-cost area? There are several possibilities. One, they subsidize housing. Two, they offer an entry to opportunities to immigrants, who are willing to put up with more deprivation than the average American. And finally, they offer non-monetary compensation in the form of recreational opportunities.

Meet the ski bum.