IS ROYAL GORGE LLC MARKETING "FAILURE" AT DONNER SUMMIT AND SERENE LAKES?

Sometimes it's hard to figure out exactly what Royal Gorge LLC is aiming at up at Donner Summit and Serene Lakes. Theoretically, they want to do a couple of things: First, they wish to bring development plans before Placer County, and convince Placer County to change the General Plan and zoning to allow them to build over 1000 units (counting employee housing) in an area that is currently either pristine land, in the case of their proposed "ski camp", and "wilderness camp", or a cross country ski resort. They then wish to sell this on in some form, either as entitled raw land, or finished houses, condos, duplexes, and hotels to other purchasers.  Royal Gorge also, if news articles of the last year are to be given weight, still entertains hopes of selling Rainbow Lodge to a new purchaser, as they'd indicated in past articles that they're not hoteliers.

If Royal Gorge LLC wishes to sell Rainbow Lodge, entitled property, or even the whole concept of the viability of new construction on the Summit, then how does one explain these statements by their employees?

Regarding Royal Gorge LLC's intent to develop the cross country ski resort:

When Foster and Syme bought Royal Gorge, the high cost to groom hundreds of miles of trails and the loss of a wilderness lodge to a fire a few year s prior to the sale made the business unviable, Livak said  "Without the wilderness lodge, Royal Gorge was a loser. This is a very modest operation. It requires a significant subsidy each year."   -Mike Livak, The Union, Oct.1 2007

The following quotes, from a May 1 article in The Union, explain Royal Gorge LLC's recent decision to shutter the historic 1925 Rainbow Lodge for the entire summer, which sadly, has put numerous employees out of work.  The lodge, as you may recall, is currently on the market. Despite its 7 million dollar price tag of a year ago having been reduced to 5.9 million dollars, and even though its antiquated sewage/septic system has been upgraded, it has continued to languish on the market, perhaps a victim of the troubled economy. 

"Rainbow is an expensive place to run. With the slowing economy, it's been decided we're going to keep it closed for the summer and re-open for winter," said Erasmus.

The Union, in the same article provides further background,

Owners of Royal Gorge are planning a 950-unit development surrounding the ski resort because the business is no longer financially viable, they said. Those who did make reservations to stay at Rainbow Lodge can stay at Ice Lakes Lodge, located on the west beach of Serene lakes. "We still have a place to send them to," Erasmus said. Usually open three days a week during the muddy season, Ice Lakes Lodge shut down in April because of a lack of reservations. "It's just so quiet. It's so slow. There's no demand for it," Erasmus said. Ice Lakes Lodge will reopen after June 18, according to the Royal Gorge Web site.

These quotes seem like a marketer's nightmare.  Aside from the fact the ongoing business "good will" of Rainbow Lodge and restaurant is certainly not enhanced by extended closure, how can one hope to interest serious buyers by talking about how expensive a place is to run? Going on to talk about lack of demand at Ice Lakes Lodge only compounds the problem-- and leads one to the further question:  If there is no demand for lodging at the scenic, and one time popular Rainbow Lodge, and if this lack of demand is expected to extend through to next winter, and if there also is limited demand for accommodations at Ice Lakes Lodge, then why should Placer County, in deciding whether to amend the general plan, and zoning to allow Royal Gorge LLC to develop, think that a development of the size proposed by the developers would be viable, instead of a drain on county resources?

It seems that Placer County should be looking at all the other competing developments that are available, or near completion, before they make big changes to allow yet more development in an area that is having trouble filling hotels.  For starters, the nearby Sugar Bowl has new condominiums at the base of Mount Judah for sale, and a new condominium development is beginning the permitting process in Soda Springs.  Down in Truckee, there are plenty of new developments on the drawing board, or near completion, and by and large they all have golfing as an amenity, something that would be impracticable up at our elevation, especially with our unpredictable weather. 

In nearby Northstar, and all of the developments slated for Martis Valley, including Martis Camp, there is a  broad range of new accommodations available, many with easy access to Northstar downhill skiing.  Since Sugar Bowl withdrew from the letter of intent to have a linking lift with Royal Gorge LLC, downhill skiing is no longer a realistic option for Royal Gorge LLC's plans, which will probably make their proposed development significantly less attractive to many would-be buyers, when compared to the myriad other options available in the area. 

Isn't this the place to shrug, and let the market sort itself out, saying, "A fool and his money are soon parted" if Placer County lets this development go forward?  There's more at risk than would-be developers' and purchasers' bottom lines.  Royal Gorge LLC's proposed development will most likely involve massive bulldozing, clear cutting, dam building, and as yet other undetermined, but resource intensive actions to solve their seemingly intractable sewage disposal and water procurement problems. Royal Gorge had proposed using Mello-Roos bonds to pay for all the infrastructure. Even if those bonds could be placed- something easier said then done in today's bond markets- if the development didn't sell, Placer County might find itself in the same position as did Nevada County when the bonds at  Wildwood Estates fell into default-- with a damaged credit rating, which would impact financing county wide.  

Moreover, for the local residents at Serene Lakes, what will seem like ceaseless years of construction (10 or more years) will destroy the rural peace and quiet they cherish, only to be ultimately surrounded by a web of roads, parking lots, houses, duplexes, condos, and commercial buildings.  Possible end result?  An undersold white elephant development, sprawling across what were once pristine lands, and a world class cross country ski resort-- all a failure of marketing, and a failure of Placer County to approach general plan and zoning changes with common sense.

Isn't now a good time to look at what really is viable at Royal Gorge, Serene Lakes, and Donner Summit, before it's too late? Wouldn't this be a good time to scale back plans, and explore options with various land trusts, with the hopes of building something that saves cross country skiing, and preserves land, instead of marketing failure?