|By Jason Blevins, The Denver Post|
Knight Ridder/Tribune Business News
June 20, 2004 - VAIL, Colo. -- A dump truck crawls down the pedestrian mall outside John Kaemmer's toy store, making the delicate dolls on the shop's shelves tremble.
Kaemmer, who this summer celebrates 25 years working in Vail Village, doesn't flinch. In fact, he could not be happier with the diesel-belching behemoth a few feet from his shop window.
"We are ready," he says. "We need this urban renewal. Vail was getting a bit worn. We have the best ski area in North America, and our village needs to keep up with that."
The town of Vail has a new theme song this summer: a cacophony of growling, beeping backhoes, bulldozers, cranes and dump trucks. Private developers, the town and Vail Resorts Inc. all are working in a massive $1 billion renovation of the 42-year-old resort.
In the next three years, the three will launch dozens of projects aimed at transforming the ski town into an amenity-laden luxury village. Parking will go underground, and clubs, lodges and homes will sprout from today's lots.
It is unquestionably the most aggressive development effort in the valley's history. Local leaders hope that when the final nail is hammered sometime around 2010, Vail will secure its reign as the most popular ski resort in the country. In 12 of 16 annual Ski Magazine rankings, Vail Mountain has won top honors.
"I think this has to be done," says Eagle County Commissioner Arn Menconi. "It's really needed. Guests today are not necessarily skiing as much on their vacations, and they want other activities around town."
The architect of the so-called Vail renaissance is publicly traded Vail Resorts, the owner and operator of the Vail and Beaver Creek ski areas in Eagle County and the Breckenridge and Keystone areas in Summit County, with $710 million a year in sales.
For 10 years the company has pined for a new Lionshead Village, the blocky, concrete cousin of the alluring, faux-European Vail Village to the east. Last month, the company began a four-year, $480 million effort to revitalize the 34-year-old Lionshead, which sprang from an embarrassing hiccup in architectural history in 1970 that featured quick construction, lots of concrete and view-blocking buildings.
"If we could only get a time machine, we might not have to do all this," said Jack Hunn, vice president of development for Vail Resorts Development Co., the real estate development arm of the ski company.
Lacking a time machine, Vail Resorts next summer plans to level two giant buildings it owns in Lionshead: an old, three-story gondola building and the older Sunbird Lodge, which is now used for company offices and employee housing.
In their place, the company will erect a pedestrian plaza, surrounded by an outdoor ice rink, restaurants, shops and a 162-unit luxury hotel. A portion of the hotel's rooms will be sold as high-end condos.
This year, the company is replacing the venerable bridge that ferried skiers across Gore Creek and into Lionshead Village. Above the bridge, on the long-fallow site of a snowmaking shack and five tennis courts, the company is developing four home sites, which have each sold for $10.5 million.
Just west of Lionshead, more tractors churn dirt in a parking lot long used for Vail Resorts employee parking. That lot will become 16 high-end condo residences, which will be offered for sale this month at prices ranging from $3 million to $4 million.
The parking structure next door, which Vail Resorts acquired when it bought the Vail Marriott for $49.5 million in 2001, will become another hotel, with some units offered for fractional ownership. An operator for that hotel has not been named.
Vail Resorts owns only a portion of Lionshead. The company hopes to persuade other building and land owners to follow its lead. The company is providing its architectural consultants to owners mulling a renovation that could complement the hotel and plaza.
"I actually think there is a business opportunity for Vail Resorts to go into partnerships and redevelop those buildings with their owners and homeowner associations," Vail Resorts chairman and chief executive Adam Aron said in a conference call with analysts last week.
Rob LeVine, general manager of the Antlers at Vail, beat Vail Resorts to the punch. He oversaw a $20 million renovation of the privately owned, 92-room Lionshead Village lodge in 2001.
"Each new project makes the next one easier," said LeVine, who begins a $2 million pool- area renovation this summer.
In Vail Village to the east, the ski resort company is planning another overhaul, albeit more modestly priced at around $100 million. The area is dubbed Vail's "Front Door." The company is burying hundreds of parking spaces and wants to resculpt a couple of acres where the mountain and town meet. The project hinges on the company's ability to negotiate a complex land swap with the Forest Service.
The plan includes shifting the Vistabahn chairlift, building a 30,000-square-foot skier services facility, developing a new 5,000-square-foot exclusive club, renovating the company's Lodge at Vail and developing 13 fractional-ownership units. More than two-thirds of the project will be underground.
On the east end of Vail Village, a block away from the gondola, the company is digging a gigantic hole on the site of a 20-spot parking lot. In the 40-foot hole, the company is burying 109 parking spaces. All have sold for at least $100,000 each.
Vail Resorts will finance most of the construction by reselling time-share units, home sites, parking spaces and club memberships. This method limits the company's risk and has been honed by Vail Resorts' chief rival, Intrawest Corp., which pre-sells at least 50 percent of any project before ground is broken. Beyond pre-sale construction financing, the company expects to finance its larger projects with project-specific private loans.
Jeff Jones, the company's chief financial officer, said the staged revenue and pre-sales from the projects will boost the company's cash flow enough to push its debt-to-cash-flow ratio down throughout the five-year building spree.
"Our financing depends on our ability to pre-sell," Hunn says. "The demand here is incredibly strong. I think the pent-up demand for new product in Vail is significant."
The ski company has company in its efforts to revitalize the aging Vail Village. At least six hotels are adding rooms, renovating or leveling buildings and starting fresh.
The venerable Tivoli Lodge has been razed. It will be replaced with a new 61-unit Tivoli. The 59-room Swiss Haus will be gone by mid-July. In its stead, the Vail-based Sonnenalp hotel company and an Arizona developer are building 23 units, 13 of which will be sold as fractional units to a total of 107 owners, and 5,000 square feet of retail, all called One Willow Place.
A New York developer is eyeing the village's Crossroads Mall for renovation. An estimated 270,000 square feet of new residential development and 70,000 square feet of retail are planned for Crossroads.
Four Seasons wants to develop 159 new units at the old Chateau at Vail in the village. The Vail Mountain Lodge is adding 20 more units. A new employee housing facility with 142 rental units is under construction.
By 2008 or sooner, Vail could see more than 1,000 new residential and hotel units. The flood of new residential units on the Vail market could attract buyers who have spent the past decade flocking down the valley to new homes and condos in Bachelor Gulch, Beaver Creek, Arrowhead and Edwards.
"There will be a huge new surge of people coming back to Vail," said Joni White-Taylor, a local Realtor. "Everyone has left because there has not been any new homes here in years."
The town is jumping into the makeover, too, with a list of projects and public improvements worth $60 million.
"I hope all this changes the whole mentality here in Vail," says Ernst Larese, owner of the 34-year-old Swiss Hot Dog Company in Lionshead, who moved to Vail in the late 1960s. "I think the town has lost its ambience. Ambience is 55 percent art and 45 percent business. We need to grow our art, and business will follow."
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