As Teton Pass Ski Area faces its third non-operational season, several individuals are coming together to form a steering committee in the hopes of getting it re-opened as a co-operative.
Approximately 30 interested citizens attended an informational meeting July 16 to hear updates on various issues affecting Teton Pass. At the opening of the meeting, Janice Brown from the Montana Cooperative Development Center thanked the advisory team — Mary Sexton, Rosanne Balasabas, Terry Barch, Brock Bouma, Bryn Cunningham, Megan Lee, Kraig Lang, Jim Bjelland and Jade Goroski — for their help in getting to this point.
“They helped pick the consultant for the feasibility study, and they even helped write the grant. It wasn’t just our team. I want to thank them because their work was very important,” said Brown, who is the executive director of MCDC.
Feasibility study key findings
The feasibility study, which was finalized and published on June 30, contains both promising and concerning details. From looking at the physical site, SE Group, the contractor chosen to conduct the study, found that all areas of the ski area (including lifts, parking space, food service areas and guest services space) are relatively balanced to accommodate about 530 visits a day. “This indicates that no facet of the ski area is being seriously over or underutilized. … The ski area’s main lift was recently replaced and the terrain distribution for each level of skier is excellent. The ski area’s offering, in terms of terrain, capacities and guest services space is strong, although there are some opportunities to increase operational efficiencies,” said SE Group in the report.
In 2017 (its last year of operation), Teton Pass was enjoying one of its best seasons on record, with about 7,000 skier visits by December, when it was closed mid-season. SE Group estimated that Teton Pass would need 9,940 skier visits a season to achieve 25% use — meaning the co-op would be operating with an output of services that was 25% of its potential output with its current infrastructure. This 25% mark is a good minimum bottom line for rural co-ops. (No business can realistically expect over 90% use, which would assume every worker and machine in the business is operating at perfect efficiency every day.)
“Co-ops still need modest profits and reserves, but they can operate closer to the margin. They don’t need a huge profit,” explained Brown.
Teton Pass would need approximately 15,000 visits a year to be financially viable. This number could include not just skier visits, but also restaurant/bar patrons and paid activities in the off-season.
To avoid bear season and stay within its USFS permit, Teton Pass could operate from July to April. In a public survey of 242 people, preferred activities other than downhill skiing and eating at the restaurant would be winter races, festivals and events, access to backcountry alpine skiing, overnight yurt camping, hiking, school visits, guided backcountry tours, zip lines and groomed Nordic trails. Eighty percent of the survey respondents said they’d invest in common stock at $500 a share for a collective $100,000 and almost half said they’d invest in preferred stock at $1,000 a share for a collective $445,000. Co-ops operate under a one-member, one-vote policy, so those who buy more stock don’t get any greater voting power.
Maintenance and repair costs
Before the ski area reopens, significant repairs and maintenance must be done. As the facilities sat idle for two years, snow caved in the roof of a storage shed, groomers went without regular maintenance (though it’s expected these are still in fine working condition) and a couple pipes burst in the lodge. In addition to regular maintenance, the lift is due for a seven-year load safety test.
Road plowing and maintenance is another costly project that the ski area must take on. In the past, operators have partnered with local government to share the workload. Similarly sized ski areas at the end of a USFS road have also made deals with government. “Dodge Ridge (in California) is responsible for 3.1 miles of nighttime plowing, but the county completes the daytime snow removal. Anthony Lakes is reimbursed by the Oregon Department of Transportation for all snow removal between Nov. 15 and April 30. … Sales of ‘Sno-park’ parking permits, a statewide winter parking pass, goes toward snow removal on the road to Anthony Lakes,” SE Group wrote.
The most expensive project will be restoring power to Teton Pass. The diesel generator broke in the 2016-17 season. A replacement generator would cost anywhere between $50,000 and $100,000. In the past, Teton Pass spent approximately $30,000 a year on diesel. Getting power from a utility company or co-op would be much cheaper annually, at an estimated $12,000. However, installation of power infrastructure is extremely expensive. The nearest existing power line is eight miles away, and it may not be strong enough to carry the ski area’s load and substation, so connection to a further power line may be necessary. Because the property is on USFS land, the lines would also need to be buried, multiplying the cost 2.5 times. Even without an exact estimate, one can confidently say the project would exceed $2 million.
Real estate activity
After the key findings from the feasibility study were discussed, Jim Bouma of Clearwater Montana Properties gave a brief report of real estate interest in the property. “There’s been lots of interest from both in- and out-of-state buyers, but it’s tough to get an estimate of total cost on a non-operating ski hill. … In the past, the current owner (Nick Wood of New Zealand) has been reluctant to put any more money into it. He probably wouldn’t want to open it himself, but I suspect he’d be willing to negotiate a little. There’s an incentive to get it sold,” he said.
“If you got close to getting a grant in for power, it would be huge,” added Bouma.
Bouma also said that one ski lift goes with the property, and the other lift equipment belongs to ski area Manager Charles Hlavac, so that would either need to be bought from Hlavac or taken out.
The USFS permit process
USFS Rocky Mountain District Ranger Mike Munoz then explained the USFS special use permit process. The permit contracts have a clause stating that if a ski hill doesn’t operate at least 30 days a year, USFS has the right to classify it as “non-use” and request a formal proposal from the owners explaining what they’ll do next season (restructure, sell, sublease, etc.) within 90 days.
“We were lenient to the owner before because he had invested a lot in the property and we wanted to give him a chance to get his things in order. He’s had two seasons of non-use and we’re looking at a third now,” said Munoz. “We have a letter drafted up to send him a 90-day notification. I’m not going to discuss what the letter says until he gets it. Then it will be public.”
If Wood doesn’t respond to the notification letter, USFS would send another letter saying his permit is being revoked, and requesting him to provide a report on how he plans to remove the facilities from the land. If Wood doesn’t respond to that letter, the property would go into public hands.
“I can tell you the Forest Service is not in the business of closing down ski areas. If there’s a way for it to successfully serve the community, that’s great,” said Munoz.
Munoz then shared updates he recently received from the Montana Department of Environmental Quality regarding a diesel fuel spill on the property.
The spill occurred in 2013, but wasn’t reported to USFS until former Teton Pass employee Nate White brought it to Munoz’s attention in the fall of 2018. USFS conducted a preliminary investigation to confirm a significant amount of fuel had been spilled, and then they transferred the case to DEQ and a private office in Helena.
“I just found out this week that they’ve turned it over from one group in DEQ to the enforcement division, who wants more pits examined to do a base risk assessment to see how much needs to be cleaned up. So more soil samples are necessary now, and those will be taken at cost of the Forest Service. I was hoping that they could’ve told me that three or four months ago, but that’s where we are today,” said Munoz.
Munoz said there are no potable water sites near the area that could’ve been contaminated. If the extent of contamination is below a certain level, the only cleanup procedures needed would be to remove the contaminated soil and take it to a landfill that will accept it.
According to the permit clause, Wood is responsible for the cleanup costs.
“DEQ told me that they’d try to contact Wood, then ask USFS if he doesn’t respond. And if USFS says no, they’d get EPA (U.S. Environmental Protection Agency) involved,” said White, who also attended the meeting.
The MCDC breaks down the process to develop a cooperative into three phases: deliberation, legal formation and operation. “We’re essentially at the end of the deliberative phase, so we need to complete that. To do that, we need a steering committee,” said Brown.
Steering committee members are volunteers who would help legally set up the co-op; they are not board members. To complete the deliberative phase of the process, the steering committee must prepare a pro forma financial report to assess the year-round viability of Teton Pass, address road and power issues in a plan and consult with USFS and the owner to set a prospective purchase agreement. If all that pans out and it is determined reopening Teton Pass is a viable option, the steering committee would then determine common and preferred stock prices, set a capital goal needed to form the co-op, outline member responsibilities, design a campaign to gather stock subscribers and draft bylaws.
At the close of the meeting, White, Rosanne Balasabas, Nate Jorden, Bryn Cunningham, Kevin Stone and Keegan Ramsey volunteered to serve on the steering committee. Mary Sexton on the Choteau Area Port Authority said she would help facilitate steering committee meetings, and would also try to recruit a few others to join the committee.
After the meeting, which was live-streamed, a total of 14 people expressed interest in serving on the steering committee, and MCDC agreed to work through a selection process to winnow the field to a seven- to nine-member steering committee.