Attention Alpine Resort developers! Beautiful Public B.C. mountain real estate for only $5,000 an acre plus the cost of timber
Most ski resorts in B.C. are on land designated as Controlled Recreation Areas, public land leased by the government to the developer. While the ski resort can build infrastructure and “improvements”, the land itself (not the ski lifts) remain publicly owned. But once these lands are in a Controlled Recreation Area, the developer often has the right to buy these public lands for real estate developments.
This offer of public land for real estate developments turns out to be a major economic foundation for the expansion of ski resorts in BC. The benefit for the private developers is obvious, but is this a good deal for the people of B.C.? As resorts continue to expand and new resorts develop this question is a pressing one.
In addition, the Crown or “public” lands at issue usually fall within unceded First Nations traditional territories where Aboriginal Title may be established through litigation or negotiation. For example, the Secwepemc Nation has Title and Rights claims that cover the land where the Sun Peaks Resort is located, and have been involved in litigation in relation to that development. The claims of BC’s First Nations raise further questions about how resort development should be managed.
How it works
The land in a Controlled Recreation Area is under the control of the Minister of Tourism Trade and Investment and is governed by a Master Development Agreement (MDA), a contract signed between the private developer and the B.C. Government. This Agreement also provides for the sale of the land to the private developer.
For the first ten years ofan MDA a developer can buy Crown land for the greater of: $5,000 + value of timber per acre, or, the appraised land value of the unimproved land. (All Seasons Resort Policy, p.31). Terry Pratt, a Major Projects Manager with the Resort Development Branch of the Ministry of Natural Resource Operations, explains, in an email to us:
The price of $5000/acre is based on land appraisals which are done from time to time. For example, [prior to the current 1997 policy which set a minimum price of $5000 per acre] the 1996 Commercial Alpine Ski Policy … had pricing for base area land at the greater of $2500/acre for Interior ski hills or $5000/acre for Coastal ski hills.
According to government policy, the government recognizes that when it sells public lands, it must ensure that it does not under-price those lands. The government’s Land Policy on Pricing states, in section 2.2, that:
In setting prices for Crown land, the Province will not distort private land markets…The Province will use the best available information…in establishing appropriate prices … [T]he methods used to establish pricing will be clearly explained, well documented, and communicated.
So has the government been successful in charging a fair price to resort developers, and ensuring that the market is not distorted? Is it appropriate to sell public lands to a developer on the market price of the undeveloped land, so that the full increase in property prices arising from the development are caught by the developer?
Is BC subsidizing the growth of resorts?
The Province’s All Seasons Resort Guidelines (ASRG) states that:
the skiing component of any successful mountain resort should be economically viable in its own right, without having to depend on the potential ongoing economic support of real estate development and sales (ASRG, Chapter II, p.39). [highlights added]
However, in a must-read article published by BC Business in 2008, Psyche Brown, a ski-resort specialist with the Province’s Resort Development Branch, is quoted as acknowledging:
No one would build resorts if they couldn’t help pay for them with real estate. It would take a long time to get return on investment from lift tickets. The province recognizes that.
So, which is it? Is the ongoing boom in resort development economically viable in its own right? Or is the province selling these lands at full market value or effectively subsidizing the development of these resorts through the sale of public lands?
The Government of B.C. has made Alpine and All Seasons Resort expansion and development a priority as part of its push to double tourism revenues by 2015. This is to be accomplished in part by streamlining the regulation process and expediting approval of new development projects (Tourism Action Plan, p. 8,9). In the Government’s push to expedite these developments, is enough thought being given to the future and the benefits to the people of B.C.?
Certainly the real estate industry is not above touting the benefits of cheap land for resort developers. A real estate brochure prepared by Landquest Realty Corp. looking for a developer for Mt. Baldy Ski Resort near Osoyoos, states that:
Under the Master Development Agreement…dated May 19, 2006, Mount Baldy Ski Corporation (MBSC) is granted the exclusive right to purchase deeded acreage from the Crown for base area development at a substantial discount to fair market value... $5,000 per acre plus appraised timber value, which is substantially below current fair market value (current fair market value is $240,000 per acre as estimated in the December 2006 Appraisal Report). (p.6, emphasis added).
This same brochure claims there is “considerable profit for an owner of the resort” (p.7).
It is difficult to square these statements with the All Seasons Resort Guidelines, which on its face would require that the sale price be at least the appraised value of the undeveloped property. However, the Master Development Agreement signed between the province and the Mount Baldy Ski Corporation (a copy of which West Coast has received from the government) does indeed specify that Crown land can be purchased at $5000/acre (plus the timber value) for the first 10 years of the agreement, with no reference to appraised land value.
When asked by West Coast to address this apparent discrepancy, government staff confirmed that the appraisal done for Mount Baldy set the value of the land at less than $5000/acre (which explains why the MDA sets the sale value at the minimum $5000/acre level). When we asked about the difference between this figure and the $240,000/acre evaluation given by Landquest Realty Corp – 48 times more than the government’s set minimum – we were told:
Land can be appraised for different purposes with different Terms of Reference and for different time periods, which likely explains the discrepancy you're referring to between Mt.Baldy's appraisal and our historic valuation.
Whether they are consistent with fair market value or not, Ski resort developers can expect to enjoy these land prices for some time to come. Terry Pratt points out:
Master Development Agreements are legal contracts so the province is contractually bound… for the term of … typically 50-60 years. As MDAs are legal contracts, the province can't unilaterally change the provisions in it without agreement from the MDA-holder.
Silver Star Resort
The Silver Star Mountain resort, near Vernon, is deserving of special mention. If selling public land for resort development isn’t bad enough, the Silver Star Mountain Controlled Recreation Area (CRA) was established, and subsequently added to, by removing land from a Provincial Park.
It is important to realise that most of these land deletions are historic: Over the past 30 years, mostly under previous governments, almost 40% of Silver Star Provincial Park has been deleted and added to the CRA of a privately owned ski resort (with the largest deletions occurring in 1992). One purpose for adding to the CRA had been the establishment of World Cup Nordic trails, trails now proposed for real estate development. Former ski runs are now housing projects. The Citizens’ Coalition to Save Silver Star Park says land is “initially deleted from the park for recreational uses, then later rezoned for fee simple property development.” The Coalition fears that further land may be deleted from the provincial park (notably the Eastern portion of the park which has been entirely severed from the rest of the park).
We requested a copy of the Master Development Agreement for Silver Star Mountain Resort, but were informed that the Agreement contains a clause stating that it cannot be released without the permission of the resort company.
The lack of a public debate
Building alpine resorts is extremely expensive. The province is clearly excited by the economic opportunities brought by the resorts. But there has never really been a public debate about whether public lands should be used as an economic incentive to promote the development of ski resorts.
It appears that a significant economic incentive for BC’s booming ski resorts comes from on-hill real estate development – real estate development on formerly public land. Even if the province is selling land based on a fair market value of the land in its undeveloped state, there has been no real public discussion of whether public lands should be made available to private developers in this way.
Questions that we need to ask include:
- Should public lands be open to private development in this way?
- Are the costs of resort development, including the impacts on our water, wildlife and environment, reflected in that market transaction?
- If government’s appraisal method produces a land value that is massively inconsistent with land values cited by developers, is there a problem with the government’s appraisals?
- Will this approach result in a ski-resort industry that is sustainable in the long-term? As Hal Clifford, author of Downhill Slide, asks in the BC Business Magazine article, will “the mountains of B.C. one day be scattered with overgrown ski runs and ghost towns?”
- How much land has already been sold to private developers under these agreements? We asked Mr. Pratt, who explained that this information is “not easily accessible as a compilation is not required for our business needs.”
- What is the impact of building large resort communities at the top of watersheds? Should there be restrictions on where resort municipalities should be built?
- Has the government met its constitutional duties to First Nations affected by the development and sale of these lands?
Let us know your answers to these questions in the comments section, below.
By Andrew Gage, Staff Lawyer and Riley Denoon, UBC Law Student
Riley is entering his third year as a law student at UBC, and is interested in environmental and Indigenous rights issues. He has done volunteer work in Nepal and Mongolia.
Photo from LandQuest Realty Corp.'s promotional brochure for the Mt. Baldy Ski Resort.