Hard times may be time for change

For some perspective on how radically our world has shifted in just a short time, take yourself back five years, to 2004, and imagine the look you'd get if you suggested that real estate values might decline.

Who would have imagined, in the heydays of the PT Cruiser, that Fiat would be the last best hope for Chrysler's survival?

In 2004, major banks around the world were declaring record profits, which prompted at least one British MP to call for an inquiry into some of the fees banks were charging. Profits continued to grow through 2007.

If, in 2004, one political party in British Columbia had been talking about its carbon tax and efforts to reach out to First Nations, and another was talking about cutting the tax because it was fiscally irresponsible, nearly everyone would have said the former was the NDP and the latter was the Liberals. But in 2009 it's just the opposite.

As GE Chairman Jeffrey Immelt has said, this is not a cycle we are going through, it's a reset. We are not going to go back to the way things were 12 or 18 months ago. As much as there is talk of markets rebounding and getting the economy back on track, when that does happen there are going to be significant differences from "the good old days" of 18 months ago.

There will obviously be more government involvement, in the form of regulation but also government investment of taxpayer dollars in major banks and industries.

Consumer spending, the foundation of the North American economy for so long, is also likely to be more cautious and restrained for some time to come.

And until the economy is stabilized and starts to grow steadily again, there will be many people unemployed.

But even more fundamentally, many people are re-evaluating what they do and how they do it, and framing their re-evaluation in a global context: China's manufacturing capacity and massive trade surpluses, climate change, energy consumption...

Change doesn't happen all at once. It's not like everyone is going to switch to electric cars overnight or mutual funds are going to return to what they were worth in a couple of weeks. But it is obvious - now - that some institutions can't continue as they have. Whether it's the price of energy, the cost of borrowing money, a shrinking market or something else, we are being forced into a period of self-examination and reinvention.

Locally, that should include looking at Whistler Blackcomb and its relationship to the Whistler community.

The idea of the Whistler community buying a stake in Whistler Blackcomb has been around for several years, but it's found new momentum given the difficulties of parent companies Fortress Investment Group and Intrawest, and the changing times.

Fortress, of course, was born in the era of unregulated hedge funds and ever-expanding profits. It bought Intrawest for $1.8 billion at the resort company's zenith in 2006, acquiring more than $1 billion in debt as well as 10 ski resorts and real estate. Fortress borrowed $1.7 billion for the Intrawest purchase and scrambled last fall to refinance the loan. Last week various reports, based on an interview Intrawest CEO Bill Jensen gave to the Summit Daily News , stated that Intrawest was willing to sell off various assets to ease its cash-flow problems.

Whistler Blackcomb is Intrawest's largest asset as far as resorts go. But Whistler Blackcomb is also in a different situation than most of Intrawest's other mountain resorts. Whistler Blackcomb has little real estate left to develop, which in the current market isn't a bad thing. But in the long term, real estate development may still be what investors are most interested in when they look at the Intrawest group of resorts and try to value them.

As well, the Whistler Village was developed and exists independent of Whistler Blackcomb. This is not the case in places like Mont Tremblant and some of Intrawest's Colorado resorts, where the company owns or operates the ski area and is also developer of the village, and often landlord to many of the businesses in the villages.

So, as large a player as Whistler Blackcomb is within the Intrawest group of resorts, it may also be the one with the least growth potential, from a financial investment perspective.

From the perspective of a community hugely reliant on the ski area operations, Whistler Blackcomb is less about economic potential and more about economic engine. And having some ownership of that engine could be advantageous.

But it is not just the Whistler community that benefits from the operation of Whistler Blackcomb; the whole province enjoys tax revenues and financial spin-offs.

And in this "reset" there may be a role for the province to play in facilitating the local ownership of Whistler Blackcomb.

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