Last Resort 

America's newest resort struggles against a barage of bad luck and bad decisions

In 2004, a spread in The New York Times profiled the country's newest ski resort. Writer Tim Neville described the scene at the resort's first-ever opening day as a "climatic cymbal crash in what has been a decades-long crescendo building to this opening." In an accompanying photograph, a crowd gathered at the base of a quad lift, which whisked skiers up the mountain. The headline read: "Tamarack: A Mountain For the 21st Century."

Since then, the Times has kept tabs on Tamarack, profiling real estate opportunities and catching up with Andre Agassi and Steffi Graf on their Tamarack hotel venture. Over the years, the resort has made many headlines, among them one in the Idaho Statesman in 2005 regarding the most notable guest the resort has hosted: "Bush bikes, boats and says 'I should have come here sooner.'"

But within just a few seasons, Tamarack has fallen from grace as the epitome of planned recreation development into complete financial meltdown. These days, construction has ground to a screeching halt, Valley County has the highest unemployment rates it's seen in nearly a decade, and many businesses near the resort are struggling to stay open.

While national economic factors play a role in the depressed local economy, many feel that Tamarack itself has had just as large of an impact in the current situation. Tamarack's principal owners, Jean-Pierre Boespflug and Alfredo Miguel Afif, filed for bankruptcy protection for their companies in February after being unable to make a payment on a $250-million loan from Zurich-based banking giant Credit Suisse, which began foreclosure proceedings a month later. In October, a judge threw out the owners' petition and appointed a receiver to take over the resort's management. The resort now owes about $322 million to banks and construction liens and cannot wander its way out of debt by selling real estate since the land was used as loan collateral.

Monty Ivey, president of the Donnelly Chamber of Commerce, said that Tamarack has had a major effect on his town's economy.

"Tamarack was very instrumental in starting a lot [of] construction around here, and it had a trickle-down effect," he said. "Unfortunately, it came to a screeching halt, as did a lot of other things around here. The restaurant business is almost zero. Hotel, motel business has fallen way off. You can't hardly buy a job."

Ivey said his own store, Bird's Nest, closed in 2006 because of Tamarack, though he said it was because the mass of contractors in town pushed aside his regular customers like RV vacationers.

Some blame Tamarack's lack of anticipation of a slowdown. Donnelly businessman Wolfe Ashcraft runs the Pro Peak ski shop on Roseberry Road on the way to Tamarack. He said his sales are directly related to the number of winter visitors to the mountain.

"This business is a volume business," he said. "We have to get X amount of people moving past here and traffic moving past here."

Ashcraft said that this past year's negative publicity, and Tamarack's lack of positive spin, has hurt the resort as well as the businesses that are tied to it.

"The media has done more damage to Tamarack and this area than the actual circumstances," he said. "And the resort never took any stance and spun anything positive out, either. It never gets reported that regardless of everything that is going on, Tamarack is still operating."

Ashcraft and his wife operate Tamarack's wakeboard and waterski programs on Lake Cascade. He's nervous about his sales figures this year, as are many business owners in Donnelly.

"We make 80 percent of our money by Jan. 15," he said. "If we don't have Christmas, then we could be really screwed."

While Ashcraft is confident that Tamarack will eventually recover, he said many people are just wondering how to survive until the upswing.

"What we could see is a Donnelly of six years ago emerge," he said, referring to a time when the town was still hurting from the Boise Cascade mill closure. Ashcraft noted that if he has to pull up stakes and move his business, it will actually have more to do with high rent rates at the Roseberry Plaza than with what is happening at Tamarack.

"Our business plan was never to move to McCall," he said. "But our business plan also never saw ... bankruptcy, so we've got to adapt."

Ivey said he's not worried that Donnelly will fade away, no matter what happens on the mountain.

"Donnelly has been here since, what, 1905? And I suspect Donnelly will be here if Tamarack were to slide into Cascade Lake," he said.

Ashcraft said he takes a more positive outlook: that even a stalled Tamarack is better than no Tamarack at all.

"I think everyone realizes now that without [Tamarack], it [would be] far worse than it was before," he said. "If you're in it for the long term, it's going to go up, and it's going to go down."

Michael Berry, president of the National Ski Areas Association, said it's all part of the cycle of a resort. He draws a distinction between ski area operations and a resort's real estate development.

"History tells us that even in difficult economic times, if the snow is great, [ski areas] generally do very well," he said. Last season, he said, resorts sold more tickets than at any other time in history. But the real estate aspect of the project is what began to undermine Tamarack's success, and it was more connected to national trends than to any mismanagement at the resort.

"If you look at the collapse of the housing market nationwide, if you look at the collapse of the credit market nationwide ... all of those phenomenons kind of lend themselves to a highly leveraged project like Tamarack not being able to sustain itself," he said.

Berry named several other resorts in the Mountain West that are experiencing similar financial problems, such as the Yellowstone Club in Montana and Promontory in Utah, both of which are in debt to Credit Suisse. He added that even Vail and Sun Valley have changed ownerships and gone through bankruptcies.

Berry said Tamarack has a unique combination of assets that he believes will save it from disappearing.

"Restructured financially, the resort is very viable. It's an attractive destination. The combination of its location and the assets that they have—the golf, the skiing, the lake—all make it the kind of resort that is not going to go away," he said.

Amy Koenig, president of the McCall Chamber of Commerce and former vice president of marketing for Tamarack from 2002 to 2007, said that the word "bankruptcy" has led to an atmosphere of crisis that isn't necessarily a true barometer of how the resort is doing.

"For as young of a resort as it is, it is actually in very good financial shape," she said. "That's why Credit Suisse has agreed to invest an additional $10 million into keeping the ski resort running this winter, because they believe in the long-term potential of the resort."

Koenig is referring to Fourth District Judge Patrick H. Owen's October decision to appoint a receiver to manage the resort. The San Diego-based firm Douglas Wilson took over Tamarack's management and immediately began work on winterizing operations and preparing a 90-day budget with the loan from Credit Suisse.

Credit Suisse announced last week that it posted a $2.48-billion net loss in October and November and will be cutting 5,300 jobs. There is no word yet if and how that might affect operations at Tamarack. Douglas Wilson is currently finalizing a new 90-day budget for the resort.

Wilson has worked as a receiver, basically a third-party asset manager, more than anyone else in the country—more than 500 times. After managing Tamarack for the past six weeks, he said he's confident that it will continue to operate business as usual.

"For the average skier, they will have no idea that the resort is actually being operated by a receiver," he said. "Tamarack is clearly a unique situation because there are a lot of moving parts. It's a four-season resort, it's a new operation. We've only been involved now six weeks, but I feel very comfortable that we've gotten our hands around the key operational issues."

Those issues have been mainly winterizing the resort's operations and any active construction projects, like the Village Plaza, a multi-million-dollar showpiece in the heart of Tamarack meant to house shopping, condos, restaurants and an underground movie theater.

Originally scheduled to be completed by the end of December, the village is still a Tyvek-wrapped shell. It's only about 75 percent finished on the outside, according to Ken Rider, Tamarack's director of resort sales and marketing. Ninety percent of the condos have been presold, but buyers can cancel the sale by the end of December if the units aren't complete. Because the money is being held in escrow, Tamarack won't actually lose money if the sales are cancelled.

Tamarack did receive some good news thanks to an economic study. In 2006, Boespflug commissioned Boise economist John Church to analyze the resort's financial and commercial impacts on Valley County. Church gave Tamarack an update this summer, which shows 2008 as its economic low point and then increasing positively through 2015. The projections were made assuming a refinancing of the project.

From 2004 to 2007, Tamarack contributed $134.2 million in wages and salaries to Idaho workers. The bulk of that—nearly $80 million—went to construction contractors and their employees. Over the same period of time, Church estimates that Tamarack has also contributed nearly $25 million in state tax revenues. Even now, "I can't think of any situation where it is costing the state more than what Tamarack may be generating in terms of tax revenues for the state," Church said.

Therefore, even a financially crippled Tamarack is better for the local economy than no Tamarack at all, according to Church's report, which estimates the resort will still contribute about $25 million in income to Idaho workers in 2008. It also states that "reports that Valley County has been devastated by employment cutbacks at Tamarack are greatly exaggerated," and that the resort actually has a mediating influence on employment due to hiring for its many winter positions.

Church is presenting the report publicly for the first time on Dec. 11 at the McCall Chamber of Commerce at the Chamber's request. He still has not been paid by Tamarack for his updated report.

Rider expects the resort could face a slower season than normal.

"We're seeing some visitation challenges much like mountain resort communities saw after 9/11, where individuals and families might stay closer to home instead of taking a long, extended vacation," he said.

The plan right now is to focus more on attracting visitors from close to home. Rider stressed that the national economic factors are a bigger deterrent to ski numbers than any current litigation issues, though he acknowledges those play a role in the resort's real estate market.

Donnelly Mayor Brad Backus said the trick to the town's success is making it a place that people want to stop, rather than one to pass through. He's been working with an economic development task force to beef up Donnelly's infrastructure through improving drainage systems and beautifying downtown.

click to enlarge Donnelly Mayor Brad Backus believes that a stalled resort is better than none at all. - TERESA SHIPLEY
  • Teresa Shipley
  • Donnelly Mayor Brad Backus believes that a stalled resort is better than none at all.

"Donnelly is growing," he said. "As a town itself, the work we've done on the streets, the infrastructure is getting set, and we're moving forward to make the town a better place."

Backus, who also works for Tamarack, said that the resort's financial situation is "part of a natural progression" and that the town of Donnelly will make it over the hump as long as it grows with the resort in mind.

"It's inevitable where Donnelly's going. It's got to just catch up with the progression and catch up with what Tamarack has brought to the valley," he said. "Instead of fighting it, you need to embrace it, and utilize the things that come with it."

Real Estate Woes

Property values are definitely down in Valley County, according to Ray Moore, president of the Mountain Central Association of Realtors. Home prices at Tamarack increased by 50 percent from 2004 to 2005, and steadily increased through 2006. But by early 2008, for the first time, prices fell. And although they're still above 2004 levels, Moore said it's nearly impossible to sell homes priced more than $300,000.

"The $600,000 and $700,000 estate homes are just sitting there," he said, estimating that he thinks property values have fallen about 30 percent across the board. According to numbers from the Mountain Listing Service, a real estate database that covers over 95 percent of all Valley County listings, residential home sales dropped by an average of 34.9 percent in the county. Donnelly saw the biggest drop at more than 57 percent. It also saw the least number of vacant lot sales, sliding from 62 in 2007 to just 13 in 2008.

Moore speculates that Valley County real estate is hit harder than other areas of the country because "it's primarily a second-home market," he said. "I think we were a little slower to fall apart because there was still that allure of Tamarack, but I think Tamarack was kind of the parting shot. I think it will recover, but it's going to take some time."

Valley County's population has grown 18.9 percent since 2002 and the county saw a 23 percent increase in housing since 2000, according to the most recent statistics from the Idaho Department of Labor. According to AmeriTitle in Cascade, there were 227 home or property foreclosures between January and November of this year. There were no foreclosure reports from 2006 or 2007 because "there were so few it wasn't necessary to keep track," said AmeriTitle employee Colleen Cole.

Moore said that several local real estate companies have merged due to an inability to survive independently. He said that several things could happen to turn the market around.

"The national market could start to correct itself. Consumer confidence as far as real estate would be good. The other thing we have is Tamarack," he said. "If Tamarack could find a buyer, or find a way to restructure and keep a positive spin on that, regardless of what the national economy does, that could help us a lot. That's a niche we have that most other areas don't."

The big question, said Moore, is when that restructuring will happen.

John Blaye is the Valley County economic development director and works for the county commissioners. He has spent eight years working with Tamarack managers and owners to help the resort grow, including developing infrastructure projects, affordable housing for employees and exploring airport expansion programs. He said he's hoping for a concrete decision about the resort's future within the next three to six months.

"We're currently working with about three buyers that have met with [Boespflug] and they're looking at the Credit Suisse situation," Blaye said. "They may or may not execute a purchase. It depends on the price points that [Boespflug] is asking for the resort, and the values have been quoted anywhere from $440 million to $480 million." Blaye said that more than a dozen potential buyers and investors have expressed interest from all over the country as well as Canada. He said that there has been a lot of interest in continuing the resort's expansion onto higher ground, encompassing roughly 15,000 acres of Forest Service land.

"It's our mission to help this company find buyers," Blaye said. "It's drastically affected the whole economy of Valley County." He's convinced that Tamarack is here to stay, reminding people to keep in mind how young the resort is. "We're the young kid on the block," he said.

Receiver Doug Wilson echoes those thoughts. "At the end of the day, in three or four years, we'll look back on this, and this whole economic meltdown will be in the rearview mirror," he said.

"Life is cyclical. It's called reality."

Constructing a Dream

Beau Value moved to Donnelly in 2002 and began building custom homes, mostly in McCall, through his business, Everest Construction. But when Tamarack started generating a buzz a couple years later, he was quick to get in line at its first real estate offering.

"Ended up buying three lots," he said. "I sold the properties as build-jobs to people ... and then things took off faster than I could handle them. At that point, I was just trying to keep up."

Value, 33, rode the wave of buying lots and reselling them as build-jobs, as well as building spec homes at Tamarack for several years. Eventually, the resort named Everest as one of its preferred builders. In 2006, at the peak of business, Value employed about 25 people and was working on 15 homes within Tamarack. Now he doesn't have a single project at the resort.

"And now I'm still sitting on three of those lots and have also built a spec house that I'm sitting on," he said. "It's hurt me because of the downturn of the market, and because of Tamarack being slowed down, I haven't been able to sell these properties."

Value said that he had to let most of his employees go and now has six people working for him. According to the most recent Idaho Department of Labor stats on Valley County, Tamarack has been the major contributor to loss of construction jobs.

"Construction, which had been driving much of the job creation, only added nine jobs in 2007 as the slowing national economy and problems at Tamarack Resort essentially brought building activity to a halt," the report said. "These factors were subsequently felt in other industries."

Koenig said that the resort always had a policy of seeking local labor first.

"Having people that had access here became important, but [Boespflug] really felt strongly about working with the locals whenever we could. He felt like they knew their resources better than anyone," she said.

The state's Department of Labor said that 15 percent of the total nonfarm payroll in Valley County went to construction jobs, while the leisure and hospitality industry accounted for 26 percent.

The department projects a positive outlook for the statewide building construction industry, calculating that it will grow by nearly 30 percent by 2016, adding almost 4,000 new jobs to the market, or about a 2.5 percent annual growth rate.

Value is working on two houses right now in the valley, with two more slated to break ground in the spring. But he said Everest is struggling, just like other construction firms.

"Before, we didn't do remodels, we didn't do other projects, and now we're doing all that type of stuff in hopes that we will survive through this 'til things pick up again," he said.

But the halting market has had some positive impacts, Value said. For example, labor rates have dropped to what he calls a more reasonable level.

"There was so much going on at Tamarack that you couldn't get subcontractors," he said. "So it drove up the labor costs of building a house because of supply and demand. And now, with people needing work, the labor rates have come way back down to where they should be," he said, noting that he can pass on those savings to homebuyers.

Costs for many materials are also down, Value said, like lumber, which costs half what it did two years ago. But costs for petroleum-based products are up, as is concrete, steel and copper.

Value doesn't have any liens filed against Tamarack since he was never employed directly by the resort, but Tamarack does owe about $22 million to other contractors. Value said he's confident that Tamarack has enough assets to attract new investors eventually, which could mean a return to better days.

"Tamarack kind of came, everything boomed, and now that Tamarack is slowing down, everything else is slowing down," he said. "But the good thing for me as a builder, being in a resort area, is that there are still people out there who want to build their dream home or their retirement home, no matter what the local economy is doing. We just won't be as busy as we were."

Tamarack Resort Timeline

1980s— The idea for a resort west of Donnelly—called Valbois—is first conceived. The project goes bankrupt in 1995.

1998—Mexican businessman Alfredo Miguel Afif pays $6 million in Valbois' debts and revives the resort concept, changing the name to WestRock.

2000—Developers bring in Jean Pierre Boespflug to manage the development. He works with the Idaho State Land Board to lease land on West Mountain.

2001—Valley County commissioners approve WestRock's master plan.


June—The State Land Board grants WestRock a 10-year lease for 2,100 acres of skiable terrain.

December—The name is changed to Tamarack.


April—Tamarack's lease is extended from 10 to 49 years at $250,000 a year, after a unanimous vote from the Idaho Legislature and Gov. Dirk Kempthorne. By the end of April, the site is permitted and ready for development.


January—Tamarack sells out its initial offering of 107 vacation homes and lots, generating $46 million, becoming the largest resort homesite launch in North American history.

June—The resort sells out another 64 properties, generating $33.4 million.

Dec. 15—Tamarack opens. It's the first major ski area to open in North America in 20 years. The total project covers 3,600 acres, approximately 5.5 square miles.


January—Tamarack's third real estate offering of 134 properties sells out, generating $91.5 million.

May—The resort nets another $25.7 million after selling 44 properties.

Summer—Construction begins on the $100-million Village Plaza at the center of Tamarack, scheduled for completion in 2009. The Plaza will have 56,000 square feet of commercial space, 129 condominiums and an underground movie theater.

August—President George W. Bush and his family visit Tamarack.

October—;Sellout of 129 condominiums in Village Plaza, generating $120 million.

Fall—Tennis stars Andre Agassi and Stefanie Graf Agassi partner with Bayview Financial to build a luxury hotel, the Fairmont Tamarack, scheduled to break ground in spring 2008. Prices start at $750,000 and range up to $4 million per unit.


Idaho Legislature approves a law on behalf of Tamarack creating an exemption to the state's liquor laws, allowing up to three licenses at year-round resorts and charging applicants a fee of $25,000.

Tamarack's Osprey Meadows golf course is named America's Best New Public Course $75 and Over by Golf Digest.

January—Tamarack's boutique hotel opens, The Lodge at Osprey Meadows.

April— Tamarack sells out 53 more properties, generating $42.7 million.

May—European banking giant Credit Suisse gives Tamarack a $250 million construction loan.

June—The 10,000-square-foot Arling Center Conference Facilities open.

Winter—Over 5,000 acres of backcountry is opened for Tamarack guided services.


Tamarack became a member of the United States Green Building Council.

Feb.—The resort hosts the first U.S. Snowboard Grand Prix.

April 27—Gov. C.L. "Butch" Otter proclaims "Alfredo Miguel Afif Day" due to Afif's "devotion to the cause of economic principles," his "visionary leadership" and his "social humanitarian contributions."

March—In one day, Fairmont Tamarack's initial offering of 125 condominium-style hotel units sells out, generating $140 million.

Summer—Idaho's first ziplining tour opens at the resort.

June—Tamarack bans its general contractor, Banner Sabey of Seattle, from purchasing construction materials during an internal budget review. The ban is lifted one month later with a revised plan in place to allow completion of the $91-million Village Plaza. Tamarack posts $92.6 million in revenues for April 2006 through April 2007. Of that, $76.3 million was from real estate sales. The annual report did not say whether Tamarack had made a profit.

October—Tamarack sells land for $17.2 million to luxury developer Plan Collection from Park City, Utah, who plans for a private residence club with 60 condominiums.

November—Tamarack completes its eighth sellout since 2004 when an initial offering of 12 properties, plus an additional five released due to high demand, generates $16.5 million in four hours.

December—East Lake Meadows, a proposed 87-acre planned community south of Donnelly with 466 residential units, received approval from Valley County. Tamarack fails to make a $6 million quarterly interest payment on the Credit Suisse loan. Credit Suisse gave the resort until Feb. 15, 2008, to make the payment.


January—Tamarack is fined $185,000 by the Environmental Protection Agency for violating the federal Clean Water Act. The settlement forces the resort to restrict its winter construction. Tamarack seeks a $42.5 million low-interest loan from the Idaho Municipal Bond Bank for sewer system improvements, using land as collateral. Construction slows while the company tries to find more money. Boespflug said an "extraordinarily difficult financing environment" delayed the resort's plans. European markets suffer their worst fall since the 9/11 attacks thanks to a rogue trader at Societe Generale who cost France's second-largest bank about $7 billion.

Societe Generale reneges on a promised $118-million loan to Boespflug for Tamarack, which, in part would have been used to make payments on a $250 million loan from Credit Suisse Group.

Feb. 15—Boespflug and his Cross Atlantic Real Estate (48 percent of shares) and Afif and his VPG Investments (27 percent of shares) file for bankruptcy protection. They owe more than $300 million to lenders and international banks. Tamarack itself did not file bankruptcy. Boespflug said he and Afif filed for bankruptcy to keep Credit Suisse from taking over. When Tamarack's owners couldn't make payments after being granted several extensions, Credit Suisse declared the entire loan be paid by Feb. 20, 2008.

March 11—Credit Suisse begins foreclosure proceedings against Tamarack.

March 19—Rory Veal, former vice president of real estate sales, files a lawsuit asking for more than $1 million in damages for severance pay and real estate commissions. Credit Suisse files a lawsuit against Boespflug and Afif for unspecified damages for violating the loan's written agreement. Tamarack lays off "a number" of full-time employees. Gov. Otter signs a bill that grants Tamarack 12 liquor licenses.

March 28—Boespflug arrested for failing to appear in court on charges of failure to report an accident and leaving the scene of an accident. He allegedly hit a parked car in Ada County and drove away. He was released on a $300 bond.

April—Tamarack closes its Boise office, laying off 12 people.

June 11—Agassi, Graf and other investors kill the contract to build the 300-room Fairmont Tamarack hotel, citing Credit Suisse's pending litigation and the slumping market. Unemployment in Valley County hits 6.1 percent, compared to the state average of 3.8 percent.

July—Tamarack receives approval from the Idaho Housing and Finance Association to seek a $670 million bond sale to boost revenues after disappointing real estate sales figures. The bond sales never pan out.

September—Contractors have filed 77 liens against Tamarack for more than $22 million in unpaid bills. Bank of America and Sterling Bank begin foreclosure proceedings on the Arling conference center and an employee housing facility, for which Tamarack owes more than $5 million. The bank also threatened to remove two ski lifts it funded, but instead forced Boespflug and Afif into a new agreement to cover the lifts' lease payments.

Oct. 12—A judge throws out Boespflug's and Afif's bankruptcy filings, ruling they were "without a legitimate purpose," finding that the developers hadn't intended to use bankruptcy status to reorganize the business, but instead used the time to seek investors.

Oct. 17—A judge orders a receiver to take over management at Tamarack after Credit Suisse, now owed about $273 million because of interest, says it will give a $10 million loan to fund winterize construction projects and get the ski hill ready to open. The resort temporarily lays off 100 of its 150 employees. Unemployment in Valley County hits 10.2 percent. The state's rate jumps to 5.4 percent.

Dec. 4—Credit Suisse announced that it posted a $2.48 billion net loss in October and November and will be cutting 5,300 jobs.

Dec. 12—Tamarack will open for its fifth winter season.

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