PARK CITY — A new developer in this resort town has rare power. It is exempt from local zoning laws. So it soon may build a huge hotel/condominium project on a pristine hillside that the city had long planned to preserve as open space.
Since local officials cannot stop it through zoning, they are trying to use millions of dollars to lure the developer to a different site. The developer who may reap such bounty also happens to be heavily armed — with missiles, bombers and fighters, no less.
It is the U.S. Air Force.
Why is the Air Force suddenly in the Park City hotel business? It "would benefit service members worldwide from all branches" with "an affordable way ... to visit Park City and enjoy its R&R opportunities," says a written statement from Hill Air Force Base.
Terry Morris, Hill's director of plans and programs, adds the military seeks to build a big, world-class hotel resort there — on par with a few big ones that the military now operates with discounts for its personnel at Walt Disney World and in Hawaii, the German Alps and Korea.
Ironically, that big goal sprouted from an effort to replace a small lodge — which some described as a glorified cabin — that Hill once owned at Snow Basin.
The tale behind that — and how local officials are waging an expensive fight against an entity not subject to its zoning — twists through the 2002 Olympics, the U.S. Congress, the Pentagon, local hardball business maneuvers and even some Iraq war politics.
Along the way, that has led to accusations that the the city and its fight are anti-military or unpatriotic, or that the military is using its exemption to zoning laws to exploit local environmental worries to enrich itself and its developer partners.
Dispute's roots
The story began with early preparations for the 2002 Olympics.
Snowbasin Ski Area near Ogden said it needed some adjacent federal land for improvements to host crowds at Olympic downhill ski events. Congress ordered the trades — including a parcel with a small, chalet-style lodge called Hillhaus, which was demolished.
Hill Air Force Base had owned Hillhaus since 1964. It originally had 44 beds, dormitory style, for single airmen. It was remodeled later into a handful of hotel rooms and a cafe as a low-cost getaway for military members to enjoy as a perk to improve morale.
But Air Force inspectors long complained that Hillhaus continually lost money and should be closed or revamped. That became moot when the Olympics led to its demolition.
However, former Rep. Jim Hansen, R-Utah, said Hill officials were upset at losing the small lodge and sought his assistance to find land for a replacement.
Hansen was in a position to help Hill, the largest employer in his district. He was a senior member of the House Armed Services Committee and chairman of the House Resources Committee, which oversees federal lands.
"I kind of argued for something at Bear Lake," Hansen remembers now. "But the Air Force found some BLM (Bureau of Land Management) property in Park City. They came to me and asked what the chance was of helping out" to obtain it for a new lodge.
Morris at Hill said, "The Air Force is looking for a four-season resort area.... Park City was ideal for that. Park City had everything in terms of sports, culture, all those sorts of things."
The Air Force initially identified some property called Gamble Oaks, a hill across from a residential area near the Deer Valley ski resort. It happened to be under long-term recreational lease to Park City, mostly to allow its preservation as open space.
When the public heard of the plans, neighbors complained that the highest hill inside the city might soon be topped by a hotel instead of open space. Park City and Summit County officials met with Hansen. Adding to their concerns, Park City at the time was not in his district — and they wondered why he was dabbling there.
Antagonism
Hansen said an incident in one such meeting created antagonism that led him, in part out of acknowledged spite, to ensure the Air Force would obtain land in Park City.
"One of the women in the group said, 'We don't want that kind of people up here.' That really ticked me off," Hansen says now. "It was like, 'We're an upper-class area and we don't want scum from the military here."'
So Hansen, who was then headed into retirement, said that spurred him to quietly include language in the 2001 Defense Authorization Act to give the Air Force some Park City land.
The trouble is, according to Park City and Summit County leaders, that they do not remember anyone saying such things to Hansen. Summit County Commissioner Sally Elliott said, "We have never once said that."
So she, and others, say it is unfortunate that the ongoing disputes sometimes frame Park City as being anti-military.
"Park City never was, not for one instant, anti-military. We are very, very positive about having the military here," she said. Her son is on active military duty in Iraq, and when she was a young military mother, she and her husband often stayed at military hotels.
Current Park City Manager Thomas Bakaly adds, "We want the military here. But we want them in the right place," not ruining long-protected open space.
The Park City land given to the Air Force by Hansen's legislation was not at the Gamble Oaks property that had been opposed by neighbors (and which had troublesome issues with mining claims), but was instead at another site called Red Maple.
It is about 26 acres at an entrance to town on state Route 248 (which travels into the city from U.S. 40) at an area that locals call "the narrows." A sign welcoming visitors to Park City sits next to that hillside property.
Red Maple is the gateway to an area in Round Valley where Park City has purchased extensive acreage to protect as open space. Red Maple itself was — before it was transferred to the Air Force — under long-term lease to the city, also for protection as open space.
Candy Erickson, a Park City councilwoman and the city's legislative liaison, said in 20 years, people may see that open space as Park City's own Central Park. "They'll thank us," she said.
Federal supremacy
But the Air Force is threatening that "Central Park" of open space with plans for a big hotel there, aided by an unusual power. As a federal agency, it is not bound by local zoning laws because of "federal supremacy." That is a legal term meaning a local government cannot tell the federal government what to do — especially on its own land.
So even though Park City and Summit County had adopted master plans and zoning codes calling for maintaining Red Maple as open space, it has no legal power to block construction of a lodge there if the Air Force wants it.
Erickson said, "I understand the Air Force would desperately like to build a recreation facility, and the Air Force needs that. But to put it right by this huge amount of open space our taxpayers just paid for? It's probably the last place we'd really like to see it."
Park City officials thought early on that they had tripped into an opportunity that might make the Air Force happy — and keep Red Maple as open space. But expanding plans by the Air Force for a bigger and world-class resort would nix that.
A bed-and-breakfast inn called the Imperial Hotel went bankrupt. The city explored buying it, hoping to trade it for Red Maple. The Air Force would have a hotel, and the city would have open space.
The 11-room Imperial is in the heart of Park City and near resorts and is a bit larger than the old Hillhaus Lodge. The city figured it was an even trade for the Red Maple property on the far outskirts of town, far from resorts and along a narrow road that is sometimes already congested even without construction of a new hotel there.
The city soon bought the Imperial for $875,000. When the Air Force issued a request for proposals and partners to build its hotel, Park City formally proposed to swap the Imperial for Red Maple.
"But they turned us down," Bakaly said.
Wynn Covieo, with Hill Air Force Base's plans and programs office, said the Imperial had problems with "size, age, parking. It just didn't meet the needs of what our requirements are." It no longer wanted a small operation like Hillhaus and envisioned something much larger.
"We'd like to provide our service members with a first-class hotel," Morris at Hill said. He adds he envisions a large resort hotel that will bring members of the military to Park City from around the world.
With that, Bakaly said Park City is now instead in the process of selling the Imperial to another developer for just over $3 million (making a nice profit over the $875,000 it spent initially — which may be used to sweeten some other trade for Red Maple).
Partner plan
The Air Force, meanwhile, selected instead as its partner for development a team led by Wadman Construction.
Salt Lake City-based Wadman has a broad portfolio of projects across the nation, including the Westgate at The Canyons. Park City developer Brent Ferrin is also partnering with Wadman on the Air Force project.
This particular development, according to the developers, is the first hotel of its kind to use a partnership between private developers and the military.
Together, they developed a conceptual plan that Covieo with the Air Force said originally envisioned about 155 condominiums at Red Maple, most with a "lock-out" design so that they could be divided and used at times as two separate units.
Ferrin said, however, that plans have grown to 300 to 600 units — a size he figures is needed for development partners to make a reasonable profit and provide discounts for the military.
The plan envisions selling condominiums to owners who would agree that when they are not using their units, they would be rented as hotel rooms. The development would carry the name of a national hotel brand, such as a Marriott, Sheraton, etc.
Members of the military would have the first opportunity to rent available hotel rooms at significantly reduced rates. But rooms not used by the military would be made available to the public — again, Ferrin said, to make discounts as big as possible for the military.
Currently, Park City hotels, ski resorts, restaurants and other businesses offer discounts to military personnel, often for 15 to 20 percent off normal prices.
Ferrin, however, said the hotel could blow those rates out of the water (and Coveio adds that many of the currently offered discounts are only for the off season).
"Theirs probably start at a little over $100 a night for military discounts. We intend to shatter that barrier and go to $50 a night and maybe even lower," he said, adding they are even looking into a free room rate for military on active duty. "This is kind of a reward for our military people who are keeping us free, and we want to give them a real benefit."
The military's donation to the project will be the Red Maple land only. The Wadman team will have to cover costs of construction — or any extra costs to obtain a different site. The military is banned by law from using any taxpayer money for such recreational developments.
Open-space impacts
The Air Force team and local officials disagree what impact a hotel at Red Maple would have.
The city illustrated its concerns by drawing a picture of the steep Red Maple hillside with a red-block, large hotel that sticks out like a sore thumb blocking views. "We tinted it red for a reason. It shows the mass on the hillside that would be needed for a 600-room project," Bakaly said.
But the Air Force team has a conceptual drawing showing attractive cabin-style condos fitting well on the hill below its horizon, screened from view from the highway. Also, underground parking helps the project fit. But Coveio said that drawing was made showing what a 155-unit project could look like, not the larger one development partners are now discussing.
The sheer number of rooms now proposed at Red Maple concerns Park City council member Erickson, who doesn't want lodging competition to hit unhealthy levels. Hotels must have at least 60 percent occupancy year-round to stay afloat, she said, something hotels in winter communities have some trouble with in the summer.
"Nothing in town is currently the size of what they would have to build to get a return on their investment" at Red Maple, she said. "We are becoming more popular, and the hotel and condominiums and a lot of the industry are doing great. But if you do that many rooms in competition, I think a lot of them are going to seriously suffer financially."
Then there's the competition with the other resort towns around the world that Park City is competing with for tourism dollars.
"If it becomes too cluttered and commercialized, we lose out in the race to Breckenridge (Colorado) or anyone else we're competing with on a recreational basis," she said. "The visual impact for tourists and the open space for constituents are the biggest concerns."
Amid differing visions of the project's impact, the city and county tried to block or move the developers' Red Maple plans.
They did such things as seek mediation help from the Utah congressional delegation, and they traveled to the Pentagon to meet with Fred W. Kuhn, deputy assistant secretary of the Air Force for Installations — who would have to give final approval to any eventual plans.
Park City Manager Bakaly said local officials were impressed with Kuhn as he pledged to try to make things work in a way that pleases local officials. "He didn't give us veto power but said he wanted to keep the city happy," Bakaly said.
Covieo at Hill echos that pledge, saying, "We want to be good neighbors. We want to work with Park City. We are doing everything we can to work out something that is mutually beneficial."
Alternatives
To seek a trade for Red Maple, Park City came up with a list of 11 properties that might be good for the Air Force hotel instead.
"The majority of them were cost-prohibitive, costing anywhere from $30 million to $50 million," Covieo with the Air Force said. Of course at Red Maple, the development team would face a land cost of zero since the Air Force already owns it.
But one site eventually showed promise. It is owned by Summit County and is adjacent to the main parking lot at The Canyons ski resort.
"It is a wonderful site, so close to a resort," acknowledges Morris with the Air Force. In contrast, Red Maple is far from any resort and lacks utilities. Morris said developers are interested in The Canyons site if a fair deal could be achieved— which may be a big "if."
The county wants about $8 million for one parcel at The Canyons that is large enough for a 200-room hotel, which Park City Manager Bakaly figures could generate as much profit with its prime location as a 600-room hotel at distant Red Maple.
Air Force partners also are interested in a second, adjacent parcel at The Canyons — to allow an even larger hotel — which might cost an extra $2 million for land.
So all the targeted property at The Canyons may be worth around $10 million — which local officials say is worth much more than the Red Maple property that they would receive in return (along with $2 million to $3 million that Park City might kick into any deal from the sale of the Imperial Hotel).
Local officials contend that Red Maple is not worth much because zoning allows it only to be used as open space by anyone but the Air Force. But the Air Force notes that it is not just anyone else, and it can build a big hotel there — so the land should have high trade value.
Developer Ferrin said, "We've always told the Park City people the same thing: If you give us the land, we would go to The Canyons to develop it. But they're trying to get us to pay over $10 million for the land, which changes the economics of the whole program."
He adds, "Although we're interested in going there, they haven't proposed anything that's been worth biting on. ... If they come to the table and become more realistic with us, then we'll talk with them."
With a groundbreaking goal of late 2007, however, Ferrin said Red Maple will be the project site unless the city offers a better option.
Elliott at the county said if the developers build on Red Maple, "They would have to do it without our blessing. ... We know how to build resort accommodations, and we just don't think they've given adequate thought to the needs of the Air Force or the needs of Park City."
Elliott adds, "It's a dumb location for a condo facility," far from ski resorts, on the side of a steep hill and merely along the side of the highway. She said tourists want instead to vacation near ski resorts.
"They want to be able to walk out the door, go on the lift and take their families up on the mountain and ski. They don't want to be remote and have to use their cars," she said. "People who come to a destination resort want destination amenities. You don't get destination amenities by being out on the highway. You don't experience the resort flavor."
The Red Maple site also does not yet have water, gas and electricity lines. And the hilly site would have to be excavated for a hotel and parking garage. Those add up to hefty start-up costs, according to business models Park City has created for both site plans.
The size of a parking structure and the number of stories the hotel would need is still being studied, Ferrin said. Meanwhile, Erickson said that no matter the size, the visual impact will be great at Red Maple as a gateway to open space.
"It would be a main focus as you come around the corner because there's nothing on either side of it," she said.
However, Ferrin notes that local officials have approved a lot of new development near Red Maple already. That includes the city's recreation complex and the National Ability Center about a half-mile away to the east.
In addition, the Park City Council approved just last month for a training facility for the United States Ski & Snowboard Association, an Intermountain Healthcare hospital, a 15-acre expansion of the recreation complex and a 5-acre affordable-housing site to be built at Quinns Junction — not far from Red Maple.
Steve Petersen, an aide to Rep. Rob Bishop, R-Utah (who was asked by Park City to help monitor and mediate negotiations), said some creativity may be required, likely on the part of Summit County, to resolve matters.
He notes that Summit received The Canyons property essentially for free from developers. "It didn't spend a nickel for it," he said. So he suggests the county might want to come down in price to offer a resolution.
That can't happen, Elliott said. She said the county obtained The Canyons property in a "density transfer" for open space. That deal requires the county to receive market value for it if it is sold, with the proceeds being used to obtain more land for open space.
So a cheaper price than fair-market value, Elliott said, legally can't happen.
Outlook
As the sides negotiate, some tough things are sometimes said or implied — including questioning how patriotic local officials are and questioning whether the Air Force is using its federal supremacy to enrich local businessmen and developers.
"I love America and the freedom to go out and make things happen," Ferrin said. "Frankly, we have plans to take most of the profits from this and turn it back to the benefit of the citizens of the community. There shouldn't be anyone who could claim we're taking advantage of our relationship with the Air Force to make a profit."
Meanwhile, Morris with the Air Force also stressed the patriotism behind the project, especially in the time of the ongoing Iraq conflict.
"You know there's a lot of veterans coming back from the desert. We'd love to have a nice place for them to go and take their families and be able to afford to go to a nice place," he said.
On the other side, for example, Park City Manager Bakaly said, "It is interesting to ask how much a developer should benefit from the use of the Air Force's power" of federal supremacy.
Elliott said, "This is not a military facility that's being erected. It is a market-rate condo project that is available as a marketing tool to retired military officers. And only retired generals are going to be able to afford to buy into this," Elliot said. "And then when they exhaust all the military possibilities, then these units will be offered to the public, and there's no restriction on ownership of the condos."
Amid that, the sides are still negotiating and, as Covieo said, "We are still looking at parcels of property."
He adds, "Our greatest wish is to find an unencumbered site so we can trade the Red Maple property to the community to maintain it as open space. That has been the goal since Day One." But until that happens, he said a possibility exists that the Air Force will build its hotel on the hillside that the city wants to protect as open space.
Park City is left waiting and worrying until a decision is made, which could be as early as the end of this month.
"Are we nervous? Sure. Because the federal government has carte blanche," Park City's Erickson said. "If the developer chooses to go to the Red Maple parcel and they can convince the higher-ups at the Pentagon and the Hill Air Force Base that that's the best decision, we have no recourse. We're trumped by the federal government."
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