Business & Real Estate

Olympic Valley incorporation bid pits residents against Squaw Valley resort

The movement to create a town was born of opposition to plans by Squaw Valley, a sprawling Sierra resort, to build new hotels, condos, commercial properties and a large recreation center over a 25-year period.
The movement to create a town was born of opposition to plans by Squaw Valley, a sprawling Sierra resort, to build new hotels, condos, commercial properties and a large recreation center over a 25-year period. Sacramento Bee file

An effort by some residents of Olympic Valley to turn the small Sierra Nevada community into a town has attracted notable opposition from Squaw Valley, the ski resort that would provide most of the new municipality’s income.

The movement to create a town was born of opposition to Squaw Valley’s plans to build new hotels, condos, commercial properties and a large recreation center over a 25-year period. Incorporation proponents, however, are downplaying that as a motivating factor, saying they need Squaw Valley’s expansion to sustain the town and that they are driven instead by a desire to have “greater self-determination.”

Executives of the ski resort said they’re skeptical of the group’s intentions and believe they can get a fairer review of their expansion from Placer County officials.

In a 12-month period ending in April, a Squaw-backed political action committee spent about $570,000 in its effort to derail the incorporation bid, according to records filed with the Placer County elections office. The money has paid for attorneys and consultants.

In recent weeks, experts from both sides have scrutinized a draft fiscal analysis of the proposed incorporation. The analysis was completed for the Placer County Local Agency Formation Commission, a board of four locally elected officials and one public member who will vote on the proposal.

After listening to both sides disagree for nearly three hours during a public hearing on the draft report, Commissioner William Kirby, an Auburn councilman and physician, said he wondered whether the incorporation would work.

“Somebody made the analogy of bride and groom to describe this process,” he said. “I think it would be a rocky marriage.”

LAFCO must complete an environmental impact report on the proposed incorporation before deciding whether to send the issue to Olympic Valley voters for a final decision. Incorporation proponents are expected to pay LAFCO more than $200,000 to complete the various reviews, relying on contributions from Olympic Valley residents.

A consulting firm, Rosenow Spevacek Group Inc. of Santa Ana, concluded in the draft analysis that the town would not be financially viable. In the town’s first year, expenses of $7.2 million would exceed revenue of $5.5 million, leaving a $1.7 million deficit, according to the draft report.

Squaw Valley’s CEO, Andy Wirth, trumpeted the conclusion, saying in a news release that “there aren’t enough pencils and erasers in the world to make the numbers work.”

But experts hired by incorporation proponents reached a different conclusion. Like Squaw, the group Incorporate Olympic Valley has hired planners and attorneys as part of its effort, spending more than $70,000 since forming two years ago.

According to Fred Ilfeld, chair of the Incorporate Olympic Valley Foundation, the draft report is “flawed by incorrect assumptions, mathematical errors and internal inconsistencies.” Once those problems are resolved, the proposed town can be seen as operating in the black each year, he said.

The foundation’s experts shared their opinions with the LAFCO board during a meeting last week in Tahoe City. More than 100 people, mostly those supporting incorporation, crowded into a board room.

Tom Sinclair of Municipal Resource Group LLC in Auburn told the commission that a misplaced decimal point in the report means that it overstates the amount of money the town would have to pay to Placer County each year by $300,000. Under state law, incorporation proponents must negotiate a settlement with Placer County over tax revenue the county will lose through incorporation. The draft analysis estimates the settlement amount.

Jim Simon, president of the consulting firm, said he would re-examine the calculations in the analysis and respond to the commission by next month.

Sinclair criticized the analysis for including a budget reserve equal to 30 percent of expenses, saying 17 percent is an accepted standard. He also said the analysis overstates the reserve payments because it is calculated against all expenses, when it should only be calculated against operating expenses.

Expenses are further overstated because the report compares the proposed Olympic Valley to larger cities providing more services than the community wants, Sinclair said.

With just under 1,000 residents, Olympic Valley would become California’s 14th-smallest town, ahead of places such as Isleton and the state’s smallest town, Vernon, in Los Angeles County, according to the state’s latest population figures. The town would be 15 square miles, mostly around the ski resort, but also stretching north on the Highway 89 corridor for several miles.

Like other small towns, Olympic Valley would contract for most of its services, proponents say. But of the six cities the draft analysis used to calculate estimated average costs for Olympic Valley, only one – Colfax in Placer County – relies primarily on contracted services, Sinclair said.

LAFCO chair Miguel Ucovich, who was involved in Loomis’ incorporation effort years ago, said Olympic Valley would not need to build a reserve as quickly as the draft analysis assumes. He also agreed that the analysis should have found better towns for comparison.

Simon defended the 30 percent reserve, saying that’s what LAFCO’s executive director proposed. He also said the community’s dependence on a single revenue source – Squaw Valley – furthered the need for a bigger rainy-day fund.

Simon said comparing Olympic Valley to similar-sized towns is complicated by its status as a resort town where thousands of people visit in the winter, raising the need for services.

Michael Colantuono, who is general counsel for LAFCOs in Yuba and Calaveras counties and has been hired by incorporation proponents, said he will ask the State Controller’s Office to review the fiscal analysis, as allowed under state law. He said he shared Sinclair’s opinions of the analysis.