Win Gruening: Can Eaglecrest support itself with gondola?

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By WIN GRUENING

To maximize the economic potential of Juneau’s municipally owned ski area, the City and Borough Assembly this week conditionally approved a $2 million investment in a used gondola system for year-round operations. An additional $6.2 million will be required for construction and installation.

This is a huge step on the road to Eaglecrest’s self-sufficiency.

Full disclosure: I’ve been a fan of Eaglecrest since its inception.  Growing up in Juneau in the 1950-60’s,  I hiked three miles up into the Douglas Ski Bowl to ski on a short tow rope staffed by volunteers. Decades later, when the Eaglecrest Ski Area was built, I served on its first board of directors. My kids learned to ski there and I spent many weekends driving them to lessons, working Mitey Mite races, and helping to raise money for the Juneau Ski Club.

Eaglecrest is unique in allowing families to participate in a sport together outdoors in Juneau’s natural surroundings.  Skiing is a multi-generational activity enjoyed by residents and visitors alike and, with Juneau’s school programs, is available inexpensively to kids of all abilities and income levels.

Like other CBJ recreation venues; swimming pools, softball fields, hockey rink, trails and parks, it requires a subsidy from the city.  Despite Juneau’s variable weather and snowfall, it has historically recouped 70% of its operational expenses.

Ever since its beginning, ideas to minimize Eaglecrest’s financial subsidy have been discussed. Privatization and housing developments were considered and discarded as impractical. However, as Juneau’s visitor industry has developed, it became clear that a summer operation was feasible.

In 2019, Juneau Mayor Beth Weldon formed an Eaglecrest Summer Operations Task Force comprised of members of the Eaglecrest Board and CBJ Assembly. Since then, over two dozen public meetings have been held while researching possible summer operation opportunities. This has resulted in a projected operations plan encompassing a number of adventure rides and amenities, including a gondola lift, which would complement Eaglecrest’s summer zipline tour that has operated since 2006.  

A public meeting was held recently via Zoom hosted by Eaglecrest General Manager Dave Scanlan. He outlined the current request and answered questions from the public for almost two hours.  Several important points were highlighted during this presentation.

  • The total $8.2 million gondola cost (installed including contingency) is approximately one-third the cost of purchasing a new turnkey system.
  • This wouldn’t just benefit visitors.  A gondola ride would open up Eaglecrest to a whole new alpine experience for locals for hiking, snowshoeing, tubing, mountain biking, and other activities, such as a mountain coaster and expanded Nordic ski trails.
  • At historic visitor levels, an Eaglecrest summer program would not compete directly with existing visitor venues but would complement them. Local tour operators would partner on offerings. Eaglecrest will also be catering to a younger, more active visitor base than has been the norm in the past.
  • Additional summer bus traffic on North Douglas Highway would constitute a fraction of that generated by the hundreds of skiers who visit Eaglecrest on a winter day. 
  • Planning has focused on confining summer tourism activities to an area that minimizes conflict with traditional local uses at Eaglecrest.
  • If the gondola project ultimately fails to materialize, the purchased system will still retain its value and could be re-sold to recover costs.
  • Extensive financial modeling and research indicate that a combination of grants, loans, and public/private partnerships could finance the venture and allow Eaglecrest to eliminate the current city subsidy.  Information on the Eaglecrest summer development program and financial projections can be viewed at https://skieaglecrest.com/summer/.

The current $2 million appropriation only secures the purchase and delivery of the gondola system and the CBJ Assembly has requested additional financial information prior to its shipment to Juneau. As I have called for in other city-owned projects, Eaglecrest should expect a rigorous examination of its financial projections and any market studies before proceeding to the next level allowing construction and installation.

Nevertheless, the case made thus far is compelling and deserves serious consideration. 

As envisioned, this concept would not only enhance Juneau as a travel destination and open up recreational opportunities for residents, but it would also free up precious tax dollars for other CBJ activities.

After retiring as the senior vice president in charge of business banking for Key Bank in Alaska, Win Gruening became a regular opinion page columnist for the Juneau Empire. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is involved in various local and statewide organizations.

20 COMMENTS

  1. Here’s a letter I wrote to the CBJ Assembly on this topic about 2 weeks ago:

    If you commit to spending up to $8 million to erect a tram at Eaglecrest please first determine that it will not take dollars away from what cruise ship tourists would have otherwise spent anyway, and that it won’t serve to prevent tourists from doing other activities during a very finite stay while their ship is in port. Spending tax money to add a tourist destination would make even less sense if doing so would reduce sales revenue in the private sector. If the market for a tram ride is the same market that Juneau taps for whale watching, dog sledding at the glacier, flying to the Taku Lodge for dinner, and riding in a helicopter then I must question the appropriateness of taxing the private sector in order to compete with it! Moreover, if a ride up to Eaglecrest and then a ride up a gondola tram takes people out of the stores and restaurants where they would be paying sales taxes then please put that arithmetic in your evaluation.

    In determining whether a tram would add to total Juneau tourism sales rather than merely switch some dollars from the private sector to a municipally-owned enterprise should be done in a more methodical and accepted way than taking numbers out of the air. I do not know anything about tourism price and demand elasticity but you need to know that before committing millions of dollars to that industry. Becoming a large player in the tourism industry is very far removed from roads, public safety, and education. Taxing the private sector successfully doesn’t necessarily make city government a good competitor in the private sector, and I am not sure if CBJ should be a competitor.

    The last time I was in Hoonah the Huna-Totem Corporation was well along in constructing a tram by the way. I don’t know if it was completed nor do I know if a tram there would have information you could use to decide if city government needs to build a tram.

    If the business model you have for Eaglecrest is unsuccessful I don’t think that putting more money into the enterprise should necessarily trump changing the model. ADF&G uses volunteers to operate its indoor shooting range here in Juneau, at least it did until the pandemic. Volunteers open the facility, brief new shooters, oversee the shooting, and even clean the restrooms at the end of the day even though that entire facility is funded by the excise tax on guns and ammo. If the winter we have had in 2021-22 has been inadequate to cover all fixed costs and overhead at Eagecrest then upping your investment on behalf of voters and taxpayers could amount to doubling down on a poor investment; perhaps your business model needs a tune-up and you could look at the ADF&G shooting range.

    Speaking of your financing plans, at least as I have heard it described, the so-called Central Treasury Note is not a substitute for stand-alone revenue bonds, especially from a risk to taxpayers standpoint. There may be an underlying belief that Juneau taxpayers are as financially unsophisticated and as gullible as is the least adept Assembly member but I am not sure that is the case. As a general rule government does not do well when it enters the private sector as a competitor, and when taxpayers want to enter the private sector they may not be well served by having CBJ be their proxy.

    I actually worked at a ski area that had a tram – a two person gondola. I think it was the winter I was 19 years of age, so that would have been 1969. The snow became so deep that my logging production dropped in half, one fellow shoveling stumps and one fellow falling, and then it became so deep as to be too dangerous. So I worked weekends at Wildcat Mt., in my hometown of Gorham, NH, while I attended the University of NH. I found the work to be fun, and the people there liked me, but it paid only about one-fifth what I made logging so I had to go back in the woods as soon as possible. Wildcat Mt. is now part of the Vail Group. The wages they have always paid has limited their labor pool to unmotivated people, whom I called “the townies,” fellows who had no hustle. Skiing in northern NH was never something people from my class did but instead Wildcat drew upper class people from southern New England, and it was only at that temporary job at the ski area that I realized that BMW made automobiles. Obviously, the Wildcat Mt. business model is considerably different than your Eaglecrest model, and taxpayers don’t worry very much whether Wildcat makes a profit.

    • Tom, your comment seems will-thought and compelling. Please let me provide some perspectives.

      Firstly, there is no tourist business in Juneau that does not depend upon taxpayer support. Every example you mentioned depends upon air/sea-ports, docks, piers, roads, parking lots, utilities, etc. The only question is, where is the public-vs-private line drawn. In the case of whale-watching it may be the bull-rail of the dock. Why not suggest taxpayers should reconsider providing that point for whale-watchers to embark? What about the point for tourists to board airplanes for flight-seeing or Taku Lodge? Or the parking lots and roads transporting tourists to the Mendenhall Glacier? Or the many trails we developed and maintain for tour guides to usher tourists? As taxpayers in our socialist culture, we absolutely subsidize tourism along with public education, private-use harbors, swimming pools, libraries, healthcare, housing, food-stamps, etc, etc, etc. The only question is, where exactly should we draw the lines of government’s heavy involvement in our economy. Should Juneau be different?

      The answer is, Juneau is indeed different. Let’s acknowledge how unique the Juneau micro-economy truly is. It is small, remote, and isolated–resulting in high living costs. These features result in many business monopolies: one airline, one weekly barge service, one garbage dump, one electric utility, one concrete plant, one asphalt plant, one particular health care specialist, etc, etc. As you know, business only serves better than government when business is subject to healthy competition. Because the cost of living in Juneau is so high, and amenities are so few, it is difficult to attract qualified workers from beyond. This, in turn, drives the cost of living even higher for everyone. These are but a few examples that make our local economy so difficult.

      Getting back to the Eaglecrest project, it is a fact that tourists demand a variety of activities and attractions in addition to buying jewelry. Returning tourists seek even more variety. It is also a fact most attractions have reached full capacity. The Mendenhall Glacier, whale watching boats, trail and bicycle tours, are obvious examples. The Eaglecrest gondola is intended to open the alpine experience and unique viewing vistas to tourists–guided by private enterprise. The access will be provided by taxpayer infrastructure (gondolas)…. similar to access to other tourist activities. During winters, the gondolas will serve as ski lifts to provide a better amenity for locals and winter tourists. This is a bold idea which I think is a no-brainer; it utilizes an existing unique (under-utilized) asset–long term.

      We only have three choices with Eaglecrest: 1) continue business as usual with perpetual subsidies, 2) shut it down, or 3) make a bold investment to fully extract its value so it pays for itself long-term. I say lets be bold.

  2. These are the type of projects that should be looked at and possibly funded in the governor’s GO bond proposal. The state could be investing in developing our natural resources that serve the tourist industry. Backcountry huts, more and improved hiking and biking trails. The average visitor spends around $120 a day in Alaska. If you can get one million visitors to spend an extra day in Alaska that is real economic gain. Makes more sense than pouring money in a port that has failed for over 20 years or building passenger terminals at Wasilla airport.

    • Funny. You used to be sooooo against any skiing infrastructure that affected YOUR backcountry.

      And, Leo, isn’t htis the same Dave Scanlon that you chastised for wanting to put a gondola in Turnagain Pass?

      What’s changed?

  3. I’m all for this and think it’s a great idea as I’ve always felt Eaglecrest is very underutilized. Many have tried to start summertime activities/businesses only get shot down by Juneau’s politically motivated conservation groups. They currently are fighting to limit the number of cruise ships and visitors so I hope we have enough people to make it work.

  4. This might be a good idea…Maybe…..However, prior to committing any money to purchase anything, I’d like to see a lot more of the basic financials. For instance, what will it cost to put into operation once we own the thing? Where will this additional money come from? What is the expected cost of operation? How long before it can beak even? How long before its profitable? In the mean time as it operates at a loss, who pays and how much?

  5. Charging the taxpayer so that a handful of people can pretend they live in a ski town is ridiculous. Don’t compare a ski hill in a rainforest to a climate controlled hockey rink or swimming pool that can be used during any weather conditions. Check the eaglecrest webcams now and then one of them points directly at the lift line. 9 times out of 10 there isn’t a soul in them. If you want to be a skier, move to a ski town.

  6. Don’t we already have a team for tourists? Do we need tourists at eaglecrest as well? This town functions fine without tourists we haven’t had them in two years and we are still here. The only people that are absent are seasonal employees from down south and the people that run the tour companies. How ever did Juneau exist before a cruise ship? I think they did just fine.. I know the last two years have been very pleasant

      • W. Douglas Coogan, your logic escapes me here, Eaglecrest since it’s beginning has been wholly subsidized by the taxpayers of Juneau. This next installment isn’t any different.
        Eaglecrest might best be described as recreational opportunities for the Juneau Elite, paid for by the common people.
        Looking forward to your response Sir.

        • Robert, Eaglecrest has never been “wholly susbsidized” as you contend. Rather, the subsidies primarily cover the construction and maintenance of the facilities. The operational costs are primarily funded by operational revenues.

    • Apparently you missed the businesses that closed over the last two years. Or the outflow of people who left for better opportunities.

      The revenue lost by businesses and CBJ will never be recovered.

      Except for downtown, the glacier, and the whale watching excursions past DeHarts, we rarely actually deal with tourists. Downtown is so nasty most sane people avoid it anyway.

      Tourism dollars go to local based vendors. Vendors buy supplies for local businesses, use local utilities and services, pay rents and mortgages (yes, some are not local, but they pay taxes), and staff.

      Staff, locals or not pay rent, buy food/gas/supplies. They go to local restaurants. They buy souvenirs. On and on and on.

      The average tourist dollar goes thru roughly four local hands before it leaves Juneau.

  7. It is very disheartening to see the naysayers so vociferously opposing the gondola project based on their lack of knowledge of the proposal. In fact most of their questions would be answered if they only took the time to review all the information that has been put out there already. The engineering, financials and visitation projections have all been reviewed by the appropriate professionals. These naysayers cannot be bothered with these details. They claim that this will be an affront to existing businesses and be unfair competition. They don’t take the time to find out that the industry folks recognize this as a complementary addition to their businesses. Even the one business with the similar model does not oppose it and the Downtown Business Association issued a letter of support. Comparing a two person winter only gondola ski area to a 45 passenger all season operation is puzzling and disingenuous. And to top it off, we have someone telling our local population that if they want to live by a ski area they should move. And all the folks that depend on the summer business should just suck it up. Every poll taken, including the 2019 poll shows that the vast majority of both skiers and non skiers support Eaglecrest moving to summer tourism and supporting expanded ski operations. We should listen to the people and embrace this opportunity and hopefully the naysayers will realize how selfish and short sighted they were. I think back to when we were proposing the summer road to be built to the too of the mountain. Many of these same type of folks came out to oppose it. Now they are some of the most regular users and greatly appreciate it. I suspect history will repeat itself as it always seems to do.

    • Your failing to explain Dave why the taxpayers of this city should provide the money for a handful of people to be able to downhill ski. My point is that the city can’t provide every source of recreation for inhabitants of Juneau. If you want to be a skier…. move to a ski town. Don’t expect the taxpayer to flip the bill for you. Move someplace that people ski. A ski hill. A town that supports skiers and a ski hill.

      • Your fail here Loren is in not understanding this gondola proposal is geared towards year-round use by those (other than skiers) when the snow is not on the ground.
        And it’s early in the final decision of whether/not such an expenditure will do what it’s intended. Further, these non-skiers utilizing this gondola during the off season would be predominantly tourists in Summer.
        You appear to just need to whine about something you’ve not thought out adequately. Read some more about this project.

  8. People!

    Learn to use paragraphs!

    There may be great ideas here, but few will bother reading the wall of texts to get to them.

  9. The expansion of Eaglecrest is a good idea for many reasons.

    My main concern is knowing CBJs ability to boondoggle, what will the final project look like and actually cost

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