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Alms For the Lift: Bogus Basin's Nonprofit Ski Model Stands Alone

Ski area's 501(c)3 status means new rules/opportunities for fundraising

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As the autumn morning sun was still warming the Boise Foothills, a low, droning sound echoed across the hills. Slowly a massive helicopter rose into view, supporting an even more massive metal tower beneath its hovering bulk. Gradually, with pinpoint precision, the tower was maneuvered up the mountain and lowered inch by inch to a crew waiting to permanently anchor the tower in its new home.

While a group of local media huddled on a ridge overlooking the scene, the newest, and much anticipated addition to Bogus Basin Mountain Recreation Area, began to take shape. The Superior lift was being reborn as a $5 million high-speed quad, with the capacity to carry twice the number of skiers and boarders to the top of the hill in half the time of its predecessor.

Though the addition of a new lift is a big deal for any resort, the way this lift became a reality busts the traditional ski-area model. Where most resorts would have set aside funds each year and eventually taken out a loan for such a massive capital-improvement project, Bogus Basin turned to the public. From a front-page feature on the resort's website to donation boxes at the base of the hill to a text message donation system, Bogus is taking every advantage of a status that is rare in the industry--Bogus is a nonprofit.

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Despite Bogus being a major highlight of winter life in the Treasure Valley, its status as a nonprofit isn't widely known by the public. But it's that status that has allowed the resort to approach business in ways usually not found in an industry that is dependent on both the weather and the willingness of skiers and snowboarders to fork out cash for lift tickets. When is the last time you were able to text a $10 donation to help you get to fresh powder faster? (Text the message BOGUS to 20222 if you're interested.)

From the convenience-store-counter-style donation boxes mountain bikers and hikers found at the base of the hill throughout the summer to an official campaign dubbed "Make 2011 a Superior Summer," Bogus Basin officials had a clear picture of not only how much they needed, but how they would get it.

The expense of a new lift is significant for any resort but especially for one the size of Bogus Basin. With an annual budget of around $10 million, taking on the $5 million lift project has been a major undertaking.

"We're targeting $1 million in equity toward the $5 million [cost of the lift], and we're borrowing $4 million through a Home Federal Bank loan," said Mike Shirley, Bogus Basin general manager.

To date, approximately $850,000 of the $1 million goal has been raised, and the remaining gap is closing daily. The lead donation was $500,000 from the J.A. and Kathryn Albertson Foundation, with George and Bev Harad contributing an additional $100,000.

Bogus' status as a nonprofit traces its origin back to 1942, when a group of die-hard skiers decided to create a resort. They established the Bogus Basin Recreational Association, and this ownership structure has weathered the last 70 years.

The association is comprised of 50 members and elects a 12-person board of directors. That board appoints the general manager, a position responsible for hiring the staff to run the resort, which generally numbers 100 to 120 during the winter.

Nonprofit resorts can be found in other areas, but in most cases they are run as a branch of a municipality. In the case of Bogus Basin, Boise and the other neighboring cities do not have input into its operations, making it one-of-a-kind even among the subpopulation of nonprofit ski areas.

The thought of converting to a for-profit business has never really been pursued by Bogus' leadership, even though some resorts in the industry have been sold to real estate investment trusts and then leased back to the groups responsible for running the resorts.

"Nonprofit is the best way for Bogus Basin to be operating. I will always ask my friends to contribute to Bogus Basin, but never to invest," Shirley said.

The resistance to becoming for-profit is centered primarily on the fact that the resort is a capital investment that is only used for about three months each year. There are biking and hiking trails and a disc golf course that are used during the off months, but the vast majority of revenue enters the coffers during the winter, while Bogus treads water--at best--the rest of the year.

The fact that the resort depends on natural snowfall, which can vary greatly between years, has minimal snow-making capabilities, and the uncertainty of when a season will begin and end all combine to limit Bogus Basin's revenue-generating ability, which makes a long-term financial commitment all but untenable for potential investors. Additionally, there would be statutory problems with selling the resort to a for-profit enterprise. The legal process would be cumbersome and complicated, and Shirley and the board of directors have no desire to go that route.

Of course, there are some financial benefits to being a nonprofit as well.

"We don't pay any income taxes," said Shirley, adding that any income typically would be written off as depreciation of the equipment. "We don't pay any property taxes, and we can raise tax-deductible contributions for capital improvements."

That last point has been the impetus for Bogus Basin's fund-raising campaign, because the resort changed from a 501(c)(4) to a 501(c)(3) organization in 2005, which paved the way for Bogus to accept contributions that donors could write off on their taxes.

According to National Ski Areas Association President Michael Berry, Bogus is a standout in the industry.

"Bogus' situation is somewhat unique in that their setup allows for tax-deductible charitable contributions. It was a unique asset in a unique situation with a unique amount of support. It allows for a high degree of community involvement. There are no parallel examples, though others have looked at it," Berry said.

The process of making resort improvements is vastly different at Idaho's most well-known resort, Sun Valley, where all major projects are self-funded.

Basically if the money is there and the upgrade makes sense--as was the case two years ago when a new gondola was installed--they will invest in the change, according to Jack Sibbach, Sun Valley marketing manager.

It's much the same story in nearby Jackson Hole, Wyo., where the area's largest ski hill, the Jackson Hole Mountain Resort, is owned in whole by the Kemmerer family. JHMR Marketing Coordinator Anna Cole said the resort typically takes out traditional bank loans to pay for significant upgrades, including the recent replacement of the resort's famed aerial tram, which can carry 100 passengers. It was constructed three years ago at a cost of $32 million. This summer's improvements totaled $4.5 million.

Bogus' modification of its nonprofit status has emboldened officials to market the resort in a different way, strongly emphasizing the connection between the resort and the community and the direct impact the community can have on Bogus' success and growth.

"The 2010-2011 winter was the best financial season Bogus has ever had. The total of 354,000 skier visits was a very close second to the record set in 2009-2010," said Gretchen Anderson, Bogus Basin spokeswoman, about the benefits of this new approach and the growth it has created.

As a nonprofit, making money is not Bogus' No. 1 goal--although it is vital to operations, of course. The primary goal, from its inception to today, has been to keep people skiing.

Shirley emphasized that Bogus Basin has "always spent everything it makes on capital improvements, reinvesting in the resort."

Anderson agreed. "This new high-speed detachable quad is one of three now on the mountain, and it makes a difference. It really brings Bogus Basin into the 21st century in terms of having a high-speed quad on all sides of the mountain."

Still, any new features have to be paid for somehow, and both Anderson and Shirley said that the numerous contributions from season pass holders and others have been greatly appreciated, and more people are giving all the time.

As a way to incentivize and publicly recognize those who give, a donor pass program has been established. Any season pass holder who gives a $100 donation will receive a green-colored pass; those contributing $250 will get a blue pass; and those donating $500 or more will be given a black diamond pass. So far approximately 300 individuals have contributed in this manner.

Shirley pointed out that the new Superior lift is just one component of a long-term master development plan Bogus Basin put together 15 years ago to modernize the facility and keep pace with what other resorts offer. With the completion of the new high-speed quad lift, a total of $30 million will have been spent since the plan was adopted.

Now that these upgrades are near completion, the focus is shifting to what is next for Bogus.

"We have to redevelop both base areas ... and covert several other lifts," Shirley said of some key components of future development.

These improvements are based on a market study Bogus conducted a few years ago, asking visitors what projects should be next for completion.

"Chair 3 was an equal priority for folks, along with redevelopment of the Simplot base area and redevelopment of the beginner area. We're listening to the public about what they would like to see done next," Shirley said.

Amid all the excitement of a new lift, there is a downside. For the first time in a very long time, the cost of a season pass is going up, starting next spring. While the exact price has yet to be set, the current cost of $199 will go up to either $229 or $239.

The increase is a change in the direction the resort set in 1998, when it drastically slashed pass prices from $550 to $199, which Anderson said started a ripple effect through the business. The effect was immediate and dramatic--season pass sales skyrocketed from 3,500 the previous year to 19,000.

Those new pass holders needed new equipment, so the season pass price reduction was a boon for Bogus' equipment rental business, too. Resort management asked local equipment retailers to offer a low-cost rental option, but after meeting with staunch resistance, they created the program themselves, offering season-long packages starting at $99.

Bogus management held to the $199 price tag as long as it could, but the reality of rising costs of power, labor and insurance forced the decision. A piece of good news for families with young skiers is that season passes for those ages 7-11 will remain $59.

Even as the first hints of autumn are arriving in the valley, the final touches are being put on the new Superior lift--concrete has been poured, and equipment has been shipped in from Canada and Austria. Load testing will be conducted in November, and everything is on schedule to be ready for the first significant snowfall of the winter.

It won't be long until the temperatures drop, the snow starts accumulating and the slopes at Bogus Basin are packed with multitudes of skiers and snowboarders shredding their way through the powder and down to the base, ready to be whisked to the top of the mountain again on a new high-speed quad lift.

Maybe they should keep some cash in their pocket to drop in the donation box while they're waiting in line.

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