Sunday, January 19, 2020

The Great Recession Changed Our Development Landscape

News came from New England’s north woods last fall that a large residential and commercial development on 17,000-acres near Maine’s Moosehead Lake conceived before the Great Recession has not begun and would not move forward.

The APA-permitted Adirondack Club and Resort near Tupper Lake has also not commenced, largely for economic reasons. The developer, Preserve Associates, is being foreclosed upon, their creditors are pressing for relief, and the new mortgage holders (Crossroads LLC) are trying to figure out what to do once they acquire the 6,200 acres.

In Maine, the failed project’s new landowner Weyerhaeuser Corporation not only asked the Maine state regulator to cancel the development plan for over 2,000 second homes, but also asked it to restore the original zoning of the land for sustainable timber operations and outdoor recreation. The landowner also encouraged Maine’s Land Use Regulatory Commission (LURC) to work with it and the small towns near Moosehead Lake to take a fresh look at the area’s future needs through a community-based planning process.

The trouble in Maine began with the application in 2005 for a major development at Moosehead Lake by Plum Creek Timber Company of Seattle, which had bought nearly a million acres of Maine industrial forest, lakes, rivers, mountains. The organization RESTORE: The North Woods chronicled Plum Creek’s application to rezone the land to allow more than 2,000 new homes near the lake, along with other commercial and industrial development.  Maine’s rural North Woods economic picture suddenly looked bright to many residents.

Months of acrimonious hearings, including expert witnesses before the LURC ensued. Legal challenges came also, brought by RESTORE. Courts ruled for, then against them. LURC ultimately approved the rezoning in 2009 authorizing a 17,000-acre development zone for up to 2,025 residences and rentals, but also placing a conservation easement on 390,000 acres around and beyond the lake, with plenty of recreational trails for public use. Despite these public benefits, the resource fragmentation resulting from all that development, road building and permanent human occupancy spread over 17,000 acres was still very concerning.

Sounds familiar. Adirondack Club and Resort (ACR) also began its lengthy review under the Adirondack Park Agency pre-recession, leading to the 2011 public hearing and ACR authorization in early 2012, and the subsequent legal fight in the state courts. Unlike the Moosehead Lake project Preserve Associates opposed, and APA never required, a protective conservation easement.

In 2016, the giant timber company Weyerhaeuser bought out Plum Creek Timber and, in late September 2019, that company sent a letter to Maine’s LURC. It asked that the Plum Creek development plan, known as the Concept Plan, on 17,000 acres be terminated and that these lands return to their original Protection/General Management zone.

The Weyerhaeuser letter to the State of Maine states that: “the impact of the 2008-2009 recession forever changed the United States development landscape. As a result, and despite our best efforts, the development components under the Concept Plan have not been implemented and no development has occurred. Therefore, we have concluded that the solutions incorporated in the Concept Plan are no longer practicable to implement. We believe returning the zoning back to its original classification, which allows sustainable timber management, would provide near-term predictability for LURC, Weyerhaeuser and the Moosehead Lake region.”

The company’s letter to Maine’s LURC concludes:

“As you may recall, when the Concept Plan was conceived in 2003, the economic well-being of the Moosehead Lake region was a primary driver. Many of the concerns that existed then remain today. We believe that terminating the Plan could allow the region to take a fresh look at its future needs. To that end, and should the region and LURC desire, we would be supportive of a community-based planning approach on these lands.”

I participated with my colleagues in the Adirondack Club and Resort hearing. Adirondack Wild focused on the natural resource impacts of the project, but wise heads privately predicted that ACR would falter due to the applicant’s failure to sufficiently analyze resort economics after the Great Recession.

Expert witnesses in the field of resort development had no axes to grind or sides to take at the ACR hearing in Tupper Lake and Ray Brook. Resort developer and advisor David Norden’s 2011 written testimony suggests why the Adirondack Club and Resort has not gotten off the ground. His insights may also apply to aspects of the Moosehead Lake development.

Here are key points from Norden’s testimony to the APA’s public hearing:

  • The project sponsor fails to give an investor the tools required to determine the marketability of the project;
  • ACR project is a statistical outlier which suggests that a) sales projections need to be revised; b) the concept needs to be revised, or c) both projections and concept need to be revised to increase the probability of success;
  • advantages of the project include the extraordinary beauty and scenic values, the “emotional allure,” and local support;
  • However, the disadvantages and hurdles to overcome were “considerable,” those being “scale, access, lack of brand recognition, and disproportionate number of off-mountain versus on-mountain real estate products;
  • On scale, Big Tupper lacks the rise, acreage and capacity “to support robust real estate sales;”
  • On access, “it is very difficult.” “A significant number of well-established mountain resorts in New York, Vermont, Massachusetts and Canada” have “better access to New York, Boston, Toronto and Montreal metropolitan markets;”
  • On lack of brand, “Big Tupper is an unknown…it is primarily the well-established resorts with modern, state-of-the-art technology that successfully market and sell resort-based real estate;”
  • On the disproportionate number of off-mountain real estate, “only 41 % (268 divided by 651) of the product is true slopeside…Anything off-mountain will not achieve the pricing premium that slopeside residential properties achieve;”
  • Also, “the development lacks properties that possess water frontage and the marina will have considerable challenges with its valet-to-ramp concept and lack of services.”

In its decision-making, the Adirondack Park Agency gave no weight whatsoever to Norden’s testimony or to the broader post-recession economic and marketing challenges facing the Adirondack Club and Resort project. This stands in contrast to the APA’s economic analysis and critical findings concerning the proposed Gleneagles development near Lake Placid in 1989, which ultimately fell apart for economic reasons.

As at Moosehead Lake, there are opportunities ahead to take a fresh look at the ACR landscape. One of the biggest obstacles is lack of trust among the stakeholders. Who would play or could play the honest broker?  Applied conservation science and conservation subdivision design principles must be a part of any fresh look, but those concerns and topics alone would be insufficient.

Conservation scientist Dr. Michael Klemens is a perceptive practitioner of local and regional land use planning.  He includes the following advice and graphic in Adirondack Wild’s guidebook Pathways to a Connected Adirondack Park – Practical Steps to Better Land Use Decisions:

“The earlier all stakeholders meet and express their viewpoints, goals, and desires the more responsive a project will be to the needs of the environment, the community and the applicant. In every land use consideration there are three basic areas where problems can arise: in the substantive science, in the procedure, and in a stakeholder’s perception of how their needs are being met/addressed/listened to within the process or, in other words, in the psychology…it is the feeling of the public’s disenfranchisement and marginalization that fuels some of the most acrimonious debates over various land use projects. Local and State officials can alleviate these perceptions by encouraging early and substantive public participation.”

Photos, from above: ACR development landscape with Tupper Lake in background, 2007, and APA staff lead a field trip to ACR site, Cranberry Pond, in 2007, provided.

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David Gibson

Dave Gibson, who writes about issues of wilderness, wild lands, public policy, and more, has been involved in Adirondack conservation for over 30 years as executive director of the Association for the Protection of the Adirondacks, executive director of Protect the Adirondacks and currently as managing partner with Adirondack Wild: Friends of the Forest Preserve

During Dave's tenure at the Association, the organization completed the Center for the Forest Preserve including the Adirondack Research Library at Paul Schaefer’s home. The library has the finest Adirondack collection outside the Blue Line, specializing in Adirondack conservation and recreation history.

Currently, Dave is managing partner in the nonprofit organization launched in 2010, Adirondack Wild: Friends of the Forest Preserve.




12 Responses

  1. Kevin E says:

    The great recession???? Im confused.

  2. Todd Eastman says:

    With diminishing numbers of baby boomers, and fewer vacations taken by those able to afford the described developments…

    … the future of these failed projects in their current visions are…

    … kaput…😊

    • Boreas says:

      It would be nice if some effort could be put into affordable housing as an alternative to some of these luxury developments. Decrease the overall footprint and build multiple-family dwellings. There are still plenty of boomers who AREN’T wealthy who would like to live in a more natural setting.

  3. Peter says:

    The problem in Adirondacks is the high cost of development. By the time the high cost of the infrastructure (roads,sewer, water, electric etc) to the subdividing the land the money is gone. Everything costs more in the Adirondacks. After the developer goes bankrupt NYS buys the land ending development “forever”.

  4. Charlie S says:

    “Everything costs more in the Adirondacks.”

    Everything cost more everywhere! High prices…the new wave! Coincidentally, or not, more and more people are homeless too.

  5. Cole says:

    The ACR dreamers didn’t scale back after the market downturn, they doubled down and increased their projected selling prices on average 50%. No one with any common sense ever thought they could sell anything anywhere near their projections.

  6. Peter says:

    Soon New York the Empire state will become New York the empty state.

    • Boreas says:

      Get downstate much? Still plenty of people down there.

      Some of my favorite states are nearly deserted.

      • Peter says:

        I live in the Adirondacks next to the Independence Wild Forest and about 1/4 mile from the Five Ponds Wilderness and Pepperbox wilderness. We call the wilderness forever dead what a waste. We watch the unmanaged forest rot and die. Did you ever read “There is a Fox in Pinchot’s Forest”?
        I avoid down state after a job on 2 Broadway Manhattan NYC after college.

        • Boreas says:

          Peter,

          Beautiful area – I am envious.

          Trees grow, die, and rot. That is critical to restoring a healthy, natural, old-growth forest ecosystem. Many species only live in old-growth forests.There are plenty of plantation forests and managed forests. Why not allow one to become old-growth again? Right now much of the Forest Preserve is a young forest still recovering from deforestation and overcutting. It will take many generations of trees and many centuries to heal, especially up here in the north. 1000-2000 years from now, it will likely be the only old-growth forest in the East.

  7. Chris says:

    People, including the ACR developmers, haven’t figured out that people’s vacation and holiday practices have changed dramatically since both the great recession and the student debt and health care vost explosions.

    People don’t spend as much time vacationing, particularly in the same place. Nor do they have the money for it. As for the high end, check out the 50% unsold rates of expensive apartments in NYC.

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