Just like IVGID’s golf courses, many people think IVGID’s acquisition of Diamond Peak goes all the way back to the general improvement district’s (“GID’s”) creation on May 20, 1961¹. But that’s not the case. As the reader will learn, IVGID exercised an option to purchase Ski Incline² at the instance and request of Japan Golf Promotion (U.S.A.), Inc. (“JGP”) more than fifteen (15) years thereafter, on/about June 29, 1976. Recall that “Art Wood (an entrepreneur from Oklahoma) and his CPA associate Harold Tiller³ envisioned…creation of Incline Village — a master-planned vacation resort community on the northeastern shore of Lake Tahoe. (And) Ski Incline…was one of Art Wood’s cornerstone recreation amenities in his master-planned ‘Pebble Beach of the Sierra.’”⁴

“In 1966 Luggi Foeger, a renowned Austrian-born ski resort consultant, was hired to design and build the resort.”⁴ Ski Incline “opened its doors on November 19, 1966, just four months after construction began.”⁴ The ski area was constructed and initially operated by Crystal Bay Development Co. (“CBDC”). On June 4, 1967 it was sold along with the rest of Incline Village to Boise Cascade Home & Land Corporation⁵ (“Boise Cascade”). And it was re-sold again to JGP on August 14, 1973⁶. So how did IVGID acquire Ski Incline?

IVGID‘s Acquisition of Diamond Peak: In the spring of 1976 IVGID was negotiating the purchase of Incline Village’s two (2) golf courses, a meeting facility (The Chateau), and bowling alley (Bowl Incline) from JGP⁷. In the course of those negotiations, on or before April 29, 1976⁸, JGP offered IVGID an option to purchase Ski Incline as well as an approximate unimproved 2.14 acre parcel adjacent to the driving range at the Championship Golf Course (today a chipping area and adjoining maintenance building) for $1.5 million⁹; allegedly “$115,000 less than the(ir) appraised valuation (as) established by the Washoe County Assessor.” On June 29, 1976 the District exercised that option, and on July 13, 1976 the Board adopted Resolution No. 1266 which authorized its chairperson to enter into a formal contract to purchase Diamond Peak.

Reasons For IVGID‘s Acquisition: So why would the IVGID Board want to purchase a Ski Area? Especially one which immediately required “$355,000 worth of repairs and replacements…$195,000 in maintenance items, and $270,000 in facilities expansion.”⁹ And more importantly, where would the money come from to pay for this purchase? Let’s examine the former question first. A review of the written record insofar as the District’s purchase of the golf courses is concerned reveals there were a number of reasons:

1. The Board felt “the ski area (wa)s of prime economic value to the area and…continued lack of proper maintenance would (allegedly) be devastating to the community;”⁹

2. To bolster the arguments in favor, the Board’s chairperson wrongly stated “the ski area ha(d) been a profitable enterprise¹⁰. (Moreover,)…if there was adequate maintenance of the area, the profits shown by the previous operators would (allegedly increase)…by some $50,000 a year;”⁹

3. Moreover, the Board’s chairperson touted Ski Incline’s alleged “unique(ness) when compared with other areas in the Tahoe Basin⁹ because of its snow making capabilit(ies);”¹¹

4. And given the Board was committed to purchasing the golf courses from JGP⁷, “acquisition of the (ski) area…would afford year-round employment for (the District’s contemplated)…golf course personnel;”⁹

5. Special interest members of the community (i.e., the realtors) touted that “property values of every property owner in the District would (allegedly) increase annually by at least the amount…the Board would ask as an increase in the” Recreation Facility Fee⁹ (“RFF”);

6. And to further bolster the arguments in favor, members of the Board touted “the opportunity to purchase the ski area…at a price not exceeding (its) appraised value…was (allegedly) a high priority of those who responded to (a) recent recreation survey”⁹ authorized at the Board’s April 29, 1976 meeting¹²;

7. Finally, the “District’s Bond Counsel…advised the Board that the District could sell bonds to sufficiently cover the acquisition and…initial cost of rehabilitation, providing the Board was willing to increase the annual (RFF).”⁹

IVGID‘s Funding For This Acquisition: Now onto the latter question; where would the money come from? Since CBDC’s and IVGID’s common playbook had worked so well in paying for the infrastructure improvements necessary for development of Incline Village and acquisition of the beaches, on July 13, 1976 the Board adopted Resolution No. 1267 which authorized the issuance and sale of $1.5 million of interim debenture no. 2 financing bonds¹³, to be junior to the outstanding Revenue Bonds of 1968. This issuance was intended to be in anticipation of issuing new 1976 Recreation Refunding Revenue bonds.

Then on July 19, 1976 the IVGID Board adopted Resolution No. 1262 which authorized the issuance of $5.71 million of revenue bonds (labeled “the Special Obligation Bonds of 1976”). The proceeds of these bonds: paid off the then outstanding principal due under the Revenue Bonds of 1968 (which had been issued to pay for the beaches); paid JGP $1.2 million for Incline Village’s two (2) golf courses, The Chateau, and Bowl Incline; paid JGP $1.5 million for Ski Incline and the chipping area adjacent to the Championship Golf Course driving range; and, provided $600,000 to pay for improvements/repairs to the Championship Golf Course and Ski Incline. And on July 12, 1976, in anticipation of servicing the Special Obligation Bonds of 1976, the IVGID Board adopted Resolution No. 1261 which doubled the RFF.

So now you know how, when, why, and at what cost the District acquired Diamond Peak!

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Diamond Peak Facilities Assessment And Master Plan: At the urging of former IVGID engineer Brad Johnson, in 2015 the District commissioned a Diamond Peak facilities assessment and master plan. And in August of that year, the same¹⁴ was presented to the IVGID Board and the public. The stated objectives of the Plan were “to articulate (a) vision for future development, and provide guidance toward achieving that vision (emphasizing)…the latest advances in ski area development and multi-season operations.” Because the Plan found that facility components were aging and needed significant renewal and investment, it made the following vital recommendations¹⁵:

1. “Terrain Expansion of Approximately 387 Acres on The Humboldt-Toiyabe National Forest;”

2. “Installation of a New Fixed-Grip Chairlift on The Spillway Trail, And The Addition of (a) Backside Lift Serving…New Backcountry-Style Expansion Terrain;”

3. Increas(ing)…Comfortable Lift Carrying Capacity by 710 From 2,440 to 3,150 Guests Per Day;

4. Construct(ion of) a “New…8,500 Square F(oo)t (Snowflake Lodge)…Facility in The Same (Existing) Location;”

5. Initiat(ion of) Summer Operations…(Attracting) Between 430 And 680 Guests Per Day, (However) on Busy Holidays And Weekends This Number Would be Higher, But…Not Anticipated to Exceed 1,300 Visits…Through The Course of an Expected 105 Day Operating Period This Would Equate to Approximately 62,000 Visitors—Roughly Half of Diamond Peak’s Average Annual Winter Visitation…Which Would Include:”

6. Development of “a Combination of 9…Mountain Bike…Trail Networks And…Skill Development Areas Such as Pump Tracks And Jump Parks;”

7. Designated Hiking Only Trails…on The Lower Mountain (Between The Base Area And Snowflake Lodge). The upper Mountain Trails to The Top of The Crystal Express Chair Are Proposed to be Multi-Use;”

8. A “Tree Top Canopy (Zip Line) Tour…Envisioned to Begin at The Top of Crystal Ridge, Zig-Zagging Down The Mountain to The Base…(Which) Will Add a New Dimension And Activity to Diamond Peak’s Offerings;”

9. “An Aerial Adventure Course…Constructed Between Trees or Platforms…(Which) Will be Located on The Slopes Below The Snowflake Lodge;”

10. “A Climbing Wall (Which)…Will be Incorporated Into The Structure of The New Snowflake Lodge Facility—an Exterior Wall For Instance;”

11. An “Alpine Coaster…Slide…Proposed to be Located Primarily Within The Tree Islands on The Lower Slopes of The Mountain, Beginning And Ending in The Base Area;”

12. “Segway Tours;”

13. “A Number of Programs…Taking Advantage of The Unique Mountain Terrain And Adventure Activities And Complementing The Programming Already Offered Through The IVGID Rec Center. Programs (Would) Include: Kid’s Camps; Adult Camps (Skills Oriented); Team Building; And, Educational Programs/Environmental Education;” And,

14. “Host(ing) Group Events And Gatherings That Would Benefit From The Unique Activities And Opportunities Available on The Mountain…Includ(ing): Small-Scale Races; Local Festivals; And, Special Events (Weddings, Retreats, Local Fundraisers And Meetings, Etc.).”

By the way, the Plan made no mention of one or more modern ski lifts given Diamond Peak’s are ancient!

Financing Construction of These Capital Projects:

“Total anticipated capital expenditures, over all phases of the program development, are (estimated at) approximately $16.4 million (in 2015 dollars). A strategic phasing sequence…divid(ing) the capital expenditure into five phases…spanning approximately twelve (12) years, requiring roughly $2.4 million, $1.7 million, $6.1 million, $3.1 million, and $3.0 million, respectively.”

“Source of Capital And Debt Service (Expenses):

The necessary capital for the project, particularly for Phase 1a–1b, has been assumed to be originated through the use of a bond issue with the payments/retirement of the bonded debt an included expense to the financial performance. For the modeling analysis, it was assumed that the needed capital ($3 million) for Phase 1a–1b would be bonded at 100% with a scheduled retirement of ten years…For Phase 2, a similar bonding assumption has been included…There would be fully sufficient cumulative net operating income to fund the capital expansion for Phase 3 ($2.6 million) and…Phase 4 ($2.5 million).”

Operating Expenses:

“Phase 1a operating expenses are expected to be slightly less than $1 million per year, approximately $1 million per year with Phase 1b, would increase to just over $2 million per year with implementation of Phase 2, and approach $3.2 million with the initiation of Phase 4. Operating expenses for the initial twelve years of operation are estimated at approximately $26 million.”

1. See Washoe County Ordinance 97, Bill 57.
2. “In 1985…an expansion plan was developed (which)…saw…the resort’s name…changed to ‘Diamond Peak at Ski Incline,’ alluding to the industry’s ‘black diamond’ symbol for advanced ski terrain. As time passed, the name ‘Diamond Peak’ stuck and ‘Ski Incline’ was retired to the history books.”⁴
3. Known as “the father of Incline Village.”
4. Go to https://www.diamondpeak.com/about/.
5. IVGID wasn’t notified of the sale until May 13, 1968 (see page 380 at https://www.yourtahoeplace.com/uploads/pdf-ivgid/BOT_Packet_Regular_9-23-2015.pdf) shortly before purchasing the beaches from Boise Cascade’s Incline Village development arm, Incline Village, Inc.
6. See pages 240-242 of the packet of materials prepared by staff in anticipation of the Board’s November 18, 2020 meeting (“the 11/18/2020 Board packet“).
7. Go to our How, When, And Why IVGID Acquired the District’s Two Golf Courses discussion.
8. See the minutes of the IVGID Board’s (“Board’s”) April 29, 1976 meeting where IVGID’s “General Manager McMillin read a(n undated) letter from (a) Mr. Katayama, Legal Counsel for JGP…offer(ing)…an ‘option’ to purchase Ski Incline.”
9. See the minutes of the Board’s June 29, 1976 special meeting.
10. Conspicuously, there was no mention made of the massive capital costs associated with ski resort ownership/operation.
11. Conspicuously, there was no mention made of the massive water costs associated with manmade (in the tens of millions of gallons) snowmaking.
12. See the minutes of the Board’s April 29, 1976 meeting where General Manager (“GM”) Kermit McMillin stated “a postcard was being sent out, on which…all property owners (c)ould vote on the types of recreation…they want(ed) or d(id) not want.”
13. We are not certain whether these bonds ever issued. In fact, Resolution No. 1267 may have been intended to accomplish nothing more than additional security for the District’s purchase of Ski Incline. However, regardless, these bonds would have been retired when the Special Obligation Bonds of 1976 issued.
14. Go to https://www.yourtahoeplace.com/uploads/pdf-ivgid/DPMP_August_2015_10-21-2015.pdf.
15. What it labeled “a blueprint for future development of multi-season activities (both winter and summer).”