The Canmore Crash
Three Sisters Mountain Village is in receivership and the vacation property market is struggling, drawing Canmore’s future as a resort destination into question. But local developer Frank Kernick isn’t panicking
by Jeff Gailus
It was in a fishing hole not far from us where Canmore developer Frank Kernick used to swim as a child. He and I look south from the new bridge he’s built over Policeman’s Creek, one of two ribbons of water surrounding his 70-acre Spring Creek Mountain Village development, bustling with construction on an early May day and just a five-minute walk from downtown Canmore. To our left is the Trans-Canada Highway and, beyond that, neighbourhoods Kernick already built – Canyon Close, Grotto Mountain Village, Eagle Terrace. Rising above it all are the towering, limestone peaks of the Rocky Mountains that have drawn 10,000 new residents here to the Bow Valley in the last decade.
The beautiful, arched bridge, part of Kernick’s transformation of the aging Restwell Trailer Park his father and uncle built on land that has been in the family since 1927, links Spring Creek to a piece of town-owned land he promised to improve as part of what he calls his “legacy development.”
“It’s not the prettiest place at the moment, with the pump station there,” he says, pointing toward the little shack and gravel parking lot I had walked through dozens of times during my own years in Canmore. “I said I’d turn it into a park while I developed Spring Creek. And I built this bridge so the kids riding their bikes to school could connect to the trail system without having to ride through town on the roads.”
At a development site across the valley, Three Sisters Mountain Village is a veritable ghost town. Completed houses appear empty, condos sit half-built and For Sale signs are everywhere. The only construction work that now rivals the activity at Spring Creek is focused on the charred remains of two condominium buildings at Three Sisters’ Wilderness Ridge, which recently went up in flames. Two brick chimneys stand naked above blackened beams that once supported the roofs of luxury condos and the dreams of their owners.
The tragic fire is a symbol of the setback of Three Sisters, Canmore’s flagship real estate development that, after a 30-year history in the Bow Valley, went into receivership under PricewaterhouseCoopers late last February. According to the bankruptcy application filed by HSBC, “a sharp downturn in the demand for recreational property tied to the economic crisis” and a “surplus of… vacant land and residential properties in Canmore… caused a dramatic decline in demand for Three Sisters’ properties.”
Unlike most developers in the area, which tend to come from away to impose their own visions of the future on the locals, Kernick is a born and raised Canmore boy, which gave him a kind of home field advantage that so far has saved him from Three Sisters’ fate. But there’s more at stake in this battle of development models than Kernick’s chances of carrying on a family tradition. Born of a coal mine that ceased production in 1979, Canmore has since become dependent on a steady stream of upscale, urban development revenue, which has all but slowed to a Policeman’s Creek May trickle.
Canmore real estate sales began dropping long before the U.S. economy went into a tailspin. Sales in the early months of 2009 were down approximately 60% from 2008, which was already down 57% from 2007. With prices still high and so many half-finished projects in the pipeline, “there is a hefty volume of inventory currently for sale,” says veteran Canmore Realtor Jessica Stoner.
“There’s no construction going on because there’s no demand,” says Bow Valley Builders and Developers Association executive director Jamie Findlay, who works out of a half-empty office building in Three Sisters. “Even if it picked up tomorrow, it would take a year for things to get moving. Things don’t just turn on a dime.”
The trickle-down effects are already being felt in Alberta’s postcard-perfect boom town. Builders aren’t currently buying lots from developers, which means they’re employing fewer and fewer carpenters, plumbers and electricians. Unemployed tradespeople spend less money on beer and pizza and mountain bikes, which means local retail outlets are suffering, too.
“A huge part of our community – arguably 30% – are construction workers, and many of them are going to be out of work soon,” says Mayor Ron Casey, a former electrician who has lived in Canmore for 36 years.
The slowdown has already dramatically affected the town’s revenue, which is largely dependent on development. The value of construction permits has dropped 75%, from $11.6 million in January 2008 to $2.7 million for the same month this year. After just the first quarter, non-tax revenue is projected to be down $750,000 by the end of 2009. This has forced Casey to bring the budget, approved in December 2008, back to council for reconsideration. There will definitely be cutbacks, he says, and taxes will rise, albeit by a relatively small amount.
“Next year we’re going to need those tax dollars because we’re not going to have any growth,” says Casey. “There’s no doubt that we can weather this storm,” he adds. “We’ve got good reserves and low taxes. But if things aren’t sorted out in a year or two…” His voice trails off, either unsure or uncomfortable with what the answer might be.
Casey, who worked for Three Sisters as a community liaison for a couple of years between stints as mayor, lays part of the blame on his former employer. Both Three Sisters and Silvertip Resort, another major golf-residential development located on the north side of the valley, were granted the go-ahead because their plans included significant amounts of commercial development – Three Sisters alone was to have a 350,000-square-foot mixed-use retail village. This commercial space was to be a valuable source of long-term employment as well as tax revenue for both the town and the provincial government. So far, neither the space nor the jobs and taxes have materialized.Pages: 1 2