Mammoth Real Estate Q & A — Enthusiasm, and Keeping Enemies Close

This Mammoth Real Estate Q & A ran in the Thanksgiving weekend issue of The Sheet.

Q: Okay, we want to know what you think about a real estate developer moving into the White House?

A: Whether we like it or not, this is what we face. It could be worse, we could have an attorney, or an actor, or a politician. This whole election has been full of surprises and I’m sure there are more to come. And everyone who has underestimated the president-elect has been wrong so far.

While many know him as the star of a long running television show, his real money was made in real estate development and management. The skill set required for success in this field makes for an interesting possibility as president.

Real estate developers come in all shapes and sizes and personalities. Some tend to be private with their lives and others can be quite flamboyant. And as we’ve seen some can be a little gruff. We’ve seen them all here in Mammoth Lakes.

It is unquestionably hard work and full of risk. And, whether right or wrong, “little guys” inevitably get stepped on. It just come with the territory. The rewards can be great, or it can become a disaster. The pressure to perform is tremendous. Don’t plan on lots of vacations. And you better believe in your project.

Over the years I’ve worked for them, worked with them, listened to them for hours in public meetings, and have had to make decisions that would affect their projects or properties. I’ve also gratefully seized the opportunity to sell their products.

One personality trait they all must have is the ability to make things happen. They all do it a bit differently. Enthusiasm for the project and to get it completed is paramount. It is a constant push. Developers are workaholics. They surround themselves with workaholics. Our president-elect certainly has this trait. The adage “time is money” applies. Poor organization and mistakes cost time and money. And most times the true return on investment doesn’t come until the end of the project. It is very important to get there.

In the early Intrawest years, their marketing director was well known for his saying “selling is the transfer of enthusiasm.” The enthusiasm has to flow from the developer to his staff to the contractors and to sales agents and ultimately to the buyers. That a lot of enthusiasm. Things can easily go sideways.

A real estate developer also has to have vision. One thing I learned as planning commissioner is that true vision is a rare human quality. Today’s tools like artist’s renderings and computer aided design help those without any vision. But true vision in development is far greater than just being able to visualize. It is the creative process of seeing the end result but also knowing how to get there and believing that it can be done. Around these parts Dave McCoy is the shining example of true vision.

The real estate development process takes incredible real-world organizational skills. And again time is money. The bigger the project the more working parts there are. It takes plenty of intelligent, responsible and reliable people (and don’t forget the enthusiasm). But the developer is still the team leader. A project like a luxury hotel can require so many small details it is mind boggling. And they don’t just build it; they manage it all the way down to every small guest convenience and comfort. They have to be obsessive.

The bigger the project the more people that are involved, so there are plenty of personalities and egos to deal with. Strong interpersonal skills become another imperative. And likewise, surrounding yourself with similar people. It is a top-down enterprise. There are architects, engineers, contractors of all sorts, consultants, inspectors, government personnel, bankers, and on and on.

I was recently reading how difficult it is to open a food truck in New York City (my next career). Forget the menu, these days it is a monumental task laden with permits and regulation. Imagine what developing a 50-story luxury condo hotel property is like.

And then there are negotiations. I learned years ago that real estate developers ALWAYS ask for more than they expect to get (sounds like the recent election). It is inherent in the process. It almost becomes ingrained in their personalities. If a developer doesn’t they won’t succeed. The planning process, both public and private, will always constrain the original development plans. There is always push back. The parties involved always want more. It is one big negotiation, so developers have to start from a lofty position. If you don’t understand that, you don’t understand the president-elect.

Real estate developers can’t get mired in negotiations or re-negotiations once the dirt starts moving. The approvals and estimates and contracts and all the other “front-end” specifics need to be understood before commencement. That takes a great deal of planning and attention to detail and anticipating every potential problem and hurdle. And again, the bigger the project the greater the scope.

Despite the sense of urgency a development has, patience is another prerequisite of the developer. Projects from start to finish often take years to complete. It is a delayed-gratification undertaking. And delayed gratification has become such an old fashioned concept.

And on top of all these traits and skills, developers must also have creativity. Creativity in many areas; negotiation, finance, problem solving, design and vision, etc.. A developer has to be open to possibilities and alternatives.

One of the hallmarks of an effective real estate developer is repeated success. With some failure mixed in. But the failures can’t be the ending. (As an aside, a bankruptcy to a substantial real estate developer is like a foreclosure or short sale or loan modification to the rest of us; and there’s been plenty of that.)

A real estate developer’s personality has to push through failure. Failure is simply a time to step back and reassess. Or move ahead more forcibly. The developer personality is always pushing forward, and looking for the next opportunity.

Whether it is New York City or Mammoth Lakes, many jobs are created and dependent upon both the development and management of the developer’s project. There are government jobs, all sorts of professional services, months and months of construction, and long term maintenance and service positions. Oh, and a significantly higher tax basis for the local and state agencies. And likely some significant bed tax and sales tax too. That is what “happens” with real estate development.

The oddity here is a real estate developer running for public office. They often try to have their “puppets” or their favorite candidates. But they normally don’t directly run for office. They have better (and more important) things to do. And the conflict of interest rules restrict them from voting on their own projects.

Real estate developers often have love/hate relationships with public officials. They need a good working relationship and reasonable approvals for projects. But anything that can add unnecessary time or expense or less revenue is met with repulsion. The officials also have the ability to deny the project altogether (up to some point). But the elected public officials love (and need) jobs and tax revenue.

A small irony is the saga of Mammoth’s ice rink and the story of Wollman Rink in New York City. The Wollman Rink was the infamous NYC redevelopment project languished for years with massive cost overruns. It was a disaster. Finally, today’s most famous real estate developer convinced the City to let him get the project completed under a public/private partnership. It was completed in four months and under budget…..I’m guessing if John Hooper was in charge of the Mammoth ice rink we would be skating in 2017.

And I wonder how many people who enjoy the facilities at Snowcreek Athletic Club or Edison Hall or Snowcreek golf course even know who Tom Dempsey was? He was Mammoth’s most significant real estate developer. He developed a truly impressive number of condominiums in the 1970’s; the “Four” projects and all their siblings all the way through Snowcreek phases 1 and 2. That is a lot of units.

Even more impressive was that Mammoth was far different then; much smaller workforce/population, far less infrastructure and access to materials, etc. (and granted, there was far less government regulation). Tom Dempsey wouldn’t have run for president or mayor, he was more of a recluse. He sent his vice-presidents to public meetings.

My favorite developer who passed through Mammoth was Bill Dendy. He was a longtime developer from San Diego County and the Temecula area. He inadvertently (via sheriff’s s ale) ended up with the majority of the property in The Bluffs. He came to town with his (real) cowboy hat and big silver belt buckle. He could have run for president.

If it weren’t for Dendy, The Bluffs might still be undeveloped. There were decades of failure. He had all the skills and abilities and personality to lead the Town and the other property owners into the solution. He brought it to fruition and the community is certainly better off because of it….

Only time will tell how this new marriage of real estate developer and public office works out. Love him or hate him, the man has a broad set of skills and vast experience. I have a feeling that this period in time will be studied in universities for decades to come. I hope we can be thankful for the outcome.

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