Saturday, November 29, 2008

Rural resorts out West take it on the chin as economy slumps, but locals suffer more

Kirk Johnson reports in Sunday's New York Times that the Yellowstone Club, a very exclusive resort outside Big Sky, Montana, population 1,221, has filed for bankruptcy. Johnson characterizes the place as "a cloistered and cosseted mountain retreat for the super-rich." The filing came after the dis-harmonic convergence of the Club founders' divorce and the freezing of credit markets, making it impossible to restructure $399 million in debt.

Johnson explains that the Yellowstone Club, which opened in 1999, is hardly alone among mountain resorts in the West. He notes financial problems at the Tamarack Resort in Idaho and the Promontory Club in Utah. I wrote about another struggling Big Sky resort here, and Johnson mentions it in his story.

Johnson also provides some historic context for the financial woes of the Yellowstone Club, citing what he calls Montana's "history as a sometimes brutal exurb of capitalism, with tensions between rich and poor and labor and capital a theme since the 1800s." He explains that as the wealthy bought "vast swaths of land, spurring the leisure economy," wage stagnation hit the middle and working classes as "Montana sank to 39th in the nation in median family income."

According to 2000 Census, the median family income in Montana was $40, 487; the median household income was $33,024; the per capita income was $17,151 ; and 10.5% of families were living in poverty.

Johnson interviewed residents in Bozeman, an hour north of Big Sky, who "said they were not particularly upset about the club’s plight, given its excesses and presumptions."

But most people also know someone whose fortunes are tied to the financial engines that made this corner of Montana’s economy go in recent years — wealth, vacation housing and tourism.

“It’s kind of like a double-edged sword for a lot of people around here,” said Greg Thomas, a 31-year-old construction worker from Bozeman. “It’s pretty grotesque and ridiculous, but at the same time, a lot of people depend on going up there for jobs.”
Folks interviewed for the story suggest that the sort of "scrambling and getting by" are typical in a seasonal economy, and that residents are accustomed to it. Indeed, while some interviewed have played a part in rural gentrification in Montana have been working hard and not exactly living the high life (except in terms of altitude, I suppose), Montana also has a true underclass that has been suffering for years, indeed, for generations. While the individual poverty rate in the state is a relatively meager 14.6% (meager, that is, in comparison to New Mexico's at 18.4% or Mississippi's at 19.9%), Montana is home to numerous pockets of persistent poverty, including 3 counties in which more than 20% of the population have been living below the poverty line for more than 40 years. (See an earlier post about these counties, which have large American Indian populations). A map here (page 2, Figure 1) shows the pockets of persistent poverty at the block level, revealing that a big chunk of Montana's territory (little of it in the most scenic and therefore most gentrified part of the state) is home to plagued by this inter-generational poverty. The picture of Montana that emerges is one featuring grossly uneven development and vast spatial inequalities.

So, while Johnson reports that some of the Yellowstone Club's 340 members are up in arms about what became of their annual dues, along with the $250K each paid to join, I'm rather less concerned about their fortunes than about those farther down Montana's wealth continuum. By this I refer not only to the working and middle class Montanans who have come to rely on the super-rich for their own livelihoods, but also to those who lack food and basic shelter.

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