Tag Archives: inflation

Whistler at 22% Interest – Part 2

Find Part 1 here.

When the financial crisis of the 1980s hit Whistler even the prime real estate at the base of both mountains did not make it through unscathed. Dick Gibbons and Jack Cram were partners in Fitzsimmons Condominiums and Stoney’s Restaurant, where La Bocca is today. With a completed Whistler development under their belts, they were approached by Whistler Village Land Company (WVLC) about potentially purchasing the unfinished project where the Carleton Lodge now stands.

The base of Whistler Mountain in 1981 showing the Carleton Lodge under construction. The Pan Pacific Whistler Mountainside Hotel can be seen on the right. The base of the mountain looks a bit different today! Arv Pellegrin Collection.

At the time the foundation was partially complete and it was anticipated that this building would be a day lodge and gateway for both Whistler and Blackcomb Mountains, however WVLC’s finances were dire and there was not enough money to finish the project. Dick recalls a conversation with Neil Griggs, President of the WVLC “I don’t want to exaggerate this, he literally begged us to finish the Carleton Lodge. I seem to recall he had tears in his eyes.”

Together with additional partners, they negotiated a deal wherein they agreed to finish the project on the condition that if they were unable to sell the 32 condominium units for a certain price the development permit charges would be refunded. Throughout the build the architect, building contractor, and many partners felt the financial strain. By the end of the project, Dick Gibbons and Ken Mahon were the only two left to finance and run the show.

Dick Gibbons and Gilbert Konqui in 1981. It was all hands on deck to get the Carleton Lodge and The Longhorn completed. Whistler Question Collection.

When the Carleton Lodge was finally completed in November 1982, few residential units sold and Dick Gibbons ended up running The Longhorn because nobody else would buy it. The unsold residential units were transferred to the people involved in the development according to their investments, and development permit charges were refunded as initially agreed after the court got involved.

When Dick Gibbons was asked how he was able to balance his finances while many in Whistler could not, he said, “Being a little more risk adverse than some others might be was good for me at times and bad for me at other times because you miss opportunities. I sold quite a bit of real estate when the market had its peak in Vancouver because I thought it pretty much couldn’t go any higher.” Obviously real estate in Vancouver did eventually increase, but selling these real estate investments left Dick in a more comfortable position when interest rates skyrocketed, although it was still a difficult period.

Signs for The Longhorn and Nasty Jack’s can be seen while the Carleton Lodge is still under construction in 1982. Arv Pellegrin Collection.

Interest rates had an impact throughout all of the Whistler community. Bruce Watt, who had been a patroller since 1974, decided his family needed better financial security which led to him getting into real estate, a career he has loved and where you will still find him today. On the other hand, the ugly unfinished Village led realtor Drew Meredith to make “the mistake of running for Mayor in 1986” (his words, not mine) where he served for two terms.

While similar circumstances led to very different decisions, a consistent sentiment when talking to long-time locals about this time is that they would not want to do it again. The Village was started just in time, a year later and it may never have happened.

Whistler at 22% Interest – Part 1

In the early 1980s, just as the development of Whistler Village was starting to boom, the economy bottomed out and interest rates skyrocketed. Whistler Village was left with 27 unfinished lots as owners, developers, and contractors were going bankrupt at unprecedented levels. Remembering the mess left behind as construction halted, Drew Meredith said, “Imagine standing in Village Square looking up towards Mountain Square and all you see is half finished concrete foundations with rebar sticking out of it. Rusty, dirty rebar. The stroll was there but on both sides of the stroll was just chaos. Very tough to sell that to anybody who wants to come for a holiday.”

Construction in Whistler Village halted when the economic crisis of the 1980s reached Canada leaving many lots unfinished. Eldon Beck Collection.

Canada’s inflation had accelerated throughout the 1970s, reaching over 10% in 1980. To curb inflation, the Bank of Canada raised interest rates to a peak of 21%, however inflation remained high. During this time interest rates for home loans reached 22% and Canada went into a recession. To top it off, in November 1981 the federal government ended the Multiple-Use Residential Building (MURB) program of tax credits. With multiple-use residential on the second and third floor of every building, much of Whistler Village was constructed with the understanding that MURB would provide tax incentives for investors. With the MURB program coming to an end many investors poured the foundations quickly to make use of these incentives before it was too late.

While some developments in the new Whistler Village had opened, most were just a foundation as the economic crunch really hit. Whistler had prioritised small developers in the building of the Village and many struggled to continue and could not pay their land taxes.

Aerial view of the construction in Whistler Village, December 1980. Whistler Question Collection.

The Whistler Village Land Company (WVLC) was a non-profit arm of the municipality incorporated in 1978 to oversee the sale and development of the Village. As land was sold, the WVLC would use the income to pay their liabilities, including loan repayments and development costs for municipal assets, notably the Arnold Palmer Golf Course and the Resort Centre intended to host a pool and ice rink (eventually the province dictated that the Conference Centre would be built instead). However, in the early 1980s when more lots were placed on the market they would not sell. To further financial woes, in July 1982, only 60% of taxes were paid to the municipality on time and they could charge a maximum of 10% on late payments, less than the bank’s interest rates. Between 1981 and 1982, the municipality’s capital budget was almost halved from $1 million to $650,000 and in 1982 municipal staff took a 2.5% pay cut.

With finances in dire straights, WVLC staff were let go and WVLC operations transferred to the municipality. With debts of approximately $8 million, no way to pay them, and creditors knocking, concerns were mounting that the banks would repossess assets worth far more than the loan amount. Banks could then sell these lands independently to developers, while the government would get nothing for the sale and still have to pay liabilities.

Bringing in the big guns. New Mayor Mark Angus takes Lands Minister Anthony Brummet and Assistant Deputy Lands Minister Chris Gray for a tour of the rebar with WRA Executive Director Earl Hansen in January 1983. Whistler Question Collection.

Whistler went to the provincial government for assistance. On January 6, 1983 it was announced that Whistler Land Company Developments, a new Crown corporation, had acquired the assets and liabilities of WVLC for $1. Government studies showed that all outstanding debts would be paid with future land sales and continued development would create many jobs, plus the expected revenue from tax and tourism. While there was uproar at the time about a taxpayer bailout, the provincial government went on to recoup far more than the initial investment through the land sales of Village North, and today Whistler brings in 25% of BC’s annual tourism revenue.

Looking at some of the unfinished construction in Whistler Village. Whistler Question Collection.

Hear how some of the Whistler community dealt with the economic crisis next week in Whistler at 22% Interest – Part 2.