Rusty Gregory takes the hot seat over June Mountain closure

July 13, 2012

A group of Lee Vining students have been holding lemonade sales to help June Mountain Ski Area stay open. On Tuesday night, at a June Lake meeting with Rusty Gregory, a group of students gave Gregory about $150 toward keeping June Mountain open.

Rusty Gregory may as well have been wearing a bullseye on his back.

About three hundred June Mountain residents and friends poured into the June Lake Community Center Tuesday night to protest the proposed closing of June Mountain Ski Area.

The target was Gregory, CEO of Mammoth Mountain Ski Area, and an owner of June Mountain Ski Area. Gregory took the shots for several hours, as everyone from schoolchildren to former—and first—June Mountain manager Bud Hayward took the microphone.

“Dave McCoy would never have done this,” Hayward said. “My father told me once to get the hell out of June Mountain. I told him I just can’t do that.

“I know Dave McCoy and I know Dave McCoy would not be doing this today,” he said to applause.
“Shame on you, Rusty Gregory,” said Jill Stark, a member of the June Lake Citizens Advisory Committee, which sponsored the Tuesday meeting (in conjunction with the Mono County Board of Supervisors). “Shame on you for putting our community through this turmoil.”

A group of Lee Vining Elementary students, led by their teacher, Anna Strathman, told Gregory how important keeping June Mountain open was.

“We hope that sending our profits from the first lemonade stand to Mammoth Mountain and Rusty Gregory will show that we’re doing the very best we can and hopefully inspire others to do so, too,” said Caelen McQuilken, a 10-year-old.

Then the students walked over to Gregory and handed him an envelope containing about $150 they had raised doing lemonade stand sales during the past two weeks, drawing an ovation from the audience.
The “Keep It Open” group will hold more sales in the next few weeks, they said.

Then Gregory took the stand.

“I’m here to stand before you and take full responsibility for my actions,” he said. “And I am sorry I was not here to face you the day it was announced.”

He handed out a pile of papers on June Mountain’s financials to some of the public officials and advisory committee members.

“It’s not the annual losses. I’m happy to continue to operate at these losses … but it’s the purpose of these losses. My question is, what the hell is [your vision] for June Mountain? We need a clearly defined future,” he said.

He said that for June Mountain to be successful, he believes two main things are needed (along with a clear vision for long term sustainability)—year-round air service and adding another 1,000 beds to the June Lake bed base, or “at least the option that they could be added in the future.”

For the ski area to open again this year, he said, there needs to be a way to “break even” this year—and there needs to be a clear vision for the future. The break even issue could be solved with between $1 million and $2 million, he said—the current annual losses at June Mountain.

Gregory implied there was no such vision in place.

Many community members, including June Lake’s County Supervisor Vikki Bauer, said the community had worked for the past six years on a vision and that it was ready to go.

“We’ve been here before six years ago, Rusty. We did what you asked then,” Bauer said, referring to a June Lake community plan that was put in place after Gregory shut June Mountain down to four days a week several years ago. That plan, she said, included a significant increase in density in the community—a minimum of 500 more units.

“To say that this is on us is really disingenuous.”

Other community members challenged Gregory’s numbers, saying the 1,000 units is too high. After the meeting, Gregory told the Mammoth Times there was a reason for the 1,000 beds number—it’s what it will take to make the resort sustainable in the long run.

“I don’t believe this is negotiable,” he said.

Air service challenge meets resistance
Gregory’s challenge regarding air service was made specifically to the Mono County Board of Supervisors and he was blunt.

“You need to get off your asses and get off your wallets now,” he said. He asked the board to increase an already controversial $85,000 county air-service subsidy to ensure year-round air service to $100,000 a year.

“I’m just telling you the truth,” he said. “We have a bigger problem now than we have ever had—the drought, the tight budget for the county government, the bankruptcy, the global recession. I really believe air service is critical. Fifty-thousand visitors a year (to June) isn’t enough.”

But the county supervisors did not buy his argument. The air service subsidy has been very controversial, especially outside of Mammoth, and the supervisors said they will have a tough time selling an even larger subsidy.

And the money wasn’t the only issue.

Mono County Supervisor Byng Hunt spoke about the loss of trust.

“I’m so appalled that we didn’t find out about this in advance,” he said. “I found out about it in the paper, the next day,” he said. “This is an issue of trust. There is no longer trust. This is about transparency, too. Maybe you can rebuild it. But there is very little trust left.”

Why did community find out at last minute?
Gregory said the reason he made the decision to close June Mountain in the first place, and the reason why it was so abrupt, was due to intense pressure from MMSA’s banks and lenders.

“When you do a bank deal, you agree to pay them and to stay healthy enough to pay them back in the future,” he said. But last year, MMSA brought in about 40 percent less than a good year.

“We breached our covenant,” he said. In the end, one week before Gregory announced June was to close, “all the banks (except Wells Fargo) railed against Wells Fargo and said, ‘No, we aren’t going to go with this deal unless you cut more expenses,’” he said.

“If we had not agreed, we would have been in default, which would have been far worse to this region.”

Inyo National Forest weighs in
June Mountain is operated on public land, managed by the U.S. Forest Service. As such, the Inyo National Forest holds the special use permit that MMSA operates under.

“We have let them know they are not in compliance and we have issued a letter on non-compliance, “said Ed Armenta, the forest supervisor for the Inyo National Forest.

He said he had spoken to Gregory for the first time that day and that the two parties were at the very beginning of the discussion.

They “discussed an audit, to be sure we are getting a straight story,” he said about the Mountain’s financials.

Beyond that, Armenta gave few specifics other than to say he had an obligation to both the public good and to treat MMSA the same as any other ski area special use permit holder would be treated.

Although MMSA’s special-use permit with the forest is clear about many things, it leaves details about time constraints, deadlines, and penalties to the forest supervisor—meaning Armenta will have the final say on how much pressure the forest service will put on Gregory.

“We will not make them run in the red,” Armenta said.

Rodeo Grounds—deal breaker or not?
When asked if MMSA wanted to or would buy the Rodeo Grounds, Gregory said no.

“It’s not what we do, we’re not real estate developers,” he said, but he added that MMSA would “frontload it [and] get it going to attract buyers.”

He did say MMSA retained the “first right of refusal” to the property.

Gregory challenged June Lake or the county to “entitle” the property for future development, noting that it would help to show potential investors that the community supported a project at the site so it would be ready “when the market came back.”

Intrawest was in the process of entitling the Rodeo Grounds for development when it withdrew its application in January. After the meeting, Bauer said this was one idea she would be willing to take to the county supervisors.

A rumor that the Rodeo Grounds had sold just hours before the meeting was not true, Bauer said.

The parcel is for sale for $2.9 million.

What does the future hold?
Gregory admitted that MMSA did not put enough money into June, mostly because MMSA got a better return from investing there and that was more important in the short term, as MMSA tried to bring more people to the region.

“I told you, you wouldn’t like the answer,” he said.

Gregory said he was willing to work with a group of community leaders, led by Double Eagle Resort and Spa owner Connie Black, in a series of intensive meetings over the next two weeks to see what options were available to prevent closing June down for the coming winter.

When asked if he would be willing to sell June Mountain if another buyer could be found, he said he would be open to the option.

“Have you had an offer?” someone asked.

“No,” he said.

He also declined to promise that June Mountain would reopen.

“I can’t promise you that,” he said, when asked to stick with the community for one more year while they figured things out. “If I did, I’d be placating you. I can only promise to keep communicating about this and work with you.”