Dr. Dennis Foster - W.A. Franke College of Business Canyon Forest Village: A Case Study in Public Choice Theory Dr. Dennis Foster - W.A. Franke College of Business

Fall 1993 – June 1997 Kaibab National Forest (KNF) gathers input and considers proposals to deal with “Tusayan” growth. Insiders: Park Service (NPS), NACOG, Coconino County. Some environmental groups. Outsiders: Cities of Flagstaff & Williams, Tusayan business owners, northern AZ hoteliers.

June, 1997: Draft EIS for Tusayan Growth (D-EIS) 60 days to respond. 5 alternatives. Main CFV proposal: Swap 2184 acres (inholdings) for 672 acres. Build 3650 lodging rooms here (and more). Conclusion: Northern AZ will continue to grow even with CFV. Up through 2010, No. AZ can add 2500 more rooms to meet rising demand. How does EIS generate no net negative impact? --Only 42% of lodging displacement comes from “northern AZ”. --Growth in visitation is about 4% per year. --Market penetration rate is 30%.

Critique (BBC & BBER): D-EIS uses 4% annual growth in GC visitation. D-EIS assumes CFV business is displaced from far away (Phoenix, Las Vegas, etc.) Conclusion - CFV will have huge effects . . . except . . .

What does the Forest Service want? Housing. Infrastructure. Community services. Assist NPS with GC plans. …or, just to consolidate the inholdings?

Fall 1997 to July 1998 KNF works on a revision to the D-EIS. None of the “outsiders” are privy to this process until it is done. In July, 1998, a Supplemental Draft EIS is released (S-DEIS).

The Supplemental Draft EIS 45 days to respond. [Issued July 17.] 3 new alternatives. KNF favors a new version of CFV that has about 270 acres and builds 900 rooms. CFV promotes a 272 acre/1270 room alternative. NPS transit unlinked from CFV proposals. Conclusion: No. AZ will be a little worse off!

Critique (BBC & BBER): S-DEIS miscalculated “cumulative” impacts over study period. Impacts are too low. “Capture” rates are arbitrary. What might be the impact? 90% x ($550 mill. to $1 billion)

Fall 1998 to August, 1999 KNF works on Final EIS. City of Williams asks for BBER to run analysis for Alt. H (1200 room CFV proposal), as that has become the favorite of the KNF.

August 1999 – The Regional Forester Announces Decision She picks the 1270 room version of CFV. Gives details of land swap valuation: 2116 acres  272 acres  $5.4 million Dismissed economic analyses as “conflicting”.

Public Choice Aspects of CFV Is this a public good? Is there market failure? Are there significant special interests here? What rent-seeking behavior is seen? Is the NPS (or, FS) able to adequately coordinate economic activity?

Public Choice Aspects of CFV Is there elitism at work here? Does this proposal increase/decrease the park’s ability to act like a monopoly? Do we see the principles of “scientific management” at work here? Are we establishing a producer-rigged mkt? Bootleggers and Baptists?

Public Choice Aspects of CFV Government exploitation: Value of the land to be swapped. Rhetoric of “improvements.” Inability to seek increased visitation. Gloomy forecasts. Decision made in the “public interest.”

Public Choice Aspects of CFV Market response to “problems”: Increase infrastructure. Allow for bidding on land. Why isn’t CFV in the park? More elitism. The dream that was the Grand Canyon Inn.

Aftermath: Spring 2000 County Hearings Coconino County holds hearings on rezoning of the 272 acres for CFV. P&Z holds many nights of hearings. Board of Supervisors holds many nights of hearings. Sends back to P&Z. P&Z considers changes made by the board. Board holds final hearing announcing their vote on this issue: 4-0 in favor of rezoning.

Fallout from County Hearings CFV buildout pared down to 900 rooms. CFV can build an additional 240 rooms if… Opponents start lawsuit. Opponents gather signatures to place zoning decision on the ballot. Nov. 7, 2000 vote on Proposition 400 2-1 against the rezoning!!

Should there even be a vote? Term Paper Project Should there even be a vote? Citizen vote to protect the property rights decisions made by economic agents. But, political argument was not about this! Why does the FS even get to consider this proposal? Review of the problems with this proposal … Distorted incentives, political rhetoric, policy symbolism, collective provision of private wants, bootleggers & Baptists to name a few. What are the alternatives? Open auction of X acres every Y years in area surrounding Tusayan. Privatization of the forest may be the ultimate goal.

Dr. Dennis Foster - W.A. Franke College of Business Canyon Forest Village: A Case Study in Public Choice Theory Dr. Dennis Foster - W.A. Franke College of Business