“You don’t know what you’ve got, until it’s gone.” This is such an appropriate saying and a song for our times, but to miss something, one first must understand what they had.
As a collective, Klamathites don’t know enough to register what they have lost. For instance, consider the impact on the economy of the late Dick Wendt. Following the trail that led to the economic prosperity Klamath experienced from 1995 to 2008, it is abundantly clear that Wendt directly and indirectly influenced almost all the growth during that period, not to mention anchoring the economy for decades prior. With such recognition, it appears he should have been thanked more when alive, but moreover, there should be a keen understanding of the vacuum left through his demise. Without the latter, Klamath will never be effective at repairing its broken economy.
The plight of our community is similar to a stranded motorist that knows nothing about vehicles. Imagine a person baffled by a car that sounds fine because he can hear the engine running, but can’t get it to move. He continues to sit in the car revving the engine, flipping switches, unable to accept that although the car seems to be operational, it won’t be going anywhere no matter how much he acts like a driver. He doesn’t comprehend that the jolt he felt while driving earlier was the transmission falling out. Without knowledge of how a car actually functions, he can’t discern that a major component required to drive the car forward is missing. The natural next step is to call in an expert, but what if there aren’t any? That’s the situation Klamath is in now. Cars don’t fix themselves and neither do economies. People with talent or money to invest aren’t inclined to work with communities that refuse to understand and embrace them.
Dick Wendt was a man the community did embrace. For a time, he was the richest man in Oregon. He was the majority owner of the largest privately held corporation in Oregon, the headquarters of which was based in Klamath Falls. That company–JELD-WEN–was also the largest wood products company in the world. Subsidiaries included Trend West Resorts, which was incubated within JELD-WEN and renowned for practically inventing the time share industry in hospitality. JELD-WEN also spawned Eagle Crest, which capitalized on building upscale resort communities. Eagle Crest’s flagship was located near Redmond, Oregon, but the model was later copied and applied to the creation of Running Y Ranch, just outside of Klamath Falls.
As the largest private sector employer in Klamath, JELD-WEN had an obvious influence on the local economy through the jobs it maintained here. Those gainfully employed people purchased homes, shopped in our stores, paid taxes, and made investments of their own. JELD-WEN owned South Valley Bank and Trust, a firm that loaned money to numerous businesses and economic expansion projects, buying or building its own structures and employing even more people in desirable jobs.
Dick Wendt invested his own money heavily in Klamath, from purchasing millions of acres for future development projects, managed timber harvesting, or local business acquisitions. He established foundations for scholarships and donations to the local university and hospital. In some instances, he was simply helping out old friends or taking care of their family members. He helped a widow out of a tight spot when he purchased Graphic Press. He bought Hire Calling when the founder passed away and sorted out a stable position for the man’s children.
People who worked for Wendt say he was aggressive and harsh. He was shrewd and often drove hard bargains, sometimes acting very predatory. Some people say most of what he did was for his own selfish profit motives–and they would be mostly right. Nonetheless, those motives served Klamath well and everyone from his employees, to every business in Klamath, and even the government types who gladly accepted his tax revenue benefitted greatly from the mass of his activities. It was a win-win. The unregulated early decades supported Wendt’s profit motive, which in turn supported everyone else. This was what Reagan wanted trickle-down economics to look like.
The entirety of Klamath’s real estate boom (and the taxes generated) can be attributed to Wendt. The Running Y Resort was established on land Wendt purchased from the Disney family. With over 1,000 upscale homesites situated around an Arnold Palmer-designed golf course, he created an anchor point for property investment and a scale of marketing that has not existed before or since. During peak marketing years, Eagle Crest spent millions of dollars on advertising and direct mail campaigns to Nevadans and Californians. The method was to generate emotional purchases by painting a picture of Klamath as a breathtakingly beautiful place filled with friendly adventurers: just the kind of place anyone stuck in traffic in San Francisco or Los Angeles dreams of.
The timing was perfect. Property values were soaring in California, so many young retirees were selling fully-owned homes for millions of dollars and building larger, nicer homes at Running Y for 10% of their nest egg. They moved to Klamath, or kept their properties as second homes. They spread their money around Klamath Falls, even investing in other properties. Some even convinced their children to move in and start restaurants.
As Wendt retired, some of the holdings went downhill. Wendt had a big ego and recruited many managers with similarly large heads. Without Wendt keeping things in check, Eagle Crest’s operations began to resemble an insane asylum run by the inmates. This is evidenced by the demise of the Klamath holdings. Running Y made money by selling new home sites. The amenities were designed to provide the perception of a functional resort, but never seemed to be a large enough priority to be done correctly or developed for long-term sustainablity. Eagle Crest never installed a marina that was in the original master plan that nearly every resident hoped for in the future. Had the marina or a decent dock been constructed, the Klamath Belle would still be operating on the lake. Also ironic to many residents and would-be investors is the fact that the “Ranch” never made it possible to board horses there, although there were corrals, barns and outsourced horse riding operations onsite.
Even with these shortcomings, investors still enjoyed their Running Y property due to the notion that it was a solid investment. For many years their properties appreciated well over 20 percent annually. It’s all about supply and demand. During the years Dick Wendt was at the helm, new sites were released in phases at a rate that perpetuated scarcity when the value proposition generated high demand. But by 2004, overzealous managers motivated by bonuses derived from new property sales devised schemes that virtually destroyed the property empire.
As new sites were running out, Running Y managers released the last phases in what amounted to an auction format. From the inception of the resort, investors were accustomed to being notified when new properties would be available and were given the first opportunities to purchase more property on a first-come, first-served basis. In 2004, management decided that wasn’t enough. They sought to increase pressure by setting up an auction format whereby a buyer that signed up for a purchase could lose their property if someone else offered more. This tedious process frustrated long-term investors who resented Running Y’s new sales practices and many did not return. There was a clear decline in interest that should have compelled a change in strategy for the resort as a whole, especially with signs pointing to the collapse of the real estate bubble.
With Running Y near capacity, it would have been prudent to restructure it to be more like a resort, with investments in amenities that could sustain operations and maintain desirability. That’s not what the father and son team (Jerry and Todd Andres) decided to do as 2005 approached. They opened up a resort called Ridgewater practically next door to Running Y. The opening prices in this new, exclusive, gated subdivision were much higher than the average prices at Running Y, but strangely there were no amenities. There was a promise of a clubhouse at the top of the ridge with the best view, but to this day it has not been built. How do you get people to pay more for property with fewer amenities? You have to make it sound better than the “old” resort. Eagle Crest tapped the same database used to attract investors to Running Y and began pushing property under a new scheme where buyers could reserve a property for a $10,000 investment with a full payment contract on property they couldn’t build on yet. They set up a sales team (not of seasoned real estate agents) to cold call leads with the deal. If a worker lined up a sale, they would receive a commission only at a future date more than a year later when the full sale was recorded. That’s a pretty mean thing to do to people. As the real estate bubble burst, many investors forfeited their reserve and cancelled the contract.
Eagle Crest (and JELD-WEN) management had accomplished the equivalent of firing a canon through the bottom of their own ship. They basically told their target customers that everything they had said about Running Y was history and Ridgewater was the superior investment. Meanwhile, by 2006, resale lot prices at Running Y declined for the first time ever. Hundreds of thousands of leads on the mailing list must have wondered what people in Klamath were smoking. They’d been barraged with junk mail about how great Running Y was for years. Now there’s a new place with no golf course, water, fitness center, skating rink, etc., that is somehow worth more? It didn’t make sense, especially to those who had owned property at Running Y and were upside down on their loans and taking huge losses. The slide continued. Lots that sold for over $200,000 in the early 2000s are now stagnant on the market for as little as $10,000.
When Dick Wendt passed away in 2010, JELD WEN was in dire straits. The collapse in the real estate market led to a collapse in home construction. Gas prices had increased so much, fewer people were travelling to resorts and certainly not investing with everything else in decline. The Wendt heirs began a mass-liquidation of holdings. They sold production subsidiaries. They sold their resorts, including Running Y. They sold South Valley Bank. Then they sold the land Dick Wendt had collected to preserve Klamath’s economic future, such as a large lakefront parcel opposite of Running Y on Klamath Lake.
The chasm remaining not only after Wendt’s departure, but the liquidation of all his assets carried with it a nearly incomprehensible negative impact on the present and future economy of Klamath. No longer will one person’s or one company’s vision drive Klamath’s prosperity. We’re left in the hands of lemmings without a clue or a pot to piss in. The most damaging hit was the loss of private sector marketing that Wendt fostered. Even with the draconian hospitality tax collected for tourism activities, no entity, or group so far can come close to the scale and effectiveness of marketing engine that existed as Running Y ramped up.
Klamath has experienced only two major, long-term economic booms. The first was in the early 1900s when Edwin Harriman (a railroad tycoon) invested heavily in Klamath and formed the Klamath Development Corporation that established Rocky Point and Klamath Falls. Harriman’s legacy ended with the depression and his influence was gone after 1924. Over 25 years later, Dick Wendt emerged to create a second boom that also ended with something very close to a depression and the complete demise of his holdings.
What could we possibly do to overcome the deficit where Wendt’s legacy once carried Klamath forward? Nobody knows, but hopefully more people will at least think about it. Considering the depth of the dark ages Klamathites find themselves in, they may be consigned to wait another 25 years for the next Ed Harriman or Dick Wendt to emerge.
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