Fountainhead: A Case Study in Failed Oklahoma Socialism

When the legislature borrows extra play money, and wants to play ‘Sim City’

The Oklahoma legislature has a legacy of wavering between socialism & fascism. Both of which have a junkyard of failures. We have pictures to prove it.
When US Senator Bob Kerr prevailed upon the federal budget, to fund a massive network of flood-prevention reservoirs which became our most popular lakes, the State legislature decided to go full ‘Sim City‘ in the early 1960s. Not only were our state parks expanded (back then camping was still a very popular byproduct of the still emerging automobile age).
No, the state felt compelled to really get into the lodging, convention, and hospitality industry. For decades, the state has poured millions in tax dollars into a massive network of lodges and resorts which were pitched to the legislature not only as a startup which would “pay for itself.. but yea, would make money to help fund core govt. services!”
Where Oklahoma Democrats loved economic socialism, today’s Republicans love economic fascism.

Fountainhead Resort, on Lake Eufaula. The state-owned would-be opulant world-class resort idea of the 1960s.

Oklahoma State Lodges: The Fabulous Fountainhead

JUNE 17, 2015
by Lynne Rostochil
Few Oklahoma buildings have been more beautifully designed — or more ill-fated — than the spectacular, crescent-shaped Fountainhead State Lodge on the eastern shores of Lake Eufaula. When the lake was completed in the early ’60s, state leaders decided that it would be a great idea to expand Oklahoma’s vast network of state lodges by adding two more along the newly-created waterfront in rural Eastern Oklahoma. Aided by federal grants totaling over $1 million, the state acquired the rest of the $10 million budget for the two proposed lodges by taking out a 40-year loan that could be paid back from revenue generated by the new facilities.
With the finances all worked out, construction began simultaneously on the two remote lodges: the modernist glass and stark white concrete Fountainhead on the north side of the lake and the more rustic modern Arrowhead 17 miles to the south. While Arrowhead resembled the ranch-style look and feel of most of the other lodges throughout the state, the five-story, brilliant white Fountainhead was designed to appeal to more affluent vacationers who expected the amenities of an exclusive resort.
To that end, architects Bailey, Bozalis, Dickinson & Roloff came up with a spectacular modern design that one writer of the time boasted would blend in perfectly in the modern urban areas of Chicago or Dallas … but here it sat, lovingly spooning the shores of a lake out in the middle of nowhere Oklahoma.

When it opened in time for the summer 1965 season, the Fountainhead State Lodge claimed 180 double rooms overlooking the lake…
… a posh, 1,300 square-foot, two-bedroom suite with its own private deck and pool…
… and 10 luxurious duplex-style cabins:

Although it was intended as an upscale alternative to the typical state lodge experience, many balked at the costly Fountainhead room rates — $16 for the rooms (nearly $120 in 2015 dollars) and a whopping $76 (almost $575 today) for the deluxe suite. But, along with those rates, guests had access to a golf course and pro shop (an exact copy of which was also located at Arrowhead)…
… boat docks, recreational activities, a pool, a 250-seat dining room, meeting halls…
… a gift shop, a swanky round bar and lounge area…
and a private landing strip just yards from the lodge:
Civic leaders (including Governor Henry Bellmon and publisher/banker Leland Gourley), who heartily supported the building of the lodges, contended that the facilities would break even at 40% occupancy during the summer months, and any proceeds beyond that would go to pay the 40-year note. They also pointed out that the lodges would bring many jobs to an area that had some of the highest unemployment rates in the state. Even with these arguments, many voiced concerns about the state taking on such a hefty loan for a “white elephant” like the beautiful Fountainhead.
However, tempers were quieted, for awhile anyway, once the lodge opened and guests from all over the state and beyond flocked to the dazzling white marvel on Lake Eufaula. Shriners booked conventions in the 500-capacity meeting rooms, weddings and receptions were held poolside, family reunions took place in the elegant dining room, and families enjoyed lazy vacation days on the lake. In fact, the entire state lodge system was so successful that, in 1966, over 10 million visitors spent time at one of Oklahoma’s lodges.
Even with the initial success of both Fountainhead and Arrowhead, the looming debt continued to make many in state government nervous. By 1970, there was talk of waiving the loan and Oklahoma gifting the lodges and surrounding state land to the Federal government to create the Five Civilized Tribes National Park, but the idea was quashed when the Federal government refused the offer. The “white elephant” remained in state hands.

Foreclosure
As for Fountainhead and Arrowhead, the two Eufaula lodges continued to operate throughout the ’70s and into the ’80s, but not at the levels state officials originally projected. Thus, it didn’t come as much of a surprise to all of the old naysayers when the Federal government sent the State of Oklahoma a foreclosure notice in 1983 for failure to pay even one dime of the original $9 million loan. Over the years, the principle and interest had ballooned to over $15 million, a sum a state in the throes of economic depression brought on by the recent oil bust had no way of paying. So, as it offered to do years before, the state deeded the Arrowhead and Fountainhead lodges to the U.S. Government to settle the debt.
Arrowhead was sold for $2 million in 1985 to the Choctaw tribe, while a private investment group, Bell Equities, bought Fountainhead for $2.6 million and immediately began extensive, bad ’80s renovations that involved lots of “Miami Vice” mauve and teal:
The new owners also painted the still-gleaming white lodge a dull, boring gray and, illustrating just how much times had changed in a mere 20 years, removed the hip, round bar and lounge and replaced it with a fitness center where leotarded women and mulleted men could sweat along to the oldies a la Richard Simmons and Jane Fonda.

To encourage year-round patronage, the new owners also took out a loan to add an indoor pool and tennis courts and to upgrade the kitchen and other behind-the-scenes systems. The lodge continued to do well for the next several years, but perhaps not well enough because the same sad fate befell Bell Equities as had the State of Oklahoma before it when the company defaulted on the Fountainhead loan in 2003. The lodge closed its doors for good the following year.
Once again up for sale, the ill-fated Fountainhead State Lodge was bought for $2 million in 2005 by the Muscogee (Creek) Nation. Originally, the tribe intended to spruce up the aging building and turn it into a casino but ultimately decided to auction every sellable item (including furnishings, door knobs, and dishes) and unceremoniously demolish the tired but still-stunning lodge.
The bulldozed land remains empty today.

Today, the governor, legislature, & even city councils; are more interested in economic fascism (giving our collected tax dollars to corporate giants).
Auto factories, retail giants, & other shiny objects are ideas sold to us as “jobs”. The legislature figures they will take from the workers’ wages, that which they give away to the captains of industry.
The fatal flaw is that those who come to Oklahoma for freebies, will leave the state for freebies. But in the process, the most loyal corporate citizens who grew up in Oklahoma, are harmed in several ways.
We create Tax Increment Funding(TIF) schemes to draw big box stores. They get new shopping centers with nice new infrastructure, while the old strip center shops just down the road have terrible infrastructure with streets often shut down or limited by narrow lanes, insufficient stormwater drainage, and broken water mains. Shoppers flock to the new shopping centers while Oklahoma’s most loyal merchants quietly go out of business.
Sure we got some jobs, until we lost old stable jobs. And we watched more money leave the state. We have less Oklahoma entreprenuership.
We set up a new lodging tax for the stated purpose of promoting tourism. Yep, we let the govt. take over our advertizing strategies. It’s mandatory, and applied to every lodging establishment, even if it’s lodging which isn’t connected to the state’s tourism priorities.
Some cities, Owasso, for instance; pillaged the local lodging tax to pay millions out in exchange for a Macy’s distribution warehouse. This doesn’t really benefit the hotels, but they are now more expensive than Tulsa hotel rates, when you factor the lodging taxes.
Today we have a major scandal from a BBQ restaurant at Roman Nose Lodge. Millions of state tax dollars are alleged to have been abused, because we have to ‘bribe’ businesses to come to our state-run lodges. Lodges who directly compete with corporate-owned hotels who must pay taxes to fund their competition every year!
I don’t take out my displeasure at the Oklahoma Dept. of Tourism, nor the State’s parks, lodges, & corporate contractors. They didn’t create this public socialism policy of predatory state marketing against the corporate lodging industry. I blame the governors and legislators over the past several decades.
A massive portion of our state budget is spent on govt. programs which conduct predatory practices to suppress their counterparts in private commerce.
This includes lodging, public education (especially higher ed.), healthcare services, transportation services, journalism & media, zoos, museums, & and many more boondoggles.
For this reason, the legislature should seek to lower taxes and cut these fascist & socialist budget items, permanently.
The Tea Party movement of a decade ago was a response to the use of tax dollars to bail out the ‘too big to fail’ corporate giants. The mom & pops businesses never got the same bailouts.
This year, our legislature funded a huge tax credit & subsidy for an automaker without any market evidence of viability. They are even rumored to already be near insolvency.
Conservatives criticized the Solyndra boondoggle involving President Obama and Tulsan George Kaiser. But this current battery and electric auto scheme could be even more embarassing.
The OKC tax exemption disaster of the 1970s, involving the GM auto plant, could be replayed in real time, right in front of us. But at least GM was a real company with a 60-year legacy of global market dominance. Kanoo is the equivalent of a 90s’ dot com idea.
State officials lured GM by promising ‘no property tax’ on the factory, but the county still taxed the contents of the factory; thus undermining the trust of corporate titans in the word of an Oklahoma politician.
Imagine if the govt. just followed a policy of having a simple tax policy of treating everyone the same?