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Except for occasional smog and aircraft noise, a hike into the Grand Canyon still is one of the supreme wilderness experiences in the world.

Above the canyon, along its South Rim, is a much different picture: a cacophony and chaos of tourists and cars.

Unless something is done to control the growing bustle and provide more services, the situation could lurch out of control, park officials warn.

But a proposed solution is raising a cry of alarm as well.

The push is on to build the biggest commercial and housing development ever near the Grand Canyon: Canyon Forest Village, a 1-square-mile, privately built community of homes, shops, hotels and restaurants.

Nestled between the tourist town of Tusayan and the main entrance to Grand Canyon National Park, the planned development could fulfill federal aims of accommodating the millions of new visitors expected in coming decades. It would become a staging area for tourists, who would park their cars and board trains, bikes and buses for the 7-mile trip to the South Rim.

The $250 million project, designed in part to serve as home for park employees, calls for as many as 5,000 hotel rooms, 2,400 new residences, 15 restaurants and 450,000 square feet of retail space. It also would have churches and schools, creating a community surrounding a natural history center and transportation hub.

Supporters say it would eliminate traffic congestion and development inside the park and provide new educational opportunities for visitors.

Opponents contend the project would further spoil the raw and quiet atmosphere surrounding the canyon, drain tourists from nearby communities and turn the area into a Disneyland of sorts.

Canyon Forest Village, along with a growing Tusayan, also could deplete a vital aquifer feeding the canyon’s most sublime springs, creeks and waterfalls, which in turn support wildlife and hikers, environmentalists say.

Proponents and opponents agree that the decision about Canyon Forest Village will determine for the next century what happens to tourism at the park and to the canyon’s environment.

“This is one of the landmark points in time in the history of Grand Canyon National Park,” said Brad Traver, a chief planner for the National Park Service.

The fate of the project could be decided next year, after the findings of an environmental impact study are released and public hearings are conducted. A decision by the U.S. Forest Service will follow.

Promoters of Canyon Forest Village would start the project tomorrow but for one catch: The land they want to build on is part of the Kaibab National Forest. Developers can’t buy national forest land, but they can trade for it.

So the promoters of Canyon Forest Village have bought up most of the small parcels of private land that dot the nearby forest, proposing to turn those 1,980 scattered acres over to the U.S. Forest Service. In exchange, the developers would receive 650 acres for the project along Arizona 64, the main highway to the South Rim.

Among the most bitter opponents of the plan are tour-related businesses in the 144-acre Tusayan township and other northern Arizona communities, such as Flagstaff. Canyon Forest Village could include more hotel rooms than all of Flagstaff and more retail space than the Flagstaff Mall.

The Grand Canyon Improvement Association, a group of Tusayan-area business people, launched a massive media campaign against Canyon Forest last year, attacking its economic impact projections and saying it would increase, not lessen, congestion.

The lands to be exchanged are worth less than the project site, they contend, and the development would harm the environment. They also criticized the project’s out-of-state and foreign investment.

Tom De Paolo, a Scottsdale, Ariz., developer and managing partner in Canyon Forest Village, says the Tusayan critics are hypocrites trying to hold on to a tourism monopoly while cloaking themselves in concern for the environment and local jobs.

The Tusayan association members have downplayed their own out-of-state and foreign ownerships, as well as their failure to provide more services to park visitors and employees, De Paolo said. They criticize Canyon Forest Village while plunging their own wells into the threatened aquifers, he said.

Caught in the middle are the federal park and forest planners, who realize that Congress is unlikely to fund any effort to improve housing and ease overcrowding.

The U.S. Forest Service has been accused of bias in favor of the project and of stacking the deck with project supporters in the environmental study group.

The consultants selected to help conduct the study are the same ones hired by Canyon Forest Village to measure the project’s potential, and their work on the study will be paid by Canyon Forest Village.

In addition, employees of an environmental consulting firm and a hydrology firm working on the study appear in a promotional video for Canyon Forest.

Cathie Schmidlin, a spokeswoman for the Kaibab National Forest, said the consultants were selected because they are the most experienced in dealing with Grand Canyon issues. The Forest Service does not have the funding to pay for the consultants’ work, she said, and the work will be reviewed by the Forest Service.

Members of the Tusayan business community have declined to participate in meetings of federal and state planners reviewing Canyon Forest Village.

Instead, they have gone to the Arizona congressional delegation to stop the study, which will help federal officials decide whether the land trade should be approved.

Sen. John McCain (R-Ariz.), has resisted efforts to stop the environmental study, saying it is the only way to determine the effect that the project would have on the canyon.

“For us to cut it off now would be crazy,” he said, “because once we get the environmental impact statement . . . we can make rational judgments.”

Opponents of Canyon Forest Village say the private lands involved in the trade are valuable only for grazing and real estate speculation.

“You’re going to have to come up with a nugget to get a nugget, and these are not nuggets,” said Jason Rose of Nelson, Robb, DuVal & DeMenna, a Phoenix public relations firm hired by the Tusayan business community.

In contrast, he said, the land sought by Canyon Forest Village is “the finest piece of real estate in northern Arizona.”

Nearby vacant land has been appraised at up to $450,000 an acre.

Another conflict-of-interest question raised by critics involves Interior Secretary Bruce Babbitt.

Just before he was appointed by President Clinton in 1993, Babbitt was a consultant for Canyon Forest Village and appeared in a promotional video for the project. The former Arizona governor has championed public-private partnerships to develop `’gateway communities” to accommodate tourists outside national parks.

In September, the Babbitt Brothers Trading Co., owned by relatives of Babbitt, offered to trade 780 acres as part of the deal for retail space in Canyon Forest Village. Babbitt Brothers already owns grocery stores near the South Rim and in Tusayan.

Babbitt says that since his appointment as Interior Secretary, he has severed all ties to his family’s businesses and has divested himself of all family holdings “forever.”

Of all the concerns about Canyon Forest, the one that could make or break the project is water.

De Paolo still has no specific plan for where Canyon Forest will get its water, saying only that it will not be from wells near Tusayan. Hydrology studies, he said, “suggest that they are adversely impacting springs in the park.”

Those wells, not economical to drill until a few years ago, are tapping waters 3,000 feet below the South Rim, undisturbed for eons. The aquifer feeds the world-famous waterfalls of the Havasupai Tribe, as well as springs at remote Hermit Creek and Indian Gardens.

De Paolo wants to tap this aquifer, but farther away from the canyon, where there will be no “material impact” to the springs, he says.

Canyon Forest Village supporters say the project would mesh with recently approved plans by the National Park Service to guide park development through the year 2010, when the number of visitors could triple, to 14 million.

The plan calls for a transportation hub with 2,600 parking spaces just outside the park, near Tusayan. Visitors could park and either ride a bike or take a bus, train or even a monorail into the park, reducing traffic along the South Rim.

Inside the park, the plan calls for restoring the historic character of Grand Canyon Village by dismantling some structures built in recent decades, including the Kachina and Thunderbird lodges.

It also calls for creating a transportation center at Mather Point on the South Rim, where visitors could catch buses or begin hiking and biking tours. It would include parking spaces for 1,225 cars and 60 tour buses. But the plan also would restrict cars inside historic Grand Canyon Village and eliminate cars from South Rim drives by 2010.

“This allows us to preserve the historic character of the Village, quieting down the rim,” said park planner Traver, also a member of the Coconino County Planning Commission.

“We don’t want to have diesel buses idling behind us or car alarms going off. We don’t think those are appropriate noises to be hearing when you’re standing on the rim of the canyon.”

But will the transportation hub near Tusayan be funded by the government or by private enterprise? The GOP-controlled Congress has indicated that it plans to cut park funding.

For private enterprise to subsidize such public amenities as parking, mass transit, education centers and park-employee housing, De Paolo said, it must be able to build hotels, restaurants and other profitmaking enterprises.

How much should be built is a matter of debate.

The numbers noted in the Canyon Forest Village proposal–the maximum 5,000 hotel rooms and 2,400 residences, for example–have been used over and over by opponents of the project. They contend that the project could drain surrounding communities of $232 million in annual tourism revenues and cost 3,600 jobs.

Scary stuff, De Paolo agrees, but it isn’t true.

Canyon Forest Village likely will be smaller, he said, and whatever is built would be phased in so that the project grows only as tourism does.

De Paolo said the numbers quoted by his opponents unrealistically assume no growth in tourism, an immediate build-out of Canyon Forest Village and the maximum amount of development.

Still, Rick Lopez, a Flagstaff city councilman and chairman of the group No on Canyon Forest Village, said he fears the project will turn the Tusayan area into an urban center.

“They’re the first megadevelopers out of the starting block,” Lopez said. “It’s very overwhelming. It does create that sort of self-fulfilling prophecy . . . in the sense that success will breed additional demand for more property for more development.”

Tusayan business people have submitted their own development plans for a transportation center and related tourist facilities and shops. But their 77-acre proposal is contingent on the Forest Service’s providing special-use permits to allow construction on national forest lands, which the Forest Service wants to avoid.

Canyon Forest Village would trade private lands for Forest Service property, which is something the Forest Service wants. Otherwise, the agency worries, the scattered private lands might be developed, causing headaches with law enforcement, fire protection, road construction and unrestricted well drilling.

Yet, Flagstaff businessman Dawson Henderson and other skeptics remain wary of any development near the South Rim.

Like the bighorn sheep and coyotes around him, Henderson needs springs in the mile-deep Grand Canyon to survive grueling, weeklong hikes. He has hiked the canyon more than 50 times the last 20 years, and doesn’t want those springs to run dry.

“Whenever you’re at one of these places–Thunder River or Roaring Springs–it’s really quite impressive,” he said. “Water coming right out of a desert.”