Inside the Bulldog Saloon in Whitefish, Mont., hangs a sign that declares, "This Ain't No Country Club. " Tell that to the Internet millionaires...

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Inside the Bulldog Saloon in Whitefish, Mont., hangs a sign that declares, “This Ain’t No Country Club.” Tell that to the Internet millionaires in the backroom.

Regulars who gather for poker include Mark Kvamme, whose Sequoia Capital financed Yahoo! and Google. Kvamme, who owns a lakefront second home in Whitefish, is building a 1,275-acre luxury residential development called the Homestead with Lehman Brothers Holdings Chief Executive Officer Richard Fuld.

Executives and investors enriched by the dot-com boom are buying land around the northwest Montana city of Whitefish, population 6,151, boosting property values, straining county services, and putting the former railroad outpost near Glacier National Park on the road to becoming a wealthy enclave like Aspen, Colo., or Jackson Hole, Wy.

“In 1999 I bought real estate because I didn’t want all my money to be in Nasdaq,” says Kvamme, 44. The Nasdaq Stock Market composite index has declined 26 percent in the past six years. By contrast, his development, valued at $5,490 an acre two years ago, is for sale today for an average of $50,000 an acre.

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Montana has long been a magnet for hikers, hunters and anglers, who cherish its broad valleys, snowcapped mountains and trout-filled rivers. One in three residents has a hunting or fishing license. While Montana ranks fourth among U.S. states in land mass, it is 44th in population, with 926,865 residents.

Some of the choicest parts of Montana, nicknamed the Big Sky state for its wide-open vistas, have changed hands as families, ranch owners and timber companies sell land. Six years ago, Charles Schwab, founder of the giant brokerage, unveiled Stock Farm, an invitation-only club on 2,600 acres about 200 miles south of Whitefish near Hamilton, Mont.

Club members, including Boeing CEO James McNerney and Kenneth Siebel, chairman of money-management company Private Wealth Partners, can play golf, ride horses, gaze at the Bitterroot Mountains and eat wild-boar quesadillas. Triple Creek Ranch, owned by Craig Barrett, chairman of Intel, is a one-hour drive away.

“Montanans are afraid to death that little towns are going to become like Aspen or Vail, where the billionaires chase out the millionaires, and employees have to live 45 or 50 miles away to drive to work,” says Wes Spiker, a spokesman for Stock Farm, which provides housing for some employees. “That won’t ever happen because people come to Montana for what Montana is. They don’t want to change it.”

Changing the state

Even so, they already are changing the state. Around Whitefish, the biggest symbol of the influx is Two Bear Ranch, a 32,000-square-foot residence that another Sequoia partner, Michael Goguen, is building on a hill overlooking Whitefish Lake and the Flathead Valley.

The house was designed with a 12-sided swimming pool flanked by a racquetball court, karate room and underground shooting range.

Goguen, 41, built a covered bridge over the railroad that runs along the lake’s western shore to link the house with the beach.

Natural beauty and recreational activities help explain the appeal of Whitefish, which is an hour and 20 minutes by plane from Seattle. Hugging a clear, 7-mile-long lake ringed by hills covered with lodgepole pine, Douglas fir and larch forests, Whitefish lies just below the Big Mountain ski resort. The Glacier Park International Airport is 15 minutes away.

Compared with the ski resorts of Aspen or Sun Valley, Idaho, Whitefish retains the rustic flavor of its roots as a logging town, its more affluent residents say.

“There’s nothing of the Old West in those places, and you see lots of fur coats and Rolls-Royces,” says John Connors, a Montana native and former chief financial officer of Microsoft, who’s building a ski house on Big Mountain on a lot just shy of a half acre that he and his wife bought this year for $575,000.

Hard choices

The boom has forced hard choices on less-affluent residents. Evelyn Rodewald, 69, says she and her husband, Gordon, decided to sell their lakefront house in 2002 and buy a home in town after property taxes became a burden and noise from construction increased. And added property-tax revenue from surging land values hasn’t kept pace with demand for services such as road maintenance, county officials say

Some encounters between locals and newcomers have caused tempers to flare. Gregg Alexander, who sells paint at Nelson’s Ace Hardware Store, discovered he could no longer ride his mountain bike anywhere he wanted in the hills around Whitefish.

On rides, he has encountered “No Trespassing” signs, and an irate property owner once ordered Alexander off his land.

Alexander has found an upside. He reckons the 60-acre parcel near Blanchard Lake Road that he bought in 1997 for $185,000 is worth millions now.

“I’ll offload it to one of these dot-commers and go somewhere else,” he says.