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AS A BOY in Leavenworth in the 1950s, Lynn Watson measured the decline of his town by the trips on his pogo stick. His parents owned an appliance store downtown, and chances were good that when Watson bounced out of his parents’ store and down the street, he wouldn’t run into another person.

Even then, Watson could tell that Leavenworth, the little town nestled into a valley of the Cascade Mountains, was dying. Boarded-up storefronts were increasingly common. Lots were vacant. Property values were so low that people looking for cheap housing in the area were pointed there. The population had slimmed to 1,500, and whenever someone asked Watson where he was from, he answered nearby Wenatchee.

“One, because we weren’t proud of Leavenworth,” Watson says. “And two, hardly anyone knew where Leavenworth was.”

As one local put it to the Leavenworth Echo, “I would have moved, except I wouldn’t have been able to sell my home and my business. So we were pretty much forced to stay.”

Backed into a shrinking corner as the ’60s arrived, the people of Leavenworth started searching for answers. They reached out to the University of Washington for help. They formed committees and held meetings.

What happened next surprised even them. Out of this hunt for solutions emerged an idea that was so large in scale, so creative in concept, that it frightened a lot of people. Only a few other small towns across the country had done what Leavenworth aimed to do, and the financial and personal risk fell hard on individual business owners. But soon the town discovered that sometimes the greatest gift we are given is one of the things we fear most: uncertainty.

THE DEBATES about Leavenworth’s future took place over morning coffee at the downtown soda fountain. What direction should the town head? What should it focus on? Who would lead the effort?

Lynn Watson’s parents, Pauline and Owen, took part in many of those meetings. “They’d just throw out all these ideas,” Watson says. “And they’d have to take it home and think about it for a while because it was so far out of their minds.”

In 1962, with help from the UW, Leavenworth created Project LIFE (Leavenworth Improvement for Everyone). Sixteen citizen committees set about considering everything from schools and parks to libraries and tourism. They had no specific end game for Project LIFE other than a broad one: helping their town get healthy.

“What they were trying to do is understand how people felt about things that could be done in the area,” Watson says.

But two businessmen originally from Seattle had grander visions. Ted Price and Bob Rodgers had redone their restaurant just outside of Leavenworth in a Swiss-Bavarian theme in 1960 and had since visited the Danish-themed town Solvang, in California.

They talked with business owners there and heard about the money tourism made. When they returned to Leavenworth, they told anyone who would listen: What if scenic Leavenworth — with the Wenatchee River running right alongside it and ski slopes just up the road at Stevens Pass — embraced a makeover with a Bavarian theme?

When Price and Rodgers spoke conceptually of Bavarian Leavenworth, they pointed to the handful of theme towns across the country for validation. If the Bavarian concept wasn’t entirely innovative at the time, it was still creative. No other towns in Washington had ever tried something like it.

This is what urban planner Ron Kasprisin calls the principle of uncertainty. For years Kasprisin consulted small towns in the Pacific Northwest on how to improve. Sometimes that meant bettering the downtown, sometimes it was fixing up the waterfront. But the point Kasprisin makes is that each small town has its own identity, with its own characteristics and problems, and every time he worked with small towns he tried to keep people from getting so locked into an idea that they’d leave no room for creativity.

“It’s like doing a watercolor,” Kasprisin says. “You don’t force a watercolor. Things happen. You follow it.”

What Kasprisin tries to eliminate from the beginning is the thing that stunts creativity: fear. “People come into a meeting and in most cases the first things they say are negative because they’re afraid,” he says. “They’re afraid of new ideas.”

THE TURNING POINT for Leavenworth came in 1965. A fire torched LaVerne Peterson’s hotel, and she needed to make repairs. Pauline Watson called Ted Price and told him LaVerne was open to suggestions.

In the back of the Watsons’ store that night, Ted and Bob showed pictures of Bavarian buildings and made their pitch. LaVerne listened and stood to leave. She had to go back to work, she said, but not before adding, “That’s good enough for me.” Five other businesses agreed to join her.

“I think that was the moment the Bavarian theme actually took hold,” Ted Price wrote in his book, “Miracle Town,” on how they made it happen.

That was the easy part. To convince skeptical business owners, Pauline Watson and Bob Rodgers drew rough sketches of storefronts redone in the Bavarian style, and by June 1965 enough people were on board that the local paper declared, “Leavenworth Goes ‘Alpine.’ ”

Then reality hit. What did it even mean to go “Alpine”? Ted Price and Bob Rodgers wanted an authentic Bavarian theme, but what was authentic? And how would people pay for it?

“There were going to be hundreds of problems,” Ted Price wrote. “Fortunately, more than we could possibly anticipate at that time.”

They had to meet with insurance agents in Seattle because the wooden roofs they proposed presented huge fire concerns for a city sitting in the middle of a forest. The financial burden of the project fell on each business owner, so they met with the president of the Seattle First National Bank to secure loans.

On Sept. 14, 1965, scaffolding went up on the first building downtown. Soon, five others followed.

But the headaches didn’t end there: the formation of the design review board in 1970, sign regulations in 1971, Bavarian guidelines for downtown buildings in 1976. Creative control was ceded to the town.

The original business leaders had looked to solve their town’s glaring problem and in doing so created hundreds of smaller ones. But they didn’t anticipate any of that at the time, and that’s precisely the point Pauline Watson made many years after her store was the first to go Bavarian.

“If anybody had told us what (the costs) would be, you wouldn’t see Building One here yet, I don’t believe,” she says. “We would have all fainted away! And that would have been the end of it.

“We started thinking in terms of maybe $500 we’d spend. And, you know, after the first $500 had gone through your mind, it’s a little easier to add another $200 or $300 to that.”

PAM AND OLIVER Brulotte owned a vineyard and old farmhouse in Prosser, but they always had an eye for investing in Leavenworth. So when the opportunity arose to buy two pieces of vacant property downtown in 2000, they jumped.

It wasn’t long before problems started cropping up. The Brulottes had quickly realized they couldn’t afford to sit on two empty properties, so they decided to sell kettle corn on one lot to make extra money. Pam loaded her infant daughter in the family pickup and met with Leavenworth’s design review board. She didn’t expect to get much of a fuss about putting up a popcorn tent. She was wrong.

The Brulottes were told they’d have to have a standing building, complete with a Bavarian design, just to sell popcorn.

So they built a snack shack not much bigger than a tollbooth. On weekends, Pam drove over from Prosser, threw on a dirndl and popped kettle corn in front of the shack.

It was tiny, Brulotte says, “because we didn’t have any money. But we had the properties, so we were in.”

By 2001, the Brulottes plunged in even deeper. They packed up their belongings, loaded up the kids and, quite literally, sold the farm to devote their full attention to Leavenworth. They wanted to turn their snack shop into a sausage grill called München Haus.

They had no previous experience owning a restaurant and only enough money to cover a year’s rent.

But “we just had to make this work,” Pam says. “We couldn’t really think about it too much.”

The challenges the Brulottes faced not only required an investment of capital but also of time and effort. They had to get new permits for the sausage grill and go to more meetings. The same was true when they added bathrooms, a beer garden and an upstairs balcony. Everything from the opaqueness of the lighting to the color and style of the doorknobs needed the town’s approval.

But the Brulottes were already so committed that turning back wasn’t an option. Instead of focusing on the impossibility of the whole hike, they looked only at the step or two in front of them.

In 2008, they took another big step, deciding to build a brewery on their second property. It took them nearly two years to formulate a business plan and secure a loan, but in May 2010 they broke ground.

A year later, they were selling their own beer at Icicle Brewery. This year, for the first time, the city is letting them sell beer at Oktoberfest (continuing through Oct. 18).

But if they had known how difficult it all would be, they would never have gone through with it.

Says Pam, “I think I would have run away.”

AT HIS HOME just outside of town, Lynn Watson slides the tape into the VCR and hits play.

“I’ve seen this a thousand times,” Watson says, “and I still get emotional.”

The movie, also called “Miracle Town,” tells the story of Leavenworth’s transformation through the eyes of the people involved: Pauline Watson, Ted Price, Bob Rodgers and LaVerne Peterson. Watson removes his glasses and wipes away tears. Sometimes he just looks out the window and stares.

The movie makes him proud. The audacity, the willingness to try something not many places had done, the guts of it. The Leavenworth outside Watson’s window is nothing like the one he grew up in.

These days, downtown is a bustle of something like 150 businesses compared to just 30 when Watson hopped around on his pogo stick. Property has become so coveted that the median home value nearly doubled from 2000 to 2012, and it’s hard for young couples and lower-income families to afford living here. Still, the population has inched up to about 2,000 souls.

And most significantly, around 2½ million people come to visit each year. They come to ski and hike, raft and tube, shop and stroll or take in one of the 50 festivals and events the town hosts — everything from art exhibits and live music to a Thanksgiving “Fowl Play” fun run and the annual Christmas Lighting Festival beginning Dec. 5.

Back at Watson’s home, it’s near the end of the movie, and his mom, Pauline, appears on the screen. “It brought so many different people from so many different walks of life and backgrounds together at the right time, the right moment, to make it all go together,” she says.

When Ted Price and the original business owners used to speak to other small towns in Washington about Leavenworth, they made the same point over and over. “We always urged others not to copy what we did, but to study their own community closely and look to themselves for creative inspiration and direction.”

Leavenworth still faces challenges. So many tourists flock there in the summer that locals don’t go downtown on weekends. The town has been accused of losing its soul to become a Bavarian Disney World. And the long list of rules still makes it tough for new businesses to get going. Debates persist about when shops should close at night and if they should stay open at all in the winter.

Lynn Watson isn’t certain what will become of all that, or where Leavenworth goes from here. But maybe that’s not such a bad thing.

Jayson Jenks is a Seattle Times staff reporter. Alan Berner is a Times staff photographer.