It won’t be The Balsams of old under Otten’s plan

Otten’s vision of The Balsams dwarfs what was there before

Second of two parts

Courtesy photo

When the last generation talked about The Balsams, they didn’t go on about the skiing or golfing, or even the views, as much as the sense of community guests experienced when they stayed there.

“They remember a sense of coming home, of a place that is very familiar,” says Steve Barba, who worked at the small resort in Dixville for 48 years, first as a caddy at 13, and eventually as general manager, 1971 until owner Neil Tillotson died in 2001 and willed the grand resort to be sold. 

The Balsams was designed to be a community. Guests were on the American Plan, which covered the cost of all amenities, where the same group of waiters were assigned to your table each meal, allowing them to remember “whether you took cream with your coffee,” as Barba says.

“It wasn’t a ski resort,” said Barba, now executive director of university relations at Plymouth State University. “It was a resort that offered skiing as an amenity.”

But if The Balsams ever reopens – at the same place and even with the same name – it won’t be your mom and dad’s Balsams.

Barba knows that. So does Les Otten, the serial entrepreneur with a history of turning around ski areas who is working with the current owners, Dan Dagesse and Dan Hebert, the Colebrook businessmen who purchased the property from Tillotson Corp. in 2011, for $2.3 million, and shut down the resort while they tried to attract investors.

Ocean Properties Ltd. Hotels and Resorts – which revived Wentworth by the Sea – considered investing in it for over a year but backed away in 2012. In the fall of 2013, Dagesse and Hebert snagged Otten. 

$48 million gap

Otten’s vision of The Balsams dwarfs what was there before. It is 20 times the size, thanks to the purchase of options on some 3,200 acres from Wagner Forest Management on behalf of Bayroot LLC Timberlands. The main draw won’t be the sense of community, though Otten would like to connect with that, but to add and accentuate so many amenities that it will become the ultimate vacation destination in New England.

“It’s on the upper edge of market drive time,” says Otten. “So it has to have the year-round amenities that would make it an exceptional resort destination.”

Or, as New Hampshire Business Finance Authority Executive Director Jack Donovan puts it: “It has to be big enough to be worth the trek. And the problem is that when you go large, you have to build infrastructure.”

There will be housing, a new type of time-share. There will be major road improvements, a huge amount of snowmaking, new ski lifts, condo construction. All of it will cost a lot of money, and Otten plans to spend upwards of $140 million on the first phase alone, which is about a third of what Otten hopes to achieve. 

But despite some $96 million in private financing, Otten says he has a $48 million gap, which he wants the state to help fill. 

The project could mean jobs – 500 by 2016 and 1,700 by 2024 – for an employment-starved Coos County. Compare the projected number of jobs with Androscoggin Valley Hospital, right now the area’s largest employer, with 400 employees, or the 330 jobs expected at the Berlin prison. The Gorham paper mill, when it was doing well, had 200 employees. 

Jeffrey Rose, commissioner of the state Department of Resources and Economic Development, calls the project “transformative,” and at a public hearing, called the project “aggressive and complex” with “magnificent potential.”

‘Four seasonality’

But can Otten pull it off? Rick Kahl, editor of Ski Area Management magazine thinks so. 

“He is a pretty smart businessman,” says Kahl. “Look what he did at Sunday River. He built it from 20,000 to 500,000 visits, very slowly, very methodically.”

Sunday River, a tired resort with just a few ski lifts in northern Maine, was where Otten got his start. Like The Balsams, it was more than three hours away from the Boston market. But there the similarities end, Otten tells NHBR.

The Balsams was always more of a summer resort. The extra land would make it even more of an attraction.

“If you can sit back in a room someplace, and I want to build a resort that has a strong summer component and a strong winter component, what would I want? Lakes? Oh we’ve got three of those. River rafting? I’ve got the Connecticut River Valley and the Androscoggin River Valley. Fishing all over the place? Check, check, check.”

And it’s on the snowmobile network. And it has hot springs, mineral pools. 

At The Balsams of old, skiing “wasn’t much of anything,” says Otten, but he thinks it has “better potential than Sunday River from a ski standpoint, because it adds a natural snow component that is really unique to northern New England.”

Other people, he says, “didn’t understand the winter piece. We could see the four seasonality of this. I think that gives us the edge.”

Kahl says he is impressed by the housing component. The Balsams never sold vacation ownership before, but Otten has, and Kahl thinks he has come up with a more flexible time-share arrangement that fits “the next generation.”

The way Otten explains it, “you pay for it once, and if you don’t exceed your own personal usage, then you don’t have any carrying costs.”

Otten says his team surveyed potential vacation buyers about what were the biggest issues when it came to time-share ownership and found two: “Why do we have to keep paying $500 to $700 a month for something we are not using that you – Mr. Developer – gets to rent?” and “When we do rent how do you know you are motivated to rent our unit and not rent somebody else’s or your own?”

Under Otten’s plan, the property owner, or owners, are deeded a share of a unit, but they only get to use it for number of choice days, paying for nothing but maid service when used. The developer can then rent it rest of the time, unless the owner wants to, in which case the owner will assume the carrying costs, as with a more traditional time share.

Is this a new way or unique way to sell vacation ownership?

“It might have been done but we can’t name anyplace that has done it,” Otten replies.

Bond proposal

Another unique aspect of the project has to do with that $48 million financing. Some $20 million will be a traditional BFA loan, with the state guaranteeing half.

The tricky part is the $28 million that would be covered through something similar to tax increment financing: the costs of the infrastructure improvements would be paid back by the people in the area benefiting from those improvements over time, though an extra assessments on their taxes.

But there is no increment, since Dixville is an unincorporated town, with nothing else to tax, really, except The Balsams.

So supporters of the project backed Senate Bill 30, which expands TIFs to unincorporated areas. 

“It’s really not an increment, but a tax to fund the bonds,” says Donovan, explaining the idea to lawmakers back in February. He admitted at the time that the idea was “out of the box” and an “extraordinary action.”

Since the state ultimately backs the amount bonded, it is included in the state’s bonding obligation, he told senators.

Otten, however, wants to make it clear that the state won’t be actually lending money.

“They are going to let the northern part of the state assess itself, use its own taxes and be supportive. It is that simple. This isn’t a freebie check from someone who lives in Manchester for some developers in the Northern part of the state,” he says, adding, “I didn’t come looking for this. This came looking for me.”

At first, the Senate opted to study SB 30. Perhaps, some suggested, Otten would find other ways to raise the money, or could push back his ambitious plan to begin the first phase of the project in June.

Kahl speculates that even if the bill doesn’t pass, “I think he will find a way to go ahead. He isn’t going to put his eggs in one basket.”

Otten would not say the project would be definitely kaput, but he does say there is a good chance it will be hard to make it go forward if SB 30 doesn’t get approved quickly.

First, he says, options on some of the land will run out, but more importantly, “we have an asset to take care of. The buildings can’t go another year. The golf course can’t go another year. I’m not buying this property unless I have a plan that I can execute in a reasonable period of time for profitability.”

Otten adds: “Jobs are needed now. Availability on the investor’s side is now. The market is good now. We are selling reservations on real estate now. We built a plan that’s for now and committed to executing a plan that’s for now. We are going to stick to our timetable, which is a now timetable as opposed to a later timetable.”

‘A bold project’

The Senate dropped the idea of studying the bill and approved it, but without the $28 million specified in the original legislation. If the House passes the bill and the governor – who strongly backs it – signs it, then it will be up to the Executive Council to approve the amount.

Chris Sununu, whose family owns the Waterville Valley resort, sits on that council.

Sununu says he needs to see the particulars, but he hopes that the project goes forward.

“This enhances the entire ski industry,” he says. “It would be a true destination resort, bold in scope and bigger than anything we’ve ever seen. It’s a bold project that needs a big vision and the means to pull it off.” Otten, he says, “could potentially do it.”

A large project like that planned by Otten means that The Balsams won’t have the same intimacy as it did, says Barba, but The Balsams of old never really made much money. 

“It was never much of a profit center,” says Barba. “But it deserves to continue, I have every confidence that it will.”

Categories: Real Estate & Construction