Mt. Sunapee condo plan: gold mine or giveaway?
Should the state — literally and figuratively — mortgage the use of Mt. Sunapee State Park, paving the way toward development in surrounding communities and financing resorts elsewhere in the country?
Should the state take advantage of a unique private-public partnership to continue to improve a thriving ski resort, conserve land outside it and increase revenue for the state park system?
Both questions, and many more, are being raised in conjunction with the growing romance between the state Department of Resources and Economic Development Park’s Division and Triple Peaks LLC — operator of Mount Sunapee Resort — a rapidly expanding resort business run by Tim and Diane Mueller based at the Muellers’ Okemo ski resort in Vermont.
The Muellers could not be reached for this article, but their company certainly has won over the state Division of Parks’ director, Richard McLeod.
“This has been the best partnership the state of New Hampshire has ever entered into,” said McLeod.
McLeod points not only to the $12.5 million of capital improvements that the company invested in the decaying ski state-run Mt. Sunapee Ski Area, but also to the $5 million in operating costs that were freed and used in the rest of the parks budget.
That doesn’t even count the $150,000 in rent and the state’s 3 percent cut of lift ticket sales.
This revenue is particularly crucial to the Parks Division, the only agency of its kind in the nation that must raise all revenue from its own operations.
On June 8, any questions surrounding operations at Sunapee will come to a head. That’s when the resort lays out for the first time details of its proposal to expand the lease to link up land owned privately by Triple Peaks on the back side of the mountain. The expansion would allow the opening of a third ski lift and connect it to the site of a proposed 200 condominiums in Goshen — roughly the same number of housing units that already exist in the town of about 750 people.
Fates already tied
The mere suggestion of building condos on land connected to the state park has fueled the fires of protest among those opposed to the expansion. The opponents — many of whom opposed the leasing of land to the Muellers in the first place — warn that expansion would tie together this “unholy alliance” permanently.
“We don’t want to be New Jersey, or Ludlow, Vt., or even Loon,” said Tom Elliott, executive director of a local opposition group called Friends of Mount Sunapee. “A sprawling mess of condo development will change the character and feel of the region, and we don’t think it makes sense to tie our future to this one big seasonal corporation from out of state.”
However, the park’s fate, for better or worse, is already tied with the company. The state has not only signed a 30-year agreement in 1998 to lease 850 acres to Okemo Mountain Corp. (with options for Okemo to renew the lease for another 20 years), it also has allowed the company to use that lease as collateral to help leverage a November 2001 loan of at least $33 million from Key Bank in Ohio.
The third and latest lease assignment went into affect on March 1 — at the same time Triple Peaks closed on a deal to buy the Crested Butte Ski Resort in Colorado. The deal, according to observers, was worth at least $50 million.
Exactly what is collateralized, how much it fetched and under what conditions is not clear. The exact amount and details of that arrangement — filed in February in the Sullivan County by The Sunapee Difference (a company wholly managed by Triple Peaks) — are submerged in a credit agreement that has not been revealed to the public, though apparently some of it has been revealed to state officials.
By law, then-Department of Resources and Development Commissioner George Bald had to sign off on the lease assignment, and he did so acknowledging that his agency had “previously been provided with the lessee’s business restructuring plan and does not object to same.”
The state won’t share those details, because they are exempt from the state’s Right To Know law, said Anne Edwards, an associate attorney general who also signed off on the deal.
Besides, Edwards said, the state’s interests are protected. If anything should happen to Triple Peaks, the state park, and anything attached to it, remains with the state. Presumably, no bank would want to auction off ski lift equipment when it could sell an ongoing ski operation. And whoever buys it would be subject to the same lease conditions to which Triple Peaks is now subject.
But who would take over such an operation would largely be the decision of the largest secured creditor — the bank — not the state, she said.
That troubles critics of the deal. They argue that if reassigning the lease puts the fate of the mountain in the hands of a bank, the details of the arrangement, and of Triple Peaks’ financial viability, should be open to public scrutiny, and the approval of the Executive Council, which normally approves contracts.
Executive Councilor Peter Spaulding said he only heard about the reassignments from reporters.
“Here they have done it again,” said Spaulding when question about the latest reassignment by the Business Review. “The council approved this lease. We should be told what is happening. In case someone should default on this loan, we need to know who the leaseholder is.”
The lease does not require that the Executive Council be kept in the loop.
“Right now, the only one who has to approve that deal is the commissioner,” added Elliot. “They could sell this lease to Disney tomorrow, and no elected official would have a say over it.”
But Jay Gamble, manager of Mount Sunapee Resort, said such speculation is all “Chicken Little” talk.
Collateralizing leases is standard practice for the industry, he said, because most resorts operate on public land, so a long-term lease is all they have to satisfy any future financing. And the latest refinancing is simply an attempt to restructure debt from three operations — Sunapee, Okemo and Crested Butte under the Triple Peaks umbrella.
The Mt. Sunapee lease isn’t the only thing being put up as collateral, and the money will go to all Triple Peaks operations, according to Gamble. He would not say how much money would be allocated to each operation.
Besides, Triple Peaks has a track record of turning ski operations around, not snowing them under, said Gamble. When the Muellers bought Okemo in 1982, the 520-acre area was nearing bankruptcy with 95,000 skier visits. The Muellers pumped millions into new snowmaking, new lodges, lifts and a golf course, and the ski area today is now thriving.
Similarly, the state simply couldn’t afford to make the improvements necessary to make Mt Sunapee a viable operation. That’s why it leased it out to the Muellers, who invested more than twice as much as required, Gamble said.
“We are a healthy company,” he said, citing the roughly $250,000 in business profits tax he said the firm has paid to New Hampshire over the past five years. Nor would it be able to get financing for the Colorado deal if it wasn’t financially viable, he said.
Marketing time shares?
Even Triple Peaks’ harshest critics acknowledge that the company has done an admirable job in turning the ski resort around, he said, but to remain competitive and not subject to the whim of fickle day visitors, the resort needs to provide skiers with a place to stay overnight. That’s one of the reasons the company purchased the more than 400 acres of Goshen land.
Gamble said 100 acres, on the east side, would be set aside for conservation, to partially make up for the extra parkland to be leased. The rest, mostly on the west side of the mountain, would be used for the condos, which ideally would be linked to the ski resort.
The extra leased land would have a 5,000-foot-long ski lift, which would be the link between the privately owned Goshen land and public land on which the ski area sits. That way, condo dwellers could ski on and off the slopes.
“It’s merely a continuation,” said Gamble. “It’s a very typical that resorts own lands in their base area while the upland is publicly owned.”
The condos would be seasonal rentals nestled in a small area of Goshen, he said, leaving most of the other land unaffected.
But the Society for the Protection of New Hampshire Forests — which originally donated the Mt. Sunapee land some 56 years ago to the state with its existing ski operation and supported the originally lease — said promoting development is not what state parkland is about.
Indeed, said Charles Niebling, the Forest Society’s senior director for policy, the revitalized ski resort is already producing enough revenue for the state. There is no need to give up precious state resources for the increased revenue the state would get through increased lift ticket sales.
“To expand the lease boundary largely to enable access to adjacent private land to increase corporate profits resulting primarily from vacation home development goes well beyond the state’s obligation,” said Niebling.
The problem, he said, is linked to the Parks Division thorough dependence on the bottom line, which skews its decision-making process.
For instance, Triple Peaks has proposed allowing the marketing of time shares by a private real estate firm out of the ski facility in the state park. Gamble compares the proposal to allowing concessions, such as the coffee shop and photography service that are already in business at the ski area.
The state would consider approving such a proposal, said McLeod, “in terms of what it is going to bring to the table for DRED. Is it going to enhance the benefit of the agency, and will it perform some kind of service that people want?”
But the very idea of marketing condos at a state park should be galling, said Elliot
“Are they that starved for dollars that they want to turn a state park over to a real estate company?” he said.
But Gamble doesn’t see what all the fuss is about. This is not a pristine state park, but a commercial ski area, and was a ski area long before there company had anything to do with it.
“We are not managing a state park. We are leasing a commercial ski area,” Gamble said.
This odd couple — the commercial ski area and the state park — will continue to live together for a long time, especially if the expansion goes through. Theoretically, Triple Peaks and the state could go their separate ways after 50 years. The state could always put the operation up for a competitive bid. But if the ski lift and trails cross public-private boundaries, that separation would have to be on the company’s terms, said Sen. Clifton Below, D-Lebanon, who represents the Sunapee area.
“It really forecloses a competitive option. It will be significantly worth less to anyone else but them,” said Below. “If this goes through, we will be stuck in this deal.”