Balsams Update - Go Big or Go home

[peakbagger]

I took a run up to Balsams on Saturday in circular loop from RT 2 to Rt2 to RT 26 and then back down via RT 26 and RT 16 back to RT 2. I skipped the RT3 stretch up from Littleton to Lancaster which is usually about 1/2 hour. From Lancaster the trip was just under an hour and half. Rt3 has a lot of local traffic and few passing zones plus it goes through several small towns so its not easy to go much more than 50 MPH.The lack of snow means there are not many sleds out on the trails so its pretty quiet. It has been awhile since I have made a winter trip up there and as usual forgot how desolate RT 26 is between the top of the notch and Errol. When I got back I looked at mapquest and in general the software defaults at heading to Berlin via Twin Mountain exit of I 93 and then heading west on RT 26 in Errol versus running up through Lancaster and then up to Colebrook before turning east. Optimistically its 2 plus hours either way. Which means anyone heading there will have passed Waterville Valley, Loon, Cannon and Bretton Woods.

There is little or no evidence of any recent work done at the Balsams and the description in the Globe pretty much hits it. The prior owners had started demo on some of the less historic looking structures without looking into the implications to historic tax credits which has hindered the project as it now doesn't qualify for historic tax credits. Those structures are now mostly completely torn down while the most distinctive buildings remain. Unlike the Mt Washington Hotel, there was little or no attempt to update the structures over recent years so at best I expect the main buildings will be close to "gut" jobs. Locally there is some disappointment as there were early comments that work would have started this winter. Unfortunately there wasn't even a framework for local permitting and building inspection so the local permitting was held up until the zoning and building laws were written and approved. Various state and local permits also have taken longer than expected. Generally financing is contingent on all permits being in place so they haven't pulled the trigger. Just locating tradesmen to work there is going to be challenge, there are many former maintenance folks from the mills that closed down but many are at or near retirement age. There is little in the way of local tourist infrastructure and its tends to be busy with ATVers so I expect a lot of construction folks will end up in campers.

The standard comment locally is everyone hopes he pulls it off for the sake of the local economy but few can figure out who the clientele will be. I haven't seen much speculating going on in the area yet, about the only thing I have noticed is someone opened a new gravel pit just down the road.

 

[dug]

I still think they will market North, like Jay Peak. Much closer to Montreal than it is to Boston.

 

[peakbagger]

Unfortunately the shift in exchange rate is hurting them, unlike a few years ago when Burlington was a "suburb" of Montreal, the current 75% exchange rate is keeping Canadians on their side of the border. The Balsams does claim that some of the current folks signed up for the "Century Club" are Canadians. Its about 50 miles via secondary roads to the auto route in Sherbrooke versus less than 10 miles from I91 to Jay Peak.

 

[dug]

Unfortunately the shift in exchange rate is hurting them, unlike a few years ago when Burlington was a "suburb" of Montreal, the current 75% exchange rate is keeping Canadians on their side of the border.

Having just come back from Jay, I did notice less French-speaking this year vs. previous, so I do assume the rate had an impact

Its about 50 miles via secondary roads to the auto route in Sherbrooke versus less than 10 miles from I91 to Jay Peak.

Still closer and easier than coming from Bahston.

Not saying it's the 'right' decision, but I do believe they will be marketing as much north as south.

 

[peakbagger]

Since you posted in two threads I will reply in this one but it applies to both the NP and this one.

The dirty secret of any ski area is the vast quantity of electric power used for snowmaking. Remote ski areas burn tanker loads of fuel oil in temporary generators that are allowed to generate more pollution than stationary generators. Ski areas near the transmission grid end up plugging into the grid and the utilities gladly upgrade the power lines sometimes to a ridiculous amount. A example is the grid upgrade from the Bartlett substation to Attitash along route 16 and the transmission lines down the Kanc to Loon. The Balsams is going to suck even more power in as they plan to pump water from the Androscoggin River 13 miles away. Even before it gets to the sthe base of the mountain, the elevation change (about 620 feet)means they need to pump it up to 270 psi which sucks up a lot of power. The utilities like ski areas as they tend to use most of the power "off peak" at night and on weekends and generally there is special ski area rate negotiated. Thus the Balsams needs to play nice with Eversource. The other "actor" is Brookfield Power who owns the nearby windfarm. In theory since they are adjoining the Balsams they could supply power from the farm but the problem is there will have to be backup service from Eversource when the wind is not blowing. Brookfield just happens to own a hydro dam in Errol near the proposed intake station so it will be interesting if they end up selling the power to run the pumps up the ski area. Balsams used to have a biomass power plant supplying electric power and heat for the facility but that was ripped down by the prior owner.

The issue with the SPNHF easement is not as clear as Jim Dannis wants to make it. The Tillotson estate was over a barrel, they had to sell the property in a manner that returned the most money to the Tillotson Foundation even if the majority of the family opposed NP. The developer who had signed an offer previously to buy and revitalize the resort pulled a fast one and walked away. There was no other buyer until NP came along and offered to pay lots of money for the right of way through the property. If not for last minute maneuvering by SPNHF to buy the development easement which occurred in matter of weeks, the Tillotson estate would have had to sell to NP. This would give NP a significant stretch of right of way that would give them a lot of flexibility in routing NP. The reality was the primary purpose of the conservation easement was a blocking maneuver to NP with the Balsams resort an inconvenient pawn as few expected it to be redeveloped. The various protected areas were put in place as an afterthought with I expect little planning with a revitalized resort in mind. Once the check cleared for the easement, the Tillotson estate sold what remains of the resort to the buyers of last resort, a local car dealer and a contractor that proceeded to strip the place of anything of short term value and started demolition. Once they had some money in pocket from the auction they announced that they would spend no more of their own money and if the resort was to be redeveloped, that state and federal sources would need to be used. Many including myself expected a convenient fire like many old resorts and then eventually cutting it up into recreation lots after they stripped the timber.

Controversial as he is, Les Otten stepped in and traded a minority interest to the two former owners to get them out of the picture and took over the project. I expect SPNHF ended up holding their nose on the transaction to trade "special lands" for other "special lands" but the reality is the major intent of the easement was accomplished which was to block NP. SPNHF is long term fixture in NH and they have to weigh negative publicity, had they been the "bad guy" and stopped the Balsams "freight train" it would hurt them for years as they would get black eye in NH government which is backing the project as an economic development project. The area of NH north of RT2 is economically devastated from the loss of in excess of 2000 paper industry jobs, the Balsams provides short term hope for jobs and possibly population gains no matter how suspect the long term viability is. Its a lot better than the short term economic benefits attributed to the NP construction. What typically happens with these resorts is they hopefully grow large enough to self sustain and then the original developers cash out and the properties are sold to a longer term owner which inevitably is overleveraged and goes bankrupt after a bust, the property then goes through a succession of owners each selling at a discount voluntarily or involuntarily until the cash flow matches the capital cost and the resort continues until the next boom. This has happened to different extents at Bretton Woods, Sugarloaf, Abrams, Shawnee Peak, Wildcat, Attitash and Cranmore and numerous areas all over New England and expect it will at the Balsams.

 

[Vermonster]

A very good overview by PB.

The only thing I would add is that the proposed Bayroot wind farm to the immediate north of the Balsams could presumably use much of the same infrastructure as a feed line to the Balsams. I am naive to the technical details but assume, for example, that siting a converter station to convert DC power to AC power required for the Balsams, and feed in DC power from a wind farm is very doable.

 

[Stan]

So, if I wait long enough I'll be able to buy the Balsams for a song, run for president and stuff the ballot box, eh.

Seriously, though, I find no fault with SPNHF working with their "arch enemy". In the long run such collaborations, as ugly as they may be to some, are more beneficial than a hardening of battle lines (think of how much better national healthcare would have been with legislative collaboration). My reasoning for this is that there is more support for conservation in prosperity than in poverty; first in terms of wealth needed to set aside lands for such purposes, and second, in terms of a willingness to preserve part of the appeal of natural areas to visitors and locals alike. There is a fuzzy line between the public good of development and that of conservation and, as much as I dislike the industrialization of pristine areas, I trust SPNHF as much as anyone to make sensible and sincere decisions regarding that line.

 

[peakbagger]

Vermonster, your speculation was most likely correct. There had been a converter station added on to the revised project proposed somewhere in Coos county to improve grid reliability and unspecified grid improvements to the Coos loop. The problem is that the line already has a lower capacity then originally planned due to partial burial and every MW that is injected into NP in Coos county is a MW that HQ cannot export, thus HQ may make strong objections. The speculation was that the converter station was a possible foot in the door for NP to claim it was public benefit project and get access to eminent domain. Others feel that once the right of way is in place for NP in Coos County, it will make a nice corridor for a second line to improve the Coos loop to the point that the new wind farm north of RT 26 can export in the grid.

 

[peakbagger]

Its starting to look like the Quid Pro Quo link between the Balsams and NP is not just a one time thing. One of two partners who bought the Balsams from the Tillotson Estate has a full page ad in several north country papers strongly linking NP with the Balsams development. It doesn't come out directly saying that the financing of the Balsams development is from NP but its sure implies it. Its on the last page of this weeks Colebrook Chronicle http://colebrookchronicle.weebly.com/. Given Les Otten's participation in the SEC hearings earlier and this Ad, it sure looks like they are on the payroll of NP.

The two partners who had purchased the facility are now minority partners of the Balsams project. They allegedly made any future redevelopment of the facility more difficult as they elected to tear down part of the facility without looking into the impact on the potential for historic structure tax credits. They reportedly did enough damage that the potential for those credits were lost or severely reduced. The somewhat infamous auction of anything not bolted down also did not win any fans.

It will be interesting to see if the actual first phase kicks off In June. If they were depending on a big check from NP I expect it will get delayed. This is not the first piece of NP backroom dealing that has caused pain in the area, NP was trying to back room negotiate a large land donation of surplus land they acquired in the chess match with SPNHF in the region as well as fund to the Ride the Wilds ATV initiative. When it came to light it caused a major issue with the Great North Woods organization and the founder was thrown out. Some key trails were closed by upset landowners and the fallout could continue.

As an aside the letter writer owns a large mansion with a 1/2 mile private driveway of about 160 plus acres bordering the WMNF with the Coos Power transmission loop right of way bordering the north line of his property. It would be interesting to see if he would be so accepting of major expansion of the right of way if it was next to his mansion which is about 350 feet north of the house.

 

[peakbagger]

There are lot of folks that are banking on the Balsams project and that letter effectively links the Balsams with NP. Those opposed probably will not change their mind but for those on the fence linking the project with NP will turn them into supporters. The Balsams developer claims to have spent a lot of their own money so they most likely don't want to officially link the two just in case NP tanks but that letter pretty much makes a big indirect link.

 

[peakbagger]

For those interested in Balsams, it was pretty well established this week that there is no doubt a direct link to NP if comments attributed to Les Otten are correct.

"If it (the North Country Chamber of Commerce) didn't make decision (to remove long standing opposition against NP) by Wednesday the Balsams project would not go forward" I do need to be careful to note that the quote was attributed to a long term opponent of NP (and in the past a very controversial figure, Jamie Sayen). Even if the quote is hyped, its very apparent from other activities that Les Otten and company are strong arming local political entities to give the appearance of non opposition to NP. It is interesting to note that the recent strong arming of the Colebrook board and this recent skirmish seems to be a ramping up of pressure.

http://www.colebrookchronicle.com/April82016.pdf

I expect that given the timing of the SEC hearings, these desperation moves have killed the momentum of the Balsams project to the point that substantial investment on the ground are most likely not happening this year unless NP is in the mood to throw more money at the project. I expect the Century Club folks will be waiting awhile before they take the Gondola from the lodge over to the ski area.

 

[peakbagger]

Gee, big surprise

http://www.berlindailysun.com/index...at-early-fall&catid=103:local-news&Itemid=442

The resort reportedly had made promises to local businesses that they would be building by this past spring. They were using this as a hammer on the county and state to rush the approval process. Given the link with Northern Pass for future financing and the delay by the SEC hearings for NP I expect the financing has gotten a lot more difficult. They already have money in hand from Northern Pass for the early phase permitting so I suspect that the schedule will lag over the winter in hopes that NP gets the go ahead in 2017.

Starting to looks like the Springfield monorail https://en.wikipedia.org/wiki/Marge_vs._the_Monorail

 

[Vermonster]

Starting to looks like the Springfield monorail https://en.wikipedia.org/wiki/Marge_vs._the_Monorail

You can't throw that out there without a link to the town meeting scene: https://www.youtube.com/watch?v=ZDOI0cq6GZM

 

[peakbagger]

NHPR has a series on the Balsams project, its in three parts. It raises a lot of questions

http://nhpr.org/post/special-series-closer-look-balsams-redevelopment

 

[peakbagger]

http://www.berlindailysun.com/index...-not-complete&catid=103:local-news&Itemid=442

Things are definitely starting to drag since the financial link with NP was revealed. Its interesting to note that the developer is starting to let things lag based on cost. The lack of applying for the state funding is also interesting as the state funding comes with strings attached that possibly the Balsams doesn't want to be tied. On the other hand the reference to one named bank is positive.

The ice wind throw issue is definitely something that could rear its head significantly. Prior to the Balsams development, the safety zone around the existing wind towers were set quite large, it didn't really impact many except for winter hikers and snow machine folks. In order for the early phases of the Balsams ski area expansion to expand skiable terrain, they need the safety zones minimized. There are whisperings in the area purported to be from folks who work around the wind farm that ice throw can be significant in certain conditions. Its a known industry issue so it should not be a surprise. With a potential height of up to 500' from the ground, the physics is that any ice thrown off a blade is probably going to make quite dent or a hole in sheet metal and potentially seriously injure a person. I don't know if the states recreational liability waiver in place for ski areas would apply to someone getting harpooned by an icicle? I expect that any side deals with the wind farm cover such a contingency. Some of the future phase terrain seems to be not impacted by the windfarm so it may comes down to having to accelerate later phases of the project earlier to expand terrain outside of the turbine safety zones which will impact financing.

 

[Vermonster]

Here is some additional information on the ice throw restrictions on both Brookfield (company that runs wind turbines) and Balsams:
http://indepthnh.org/2016/07/28/law...close-skiers-get-to-wind-turbines-at-balsams/

 

[TEO]

Peakbagger, thank you for staying on top of this and other news from the North Country, and giving us regular updates. You have become a reliable source of information for an area that many of us care about. Thank you!

 

[Stan]

Peakbagger, thank you for staying on top of this and other news from the North Country, and giving us regular updates. You have become a reliable source of information for an area that many of us care about. Thank you!

Ditto! Our resident Kiplinger Letter of the North.

 

[peakbagger]

Les Otten needs some loans

http://www.berlindailysun.com/newsx...ek-backing-on-40-m-of-balsams-143-m-project#/

 

[egilbe]

If the loans are guaranteed by the feds or state agencies, where's the risk to Otten if it folds? Taxpayers pay for it and try to sell it to another investor, probably at a loss? Public money shouldn't be used for private investors.