Balsams Update - Go Big or Go home

[peakbagger]

He did more than testify and support NP, he reportedly threatened a local development board that if they didn't change their stance on NP that it would kill the Balsams project.

I have run into developers in the past and they generally are quite "fluid" on their ethics, If they pull it off they get a huge paycheck and quickly cut and run before the consequences of their compromises come to light, if they don't, they end up like Jay Peak and Burke https://vtdigger.org/tag/bill-stenger/#.Wdn_aIeGOM9.

 

[Raven]

Another good part:

Prior to the loan, had Otten publicly supported the project? Reimers asked.

“I don’t have a recollection,” Otten said.

 

[peakbagger]

Tearing down the house

http://www.berlindailysun.com/newsx...-balsams-plan-calls-for-demolishing-dix-house

One of the big hits to the project was the loss of historic tax credits when the prior owners (one sold out and the other may be a minority in the new venture) tore down historic buildings without the proper permits losing some of the potential tax historic credits. Realistically the old Dix house structure wasn't designed or built to any known code and I expect they would have essentially had to build a new structure under the old shell plus deal with lead paint, asbestos and other legacies of the past. Its probably a good business move and far better for life safety but another case of holding back information until the last minute from authorities and the public.

Getting kind of cool up north for the start of construction this fall, I expect it may be more of the start of destruction at best If the NP permit goes the wrong way it may end up being a empty field after all.

 

[Vermonster]

Somehow they are still claiming a possible start of "late this fall". I guess technically December 21 is still fall.
Source: http://www.pressherald.com/2017/10/13/financing-delays-redevelopment-of-balsams-resort/

Financing delays redevelopment of Balsams resort
DIXVILLE, N.H. – An ongoing resort redevelopment project in the New Hampshire town of Dixville has been delayed because of changes in financing.

The Caledonian-Record reports The Balsams Grand Resort project spokesman Scott Tranchemontagne says delays have been caused by updates on an appraisal. Northern Bank and Trust, the project’s chief lender, still has to submit a loan application to the New Hampshire Business Finance Authority.

The BFA will review the appraisal before it is approved. The process could take up to two months.

 

[peakbagger]

Ski Area Expansion delayed

http://indepthnh.org/2017/10/26/balsams-key-plan-to-expand-ski-slopes-slips-behind/

 

[srhigham]

BALSAMS RESORT REDEVELOPMENT TAKES MAJOR STEP FORWARD ON FINANCING

December 19th, 2017

Project’s Lead Lender Submits Application to NH Business Finance Authority

DIXVILLE, NH – “The Balsams Resort redevelopment has taken a significant step forward on financing, just weeks after announcing it has received pre-sale deposits representing more than $26 million of real estate. The project’s lead lender, Service Credit Union (SCU), has applied to the New Hampshire Business Finance Authority (NH BFA) for consideration of a state-backed guarantee on the credit union’s $28 million loan to the development.

The NH BFA credit enhancement is an integral component of The Balsams proposed $170 million renovation and expansion of the iconic Dixville Notch resort. The consideration of this credit enhancement was enabled by the passage of Senate Bill 30 in 2015, which allows for the creation of a tax assessment district in Dixville, whereby property taxes paid on all future Balsams real estate components will service the SCU loan.

‘With the majority of our permits in hand, and more than $26 million worth of potential real estate sales under deposit, it is exciting to take The Balsams rebirth to this next, critically important level,’ said Les Otten, the project’s lead developer. ‘Enhancing our credit through the NH BFA was one of the first recommendations proposed by the NH Division of Resources and Economic Development when they pledged to support The Balsams redevelopment years ago. We look forward to working with Service Credit Union and the NH BFA during the review process.’

Otten added that it is important to note that neither the State of New Hampshire, nor the NH BFA, are being asked to provide funds. Service Credit Union is issuing the $28 million loan, based on its independently-conducted diligence and underwriting process. The NH BFA’s review and analysis will result in whether to recommend the application, and thereby the project’s overall viability, to the Executive Council. The Executive Council will then consider and vote on the NH BFA’s recommendation.

Otten said The Balsams is very pleased to be working with Service Credit Union, a New Hampshire-headquartered institution with solid experience in the resort arena, having recently provided a construction facility loan for the development of RiverWalk at Loon Mountain in Lincoln, NH.

Included in the NH BFA application are a work force study commissioned by PolEcon Research and an appraisal/feasibility study by CBRE Hotels on the value of the improvements that will be made to The Balsams property, and the overall feasibility of the redevelopment plan presented.

The work force study concludes that there is sufficient available labor in the region to meet the staffing needs of the redeveloped Balsams Resort. It determined that the project will have a positive impact on workers in the region and provide a number of public benefits, including:

• Putting people to work – The Balsams Resort will increase the size of Coös County’s labor force and raise the below-average labor force participation rate, especially among younger, working-age residents.

• Job diversity – The Balsams Resort will create 600 construction jobs during Phase 1. Once operational, The Balsams Resort will employ roughly 400 people with the potential of creating more than 1,500 jobs once the build-out is complete, as well as indirect jobs in the communities around Dixville.

• Good wages – Wages will average more than $17 per hour and the median wages are above the median for all of Coös County.

The CBRE study states, ‘Based on the detailed market analysis performed herein, there is absolutely no question that a market exists for the creation and operation of an upper upscale/luxury, four-season resort on the grounds of the subject property. Equally important to note is that there is sound reason to believe that the for-sale real estate components as contemplated herein as part of Phase 1A and 1B, will be received well in the marketplace.’

In addition to SCU’s $28MM loan, the project’s contemplated financial structure includes developer equity, construction debt, an EB-5 investment as well as equipment lease financing relating to the ski expansion.

The Balsams first phase will include renovating the historic Hampshire and Hale Houses, reconstructing the historic 1866 Dix House and building a new Lake Gloriette House hotel and conference center, Nordic Baths and Spa, Marketplace, and an expanded ski area. Construction in The Balsams village may proceed independently from work on the ski area.

The Balsams project has been rigorously reviewed by various local, state and federal agencies and has received the following legislative and permitting approvals:

May 2015 – The NH Legislature passes and Governor Hassan signs SB 30, allowing the NH Business Finance Authority to consider a $28 million loan guarantee for the project’s redevelopment district
July 2015 – NHDES – 401 Water Quality Certificate to withdraw water from the Androscoggin River for snowmaking
November 2015 – Coos County Planning Board and Delegation – zoning amendment approvals
December 2015 – Coos County Planning Board – Planned Unit Development approval
December 2015 – NHDES – Wetland Permit
December 2015 – U.S. Army Corps Permit
June 2016 – Coos County Planning Board – Hampshire and Dix House Site Plan and Subdivision Approval
June 2016 – NH DES – Shoreland Impact Permit
July 2017 – NH DOT – Driveway Permit
August 2017 – Coos County Planning Board – Amended Hampshire and Dix House Condominium Site Plan Approval
September 2017 – Coos County Planning Board – Lake Gloriette House Condominium Site Plan and Subdivision Approval

About The Balsams redevelopment:
The Balsams redevelopment proposal includes reconstructing the historic Dix House, and renovating the historic Hampshire and Hale Houses, as well as restoring the acclaimed Panorama golf course and clubhouse designed by pioneering golf course architect Donald J. Ross. The Balsams Lake Village, which will encompass the Dix and Hampshire Houses, will feature a new Lake Gloriette House hotel, a 600-seat conference center, Nordic baths and spa, a performing arts center and an open-air marketplace. The resort’s fine cuisine and chef training programs, known worldwide, will return through multiple culinary options around the resort. All will embrace the farm-to-table concept by sourcing locally-grown meats, produce and dairy. The plan also includes expanding The Balsams Wilderness Ski Area into one of the largest, most technically advanced ski resorts on the East Coast.”

 

[Hillwalker]

Looks like the ducks are lining up. Good to hear.

 

[Vermonster]

One has to question why the lender mentioned by Otten and crew for more than a year (Northern Bank & Trust) is no longer in play. It hardly seems like Service Credit Union is really just a "better fit" since they only came to the table with $28 million as compared to the $100 million Otten said they would get from Northern. I have no inside information, but assume Northern said no thanks. Service has zero risk in lending the $28 million since that will only happen if the BFA offers them a guarantee.

If Balsams is left making up the $72 million from more expensive sources (perhaps the preferred equity mentioned in the release), I would imagine it will make a positive net profit line more difficult to achieve for the future operators.

 

[Stan]

I'm not sure why we have to question the source or amount of the financing but there could be a hundred reasons to chose one lender over another. It might entail rates and terms, required security or perhaps better timing the need for capital. Perhaps it reflects a greater than projected success of pre-sales. Whatever the case, its none of my business unless I chose to acquire a "unit", which I decided against since I'm a fee simple kind of guy. I must say a stake in the Balsams is a very intriguing prospect but for my taste it sounds like it'll be too much of a winter Disneyland,

Having developed real estate of a modest scale, my hat's off to the developer for keeping a very complex deal on track. Frankly, I'd rather be postholing!

 

[skiguy]

Looks like the ducks are lining up. Good to hear.

I agree...bring it on!

 

[peakbagger]

Note this is the first mention of an EB-5 investment in the mix. Lots of foreigners with money they are trying to offshore that want to buy a visa with few questions asked. After the Jay and Burke fiasco, I expect there are still folks looking for the golden ticket. The hassle with ski resorts is they rarely can meet the long term permanent job requirements required of an EB-5 investment.

Looks like the fall construction promised earlier in the year has shifted to winter or spring of 2018, not like it hasn't happened before. Given that the NP project is predicting a major labor shortage in the region if it gets approved, I expect Balsams will be paying a premium for folks to support the first phase of construction.

 

[peakbagger]

Update in today's Colebrook Chronicle http://www.colebrookchronicle.com/Feb162018.pdf

Short version, they will start work as soon as the state loan guarantee is in place in the "spring". There is state board meeting on March 19th where they hope to get the loan guarantee approval based on their proving the finances of the project are adequate. They are decidedly optimistic that will occur on the 19th. They then will need approval by the governor and executive council "that may take awhile". The executive Council is always a wildcard but I expect that they will make sure they get the attention they feel they are due proving that they are looking out for the state and then vote to approve the loan guarantee.

Note that that just gets them the okay to build the resort side of the complex, they still need final permits for the ski area which could have been worked on long ago but required spending some of the developers cash for required studies. I still have heard no resolution on substantially reducing the ice exclusion zone for the wind farm. Without that the ski area build out loses a lot of what little higher elevation ridgeline they have.

 

[Scubahhh]

From today's paper:
https://www.conwaydailysun.com/berl...cle_bdd65966-1741-11e8-935a-578e0dc4b644.html

Any comments about those roads?

 

[peakbagger]

Not a lot of controversy, these are the roads immediately adjacent to the main resort complex and I expect the Balsams owns or controls all of the abutting land. I expect the developer would prefer to own the road private as its a lot easier to alter them as needed than being under state control. The state is probably glad to get rid of the plowing an maintenance of those roads as they only serve the resort. Plus it will allow the developer to keep the "riff raff" out (like grubby hikers) if they wish. A lot easier for security while the project gets built, even though they have badly trashed the site, it still may attract sightseers (and folks looking to steal stuff) so having a couple of construction gates back at RT 26 is a lot easier to manage

There is at least one other much longer road transaction called Country Club road which was far more controversial. The developer wanted the state to rebuild it and upgrade it to current standards and then transfer it to the developer as a private road. That is done when urban contract zones get moved around where towns take over sections of state roads but it is highly unusual for this to happen with a private developer. Les was pushing for this two or three years ago when he was breaking ground "any day" and the state and county was ramping up for it but at some point when it was apparent that the project was not going as quickly as promised, the state and county held off until certain conditions on progress were met. I dont know if its still on the table but there was local pushback as the locals felt the money that the state and county scraped up would be best spent on public roads.

 

[peakbagger]

The vote for the state loan guarantee got postponed another month until Mid April. They were asked to supply addition information and there are additional questions for the NH attorney general.

I would speculate that the start of construction in April is postponed. Given the snow pack I would expect the delay is not a major loss although its one more PR hit. There has been no indication in local papers of any firm advertising for construction workers. Based on the slow progress of the Glen House hotel, I would expect there is skilled contractor shortage in the area so I would have expected heavy advertising to staff the Balsams work.

 

[peakbagger]

Another months delay https://www.conwaydailysun.com/berl...cle_6c507a0c-411e-11e8-9259-bfb1e3f9ea73.html

 

[peakbagger]

Another month, another delay (again)

https://www.conwaydailysun.com/berl...cle_797a6e42-5e8b-11e8-9425-eba68d9d892a.html

Beginning to look like the Balsams doesn't have their ducks in a row or they don't want to reveal information to the BFA. Or possibly they are still inexorably linked to Northern Pass and the NP appeal is dragging on? Going to be tough to staff a construction job mid summer as the labor market is tight and most folks have already lined up a gig for the season. There is supposed to be big greenhouse project starting in Berlin this month that will probably suck up a lot of folks.

 

[peakbagger]

Another month and now a change in tactics

https://thebalsamsresort.com/balsams-update/#more-4418

 

[skiguy]

Another month and now a change in tactics

https://thebalsamsresort.com/balsams-update/#more-4418

How is this a change in tactics? Hasn't the application to the BFA been a part of the process all along? Albeit it should have happened months ago maybe based on the original timeline of the project. But a change in tactics is debatable.

 

[peakbagger]

The original BFA deal was negotiated early on in the project. The developer makes certain commitments and the state guarantees a loan. Up until this change the deal was the same. Now the developer wants to explore all options
On Monday, June 18, the BFA’s board of directors had been expected to vote on the Balsam’s bond loan request, but the Balsams developers asked the BFA for additional time to ‘explore all options’ with the the BFA, said Balsams project spokesman Scott Tranchemontagne.

Potentially a big difference if they change the terms by "exploring all options".