Balsams Update - Go Big or Go home

[skiguy]

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".

Thankyou for the clarification. Probably a tactic to keep the dialog open and in the news.

 

[Scubahhh]

This from The Balsams' press release:

In a statement, lead Balsams developer Les Otten said, ‘We have worked productively with the BFA over the last several months and would like to continue those discussions to explore potential options to make sure we find the best solution for the project, but also the state. As we have learned more about the BFA’s programs and protocol, we have developed potential scenarios that warrant further discussion. It is prudent to explore those options thoroughly, as the BFA’s support is critical to our project’s success.’[/I]

My bet is that they don't think the BFA would approve the guarantee and see it as a one-shot deal, and so want to delay.

Just my 2¢...

 

[peakbagger]

Balsams withdraws loan application

http://www.nhpr.org/post/balsams-developers-withdraw-application-28m-loan-guarantee#stream/0

I expect with the feds plan to sell Jay Peak this summer for whatever the market will pay (with Burke in the wings for a future sale), Saddleback back in play plus a slowdown in Chinese real estate investments and of course the Northern Pass debacle, coming up with a new financing plan may take awhile.

 

[srhigham]

FOR IMMEDIATE RELEASE

DIXVILLE, N.H. (August 27th, 2018)

"The Balsams Resort redevelopment team, through its lead lender Service Credit Union (SCU), has withdrawn its application for a loan guarantee through the New Hampshire Business Finance Authority (NH BFA). Despite collectively working with all parties for several months to find a collaborative solution to advance a $28 million Tax Assessment Bond with a State of New Hampshire Loan Guarantee, the conditions ultimately required by the Authority do not allow SCU and the Balsams to proceed.

SCU, the state’s largest credit union, began working with The Balsams in the spring of 2017, filling the role of lead lender relating to the $28 million loan. An application was submitted by SCU to the NH BFA in December 2017. After spending many months working through the Authority’s process, the withdrawal results from positions taken by the NH BFA on loan guarantee conditions that were unfortunately not contemplated by The Balsams and are inconsistent with its historical understanding of the proposed transaction."

To learn more, please feel free to click here <http://click.icptrack.com/icp/relay.php?r=28923762&msgid=236791&act=XJT3&c=1541321&destination=https%3A%2F%2Fthebalsamsresort.com%2Fbalsams-withdraws-bfa-application%2F> to read the entire press release.

Sincerely,
The Balsams Team

 

[Vermonster]

Some additional details in the story @ NHBR: https://www.nhbr.com/August-31-2018/Balsams-loan-guarantee-application-withdrawn-from-BFA/
Tranchemontagne said he couldn’t “go into specific detail” about those conditions. “I can just tell you that what was promised to us in terms of BFA support back three years ago did not materialize. The conditions were different.”

In a statement, the BFA defended those conditions, saying that agency “only asked for assurances from the developer that were necessary in order to protect New Hampshire taxpayers from losing $28 million.”

In the statement, Dick Anagnost, chair of the BFA, said the agency “worked very closely with both the applicant, Service Credit Union, and the Balsams team throughout the application process. Unfortunately, since the developer wasn’t willing to meet the normal and customary conditions that are required as part of the regular application process, we could not in good conscience risk taxpayers’ funds for a private venture with no assurances of repayment in the event the project was not successful.”

 

[peakbagger]

This is a tough one for the area. The projects timing lined up with a sustained real estate boom that is starting to sputter. It could be the "straw that broke the camels back". Many folks along the RT 3 corridor centered around Colebrook were most dependent on the old Balsams and were banking on the new project. I expect many including myself figured the financing was a house of cards but that ultimately the investments would be made in the resort and then the original developers would cash out and somehow precipitate a financial reorganization so that the resort could keep operating on sustainable debt load. The Jay Peak mess is depressingly a potential parallel, albeit with less entities to sue and get settlements. The only way to make the Balsams project viable is to make it big so it can be developed as destination resort as compared to weekend resort due to the long distances and poor highway access from major markets. It does have the potential to be supported by the "millennial" approach to recreation which is spending on experiences rather than assets, but the business model was predicated on that someone with cash was going to want to buy the units to begin with.

There has been haggling over the BFA financing since early in the project. The BFA has consistently asked for additional information to the application that the developer was unwilling or unable to provide. Pure speculation on my part is that one of the sticking points was transparency to the public, which generally is not something a developer wants to reveal. The usual sticking points in a complex deal is who holds the most senior debt and how does the revenue flow out to the developers and debtors. Generally a developer puts a minimum amount of their own money into a project and they put in place methods of getting their money out quickly. The banks/credit unions are desperate for investments that pay more than T bills so they are willing to lend but they in theory have strict policies on the risk they are taking. The one exception to that was the Northern Pass money, in the final offer to the SEC it became obvious that the loans were effectively bribes to various entities. NP wrote the money off as a cost of doing business. If the loans got paid they went back into an economic development pool controlled by NP. I expect that this debt became far less "senior" to Service Credit Union's investment which means SCU get paid first if the project fails. With NP money out of the picture I expect the problem is they need some entity with big pockets that is willing to take a back seat to SCU.

Interesting to note that the current governor was involved for many years with the Waterville Valley resort and he has been very hands off on this project.

 

[skiguy]

Interesting to note that the current governor was involved for many years with the Waterville Valley resort and he has been very hands off on this project.

With all do respect Sir I happen to be a supporter of the Governor and find this comment to be politically offensive. Let's all be transparent here and stick to the facts of the matter within your thread please.

 

[peakbagger]

Not sure where you take offense. I am stating the truth. The governor was involved with the Ski resort ownership prior to running for office. He also has said little with respect to the Balsams project prior to and during his tenure despite it being a major economic project for the Northern Part of the state.

 

[JoshandBaron]

Not sure where you take offense. I am stating the truth. The governor was involved with the Ski resort ownership prior to running for office. He also has said little with respect to the Balsams project prior to and during his tenure despite it being a major economic project for the Northern Part of the state.

It's an obvious conflict of interest, as it has been with every other ski related project that has come before the Executive Council from which he has abstained. To be fair, he did weigh in previously saying the loan guarantee didn't make sense.

 

[skiguy]

Not sure where you take offense. I am stating the truth. The governor was involved with the Ski resort ownership prior to running for office. He also has said little with respect to the Balsams project prior to and during his tenure despite it being a major economic project for the Northern Part of the state.

It's about transparency and a potential conflict of interest. Once again I find your statement with it's underlying political tone offensive and not congruent of the guidelines of this board.

 

[peakbagger]

My understanding is that the governor was no longer connected with Waterville valley prior to his election as governor. Not sure if that was so when he was on the executive council.

I guess Ski Guy feels that there is underlying political tone and I do not.

 

[JoshandBaron]

My understanding is that the governor was no longer connected with Waterville valley prior to his election as governor. Not sure if that was so when he was on the executive council.

I guess Ski Guy feels that there is underlying political tone and I do not.

He resigned from WV after he won the election.

 

[ChrisB]

He resigned from WV after he won the election.

Here is an interesting (two-year-old) article about the Govs impact on the resort during his brief tenure as CEO.

Many of his expansion plans were delayed/thwarted due to regulatory process and procedures. WWV is a private corp so the financials are unknown.

But, "facts is facts" and we got a governor whose family is in the ski biz. I doubt they give a hoot about the Balsams. It's in another time zone from their operation and they have problems of their own at WVV.

cb

 

[TJsName]

Here is an interesting (two-year-old) article about the Govs impact on the resort during his brief tenure as CEO.

Many of his expansion plans were delayed/thwarted due to regulatory process and procedures. WWV is a private corp so the financials are unknown.

But, "facts is facts" and we got a governor whose family is in the ski biz. I doubt they give a hoot about the Balsams. It's in another time zone from their operation and they have problems of their own at WVV.

cb

I'm be curious how ski resorts view competition in the industry. I'd think that anything that good for the NH ski industry would be good for most reputable places, but I'm not familiar enough with the industry to get a feel for the answer.

I can tell you that going skiing in CO (I first skied at Vail in 2002 I believe) has made me want to visit other ski areas other there - and I have: Winter Park, Steamboat, A-Basin, Keystone, Loveland, Cooper, Copper, Breckenridge, and Beaver Creek. I'd argue that Vail's success is what brought me to the other resorts.

 

[TJsName]

It's about transparency and a potential conflict of interest. Once again I find your statement with it's underlying political tone offensive and not congruent of the guidelines of this board.

Can you expand upon what you mean by 'transparency and a potential conflict of interest'? It's unclear what issues with transparency and conflicts of interest you are referring to.

I found a quote that indicates the Governor supports the idea, but given the lack of specifics (and now the withdrawal of the BFA application), there might not be a lot the Gov. could weigh in on. Given the Gov.'s potential conflict of interest, being quiet is probably a good strategy. Ultimately he would have to approve the Loan, so a decision was coming down the pipe that appears will no longer need to be made.

The statements about the Gov.'s involvement with WVV, and hands-off approach with Balsams both appear to be factually accurate. I'd agree with the opinion that it is an "interesting" note, as I'm sure people would have wanted to know the reasons behind the Gov.'s decision - regardless of the decision itself.

As for any insinuation of impropriety on the Gov.'s account, since it's not clear what would benefit the Gov more (Balsam's failure or success), I think it's hard to assume any intent one way or the other from the statement. That's just my interpretation of it though.

 

[peakbagger]

Pressing on past real or imagined slights, the caption on this Globe article adds a bit more clarity to the reason for turning down the loan guarantee

State officials say developer Les Otten’s business plan offers no assurance the loan he seeks would be repaid

https://www.bostonglobe.com/busines...ers-setback/m9EPAmTAH1uXFA1mwEYznI/story.html

I would like to see the source that the Globe used but this would be a non starter for the state of NH. The original claim was the loan would be secured by the tax revenue on the new construction. Even if the resort owner went belly up, there would still be taxes due to pay the loan. I envisioned a TIF district being created where the resort pays the taxes into the TIF and the loan payments are made from the TIF. I expect there were other approaches to making sure it gets paid but unless the state backed debt was senior debt backed by a secure cash flow versus subordinated I don't see how the state would have signed on.

 

[skiguy]

Pressing on past real or imagined slights, the caption on this Globe article adds a bit more clarity to the reason for turning down the loan guarantee

I don't get offended by much and I have been called just about everything under the sun but I don't care, so I am not the best judge of what is offensive (I have been told that I am an insensitive asshole) so my question is "Is this somehow offensive or is it just funny?" I say it is great and hysterical.

 

[Quietman]

As a NH taxpayer, I welcome this decision. The proposed resort is a bunch of 900-1200 vertical trail pods, unless I am missing something. Lots of acres, but not so much continuous vert. SR is similar, but has pods with 1,500 plus vert. I welcome Les to prove me wrong, but this was a pie in the sky from the start as far as I can see.

 

[dug]

As a NH taxpayer, I welcome this decision. The proposed resort is a bunch of 900-1200 vertical trail pods, unless I am missing something. Lots of acres, but not so much continuous vert. SR is similar, but has pods with 1,500 plus vert. I welcome Les to prove me wrong, but this was a pie in the sky from the start as far as I can see.

As a taxpayer, who don't like the mountain setup?

 

[Quietman]

Ok, I'll simplify. I don't trust Les with $28 million, and the layout for the resort is lacking any serious vert that would entice skiers to drive 1 1/2 hours north of 93 or 1 hour past SR on 2 lane twisty roads in winter.

Gee, why wont a bank lend him the money unless the state guarantees it? Too risky!

Just my opinion.............