Big chill: Biscuit Run presaged Wintergreen money mess
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The slopes as seen from Charlottesville.hawes spencer
A pile of debt, another warm winter, and the state's unwillingness to accept a dead appraiser's valuation for millions in already-spent conservation tax credits have pushed the company running Wintergreen Resort to the brink of insolvency, as reported Monday morning in the Nelson County Times.
Despite– in a deal reminiscent of Biscuit Run– scooping up $4.6 million from taxpayers four years ago, Wintergreen Partners Inc. has reportedly defaulted on its loan from Bank of America and now implores members to voluntarily lend it $6 million to save the company from bankruptcy.
Another shocker is that Wintergreen joins a host of Virginians in parlaying empty land into cash, part of Virginia's generous conservation tax credit scheme that transfers over $100 million a year from taxpayers to owners of large tracts. The scheme is the centerpiece of ongoing litigation between the state and a team of land speculators who failed to convert an Albemarle tract called Biscuit Run into a housing development.
At Wintergreen, a company subsidiary found an appraiser willing to claim in 2008 that the 1,422-acre peak called Crawford's Knob was worth $11.5 million. Like the owners of Biscuit Run, Wintergreen turned that valuation into several million in cash. Also like Biscuit Run, the state later cried foul.
With the original appraiser having reportedly died, a state-hired appraiser determined that Crawford's Knob was worth just one quarter what Wintergreen and the dead man– whom Wintergreen would not identify– were claiming. Alas, Wintergreen already converted the original appraisal into $4.6 million in tax credits, with much of that money paying down debt, according to Wintergreen's own summary of the situation.
A Hook email to the general manager on Wednesday the 30th of January, the date of a revealing email to members, was not returned until February 6, the day the revelations were publicized. The official statement from Wintergreen notes that the company has lost its line of credit, its ability to borrow money. Besides the plea for a $6 million loan, other emergency measures include an accelerated billing of homeowners for their annual dues and chopping $1.5 million from the budget beginning July 1.
Wintergreen notes that it successfully raised $7.5 million in 2009 with the new debt offering to be presented to "qualified investors" around March 1.
What's unknown at this time is the fate of the tax credits. Wealthy individuals paid Wintergreen $3.5 million for the $4.6 million in tax credits to reduce their own tax burden. In 2010, the state forced a Fredericksburg company to refund $7.2 million to taxpayers and investors after allegedly overstating the value of land placed under conservation easement.
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Notes: An early online version of the story used the wrong word: solvency for insolvency. Also, this story was edited and augmented for print publication on the morning of February 7. Original headline: "Big chill: Warmth at Wintergreen exacerbates financial mess"
31 comments
Glad I squeaked in some tubing when I did!
Anyone studying the changing migration pattern of birds could have predicted this warming trend for southern ski resorts, and there subsequent financial demise. No amount of snow making equipment can match the power of a changing planet. And some would say - we are to blame.
I've been amazed at the impact up in Canaan Valley this winter. Even with the significant gain in altitude and lack of protection from cold Canadian air.
daily prog article quotes how strong their leadership is however i strongly disagree and would rather classify the winter activities as a leaking chaotic ship at best and cannot fathom the idea of investing money into something so dependent on weather, especially snow sports in a place like va where the best years are really only average. cant comment on the summer activities but i would guess that the winter is the money maker and with that going under the future is, and should be grim.
One is left to wonder how many other inflated appraisals are out there.
Quite a discrepancy in this case, as was seen in the Biscuit Run deal
From the Nelson Times:
In 2004, the Crawford’s Knob conservation easement was assessed at $11.5 million. This appraisal led to $4.6 million in tax credits for the resort.
In November 2008, the resort was required to pay $2 million to Bank of America to reduce the approximate $10 million debt owed to the bank. Wintergreen Partners sold the tax credits for net proceeds of about $3.55 million, which was used to pay the bank.
The land was reassessed by the commonwealth’s appraiser last summer for about $3.15 million, which implies that some of the tax credits sold in 2008 were “improper/invalid,” according to the letter.
They're making snow, and the conditions are the best they've been all winter. Let them figure out the money, I'm going skiing!
Much of the residential or vacation homes at Wintergreen appears to be overpriced right now. It's time for a reality check. It's not as out of wack as Charlottesville, but then it's not Charlottesville.
Actually, if you're a skier these are perfect conditions - cold enough to make snow at night and warm enough to stay out all day . One other factor that may be part of the equation is the high price of a Iift ticket and the sputtering economy - how about half price days ?
The lack of cold/snow is only a small part of the problem, the resort has had tough winters before this. Years of poor management is the real issue. Home owners don't make for good resort managers.
This Wintergreen conservation tax credit smells eerily similar to that of Biscuit Run. In the Biscuit case we know what that property was worth (conservatives involved seem to either not know or to conveniently forget the relationship between supply, demand and valuation). And we know that the appraisal purchased by its investors was grossly inflated. Pure and simple, it was tax fraud.
Wintergreen sought appraisal for its Crawford’s Knob parcel that came in at $11.5 million, making it eligible for $4.6 million in tax credits. However, according to the Wintergreen email titled “Summary of Conservation Easement Issues,” the resort “could not use those state tax credits” and so it” sold them to three brokers for an aggregate amount of approximately $3.5 million.” That money was used to pay down debt with Bank of America (as Nancy Drew points out) and to provide “additional liquidity to” Wintergreen Hospitality Partners.
See: http://direct.wintergreenresort.com/hostedemail/email.htm?CID=1618935583...
The Virginia Department of taxation commissioned its own appraisal –– a “separate valuation of Crawford’s Knob” –– that came to a far different valuation, only $3.15 million. That is, the Wintergreen valuation was nearly 4 times that of the state. Wintergreen is appealing, and plans to seek a third appraisal “to support its original appraisal.” (Note: half of all Wintergreen property is already in conservation easements.)
One has to wonder when the time will come that state leaders –– like Bob McDonnell and Ken Cuccinelli –– and legislators (like Rob Bell and Steve Landes, and Creigh Deeds) will stand up for the principles of equity and fairness in taxation. Deeds has at least sponsored legislation that offers a bit more transparency into conservation easements. But McDonnell, Cuccinellli, Bell and Landes have uttered not a peep of support.
Rob Bell wants to succeed Cuccinelli as Attorney General, and Cuccinelli wants to become governor. We all know just how reactionary and dogmatic Cuccinelli is. Bell is as bad. In the name of “helping families” (wink), Bell would expand the death penalty, undermine the state pension system (and call it “reform), restrict voting rights and reproductive choice, expand tax credits for school “choice,” and resurrect the discredited theory of nullification.
Biscuit Run and Wintergreen are but two examples of what might be called conservation easement abuse. Surely there are more out there.
Birder- Just when you start thinking that the tropics were making their way to Wintergreen, some British scientist using NASA's data predict the next little ice age is on its way... I'm guessing that isn't the change you are referring to.
"brink of solvency" to mean they have been in the red but are now closing in on positive numbers?
tomr - are you referrring to the Daily Mail article was linked last week by the Drudge Report? If so, I hate to tell you, but the article was not correct. Here are the recent findings from the Met Office (aka the British scientists) website that the Daily Mail misquoted.
http://www.metoffice.gov.uk/news/releases/archive/2011/2011-global-tempe...
29 November 2011 — This year is set to be the 11th warmest in a record spanning more than 150 years, according to climate scientists from the Met Office and the University of East Anglia.
The global average temperature from HadCRUT3 for January to October 2011 was 14.36°C, 0.36°C above the 1961-1990 long term average.
The latest figures from the HadCRUT3 record supports those already published by NOAA and NASA GISS which are all run independently.
2011's placing near the top of temperature datasets which go back to 1850 continues a long-term warming trend in global climate.
...
"However, global temperature so far this year is likely higher than it was during the La Niña events in 2008 and 1999-2000 - indicating a continuing warming trend combined with natural variability."
Phil Jones, Director of the Climatic Research Unit at the University of East Anglia, said that due to natural variability we do not expect to see each year warmer than the last, but the long-term trend is clear.
"The HadCRUT3 record, supported by the other records, is one indicator amongst several which provide overwhelming evidence that the climate has warmed," he said.
...
http://www.metoffice.gov.uk/news/releases/archive/2012/solar-output-rese...
23 January 2012 - New research has found that solar output is likely to reduce over the next 90 years but that will not substantially delay expected increases in global temperatures caused by greenhouse gases.
Carried out by the Met Office and the University of Reading, the study establishes the most likely changes in the Sun's activity and looks at how this could affect near-surface temperatures on Earth.
...
tomr, you are referencing a terrible mangling of a UK press release by a British tabloid. There is pretty much nil chance of a new ice age, but a 95% chance of continued global warming. However, that said, it's too early to pin the blame for this unusually warm winter here on global warming. While it's been warm here in the US, Europe has been shattering record lows and snowfall records. It will be several months before we can properly compute whether the globe was warmer than average and by how much. This year's warmth is mostly a weather phenomenon, not a climate phenomenon. However, years like this will become increasingly common in the future.
I like global warming. The polar bears will just shed a little bit and mate with the black bears and we can have a lot more brown bears like Yogi and boo boo.
The tar sands will defrost in canada and we will have more oil.
All the rich people who live in malibu will have to buy the houses that are now a block back from the beach
and we can grow bananas is South Carolina
bring it on....
Also... the state requires that all properties in VA be assessed at market value so what number were they paying taxes on and why didn't the state compare that number to the appraisal before cutting a 7 million dollar tax credit?
can you fix the link to the 2010 story about the Fredericksburg company? It doesn't work.
It's a shame that our right wing politicians are so busy in their ideological pursuit of climate change researchers that they have not the time to investigate conservation easement tax fraud.
@ Bill Marshall
You left out the part about all the pockets of frozen methane gas that will thaw and seep out into the atmosphere and the effects that will have. ;) And the effects of the melting peat bogs throughout the world's tundra areas.
While the scientific establishment has been diverting everybody's attention for decades on the dangers of carbon, they overlooked the dangers of methane. For more information on how methane factors into the environmental equation, and the earth's history of methane levels and what it did to the climate, check out a book called "With Speed and Violence." Though I'm sure there are many more sources of info. on this.
(btw "With Speed and Violence" isn't solely about methane. It's a book researching whether climate changes are actually happening, of which methane is one of the gazillion subjects covered. It's available at the downtown library.)
Where is the transparency, who bought these tax credits ?
There is ample evidence the tax credit program is being abuse with trumped up land valuations - time for Senator Deeds to stop it and stand up for fair tax policies.
"What's unknown at this time is the fate of the tax credits. Wealthy individuals paid Wintergreen $3.5 million for the $4.6 million in tax credits to reduce their own tax burden "
Wow,
This report is so far off truth that it's almost hard to believe it's actually in print.
Its a good thing The Hook is so insignificant or else I suspect somebody would be filing a suit for damages.
People, don't believe something just because it has been printed. Do your own homework and you will see the conspiracy theory referenced in the article is a bunch of dung.
I suppose it is worth the price.
@SK what conspiracy theory ?
Wintergreen can convert into a sanitarium for people recovering
from the tropical diseases that will come north with
global warming.
Hey, Pete, you talk about the idiocy of investing in something totally "weather dependent", what do you think FARMING is all about?????
an industry based on snow in the southeast has many fewer factors that can be mitigated than a farm in the same region, I am suggesting that long term there is a diminishing return on wintergreen's product and it's not a sound place to park funding. I understand farming is weather dependent, but in central VA (with gov't help) farming has (and will) continue.
Looks like Wintergreen had a little "gov't help"!
Aldous Snow, what on Earth?? Who's interest are you protecting? And besides, that has NOTHING to do with Wintergreen scamming the populous. Let's stay on topic.
Ski Bum, what do you know that we don't? Here are some links BESIDES the one Wintergreen made Monday:
http://www.wtvr.com/news/wtvr-warm-weather-putting-wintergreen-resort-in...
http://legalnews.findlaw.com/article/06kI39T2d77Rx?q=%22bankruptcy+law%22+OR+%22bankruptcy+case%22+OR+%22bankruptcy+cases%22+OR+%22liquidation+bankruptcy%22+OR+%22pre+bankruptcy%22+OR+receivership+OR+%22rooker-feldman+doctrine%22+OR+(bankruptcy+AND+(court+OR+file+OR+filing+OR+%22chapter+11%22+OR+%22chapter+7%22+OR+%22chapter+13%22)
http://www2.timesdispatch.com/business/2012/feb/07/tdbiz01-financial-pro...
For starters, I know the difference between a loan and a line of credit. Wintergreen doesn't owe one single penny to BOA. All Wintergreen debt is privately held.
I can't say there weren't problems w the states conservation easement program. It appears as if there were. However the problems were on the Commonwealth's end, and that will eventually be proven.
Why in the world would Wintergreen do anything to place it's 40M in assets at risk over 3M in tax relief?
Gotta run......better stuff to do!
I'm amazed at how easily people assume that just because there hasn't been any significant snowfall in town that they don't have snow at Wintergreen. +4,000 feet of elevation and high-tech snowmaking equipment can do wonders, even when the days get into the 50s. Those nights when it's in the 20s have made it possible to get almost half the mountain open and you can go ride and ski your butt off. It's not Lake Tahoe, sure, but it's a 50 minute drive from town.
The Hook should have balanced this damning piece about the business and taxation foibles of the Wintergreen Corporation, and included some facts and info about the fact that, yes, you can still go skiing even when there hasn't been 40 inches of snowfall on Market Street.
the prices on a weekend for a lift ticket are 70 bucks, so not too different from say lake tahoe, alta, taos. the only difference is that you get 14 nub slopes that take 1.5 minutes to get down and a 20 min wait in line for the 4 lifts.
I can't go to Tahoe on a Tuesday night and get 3 solid hours of continuous skiing with no lift lines with a season pass that pays for itself after 5 visits.
And then when I do pay a bunch of money to go to Tahoe for a week, I'll have Wintergreen to thank for my conditioning and stamina to be able to handle skiing at a bigger resort out west.
You seem hell bent on hating, Pete. I'm not interested in your cynicism about this. I like Wintergreen, I like that it's close, and I like the value it provides me. If you want to crap all over that, fine. I'll be on the slopes while you tap tap tap away your hate on the interwebz.