Saving Wintergreen: Ski resort wins 'favorable' ruling and 'transaction'
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This picture was taken during snowy 2009-10, before a pair of warmer seasons helped deplete Wintergreen's finances.photo by hawes spencer
Wintergreen has won a "favorable" settlement on disputed state conservation tax credits but has still gone ahead with the humbling prospect of hiring a turnaround company to help escape a financial morass. The information comes in a new statement sent to key stakeholders at the struggling Nelson County resort.
The resort has been in serious financial straits since a December default on its Bank of America credit line, something originally reported by the Nelson County Times. The situation was "exacerbated by historically warm temperatures last winter," general manager Hank Thiess writes to members of Wintergreen Partners Inc., the many-membered corporation that owns the services and facilities at the resort.
In addition to bad weather, Wintergreen leaders were confronted with a potentially catastrophic financial hit this season after the state raised eyebrows over a deal that put the 1,422 acres called Crawford's Knob under conservation easement. In 2008 the resort submitted paperwork showing that an appraiser valued the land at $11.5 million– and then Wintergreen reaped $4.6 million in tax credits. Following the scandal of potentially grossly over-appraised failed-development-turned-state-park Biscuit Run, the Virginia Department of Taxation hired its own appraiser, who in 2011 came up with a considerably lower valuation for Crawford's Knob: $3.6 million.
Last November, Wintergreen notified members that it hired an attorney and was shopping for an appraiser to support the original $11.5 million valuation. In April, Wintergreen settled with the Department of Taxation and now is tight lipped about the confidential settlement, only to note that it was "favorable."
At the Department of Taxation, spokesman Joel Davison confirms that despite calls for greater transparency, state law still shields such deals. Therefore, taxpayers who shell out over $100 million a year in one of the most generous tax credit programs in the country cannot learn how much they're giving Wintergreen.
Favorable tax credits aren't the only sweet deal Wintergreen Resort gets from taxpayers. In Nelson County, where Wintergreen property owners pay 30 to 40 percent of total real estate taxes, the resort itself pays nada in real estate taxes on its spa, golf courses, and other facilities. That's based on a deal made in the early 1990s.
"It screws us," says Nelson County commissioner of revenue Jean Payne.
However, Nelson Supervisor Allen Hale notes that Wintergreen, providing jobs for about 400 people year round, does pay meals and lodging taxes.
"They're very important to us in terms of revenue," says Hale.
"We have great concerns about the success or failure of Wintergreen because it's the economic driver in the county," says Hale. "They're facing severe financial difficulties."
So severe that the resort stiffed the Wintergreen Property Owners Association for fees and dues the past two quarters, according to the May property owners newsletter, which encourages owners to keep using the facilities to keep dollars flowing.
Many property owners at Wintergreen are members of Wintergreen Partners Inc., and they helped bail out the resort by paying their dues five to six months early, bringing in over $4 million, according to Hale.
"They can't keep coming after their own members for money," notes Hale.
The newsletter mentions that a restructure committee had been formed to come up with transitional plans for the resort, leading some to wonder if a bankruptcy was in the works.
"Usually the term 'restructure' is used when an organization is going through bankruptcy but has considerable assets that aren't liquid," explains Charlottesville-based financial adviser David Marotta. "They can't pay bills and get relief from creditors... I would guess it would mean debt restructure."
According to the new dispatch, Wintergreen has hired a turnaround firm– Alvarez & Marsal– to help it either sell itself, work out a joint venture, recapitalize, or embark on a combination of such options.
"The management and Board of Wintergreen Resort are encouraged," writes GM Thiess, "that a transaction will be closed in the coming months to provide the resort greater financial security and capacity for growth in the future." He declined to elaborate.
Hale points out one big problem with Wintergreen's revenue stream: It makes most of its money during the winter.
"They need new ideas," says Hale. "You can't lose money for three seasons."
In addition to seeing a company with firmer financial footing, Nelson County tax coffers might benefit in the event Wintergreen Partners, which wrangled that tax-free deal, gets sold.
"That deal," says Hale, "would not carry forward to the new owner."
7 comments
Wintergreen could learn some lessons on marketing their assets from Massanutten, though Massanutten has a built in advantage of a portion of their base being time shares... an always revolving source of customers needing to use the facilities and be entertained.
Got caught with their hands in the public till. I'd love to see nature reclaim itself on those slopes.
They didn't get caught with their hands anywhere. They took land that they could have developed, but did not and sold the tax credits. It happens all the time and there is nothing dishonest about it. They had a valid appraisal done when land value was much higher. I personally don't understand how the state can come back years later and say the land has a different value. Of course it does! Land and property values are constantly fluctuating up and down. The state could do this to every land owner who has tax credits.
It behooves Nelson County to remain helpful to Wintergreen if they are already reaping 30-40% of their real estate taxes from the property owners. It will be difficult to find a buyer, much less a joint venture or way to recapitalize right now. But the alternative would be very, very bad, not only for Wintergreen and its owners, but to Nelson County, all employees and vendors to this multi-million dollar enterprise that is the draw to all the ancillary tourism, wineries, etc. in the area.
Glad I sold my condo a few years back. Got a good deal on it when I bought and made some money on it when I sold. Lucky I guess. It is a lovely facility, don't care much for the county government though.
Looks like SP will believe anything. So the VA state grabbags(congress) passes a law that hides the identities of those recieving tax credits and there's nothing shady about that? Paleeeeeeeeese. If Sp believes land values have dropped that much he'll believe anything. Sure they have dropped but not 75%. Good grief man, wake up. Oh, SP must be buddies with someone there who has something to loose, they've already lost their integrity.
Agreed, the State should not be giving money to unknown private entities and not disclosing where the money went, to whom, how much and why was it beneficial to the public to use tax credits this way.