Big chill: Biscuit Run presaged Wintergreen money mess
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.
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"