Saving Wintergreen: Ski resort wins 'favorable' ruling and 'transaction'
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."Read more on: wintergreen resort