Balsams Wilderness State Loan in Limbo

Vote on $28M loan guarantee to save Balsams grand
hotel in limbo

 

By
MICHAEL COUSINEAU

New Hampshire Union Leader

March 28. 2018 9:22AM



CONCORD
— The state Business Finance Authority said it didn’t have all the answers yet
to vote on a $28 million state loan guarantee to revitalize the Balsams resort.




“We
continue to work with the Balsams team to get more information,” BFA Executive
Director James Key-Wallace said Tuesday.



The
finance authority, which met Monday, is being asked to approve a $28 million
loan guarantee from the state of New Hampshire that would require the state to
step in and make loan payments should the $170 million project run into
financial difficulties.



The
finance authority and the project’s lender, Service Credit Union, “are looking
a little bit further into the terms and potential conditions,” said Scott
Tranchemontagne, a spokesman for developer Dixville Capital LLC.



The
state loan guarantee “is a critical component of the financing plan that must
be in place for us to proceed with the rest of financing as proposed,”
Tranchemontagne said.



If the
BFA approves the loan guarantee, then the proposal would go before the
Executive Council.



The next
authority meeting is April 16, but Key-Wallace wouldn’t guarantee a vote then.



“It
really depends on when and if we get the information we need,” he said.



Key-Wallace
said he couldn’t disclose what information the authority was looking for. The
BFA, established in 1992, is tasked with promoting economic development in the
state by assisting businesses to obtain loans that banks otherwise might not
fund, among other initiatives.



The
project’s first phase includes renovation of the Hampshire and Hale houses;
reconstruction of Dix House; and construction of a 400-room Lake Gloriette
House Hotel and Conference Center, Nordic baths and spa as well as a
marketplace and expansion of the former Wilderness ski area.



Other
financing includes $20 million in developer equity; about $35 million in other
equity, including preferred equity from investors; $18 million in equipment
lease financing for the ski area; $53 million in construction financing; and
$15.4 million in funding through the EB-5 Immigrant Investor Visa Program,
which allows foreigners making certain commercial investments in the United
States to be eligible to apply for a green card and permanent residence.



mcousineau@unionleader.com

Comments

  • If I were a NH taxpayer, I'd be praying that the loan guarantee does not come through.  I'm hardly anti-development, I'm just pro-rationality.  This whole project is an economic disaster waiting to happen, being run by people who hardly have a track record that breeds confidence. 
  • If I were a NH taxpayer, I'd be praying that the loan guarantee does not come through.  I'm hardly anti-development, I'm just pro-rationality.  This whole project is an economic disaster waiting to happen, being run by people who hardly have a track record that breeds confidence. 

    I agree. State-supported ski areas in NH and NY are highly accessible, established areas in tourist locales (North Creek is a stretch, but still close to highway as well). Jay Peak, also built on the back of EB-5 money (and we know that tale) succeeds because of proximity to Montreal and huge, diverse buildout). Balsams is WAY off the beaten path and will be a big pull to attract people. NH is right to hesitate on this...
  • I agree. State-supported ski areas in NH and NY are highly accessible, established areas in tourist locales (North Creek is a stretch, but still close to highway as well). Jay Peak, also built on the back of EB-5 money (and we know that tale) succeeds because of proximity to Montreal and huge, diverse buildout). Balsams is WAY off the beaten path and will be a big pull to attract people. NH is right to hesitate on this...

    The problem isn't distance, the problem is demand and passing other areas. Balsams is a shorter drive from Boston than Sugarloaf. Balsalms is also less than three hours from Montreal and barely a longer drive from Portland, ME than the Loaf. If Sugarloaf can be a long term viable resort in its location, then distance is not the issue as Balsams is better positioned for the Boston market from a driving perspective.

    That said, I don't think it is viable. We've seen Burke struggle for years due to the "passing other areas" effect despite being closer to Boston than any ski area in Vermont north of Pico (and also more highway and less state road driving as well). At least when driving to the Loaf, most people aren't passing other areas thinking "I could be skiing already instead of driving..."

    But maybe Burke just isn't a big enough resort compared to its competition and Balsalms plans to be? Then the issue is demand. How many big resorts can New England sustain, especially those that are a long drive from population centers? One Loaf is fine, but two? 

    "If you build it, they will come" might work if there is demand. But if Balsalms is just siphoning off guests from other areas, I can't imagine they will draw enough to make it viable. The industry is struggling to attract new blood while evergreen money ages out. They'll need to cover costs with real estate sales but is there really demand for yet another massive mountainside development?
  • edited March 30
    riverc0il said:



    The problem isn't distance, the problem is demand and passing other areas.




    I know a handful of people who are among the Boston area well-to-do who made annual or semi-annual visits to Balsams because it was what it was, family tradition, etc. They didn't find the distance terrible, and they had no interest in skiing at Loon or Attitash or Wildcat or whatever. A few have moved on to that monster lodge at Sunday River.

    Therein is the problem -- times have changed, people have moved on. I think a lot of the people who were attracted to Balsams are no longer with us, and a majority of society has moved on to other types of ski trips. Just like the grand old resorts in the Catskills that are slowly crumbling, time has passed it by.

    There are still some folks who would gladly drive by the closer areas to ski Balsams but there aren't many of them left, and now they've got some 10 years worth of memories and experiences at new places.


    Like the song says, "used to be's don't count anymore, they just lay on the floor til we sweep them away."

  • edited March 30
    Sugarloaf isn't really a skiing destination from Montreal. The roads from Montreal into Route 27 are terrible. Most of Sugarloafs Canadian visits come from the Maritime Provinces and they do a successful marketing campaign with that area. Balsams may do better with Canadian visits as 1-91 is easier to access and somewhat close to Balsams. Honestly though most Canadians will probably stop at Jay, Smugglers or Stowe.

    My brother lives in Montreal and does most of his skiing at Jay and Smugglers Notch.

    Ski Conditions Report: A detailed report describing the snow conditions on the mountain the day of your visit. Skiers should become familiar with the following snow surface descriptions: Ice: Packed Powder, Slush: Packed Powder, Frozen Granular: Packed Powder , Packed Powder - A thin covering of snow over bare earth.

  • The distance IS a problem, and further, if you have ever driven Rt. 3 north of Franconia Notch, it is SLOW GOING.  I last drove it about a decade ago, and there's just no getting around the fact that it's not a highway and you can't make good time on it.  Between the locals driving at ridiculously slow speeds and you can't pass, to constant speed traps (and I never got a ticket, but the cops were out every time I drove the route and it was clear that speeding tickets have to be a significant source of revenue for those towns), to (at the time) sections of the road being in pretty poor condition with potholes, terrible paving, etc., I just don't see how anyone would ever commit to traveling to Dixville Notch regularly.  PLUS you pass through a number of small towns which also slow down the trip.  We drove to Colebrook several times, and while the trip is at times breathtakingly beautiful, it is not quick or anything close to it.  With so much less time and effort, you can get to just about anywhere else to ski from Boston.   Further, I think Rick Bolger hit the nail on the head. 

    It just seems so obvious to me that this whole project is a boondoggle.
  • Re. Rivercoil's comments:

    I am not privy to insider's information, but someone very much in the know told me a while back that what makes the Loaf viable is the traffic not from Boston, but from Portland ME.  He said, "If they ever lost the Portland crowd, Sugarloaf would be out of business."

    If that's true, than it bodes even worse for the Balsams. 
  • As far as the grand hotel era gone, isn't the hotel at Brenton Woods doing well?
  • newman said:

    As far as the grand hotel era gone, isn't the hotel at Brenton Woods doing well?

    Yes but it's not the same, I've visited it and stayed there and it has changed with the times.  seems much more of a transient, spontaneous crowd.   It's a hotel, and yes it is special and historic, but they're no longer operating like it's 1958.  

    What made Balsams special was, they did operate like 1958.  But who wants that anymore?  

    And if LBO offers up another Loon, as pointed out many times, who wants to drive to the end of the world when they can simply drive to Loon?    

    Still, I wouldn't count the guy out.

  • edited April 2
    Some of the coldest skiing I ever did was at Balsams. My son and I skied there in March of 2008. The weather was sunny and tranquil in Bethel, but Ice Station Zebra once we got past Dixville Notch.

    Single digit cold combined with wind gusts to 40mph made for uncomfortable skiing conditions. To this day it's the coldest and Windiest skiing I've ever done in March.

    Ski Conditions Report: A detailed report describing the snow conditions on the mountain the day of your visit. Skiers should become familiar with the following snow surface descriptions: Ice: Packed Powder, Slush: Packed Powder, Frozen Granular: Packed Powder , Packed Powder - A thin covering of snow over bare earth.

  • My parents once XC skied to Mud Pond there in -40 degree weather.
  • New Hampshire tax payers should be paying attention because they are going to pay either way.  Gov. Sununu has stated we are "open for business", he will not fund this (the Balsams) "in" state project, to the economic benefit to the state.   All the while, the BFA is looking and encouraged to fund out of state projects (with no nexus to the State of NH) SB537 - hiring an out of state contract agency.  Gov. Sununu needs to decide if he supports New Hampshire or if he will use its resources to support other states - huge distraction for the BFA!   Build it and they will come!  Not only the skiers, but the snowmobiles, hunters, hikers, fishers, fourwheelers ... Are we open or not?

    I personally would rather support my historical landmarks and the people of New Hampshire than use our resources for out of state financing with no ties to NH.  People should encourage the financing - it is desperately needed and would promote tourism and "business friendly".
  • Interesting post, thanks for adding a different perspective to our discussion and welcome aboard mreally!

  • Montreal has a ton of options that Balsams has to compete against.
    There are all the small areas north of Montreal on rt 15 leading up to Mt Tremblant. They are close and affordable. There are the Eastern Townships with some awesome big time skiing, also close and affordable. Mt St Anne is about 3-1/2 hours and is mostly highway.
    While Vermont (Jay/Smuggs/Stowe/Sugarbush Valley) certainly gets a lot of visitors from Montreal, Whiteface  (2 hours) and Gore (2:45) also see lots of skiers from Montreal and both are an easy drive off the highway.

    The Balsams has a real tough market to try and crack.
  •  

    Plan to remake Balsams Resort faces
    decision on loan

    Christopher Jensen for the Boston Globe

    Developer Les Otten
    wants to build a hotel, a conference center and condos at the Dixville Notch
    ski area.

    By
    Christopher Jensen
    Globe Correspondent  May 08,
    2018

    For four
    years, developer Les Otten has been trying to resurrect the closed Balsams Resort in
    Dixville Notch. This month he faces what could be a make-or-break moment:
    getting New Hampshire to agree his plan is good enough that the state should
    back a $28 million loan.

    Otten,
    former head of American Skiing Co., said he wants to expand the ski area and
    build a world-class, year-round resort with a hotel, condominiums, and a
    conference center.

    ADVERTISING

    As Otten
    sees, it the Balsams wouldn’t compete with ski areas such as Loon, Cannon
    Mountain or Bretton Woods. Instead, its guests would drive past those venues to
    Dixville Notch, about 35 miles from Canada and home to the famous midnight
    primary vote. Then, they’d stay for several days.

    Advertisement

    The
    project is seen as having the potential to provide a badly needed economic
    boost to the region, which suffered when the outdated and worse-for-wear resort
    was closed in 2011. About 300 full- and part-time workers lost their jobs.

    Bottom of
    Form

    But the question
    Otten has yet to answer is about funding.

    That $28
    million loan is just part of the $170 million Otten needs for the project’s
    first phase. But a state guarantee could boost the plan’s credibility as he
    seeks the remaining $142 million.

    Otten, a
    former minority partner in the Red Sox, declined to be interviewed. But Balsams
    project spokesman Scott Tranchemontagne said a guarantee on the $28 million
    loan is a “critical element of the total package.”

    The
    fund-raising now includes plans to seek funding from investors in India, China,
    Vietnam, and Turkey, said Kelly M. Wieser, manager of the Invest New Hampshire
    Regional Center in Campton, which is working with Otten.

    Under the
    so-called EB-5 program, foreigners who invest at least $500,000 in an approved
    business that will boost the economy and create jobs will receive so-called
    green cards, allowing them and their immediate families to live in the United
    States.

    And Wieser
    said there is good news.

     “We have a commitment from an investor source
    in India,” Wieser said. She declined to disclose the amount and said she will
    not release any EB-5 money for the project until Otten has all of his other
    financing lined up.

    Tranchemontagne
    said Otten has identified funding needs beyond the $28 million loan, and the
    company is “navigating through the various due-diligence processes.” He
    declined to be more specific.

    In 2016,
    Otten told reporters that Northern Bank & Trust, of Woburn, was considering
    a $100 million loan that he hoped would include $28 million guaranteed by the
    state. He said the bank was reviewing his business plan, and he expected
    approval.

    But in
    December of last year, Northern Bank & Trust faded from the picture. The
    Balsams announced a different entity, Service Credit Union, of Portsmouth,
    N.H., was willing to loan Otten $28 million — if the state would guarantee it.

    Asked
    about the change, Tranchemontagne said Service Credit Union was “a better fit.”

  • Part II

    James
    Mawn, president and chief executive of Northern Bank & Trust, did not
    respond to requests for comment. David Weed, an official at Service Credit
    Union, did not respond to a request for an interview.

    The loan
    guarantee first goes before New Hampshire’s 10-member Business Finance Authority, nine of whose
    members are appointed by the governor. If the BFA recommends the guarantee, it
    would then need approval from the state’s five-member Executive Council.

    The
    guarantee was expected to be discussed at a meeting last month but was
    rescheduled for May 21 because the BFA didn’t have all the information it
    wanted.

    “It is an
    active dialogue with many moving parts,” said James Key-Wallace, the BFA’s
    executive director. “Some projects naturally come together quickly, and some
    take longer. The BFA stands ready to vote whenever the project is ready and the
    lender has submitted all the necessary information.”

    Key-Wallace
    said that for him the major issue is whether the project will provide good
    jobs.

    Otten has
    said the project will create 600 construction jobs, and when the resort reopens
    about 400 employees will be needed.

    However,
    some employers in the North Country report they are having problems finding
    workers. In March, the state’s seasonally adjusted unemployment rate was 2.6
    percent. Otten predicted a salary of “more than $17 an hour” would draw the
    needed workers from other jobs.

    State
    economic development officials have strongly supported the project, describing
    it as a rare opportunity for economic growth. They say that if there is a
    problem with the loan being paid off, the state would still benefit, by getting
    part of the resort. Critics have wondered, however, what the state would do
    with a portion of a presumably failed resort.

    Otten
    said there’s plenty of interest in the resort: He has “more than 120 families
    and individuals” who have provided refundable, 5 percent deposits on
    condominiums that represent $26 million worth of future sales.

    But Otten
    doesn’t yet have permission from the state to sell condominiums because he
    doesn’t have all of his financing, said James Boffetti, a senior assistant
    attorney general who heads New Hampshire’s Consumer Protection and Antitrust
    Bureau.

    The
    project has some state permits. In September, the Coos Planning Board approved
    the plan for a $50 million Lake Gloriette hotel and conference center. But
    Otten has yet to begin building anything, despite predictions over the years
    that there would soon be “shovels in the ground.”

    If the
    BFA and Executive Council guarantee the $28 million loan, it is hoped that
    construction would begin this summer, Tranchemontage said.

    The
    resort closed in 2011, and the decaying buildings and about 11,000 acres were
    purchased by two businessmen, Dan Hebert and Dan Dagesse. Hebert owns a
    construction company in Colebrook, N.H., and Dagesse has a string of automobile
    dealerships, including several in Massachusetts.

    Last
    year, Dagesse sold his half to Otten, telling InDepthNH.org that “my involvement with the
    Balsams was purely to get it off the ground” and that it made sense for Otten
    to buy his share. Hebert retains the other half. Dagesse declined to provide
    the selling price.

    Hebert
    and Dagesse have recouped at least some of their original investment. Shortly
    after the purchase, some of the property was logged under a forestry management
    plan one state official described as aggressive.

    There was
    also a public auction in 2012 at which much of the equipment and many of the
    furnishings were sold.

    Christopher
    Jensen can be reached at christopherjensennh@gmail.com.

     

  • Les Otten, Tom Mullen, and EB5 ... what could possibly go wrong???
  • I haven't followed the Eaton Mt. thread. But if Otten doesn't get the loan, maybe he could buy Saddleback. I'm half joking. But I wonder if he has thought about it during all the drama of the Saddleback situation.
  • TomWhite said:

    I haven't followed the Eaton Mt. thread. But if Otten doesn't get the loan, maybe he could buy Saddleback. I'm half joking. But I wonder if he has thought about it during all the drama of the Saddleback situation.

    If he looks at the financials going back the last 10 years, I think he is smart enough to know that Saddleback is not a viable commercial ski area.  Most of the "big players" have looked at it already.

    The Balsams, on the other hand, has an established golf course as well as the beds from the hotel.  While I'm not sure that the Balsams is a viable idea for a commercial venture, IMO it's a LOT better than Saddleback.
  • Was Saddleback making money before the big investments at the end of the Berry run?
  • edited May 12
    newman said:

    Was Saddleback making money before the big investments at the end of the Berry run?

    Probably not and Saddleback was rough shape prior to the Berrys with failing infrastructure and lifts in very poor condition. For better or worse the Berrys investment drew in more skiers and kept Saddleback going for several more years.

    I just wish that the hotel plans and Rangely Chair replacement where followed through by the Berrys. When both where cancelled it was a big reto roh.

    Ski Conditions Report: A detailed report describing the snow conditions on the mountain the day of your visit. Skiers should become familiar with the following snow surface descriptions: Ice: Packed Powder, Slush: Packed Powder, Frozen Granular: Packed Powder , Packed Powder - A thin covering of snow over bare earth.

  • newman said:

    Was Saddleback making money before the big investments at the end of the Berry run?

    No.  They were close to break-even in one really good season - but not profitable as investment quality.
  • The Berrys did bring about a large increase in skier visits.

    Ski Conditions Report: A detailed report describing the snow conditions on the mountain the day of your visit. Skiers should become familiar with the following snow surface descriptions: Ice: Packed Powder, Slush: Packed Powder, Frozen Granular: Packed Powder , Packed Powder - A thin covering of snow over bare earth.

  • sugarloaf said:

    The Berrys did bring about a large increase in skier visits.

    $40M including the Kennabago Quad, the base lodge, huge snowmaking improvements, etc.  And yes: skier visits about doubled on their watch.
  • edited May 12

    sugarloaf said:

    The Berrys did bring about a large increase in skier visits.

    $40M including the Kennabago Quad, the base lodge, huge snowmaking improvements, etc.  And yes: skier visits about doubled on their watch.
    Closing weekend offered any full time college student a free lift ticket. That drew in a pretty good crowd with lots of plates from far away states in the parking lot. I thought that was good marketing on Saddlebacks part. Little did I know that they where going out of business.


    Ski Conditions Report: A detailed report describing the snow conditions on the mountain the day of your visit. Skiers should become familiar with the following snow surface descriptions: Ice: Packed Powder, Slush: Packed Powder, Frozen Granular: Packed Powder , Packed Powder - A thin covering of snow over bare earth.

  • Balsams Development Team Requests Delay In BFA Process

    June 13th, 2018
    DIXVILLE, NH – “The Balsams redevelopment team on Tuesday announced they are asking the N.H. Business Finance Authority, which is reviewing the team’s application to determine whether to recommend a $28 million state-backed loan, for more time.
    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.
    In a statement, he said the redevelopment team made the request ‘to continue collectively working with the NH BFA to discuss potential alternatives to the current application for a state-backed guarantee on a $28 million loan.’
    The team hopes the additional talks will help bring the process to a successful conclusion, said Tranchemontagne.
    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.’
    BFA Executive Director James Key Wallace said, ‘We believe it makes sense to consider potential alternatives to see what best suits the project while protecting New Hampshire taxpayers. We recognize how impactful this project would be for the North Country and believe it’s important to explore every avenue.’
    Developers for the Balsams Grand Resort, which has been closed since 2011, said the BFA’s $28 million credit enhancement remains an integral component of the total estimated $170 million firstphase renovation and expansion of the 153-year-old Dixville Notch resort.
    Plans include rebuilding the historic Dix House, renovating the Hampshire and Hale houses, building a new Lake Gloriette House, restoring the golf course, quadrupling the size of the Wilderness Ski Area, and adding a new spa, open-air marketplace, 600-seat conference center and performing arts center.
    The $28 million bond loan, facilitated by the 2015 passing of Senate Bill 30 that created a tax assessment district in Dixville, would be serviced through property taxes on all future Balsams real estate assets.
    The project’s current chief lender is Service Credit Union, of Portsmouth.
    The resort is owned by Dan Hebert and Les Otten.
    Otten was brought into the fold as lead developer in 2014.
    The development team said they want to return the Balsams to its former place as the economic driver of the region and estimated it could create more than 1,000 jobs after it is redeveloped.”

    https://thebalsamsresort.com/balsams-update/
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