VT Digger Reports on EB-5 "Saving" Sugarbush

Not Sure · Nov 3, 2015

deadheadskier said:
The other side of that argument is that if there was no EB-5 investment in these areas, there would be no investment at all.

IMO that's a much better situation than say a government / taxpayer backed project like the Balsams, which will produce the same kind of jobs.

Ironically I just heard a radio conversation about a local EB 5 project , if they are correct the sales Tax goes to the developer and not the state ?
My main objection is after 9/11 "Who are we letting into this country ?"
How are these potential new citizens being vetted?

thetrailboss · Nov 3, 2015

gostan said:
I was a long term Sugarbush skier who left the mountain from 1995 until returning in 2010. The folks who are critical of Sugarbush's use of EB-5 have the right to voice your opinions, but there really is nothing to complain about here. Overall,Vermont is really a depressed state economically. The vibrancy and recent rebirth of Mad River Valley has been revitalized by Win Smith and Sugarbush and their visions. We should all be applauding the successful use of EB-5 funds to provide such positive results as well as the fact that the EB-5 investors are being repaid. And Sugarbush remains an independent Mecca (not without issues) in this era of large conglomerates owing our ski areas and all of the USA becoming a homogenized rubber stamp.

And Sugarbush (as far as we know) is not for sale like many ski areas are per this thread elsewhere on Alpine Zone.

http://forums.alpinezone.com/showth...A-Brighton-UT-Sunday-River-ME-amp-12-More-Ski

+ 1

Sugarbush has done a good job of offering at least something better than minimum wage jobs for the locals. In my recent time there (2007-2011) you saw the same locals working every weekend and every season. That says something.

As to BG, I have been concerned about the oversight as well. That's because of my background. As to BG, it sounds like he works in traditional capital investment that is subject to tighter regulations, etc. and he is not a fan of the loosey-goosey aspect of some of EB-5.

from_the_NEK · Nov 3, 2015

VTKilarney said:
1) Rather than post endless GIFs of someone beating a dead horse, the more mature thing to do is to just not participate in the conversation. Things are talked about repeatedly in just about every thread in this forum. Deal with it.

Apparently I'm too juvenile to participate. I guess I'll stick with the gifs and memes :sadwalk:

You guys really need to lighten up a little bit. Every topic is doom and gloom and "i don't approve!" of this or that.

tumbler · Nov 3, 2015

steamboat1 said:
Pretty sure DHS is correct saying we don't know what Summit Ventures paid for Sugarbush. ARA Services sold Sugarbush in 1985 to Claneil Enterprises for $14.5 million. Claneil sold Sugarbush in 1994 to LBO Enterprises (Les Otten) for $9.1 million. I believe it was just before Claneil sold to LBO that rumors of Sugarbush going bankrupt were circulating. Certainly the depressed sale price would indicate that.

The rumor is that is was around 9M from ASC to SV.
Does anyone recall what the place looked like when Claneil sold? Obsolete and outdated. Hence the 9.1M sale. LBO->ASC spent an incredible amount of money on the skiing infrastructure, at least 7 new or moved lifts and added snowmaking to South. North had all the firepower. ASC also went through the arduous process of permitting the Grand Summit in the town of Warren but that is all the real estate work they did. They went bankrupt, fire sale and SV picked it up. SV got the benefits of the skiing infrastructure (with deferred maintenance, so $$$ there) and the permit for the Grand Summit. They re-replaced the GMX at North and then focused on the one area with growth potential- real estate. They we able to modify the permit and build Clay Brook and lodges then continue with Rice Brook and Gadd Brook. There was a system in place for increased capital infusion and Win took advantage of it like any savvy businessman would. Why knock him? He has increased the economics of the Valley and is a good citizen and neighbor.

steamboat1 · Nov 3, 2015

tumbler said:
The rumor is that is was around 9M from ASC to SV.
Does anyone recall what the place looked like when Claneil sold? Obsolete and outdated. Hence the 9.1M sale.

Claneil made significant investments at Sugarbush. As for new lifts they were all at Mt. Ellen. They installed the original GMX HSQ (now North Ridge Express), Summit Quad & new Inverness lift. They also purchased the Sugarbush Inn, golf course, tennis center, cross country ski center & 3 area restaurants. They also assumed management of several area condo complexes. To infer they let the place run down just isn't true.

tumbler · Nov 3, 2015

Correct, I didn't mean to infer that, they invested money also and then ran out and had to sell low with South needing improvements. ASC invested, ran out and had to sell low. Without EB-5 money SV would have run out also and been forced to sell low. The real estate development is now helping to fund the operations of the ski mountain.

Newpylong · Nov 3, 2015

steamboat1 said:
Claneil made significant investments at Sugarbush. As for new lifts they were all at Mt. Ellen. They installed the original GMX HSQ (now North Ridge Express), Summit Quad & new Inverness lift. They also purchased the Sugarbush Inn, golf course, tennis courts, cross country ski center & 3 area restaurants. They also assumed management of several area condo complexes. To infer they let the place run down just isn't true.

Run down might be an incorrect term - outdated, especially when intending to compete with other resorts is a better term.

steamboat1 · Nov 3, 2015

Newpylong said:
Run down might be an incorrect term - outdated, especially when intending to compete with other resorts is a better term.

Both the Super Bravo & Heavens Gate (still operating) triples were just over 10 years old when Claneil sold. Relatively new lifts by today's standards.

steamboat1 · Nov 3, 2015

tumbler said:
Correct, I didn't mean to infer that, they invested money also and then ran out and had to sell low with South needing improvements. ASC invested, ran out and had to sell low. Without EB-5 money SV would have run out also and been forced to sell low. The real estate development is now helping to fund the operations of the ski mountain.

Only improvements south needed at the time was snowmaking. Like I said in my previous post the lifts weren't that old. As for real estate now funding operations I agree with you 100%. EB-5 money was a small but significant part in financing the real estate development. It's my understanding that SV has invested nearly $80 million in the base area development with EB-5 money only accounting for $20 million of that. Look no further than Stowe, Stratton & Okemo to see what a significant role real estate plays in today's ski area operations.

HowieT2 · Nov 3, 2015

thetrailboss said:
+ 1

Sugarbush has done a good job of offering at least something better than minimum wage jobs for the locals. In my recent time there (2007-2011) you saw the same locals working every weekend and every season. That says something.

As to BG, I have been concerned about the oversight as well. That's because of my background. As to BG, it sounds like he works in traditional capital investment that is subject to tighter regulations, etc. and he is not a fan of the loosey-goosey aspect of some of EB-5.

How are these eb5 projects any more "loosey goosey" than non eb5 funded, real estate or other private
market investments???? real estate developer putting up a shopping mall or condo development isnt subject to any investment oversight from the federal or state govt. They are subject to the same laws the eb5 programs are.

thetrailboss · Nov 3, 2015

HowieT2 said:
How are these eb5 projects any more "loosey goosey" than non eb5 funded, real estate or other private
market investments???? real estate developer putting up a shopping mall or condo development isnt subject to any investment oversight from the federal or state govt. They are subject to the same laws the eb5 programs are.

It's different because in EB-5 the investors are participating not for a profit or investment but for a Green Card. EB-5 is a government run program set up to connect investors with projects that can't get traditional capital. So you need to ensure that the investors and projects are both legit.

HowieT2 · Nov 3, 2015

steamboat1 said:
Only improvements south needed at the time was snowmaking. Like I said in my previous post the lifts weren't that old. As for real estate now funding operations I agree with you 100%. EB-5 money was a small but significant part in financing the real estate development. It's my understanding that SV has invested nearly $80 million in the base area development with EB-5 money only accounting for $20 million of that. Look no further than Stowe, Stratton & Okemo to see what a significant role real estate plays in today's ski area operations.

Agreed. and if you look at those other mountains, the real estate development is on a far greater scale than that at SB. I mean between Claybrook, rice brook and Gadd brook, we are only talking about some thing in the neighborhood of 120 units.

HowieT2 · Nov 3, 2015

thetrailboss said:
It's different because in EB-5 the investors are participating not for a profit or investment but for a Green Card. EB-5 is a government run program set up to connect investors with projects that can't get traditional capital. So you need to ensure that the investors and projects are both legit.

That's where we disagree. I dont think there is any reason for the federal govt. to insure anything to the foreign investors other than theyre getting their visa. In fact, the law specifically requires that in order to qualify for an eb5 visa, the investment must be "at risk". If the govt. was to insure this program, then the capital would be available from Banks and other private sources of capital. The whole purpose of the program is to leverage the visas to entice foreign capital to invest in projects that are too risky for traditional sources of capital.

steamboat1 · Nov 3, 2015

HowieT2 said:
That's where we disagree. I dont think there is any reason for the federal govt. to insure anything to the foreign investors other than theyre getting their visa. In fact, the law specifically requires that in order to qualify for an eb5 visa, the investment must be "at risk". If the govt. was to insure this program, then the capital would be available from Banks and other private sources of capital. The whole purpose of the program is to leverage the visas to entice foreign capital to invest in projects that are too risky for traditional sources of capital.

Exactly!

VTKilarney · Nov 3, 2015

Nobody is suggesting that the government insure against loss. It's reasonable, however, to expect that outfits that take advantage of this program are not engaging in fraud. I fail to see how this is at all contentious.

It's also reasonable to ensure that the "jobs created" metric is accurate. I know that government is good at wasting money, but I'd like to know that if they are selling visas for jobs being created, those jobs will actually be created.

deadheadskier · Nov 3, 2015

It should be noted that programs like EB-5 aren't unique to the US. New Zealand has a program like it. I'm sure there are others.

http://www.immigration.govt.nz/migrant/stream/invest/investment/investorplus/requirements.htm

VTKilarney · Nov 3, 2015

There are a few Caribbean countries that sell citizenship for cash.

HowieT2 · Nov 3, 2015

VTKilarney said:
Nobody is suggesting that the government insure against loss. It's reasonable, however, to expect that outfits that take advantage of this program are not engaging in fraud. I fail to see how this is at all contentious.

It's also reasonable to ensure that the "jobs created" metric is accurate. I know that government is good at wasting money, but I'd like to know that if they are selling visas for jobs being created, those jobs will actually be created.

I don't disagree with you. But "fraud" is already illegal in many ways. I just dont think there needs to be any additional regulatory oversight to prevent fraud in investments benefiting from eb5 capital.

As for your comment about "govt. being good at wasting money", this is actually an example of a govt. program that is economically beneficial which isnt costing the govt. anything. and there are already reporting and disclosure requirements for the jobs creation aspect. (and if you want to get into it about govt. waste in general, PM me.)

Highway Star · Nov 3, 2015

Ski areas are valued based on 6x to 8x their operating profit as a business.

VTKilarney · Nov 3, 2015

HowieT2 said:
I don't disagree with you. But "fraud" is already illegal in many ways. I just dont think there needs to be any additional regulatory oversight to prevent fraud in investments benefit

Except that for some high profile (non-Vermont) projects, there appears to have indeed been investor fraud. So whatever was in place clearly was not working. There may not need to be additional oversight, but at a minimum the existing oversight needs to be effective. It hasn't been.

VT Digger Reports on EB-5 "Saving" Sugarbush

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