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Mountain Creek - Ch. 11

Abominable

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Didn't see a thread on this. Mtn. Creek files for bankruptcy.

Seems to be mainly a debt restructuring involving sewer debt and local municipalities, so it says they will stay open. But you have to wonder how this impacts short term borrowing for operations, and it's bad press if you're looking for pass buyers or condo buyers.

http://www.njherald.com/20170516/mo...nkruptcy-plan-would-allow-debt-restructuring#

By Eric Obernauer New Jersey Herald
Posted: May. 16, 2017 12:01 am

VERNON -- Less than two years after acquiring Mountain Creek, the resort's new ownership has filed for Chapter 11 bankruptcy reorganization.

The filing, which had been rumored to be in the works for some time, was submitted in federal court Monday morning and seeks a restructuring of the resort's debt including an estimated $26 million in contractually obligated sewer debt payments to the Vernon Township Municipal Utilities Authority.

The debt obligations to the township stem from a 2012 agreement under which the resort's former principal owner, Gene Mulvihill, had agreed to have the resort assume approximately 65 percent of the MUA's debt to the Sussex County Municipal Utilities Authority for the buildout of the township's sewer system.

Mountain Creek CEO Jeff Koffman, reached by phone Monday, declined to elaborate but said he was still optimistic about the prospects for growing the tourism and resort industry in the Vernon Valley area.

In a press release late Monday, a Mountain Creek spokesperson indicated the filing would not affect existing operations at the resort and would best enable it to attract outside investment for other planned ventures. According to its website, the resort's waterpark is scheduled to open the weekend of June 10-11 and seven days a week starting June 22.

"The four-season resort, which offers gourmet restaurants, lodging and a variety of outdoor sports and activities, will continue to operate fully during the bankruptcy process," according to the press release.

Koffman, in a prepared statement included with the press release, said "(Monday's) filing will allow us to deal with the legacy debt we inherited from the property's former owners and attract new investment into the resort.

"We remain committed to seeing Mountain Creek develop to its full potential with new hotels, new outdoor attractions and expanded residential homes," he said. "Our vision to create a world class, four-season resort here in New Jersey is still our main objective and this move will put us in the best position to achieve that."

With Vernon's sewer system currently facing a cumulative debt of more than $40 million, it is unclear how the debt restructuring might impact the township or how much of the sewer system debt might otherwise fall on the balance of ratepayers, most of whom dwell in condominiums and single-family homes, if the court approves the restructuring.

Mayor Harry Shortway said late Monday that he was aware of the bankruptcy filing but had not yet had a chance to review it. He suggested, however, that the pickle in which the township now finds itself was the direct result of the township being misled by professionals under prior administrations who over-projected the amount of sewerage capacity the township would need, with the result that existing ratepayers have largely now been left holding the bag.

He also suggested that the resort's former owners -- who had previously talked of building an indoor waterpark and up to 1,500 new condominiums -- never intended to fulfill their contractual obligations to assume the lion's share of debt for the sewer system expansion.

Regarding the resort's current owners, "it's a major problem for them and I hope they can come out of this reorganization stronger," Shortway said.

Shortway nonetheless noted that 90 percent of the township's tax base was residential and suggested the collective well-being of smaller tourism-oriented businesses was as vital to the township's long-term economic future as that of Mountain Creek.

"We want all our businesses to do well, but I also believe in the smaller mom-and-pop shops and don't believe we can put all your eggs in one basket," Shortway said.

As for the township, "We have to find a way to get through this and we will," Shortway said. "We'll likely be looking to hire a bankruptcy counsel and will take the steps necessary to protect the township and to ensure this doesn't all fall on the existing base of ratepayers."

Council President Jean Murphy said late Monday that she was aware of the filing but said she and the other council members had not yet been briefed on its details.

"Our attorney is reviewing it, and we'll be considering all the options the town may have," she said.

Councilman Pat Rizzuto, who attended Monday's debate between the two Republican candidates for state Senate in the 24th District, said he, too, was aware of the filing.

Among the 17 other creditors named in the bankruptcy filing is Crystal Creek Associates, a special-purpose financing entity affiliated with and domiciled at Crystal Springs Resort, to which Mountain Creek owes approximately $885,000.

Mountain Creek is being represented in the bankruptcy proceedings by the Roseland-based law firm of Lowenstein Sandler.

The same firm also was retained by Sussex County last year as part of a review of cost overruns and delays associated with the county-wide solar project that was approved in 2011. The investigation by former State Comptroller Matt Boxer, a partner at the law firm, is ongoing.

Eric Obernauer can also be contacted on Twitter: @EricObernNJH or by phone at 973-383-1213.
 

cdskier

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It was mentioned in the season pass thread, but not in a unique thread solely for this topic. The article you shared has a lot more details than the one I shared from nj.com.
 

ss20

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What mountain is stupid enough to agree to fund a town project? What town is stupid enough to charge it's main source of revenue with funding a town project?
 

benski

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What mountain is stupid enough to agree to fund a town project? What town is stupid enough to charge it's main source of revenue with funding a town project?

Your contradicting yourself. The main source of revenue pays for a lot of the projects.

If this were done rite this would hold mountain creak accountable for the money its forcing the town to spend to provide additional services when they expand. I would assume this makes it easier to avoid having one without the other. I am not sure why they are stuck with the bill for a sewer plant to handle condos that are not being built. Making a developer pay for other stuff is not unusual.

Also a ski area may want stuff a town is not willing to pay for on its own, like a rec trail or bus service between condos and the base.
 

ss20

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Your contradicting yourself. The main source of revenue pays for a lot of the projects.

If this were done rite this would hold mountain creak accountable for the money its forcing the town to spend to provide additional services when they expand. I would assume this makes it easier to avoid having one without the other. I am not sure why they are stuck with the bill for a sewer plant to handle condos that are not being built. Making a developer pay for other stuff is not unusual.

Also a ski area may want stuff a town is not willing to pay for on its own, like a rec trail or bus service between condos and the base.

Yeah...but $26 mil??? Come'on...that'd be a huge choke on any northeast mountain. Let alone one that has the huge operational costs of essentially having to make snow anytime the temp falls below 28 degrees December-March just to stay open.
 

benski

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Yeah...but $26 mil??? Come'on...that'd be a huge choke on any northeast mountain. Let alone one that has the huge operational costs of essentially having to make snow anytime the temp falls below 28 degrees December-March just to stay open.

Agreed about the high price tag. Not sure how it got so high, just how they got the bill or a portion of it in the first place.
 

benski

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Yeah...but $26 mil??? Come'on...that'd be a huge choke on any northeast mountain. Let alone one that has the huge operational costs of essentially having to make snow anytime the temp falls below 28 degrees December-March just to stay open.

they planned on building 15,000 condos. thats 17,000 per new condo if you assume the new homes have septic systems. Maybe that normal I don't know what sewage treatment costs.
 

chuckstah

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they planned on building 15,000 condos. thats 17,000 per new condo if you assume the new homes have septic systems. Maybe that normal I don't know what sewage treatment costs.
It's costing me 25K for town sewer hookup this summer on Cape Cod. Mandatory, but spread out over the next 10 years. That doesn't include the hookup to the house. "shit" is expensive. Pun intended.

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abc

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they planned on building 15,000 condos. thats 17,000 per new condo if you assume the new homes have septic systems. Maybe that normal I don't know what sewage treatment costs.
Its the same old shit again. Over estimates of real estate development.

Only this time, instead of unsold condo, it's unfunded sewer system for the unbuilt condo.

Now they want to stick the town with the bounced check ( the town was being stupid to believe MC can actually foot the big bill BEFORE they even build the condo)
 

Jully

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Its the same old shit again. Over estimates of real estate development.

Only this time, instead of unsold condo, it's unfunded sewer system for the unbuilt condo.

Now they want to stick the town with the bounced check ( the town was being stupid to believe MC can actually foot the big bill BEFORE they even build the condo)

I agree. Its an even more ridiculous take on a typically ridiculous real estate developmemt plan. I'm assuming you meant 1500 condos, right Benski? Still seems real high.
 

cdskier

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I think Vernon was naive to even think there would have been demand for 1500 condos at Mountain Creek and should have realized right away it was unrealistic for anywhere close to that many to be built. Mountain Creek can call themselves a resort all they want...but they are not a destination resort that is going to attract that many second home-owners. I would think most of the people that visit MC are day-trippers and people that live within an hour or so. I skied there a lot back in HS, but after HS went there once with my dad and we both said "not worth it". I'd rather drive 2 hours to the Catskills than the 45 minutes to MC.
 

Jully

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I think Vernon was naive to even think there would have been demand for 1500 condos at Mountain Creek and should have realized right away it was unrealistic for anywhere close to that many to be built. Mountain Creek can call themselves a resort all they want...but they are not a destination resort that is going to attract that many second home-owners. I would think most of the people that visit MC are day-trippers and people that live within an hour or so. I skied there a lot back in HS, but after HS went there once with my dad and we both said "not worth it". I'd rather drive 2 hours to the Catskills than the 45 minutes to MC.

Exactly. It would be like Wachusett building condos.
 
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