VT Digger Reports on EB-5 "Saving" Sugarbush

[Newpylong]

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.

I lived in Waitsfield pre and post sale to Otten.

1 HSQ when everyone else was installing them wasn't going to cut it. It doesn't matter how old they were. Also, don't undersell the snowmaking upgrades, capacity was increased by 300% and they didn't have adequate water before that.

http://articles.latimes.com/1995-10-25/business/fi-61030_1_vermont-ski-areas

"Sugarbush, once known as one of the best skiing mountains in the East, had suffered from little or no investment for more than a decade. It was on the brink of closing three years ago."

"Sugarbush, which once had more than 400,000 annual skier visits, was down to roughly 300,000."

 

[HowieT2]

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.

No, I dont think we do. Its called capitalism, some investments bear fruit, others dont. some businesses succeed, others dont. Banks loan money and sometimes they dont get paid back.
The eb5 investors are taking on the risk in exchange for a visa which is apparently valuable to them. From their perspective they need to do the due diligence into where they are putting their money. If you had asked me 5 years ago, whether to participate in a 20M investment into sugarbush or 500m into Jay peak, I would have told you that the jay peak investment was a lot riskier than sugarbush. Orders of magnitude more risky.

 

[VTKilarney]

No, I dont think we do. Its called capitalism, some investments bear fruit, others dont. some businesses succeed, others dont. Banks loan money and sometimes they dont get paid back.
The eb5 investors are taking on the risk in exchange for a visa which is apparently valuable to them. .

I'm not talking about those instances. I'm talking about instances where there has been actual fraud - not just risk.

For example:
http://www.lexisnexis.com/legalnews...enter-anshoo-sethi-massive-fraud-alleged.aspx

To be fair, this is an example of the SEC doing something - but it was WAY too late.

 

[thetrailboss]

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.

Hold on a second--I don't think you understand what folks are saying about oversight of the EB-5 program. Nobody is saying that the government should "insure" or even "ensure" that investments will be successful. And the term "at risk" investment simply means that the project may or may not succeed--not that your funds can be used inappropriately by the project managers.

The issue with the oversight is, as VTK said, that there are some who have used it as simply free money to do whatever the hell they want instead of actually creating the project and the jobs. There is a pretty big scam in Chicago where this happened. Similarly, there is a risk that companies will use this to cover losses or other unrelated expenses. The intent is to spur economic development and create new jobs.

Closer to home, Vermont has been called on the carpet because it WAS marketing to investors that Vermont's EB-5 program was a great investment because the State oversaw projects for compliance. The problem was as we learned last year that they were not really doing any oversight.

So sure, I guess we can go back to the pre-Great Depression era where scam artists and Ponzi schemes were left and right but our economic system needs some oversight to ensure that things are legit.

 

[dlague]

Here is a tiny point! Not all EB-5 funded projects will be successful! So in effect, investors get nothing back. There are no guarantees except the green card. Many investors are now expecting returns. Is that because they seem others potentially profiting from their investment? Then lawsuits follow etc. welcome to America where we will let you sue even if you should not have expected anything in return.


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[thetrailboss]

Decided to show my Sugarbush love tonight...




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[skiNEwhere]

I think the name of this forum should be changed to "EB-5skiareazone.com"

 

[Jully]

No, I dont think we do. Its called capitalism, some investments bear fruit, others dont. some businesses succeed, others dont. Banks loan money and sometimes they dont get paid back.
The eb5 investors are taking on the risk in exchange for a visa which is apparently valuable to them. From their perspective they need to do the due diligence into where they are putting their money. If you had asked me 5 years ago, whether to participate in a 20M investment into sugarbush or 500m into Jay peak, I would have told you that the jay peak investment was a lot riskier than sugarbush. Orders of magnitude more risky.

Its not really capitalism when you have the project heads just giving themselves enormous payouts when they have the company receiving the investment paying out money to a contractor owned by the same individual receiving the investment. Or even better buying land that you already own with the EB-5 money!

 

[steamboat1]

If anyone has used EB-5 money appropriately & seems to be paying back investors in a timely fashion it's Sugarbush. Isn't that what this thread is about?

 

[cdskier]

If anyone has used EB-5 money appropriately & seems to be paying back investors in a timely fashion it's Sugarbush. Isn't that what this thread is about?

Well said...

While I'm not personally a fan of people being able to simply buy their way into this country, I do see value in the EB-5 program when it is used in moderation. If the information in the article is accurate, then I'd certainly say it was a positive program for SB. They didn't go crazy looking at EB-5 as free money where they could go nuts with grandiose plans that they'd never be able to repay. They kept things relatively modest and built what they needed and what seemed reasonable. Overall I'd say this definitely represents a win for both SB and the entire MRV area.

 

[xlr8r]

If anyone has used EB-5 money appropriately & seems to be paying back investors in a timely fashion it's Sugarbush. Isn't that what this thread is about?

Spot on, I think Sugarbush is the prime example of how EB-5 should be used, where Jay Peak uses it all wrong. Sugarbush used EB-5 money only because they lacked the money to fully fund something that the ski area desperately needed to stay afloat, new lodging and new base lodge. They only asked for 20 million and at that it was only a fraction of the total cost of the project. And they seems to have kept their investors happy with some repayment. This is what EB-5 is perfect for, help out financing projects that are almost there but just need a bit more funding to get over the goal line. Sugarbush has done projects since, but since these projects are smaller in scale, and the mountain is in better health they no longer use EB-5.

Jay Peak on the other hand uses EB-5 as the primary funding for projects and only a small fraction of their projects are funded from non EB-5 sources. Also Jay Peak uses EB-5 money to pay for things it really doesn't need. It is reasonable to say IMO that Jay Peak needed a new hotel, and an updated or new base lodge. But did they really need 3 new hotels, an ice skating rink, and a huge indoor waterpark. It is clear to me Jay has moved on from using EB-5 money for needs onto luxuries. And in total Jay has used what 10, 20 times the amount of EB-5 money as Sugarbush, and has yet to pay back a single investor. And it seems there is no end to their ponzi scheme as they keep coming up with new things to build that they do not need at all like the proposed movie theatre.

 

[steamboat1]

I lived in Waitsfield pre and post sale to Otten.

1 HSQ when everyone else was installing them wasn't going to cut it. It doesn't matter how old they were. Also, don't undersell the snowmaking upgrades, capacity was increased by 300% and they didn't have adequate water before that.

How many high speed detachable chairlifts did Stratton have when Claneil sold? I'll save you the time, zero. American Express six pack wasn't installed until 1995.

I think I said what south was lacking was snowmaking. So your point is what?

 

[steamboat1]

Jay Peak on the other hand uses EB-5 as the primary funding for projects and only a small fraction of their projects are funded from non EB-5 sources. Also Jay Peak uses EB-5 money to pay for things it really doesn't need. It is reasonable to say IMO that Jay Peak needed a new hotel, and an updated or new base lodge. But did they really need 3 new hotels, an ice skating rink, and a huge indoor waterpark. It is clear to me Jay has moved on from using EB-5 money for needs onto luxuries. And in total Jay has used what 10, 20 times the amount of EB-5 money as Sugarbush, and has yet to pay back a single investor. And it seems there is no end to their ponzi scheme as they keep coming up with new things to build that they do not need at all like the proposed movie theatre.

Personally I think Jay/Burke is using EB-5 money for more than just improvements to the resorts. I think part of it is being used just to coat the pockets of Mr. Stengler(?) & Mr. Q. Just speculation on my part but they don't seem to have any receipts for the money spent. We'll see what the SEC finds.

 

[thetrailboss]

Personally I think Jay/Burke is using EB-5 money for more than just improvements to the resorts. I think part of it is being used just to coat the pockets of Mr. Stengler(?) & Mr. Q. Just speculation on my part but they don't seem to have any receipts for the money spent. We'll see what the SEC finds.

Uh oh....

http://vtdigger.org/2015/11/03/q-burke-contractor-threatens-to-walk-off-job-blames-state/

 

[xlr8r]

Personally I think Jay/Burke is using EB-5 money for more than just improvements to the resorts. I think part of it is being used just to coat the pockets of Mr. Stengler(?) & Mr. Q. Just speculation on my part but they don't seem to have any receipts for the money spent. We'll see what the SEC finds.

I don't disagree at all. I cannot trust a word that come from Stenger or the Qs these days IMO

 

[steamboat1]

I don't disagree at all. I cannot trust a word that come from Stenger or the Qs these days IMO

They'd make perfect presidential candidates.:grin:

 

[HowieT2]

Hold on a second--I don't think you understand what folks are saying about oversight of the EB-5 program. Nobody is saying that the government should "insure" or even "ensure" that investments will be successful. And the term "at risk" investment simply means that the project may or may not succeed--not that your funds can be used inappropriately by the project managers.

The issue with the oversight is, as VTK said, that there are some who have used it as simply free money to do whatever the hell they want instead of actually creating the project and the jobs. There is a pretty big scam in Chicago where this happened. Similarly, there is a risk that companies will use this to cover losses or other unrelated expenses. The intent is to spur economic development and create new jobs.

Closer to home, Vermont has been called on the carpet because it WAS marketing to investors that Vermont's EB-5 program was a great investment because the State oversaw projects for compliance. The problem was as we learned last year that they were not really doing any oversight.

So sure, I guess we can go back to the pre-Great Depression era where scam artists and Ponzi schemes were left and right but our economic system needs some oversight to ensure that things are legit.

I understand. I believe however that the only thing the govt. need be demanding and insuring compliance with, are the obligations of the recipients of the eb5 money to actually develop the projects and provide the jobs required. That would necessarily address those scams.

 

[HowieT2]

Here is a tiny point! Not all EB-5 funded projects will be successful! So in effect, investors get nothing back. There are no guarantees except the green card. Many investors are now expecting returns. Is that because they seem others potentially profiting from their investment? Then lawsuits follow etc. welcome to America where we will let you sue even if you should not have expected anything in return.


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well, yeah, we have a judicial system to adjudicate business disputes. It happens to be quite effective, so much so, that global capital it attracted to do business here. It's also guaranteed in the constitution.

 

[HowieT2]

Spot on, I think Sugarbush is the prime example of how EB-5 should be used, where Jay Peak uses it all wrong. Sugarbush used EB-5 money only because they lacked the money to fully fund something that the ski area desperately needed to stay afloat, new lodging and new base lodge. They only asked for 20 million and at that it was only a fraction of the total cost of the project. And they seems to have kept their investors happy with some repayment. This is what EB-5 is perfect for, help out financing projects that are almost there but just need a bit more funding to get over the goal line. Sugarbush has done projects since, but since these projects are smaller in scale, and the mountain is in better health they no longer use EB-5.

Jay Peak on the other hand uses EB-5 as the primary funding for projects and only a small fraction of their projects are funded from non EB-5 sources. Also Jay Peak uses EB-5 money to pay for things it really doesn't need. It is reasonable to say IMO that Jay Peak needed a new hotel, and an updated or new base lodge. But did they really need 3 new hotels, an ice skating rink, and a huge indoor waterpark. It is clear to me Jay has moved on from using EB-5 money for needs onto luxuries. And in total Jay has used what 10, 20 times the amount of EB-5 money as Sugarbush, and has yet to pay back a single investor. And it seems there is no end to their ponzi scheme as they keep coming up with new things to build that they do not need at all like the proposed movie theatre.

Well, the market will decide whether those things were luxuries or are a necessary to satisfy demand. If it's the former, there will need to be a restructuring and the eb5 investors will lose out. If it's the latter, they'll get their money back.

im fairly confident sugarbush is in a good place right now.

 

[xlr8r]

Howie,

I don't see any way how everything Jay has built can be considered a need. They just come up with things to build there now just to get free money. No ski are needs a movie theatre. Would a theatre be nice, yes, but it isn't needed, it just a luxury item for the resort.