[D]OVER — Last winter’s tepid weather has led to an undisclosed number of layoffs at Mount Snow ski resort.
But resort administrators say they expect to hire back those employees soon. And they say the furloughs are not related to a $52 million cash crunch in the resort’s EB-5 foreign investor program — a problem that has slowed development of a new lodge and snow-making improvements.
The resort already has sunk more than $12 million into those projects while waiting for federal approval and release of the EB-5 funds, affecting cash flow for parent company Peak Resorts.
But when discussing the layoffs and EB-5 delays last week, Mount Snow President Dick Deutsch was adamant that “one has absolutely nothing to do with the other. One is on the development side … and one is strictly operational.”
Deutsch added that “just about every ski resort in New England had a subpar season this year. So (the layoffs are) not atypical of what people do in the ski resort business.”
Mount Snow bills itself as “Vermont’s closest big mountain to the Northeast’s metropolitan areas.” But that wasn’t much help during a winter that featured historically warm temperatures and little natural snow.
Resort spokesman Thad Quimby said Mount Snow was open for roughly a full season, though he acknowledged that a lack of snow in December made things difficult. He credited the resort’s staff for keeping the slopes open to the fullest extent possible.
“From our perspective, it was a huge success in that we were able to rebound with our snowmaking,” Quimby said. He added that, throughout the winter, “we had all the events that we normally would have.”
Quimby said he could not release statistics detailing the warm winter’s impact at Mount Snow. But the resort’s parent, Missouri-based Peak Resorts, noted a 23 percent decline in skier and tube-rider visits companywide when releasing financial results for the quarter that ended Jan. 31. The company operates 14 resorts and owns all but one of those.
Timothy Boyd, Peak Resorts’ president and chief executive officer, said the 2015-16 ski season “got off to a late and very choppy start due to unseasonably warm weather in both our Northeast and Midwest regions.” As a result, Boyd said in March that he expected Peak Resorts’ fiscal year revenue to be down from last year because “the effect of the poor weather conditions was simply too much to overcome.”
At Mount Snow, that has translated into furloughs that are a step beyond the normal springtime workforce reduction. Neither Quimby nor Deutsch would say how many employees were affected, but Deutsch characterized the positions as hourly and seasonal.
“Operationally, the impact is very minimal for us,” Quimby added. “We look forward to having all these employees back as we ramp up for the summer.”
Deutsch said there is recent precedent for such reductions at Mount Snow. “In 2011-2012, we had a subpar year. We did it then,” he said. “There are some ski resorts that do it every year.”
He was adamant, though, that resort employment is not connected to EB-5 funding delays at Mount Snow.
The federal EB-5 program, created by Congress in 1990, aims to stimulate the economy by allowing foreign investors to obtain permanent residency and eventually citizenship if they contribute certain amounts to job-creating projects in the U.S. Generally, the minimum investment required is $1 million, but that’s reduced to $500,000 in a “targeted employment area” like Mount Snow.
The EB-5 program is under scrutiny after state and federal authorities earlier this month alleged a $200 million “Ponzi-like scheme” by developers in Vermont’s Northeast Kingdom. The fraud allegedly was connected to EB-5-funded activities at Jay Peak resort and in Newport.
Deutsch took pains to separate Mount Snow’s EB-5 projects from the recent headlines, stressing that his company has “no connection to Jay Peak.” He acknowledged, though, that he is concerned the public’s perception of EB-5 will be hurt by the legal drama unfolding a few hours to the north.
“I’m very concerned. I’d be foolish not to be concerned,” he said. “But it’s important to know that we are in good standing with the state of Vermont.”
That’s not to say EB-5 isn’t causing some headaches at Mount Snow. The resort’s first such project — consisting of the West Lake snow-making upgrade and the new Carinthia Ski Lodge — has slowed because $52 million in foreign investments is in escrow while Mount Snow waits for the U.S. Citizenship and Immigration Services to approve the project and the investors.
Construction has not begun at Carinthia Lodge. In reporting Peak Resorts’ quarterly earnings last month, Deutsch said work began last summer on the West Lake project.
“When work on that project was paused, as required, for the winter, it was about 50 percent complete,” he said at the time. “The related worksites require little attention until we are prepared to resume full-scale work, which we will do just as soon as the $52 million in funds are released from escrow.”
Boyd noted that Peak Resorts already had invested more than $12 million in the West Lake project, which is expected to give Mount Snow six times the water storage capacity it currently has.
“We will be reimbursed for that spending when the committed funds are released from escrow,” Boyd said. “Our advisers continue to indicate that there are no areas of concern in the USCIS approval process and attribute the delay to a growing review backlog at the USCIS.”
He added, though, that the “slower-than-expected timeline for approval of our EB-5 project has resulted in (Peak Resorts) cash balances that are lower than we had anticipated.”
Deutsch said Mount Snow and Peak Resorts have enlisted congressional help in an effort to free up the EB-5 money. But he said that “we’ve not been able to get a date certain.”
“We are now in our 23rd month of waiting for the immigration service to approve our first investor and our project,” Deutsch said. “We think it’s because they’ve just been deluged with thousands of applications.”
Federal documents confirm that’s the case. The Citizenship and Immigration Services website shows that the current estimated waiting time for approval of an I-526 immigrant visa petition — the kind submitted by foreign investors under the EB-5 program — is 16.6 months.
A year-by-year list of I-526 petitions details the program’s rapid growth. The government received 3,805 petitions in fiscal year 2011, 6,346 petitions in fiscal 2013, and 14,373 petitions in fiscal 2015.
Officials are approving or denying thousands of petitions each year, but it’s not happening quickly enough to keep up. In the first quarter of fiscal year 2016 alone, potential foreign investors filed 6,277 new I-526 petitions, and nearly 22,000 applications were listed as pending overall.
While not commenting specifically on Mount Snow’s case, a Citizenship and Immigration Services spokesperson said the agency “has taken many actions to improve overall efficiency.” That includes a greater focus on clearing “aging cases” and reducing processing times.
The Immigrant Investor Program Office also is hiring more adjudicators and economists to try to address the backlog: The office has 125 full-time employees and is looking to reach 171 staffers by the end of 2016, the spokesperson said.
Deutsch, who also serves as a Peak Resorts vice president, said he’s hoping Mount Snow’s wait is over soon.
“I think the future of Mount Snow is great. We have really been very satisfied with our investment at Mount Snow,” Deutsch said. “We have invested in our (West Lake) project to date. And we hope the EB-5 project continues for many years to come.”
