[T]he state has ordered Jay Peak’s aerial tram idled until repairs are made, including work on its electrical system, brakes and towers, and replacement of two passenger cabins at a cost of $4.9 million.
The tram is “crucial” to the resort’s operations, but it will likely be a year before repairs are completed, according to the resort’s current operator.
State inspectors had “expressed concern over the condition of this tram” before the start of the last ski season, according to Tuesday’s order from the Workers Compensation and Safety Division of the Labor Department. It was agreed that if the resort completed top-priority work, it could use the 52-year-old lift during the winter, with the understanding that the rest of the work would be done after the season, according to the state.
Tuesday’s order, signed by J. Stephen Monahan, director of the labor safety division, says the resort hasn’t taken steps to begin the remaining work.
Jay Peak is one of the properties taken over by the Securities and Exchange Commission after it brought fraud charges in April against owner Ariel Quiros and his partner, Bill Stenger. They are accused of misusing more than $200 million that foreign investors put up for projects at the resort and in Newport.
The resort and several other properties are now under the control of a court-appointed receiver, Michael Goldberg.
On Wednesday he asked the federal court overseeing the fraud case to allow an immediate start to the ordered repairs and upgrades, calling the aerial tram “critical to Jay Peak Resort operations.”
His filing says the resort will be able to cover the cost. The money is to come from “Jay Peak Resort operations, existing bank accounts, sale of certain cell tower rights, settlement with third parties and potential other claims, and, if necessary, through borrowing of any remaining necessary funds.”
“If the gondola becomes non-operational, the resort will not be able to transport skiers to the top of the mountain, and will not survive,” Goldberg has told SEC lawyers.
Goldberg’s motion, which was filed Wednesday, says the lead time for obtaining the equipment and supplies for the repairs is several months. It will likely take another seven to nine months for the repairs to be completed. That means the tram, which carries 60 people at a time to the peak, won’t be open until June 2017. The ski area has other lifts — three quads, one triple and one double — but the tram is the only lift that carries visitors to the peak.
In the past the tram has also run during the summer and fall, to take visitors on scenic rides. Wedding parties count on the gondola for trips to the summit for cocktails and pictures, Goldberg wrote. On Thursday the Jay Peak Resort website said the schedule for summer rides was “TBD” and to check back later.
The website describes the lift as a 60-passenger tram, but the state order has limited the capacity to 45 passengers and one attendant.
Goldberg told the federal court that resort managers had negotiated a contract, not yet signed, with Doppelmayr USA, the tram’s manufacturer, which he said is the only company in the world capable of properly repairing it. The contract’s value is $4.9 million.
Goldberg has indicated it’s important to keep the resort operating normally for the sake of employees and investors, for whom he is seeking to minimize losses.
In late April, Goldberg had painted a dire financial picture for the resort in a deposition, telling a federal judge the ski area had “insufficient cash” to meet operational costs in the lean summer and fall months. However, he later said it has enough money to operate through the off-season.
Once all the repairs and renovations have been made and found satisfactory, the tram can be used again, according to Monahan. It ceased operating at the end of the ski season, he said.
The resort has 10 days in which it can appeal the order to the Passenger Tramway Board.
