[B]urke Mountain resort and the elite ski school that trains and races there are asking a judge to approve their agreements on the financing of a new $1.5 million lift and increased revenue sharing between the two entities.
Details were outlined in a filing late last week by Michael Goldberg, a court-appointed receiver overseeing the property amid investor fraud allegations against resort owner Ariel Quiros.
The proposed agreements have been in the works for months.
Burke Mountain Academy “intends to expand its ski program through increased student enrollment, and expanded training and national ski race events on Burke Mountain,” the filing states. “The Receiver and BMA believe this will help fill additional hotel rooms and increase sales at the Burke Entities’ restaurants, ski lifts and stores.”
The agreements still need the approval of federal Judge Darrin P. Gayles. He is presiding over the investor fraud case against Quiros brought by the U.S. Securities and Exchange Commission in Miami, which is where the ski resort developer lives and many of his businesses are located.
The proposed agreements come on the heels of an arrangement last year between the resort and the academy that allowed the mountain to become an “official U.S. Ski Team development site,” the first of its kind in the country.
“Starting last year we have not officially partnered, but informally partnered with Burke Mountain Academy in improving the mountain,” Goldberg said Friday.
“This is the second step of the informal partnership all designed to improve the mountain and improve the ability to deliver skiing services to our customers, and at the same time improve the access to the academy.”
The latest agreement sets up a financing arrangement for replacing the mountain’s 62-year-old Poma lift, described in the court filing as “dilapidated and only capable of serving 200 skiers per hour when operable.”
A new high-speed lift, which can transport 1,000 skiers an hour, costs about $1.5 million, the filing adds.
Burke Mountain Academy is contributing $260,000, and $240,000 will come from grant funding. That left $1 million needed.
Under a recent settlement Goldberg reached with Raymond James & Associates Inc., a financial services firm Quiros had used, $3 million was earmarked to pay a debt owed to Burke Mountain Academy from Quiros’ purchase of the resort in 2012. The academy has reduced that amount to $2 million, allowing the resort to put the $1 million that was saved toward the lift.
“In short,” the filing states, “the Burke Entities will obtain a brand new, state of the art lift at little or no cost while at the same time creating additional jobs that will benefit its investors.”
Meanwhile, the receiver said, Burke Mountain Academy is “walking away” from $1 million it is owed under the deferred payment agreement with Quiros.
“From the academy’s perspective this benefits our school and our ability to train,” Willy Booker, the academy’s headmaster, said Friday of the arrangement and the new lift. “We had that debt outstanding out there, and forgiving it was a way for us to partner with the mountain and help jump-start the project.”
He added, “We also feel good about the project because we do feel it benefits the local community, significantly. Everybody will get to participate in the enhanced uphill capacity.”
In addition, the new lift will provide improved access to intermediate terrain on the east side of the mountain, Booker said. “There’s been a little bit of a dearth of access to intermediate terrain,” he said. “Hopefully, this solves that.”
The Raymond James settlement was approved earlier this year. The financial services firm, which had Quiros as a client, admitted no wrongdoing in agreeing to pay nearly $150 million to resolve a lawsuit Goldberg brought against it.
Quiros, whose Jay Peak ski resort was also taken over by the feds, and Stenger, Jay Peak’s former CEO and president, are accused of misusing $200 million of more than $350 million they raised through the federal EB-5 immigrant investor visa program.
The Burke hotel, with 116 rooms, opened in September, about six months after the investor fraud allegations were leveled against Stenger and Quiros.
Goldberg’s filing last week involving Burke Mountain also lays out several components of an “operating agreement” between the resort and the academy, and spells out areas of expense and “revenue sharing” between the two. Those provisions include:
- In accordance with existing policy and practice, a race day ticket price of $20 per racer will be collected by the academy and paid to the resort.
- The resort will offer “preferred hotel room rate” to U.S. Ski and Snowboard Association members, including coaches and staff, and FIS organization members.
- The resort will “remit” to the academy a 10 percent commission for all group hotel room bookings by the U.S. ski team, or by ski race team groups that are USSA or FIS members and are provided a discounted group rate at the resort.
- The resort will install snowmaking on the trail known as McHarg’s by the start of the 2017-2018 ski season and will do its best to open McHarg’s each season as soon as weather permits.
The filing by Goldberg also says the agreement allows for the academy to increase training and the number of ski races.
“Importantly, the proposed amendments increase the usage of the existing easement and will not interfere with the hotel guests and general public’s use of Burke Mountain,” Goldberg wrote. “Moreover, the amendment to the easement contains restrictions on weekends and holidays.”
Burke Mountain Academy, which has 65 students from all over the world, is just a short way down a road from the resort.
Over the past 40 years, the academy has produced 33 Olympians, 138 national team athletes and 117 U.S. Ski Team members. A recent alum, Mikaela Shiffrin, was the 2014 Olympic gold medalist in the slalom.
Both Booker and Goldberg said they were unsure how much the revenue sharing provisions of the agreement would mean to each entity.
“I think the concept is just that we’re incentivized to bring people to Burke Mountain,” Booker said. “We want to help the mountain attract other ski racers to come here, stay and train.”
Michael Sher, the head of Friends of Burke Mountain, a nonprofit group, called the proposed agreements “a tremendous victory” for stakeholders in Burke Mountain.
“This is something that we strongly support,” Sher said Friday.
He agreed with Booker regarding the benefit of the new lift opening up access to intermediate terrain.
“This is a project for everybody, it’s not just a project for Burke Mountain Academy or the ski team,” he said. “This is a project that will benefit recreational skiers, including a whole new class of recreation skiers — intermediate skiers — who can now access safely the upper half of the mountain.”
At a community meeting last month about the future of the town of Burke, some business owners expressed concern about making sure dollars from skiers and other visitors flow down the mountain into the village below.
“I think that is something that everybody has to study closely,” Sher said Friday. “Our view is that a strong village makes a strong mountain and a strong mountain makes a strong village.”
He said the “net-net” is that with increased investment in infrastructure on the mountain, from the lift improvement to large snowmaking upgrades, more people will be coming to Burke.
“This is a period of transition,” Sher continued, and eventually as the receivership plays out the resort will be sold to a new owner.
He added, “This is the continuation of the effort to make Burke a much, much more valuable mountain that will be attractive to a buyer who will take good care of it.”
