This story by Chris Mays was published by the Bennington Banner on Aug. 11.
[W]ILMINGTON — From regular paychecks to real estate values, a great deal of the Deerfield Valley’s economy is riding on the future of The Hermitage Club, and whether the four-season private resort can get back on its feet in time for ski season.
How much the club’s foreclosure has impacted the region’s economy is still being assessed as the club continues to work on a restructuring plan worth more than $50 million, one that would remove founder Jim Barnes’ controlling interest.
Of key concern is the club’s impact on property values, and the local and state taxes on those properties that pay for area infrastructure and schools.
The Hermitage is good for tax revenue but also the grand list, said state Rep. John Gannon, D-Wilmington, who also serves on the Wilmington Select Board. He noted that homes will continue to increase in value with the Hermitage properties being operational.
“So I truly hope it does come back and is very successful,” he added.
Gannon said he would like to see the Hermitage reopen with a viable financial structure, a management team experienced in running a private club and regular reports to its members. He said he would like the model to go from one where members could not vote and elect board members to one where they could.
At other clubs, Gannon said, initiation fees go into a capital account for general maintenance items. But at the Hermitage, “as far as I can tell, all that money was just spent,” he said. “So I mean it’s sort of a mystery to what happened to all that money. Jim’s always talking about all the money he’s contributed to the club. But members contributed more money to the club than he did.”
Besides initiation fees, said Gannon, who is a Hermitage Club member, there were other investments made by members.
“One of the things that was problematic at the club: Every member’s deal was sort of different,” he said, acknowledging the initiation fee would rise each year. “But did you have to pay the whole initiation fee? In the end, there were all sorts of payment plans. Or could you barter? I heard, I cannot confirm, people bartered for memberships.”
A call with members last Wednesday revealed more details about a potential transaction that would see a group take over the debt owed to Berkshire Bank and allow Haystack to reopen for the upcoming winter season. The plan calls for New York City-based Oz Real Estate to commit more than $50 million to saving the Hermitage, and a board of directors will be created with two board members appointed by Oz, two appointed by Barnes and four appointed by club members, according to a person familiar with the situation.
The source said that Barnes would no longer own the majority of the company: Approximately 60 percent would be split between Barnes and Oz, and the members would own the remaining 40 percent.
“A development of this magnitude really needs institutional capital and that is why we are working with Oz Real Estate on the restructuring,” Barnes told the Reformer. “Oz also has significant experience in the ski industry and we welcome their insight.”
Harper Sibley, who has 35 years of experience running and managing private clubs and resorts, was named the new president last week. He said the long-term plan is to build out the campus at the base of the mountain, starting with the hotel. He expects groundbreaking could occur in 2020.
“The residential townhome construction restarts immediately upon closing,” he said. “We will look to reopen the Hermitage Inn and focus on one other inn.”
Sibley said the Hermitage will sell off some of the former hotels that have been used as employee housing to third parties the Hermitage may lease from later. He expects to employ upwards of 200 people in the future.
Regarding payments owed to contractors, vendors and judgments from lawsuits, Sibley said, “Our plan is offer a fair settlement and get everyone back to work.”
Sibley said the Hermitage is focused on closing on the transaction with Oz in the next month or two. He does not plan to open the golf course until next year. Liftblog.com says Oz is the parent company of Ski Resort Holdings, which purchased 14 major ski resorts from CNL Lifestyle Properties in 2017 and sold most of them to Boyne Resorts, Vail Resorts and other operators over the past year. The website called news about the potential deal “a sign Mr. Barnes and his staff continue to work hard toward a resolution four months from ski season.”
Economic impact
Eighty local businesses were contacted for a report on the foreclosure’s economic impact. The resulting memo was submitted in April to Gannon and Rep. Laura Sibilia, I-West Dover. Its authors were Eric Durocher, executive director of the Southern Vermont Deerfield Valley Chamber of Commerce, Meg Staloff, program coordinator for downtown organization Wilmington Works, Gretchen Havreluk, economic development consultant for the town of Wilmington, and Steve Neratko, economic development specialist for the town of Dover.
Some businesses anticipated 10 to 20 percent in losses due to the situation.
“Many businesses had distanced themselves from the situation seeing something like this coming,” the memo says. “Some say it has been business as usual while others say that they have made changes (marketing, strategies, etc.) to offset any losses caused by the change in the valley.”
Real estate agents and brokers were largely affected, according to the memo.
“The brokers are saying they are doing their best to make sure the market for housing in the area remains stable as some club members are trying to dump property in the wake of the issues,” the memo says. “Agents we spoke to have reported a slight decline over last year in people seeking second/vacation homes near The Club and the surrounding area.”
One broker’s analysis showed sales for homes going for $400,000 to $500,000 and higher was half of what it had been in the first quarter of last year, according to the memo, but sales for homes in the $150,000 to $300,000 range had remained stable at that point.
Businesses offering dining, retail, lodging and recreation indicated it was still to early to tell what the effects would be as the ski season had gone strong from March into April and the Hermitage properties had not been closed very long.
“Another factor is that most of the business owners are not asking their patrons if they are club members or visiting the club, so it is hard to tell if the visitation has dropped off among that demographic recently,” the memo says. “There were a small handful of businesses who were doing a lot of their business with club employees who said they saw the effects this winter right after many of the employees had been laid off.”
Contractors and service businesses in the valley indicated that they “had seen something like this coming and distanced themselves” from Hermitage projects, according to the memo.
“There are still a number of contractors throughout the valley who are owed money for services and materials, and many of them are listed in the open litigation against The Club,” the memo says. “There are still a number of contractors (both local and non) who continue to do work for The Club [and] are being paid on retainer for time and materials.”
Empty and deteriorating buildings owned by the Hermitage or its associates, the memo says, are “bringing down property values and affecting the facade work that has been done since the flood.”
Employment
It is likely most workers who were laid off have found new jobs if they were looking, according to Adam Grinold, executive director at the Brattleboro Development Credit Corp. His group collaborated with the Department of Labor when the layoffs were first announced.
“I don’t know at this point if there’s a lot of folks from the Hermitage still seeking employment,” Grinold said. “The job market is hot. There’s a 2.8 percent unemployment rate [in Vermont]. The region is always looking for workers.”
And of course, Grinold said, some of the former Hermitage staff members have left the area.
A spokesman for Mount Snow, the neighboring resort, declined to comment.
Department of Labor representatives from Bennington and Windham counties came to assist during the layoffs. Hermitage employees in the human resources department were “incredibly nice” and the company’s executive chef knew every one of his employees by first name, said Alex Beck, workforce and education specialist at the BDCC.
Beck estimated about 100 people had lost their jobs at the time. But many of them were visa workers, he said, adding, “I know those contracts were honored.”
Beck said he was surprised by the large number of workers from Connecticut, Massachusetts and New Jersey who come to Vermont to work for the winter.
“It was certainly a hardship but their response was, ‘It looks like I’m going back home or to the next place in my career,’” he said. “We really made sure anyone who didn’t really know what they were planning next knew they could enroll in the Department of Labor.” Beck had a list of job openings in the region and shared them with locals. He said data regarding the number of former workers who accessed unemployment benefits is protected and not made public.
