The Securities and Exchange Commission now says that the money Quiros used to acquire Jay Peak, and eventually Burke Mountain, came out of funds raised through the EB-5 program. But financing the acquisition of the two resorts is not what the EB-5 funds were intended for. Over the years, there were quite a few checks written that shouldn’t have been, according to the SEC—to the tune of $200 million, it says.
“The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft,” said Andrew Ceresney, director of the SEC’s Division of Enforcement.
The SEC investigation culminated on April 14 when the agency charged Stenger and Quiros with fraud, froze all EB-5 assets, and took control of Jay Peak and Q Burke ski areas. The SEC alleges that Quiros used $50 million of EB-5 money for his own personal gain, including the purchase of Jay Peak and Q Burke. Other alleged illegal expenditures he made include a $2 million luxury condo at Trump Place in New York City and millions to pay for his personal income taxes. The complaint did not cite any personal financial gains for Stenger.
This news comes as a major blow for an area in desperate need of jobs, and whose residents at one point looked to Stenger and Quiros as their saviors. It also leaves in question the future of the EB-5 program in Vermont, where Mount Snow, Sugarbush, and Trapp Family Lodge, among others, have tapped this resource for major projects. And the program has had its successes: despite whatever their wrongdoing, Stenger and Quiros have transformed Jay Peak by adding three hotels, an indoor water park, an ice rink, and more—courtesy of EB-5 investors.
The scandal has already had its ripple effects. Mount Snow, in particular, has raised $52 million from foreign investors for its West Lake snowmaking project and new Carinthia Base Lodge. But that money now sits in escrow, awaiting federal approval, even though there are no allegations regarding the resort. Last summer, the area broke ground on West Lake, confident that the EB-5 funds would be released and any cash out of owner Peak Resorts’ pocket would be reimbursed. The project is now on hold, and Peak Resorts is out $12 million of its own cash.
DREAM BIG SNOW, AMERICA!
The ambitious shopping mall/sports entertainment project at The Meadowlands in East Rutherford, N.J., now called American Dream, is nearing completion. When the megaplex opens in 2017, so will “Big SNOW America,” the continent’s first indoor snow center. It’s almost hard to believe that this project, more than a decade behind schedule, will finally come to be. It’s equally surprising that there’s finally a “snow dome” in the U.S., after so many other proposals have melted away.
The 12-story, 180,000 sq. ft. Big SNOW facility will offer year-round skiing, snowboarding, and snow tubing, as well as indoor snow play, event spaces, a ski chalet, and s’mores by the fire. Surrounding it will be a collection of snow-focused retail outlets, dubbed “The Shops @ Big SNOW.” The facility will be run by SNOW Operating of terrain-based learning fame.
Will “a year-round experiential attraction that blends skiing, snowboarding and snow tubing with fashion, design, and culture to provide a unique and entertaining experience,” as SNOW Operating CEO Joe Hession envisions it, prove to be the magic formula for indoor ops? Hard to say. But Hession’s roots are in The Garden State, and his tenure at Mountain Creek makes him familiar with the market. SNOW’s chances are as good as any.
LOCALS LIVE HERE, TOO
Employee housing has become a major headache for resorts across the country, but strides are being made to mitigate the crisis. Copper Mountain, Colo., plans to break ground this month on the Copper Point Townhomes, a deed-restricted workforce housing project in the resort’s East Village. It will include 15 two-bedroom, two-bath units that sell for, on average, no more than 110 percent of the area median income.
In Big Sky, Mont., the local chamber of commerce and the Human Resource Development Council have formed a non-profit housing trust. Similar to successful programs in Jackson Hole and Park City, the organization aims to provide permanently affordable housing units by acquiring and removing them from the for-profit real estate market. The group will also provide assistance to local workers through mortgage counseling, homebuyer education, lending programs, and of course, development.
Rome wasn’t built in a day, and affordable housing won’t be, either. But these are steps in the right direction.
FUN THINGS HAPPENED AT THE FORUM
The Forum portion of the Mountain Travel Symposium remains the most entertaining and, often, revelatory conference in winter sports. The related themes of innovation and disruption at this year’s conference, held in early April at Keystone, Colo., highlighted the challenges the industry faces, but also suggested several means of meeting them.
This year’s Forum insisted that resorts innovate to take advantage of the changes—disruptions, if you will—sweeping the travel industry. It painted a clear portrait of the Millennial generation and how thoroughly different it is from previous generations. And it encouraged resorts to act on a variety of fronts to align themselves with the changes. The overarching message was to fit into the lifestyle of your customers, not try to make them bend to old ways of doing things.
For example: If Millennials are not buying cars (and therefore, have no way to get to your area), work with Uber, Lyft, and others who can provide transportation. If Millennials make last-minute reservations via mobile, give them a messaging app to facilitate your transactions. If people don’t want or can’t afford to own a slew of sports gear, partner with companies that will rent it to them. And if they want to book a room via Airbnb or VRBO, figure out how to work with that.
MTS helps resorts see the market from a different vantage point. That’s quite an accomplishment, and useful, too. As a young sage once said: Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.
APPEALS COURT UPHOLDS ALTA SHRED BAN
Yes, Alta has the right to ban snowboarding if it wants. The Circuit Court of Appeals in Denver determined in April that a private business, even one operating on federal land, has the right to ban snowboarding if it wishes. The Court dismissed the lawsuit brought by snowboarders who claimed that the Alta ban was discriminatory. This leaves the number of resorts that still don’t permit snowboarding at three: Alta, Deer Valley, and Mad River Glen.
IT’S TRUE, PEOPLE STILL SNOWBOARD
Alta’s ban notwithstanding, the sport hasn’t crashed, like some reports have suggested. According to an analysis by SIA Research called “The State of Snowboarding,” participation has “stabilized.” Snowboard participation peaked in 2010-11, which was an epic season coast-to-coast. Then it didn’t snow in the Pacific West, where 1 in 4 snowboarders reside, for three years, and participation dropped. In 2014-15, it went up again, or as the analysis puts it, stabilized. The positive signs: the number of riders age 17 and under is up 16 percent, and female participation is up 10 percent. In fact, snowboarding is growing in popularity among all age groups except the hard-to-figure Millennials ages 18 to 24. That cohort has been a conundrum for resorts. Queue the rise of Millennial monoskiing?