Mountain Creek near deal on $28M sewer debt, ending bankruptcy

A new majority owner and a deal with the township of Vernon could right the resort's financial woes.

Mountain Creek could be out of bankruptcy protection early next year if two agreements — including an shift in ownership structure — are approved in the coming weeks. 

SNOW Operating would acquire controlling ownership of the ski resort and water park from current majority owners Mountain Creek Resort, Inc. and the Koffman family. And, $28 million in sewer debt that has plagued the business would be worked out with Vernon Township, according to the parties.  

The terms of the agreements remain confidential until they are reviewed by the court. First, the Vernon Township Council must approve the sewer component. Both are expected to happen by the end of the year.   

The resort should be out of bankruptcy within 60 to 180 days, said Joe Hession, founder of SNOW Operating.

“We’re very motivated to get this done,” Hession, 38, a Vernon native who now lives in Mountain Lakes, said during a phone interview Thursday.  

Mountain Creek Management, LLC filed for bankruptcy protection in May 2017, citing debt that it inherited from previous owners.

The biggest chunk of that debt — $28 million — is owed to Vernon Township Municipal Utilities Authority for sewer system capacity of 166,000 gallons per day that was set aside for Mountain Creek under a previous owner, Intrawest, who planned to build 1,200 more condominiums.

The $40 million tab for the additional sewer capacity was covered with municipal bonds and the resort was made responsible for $28 million of it. That development never materialized and the resort’s share of the sewer bill was never paid. It has financially plagued the struggling proprietor since.

But, Hession said, the sewer is an asset that allows the resort to expand in the future. “I see the sewer as a positive thing,” he said. “We need to figure out a way to get the town paid and allow us to keep the capacity.”

Vernon Mayor Harry Shortway says he has been stedfast that taxpayers should not shoulder that financial burden.

“I think this will outline a solution to go forward where Vernon will be made whole and Mountain Creek will be able to develop,” Shortway said of the proposed agreement between the resort and the township.

Mountain Creek is the township’s largest taxpayer — with an annual tax bill of about $850,000 — and the backbone of the local economy, Hession said. 

“Vernon’s economy is built around being a resort town,” he said.”When Mountain Creek does well, the rest of the businesses around town also do well.”

SNOW Operating signed a 15-year lease for the ski resort last fall and took over operations of the water park in June. 

“The team at SNOW Operating has proven themselves to be very capable operators over the past year. We are very excited about working with them at Mountain Creek for years to come, and we look forward to a long and mutually beneficial partnership for all,” Jeffrey Koffman, of Mountain Creek Resort, Inc. said in a press release.

SNOW Operating and Mountain Creek, Inc. would share a 50/50 ownership of the property, but SNOW Operating would be the principal owner under the new agreement. During their time at the helm, SNOW Operating has focused on making what’s already there work better, Hession said, as opposed to previous owners who all had their eye on expansion.

One of the biggest tools SNOW Operating will use to improve Mountain Creek is technology, Hession said. If you pay with your mobile phone or at home you can go straight to the ski lift when you arrive. (The company can also track what customers are doing while they are there, including how many runs they take).

Construction is underway at the equipment rental shop that will change the flow and make it “look like a Disney ride,” he said. Instead of processing 380 rentals per hour, it will be able to handle 1,200 per hour. 

New snowmaking fan guns will strengthen production and erosion control measures and preventative maintenance were also done this summer to enhance the trails.

“It’s not the glamorous stuff, but it makes a big difference when the ski season’s here,” Hession said.

The mayor said he is optimistic about the future of Mountain Creek and its relationship with the township. 

“I look forward to this being put to rest,” Shortway said. “And I look forward to being a partner in really a symbiotic relationship.”

Communication and trust between the town and resort have improved since SNOW Operating took over, he added.

“They have skin in this game,” Shortway said. “Their families live here. This is their hometown. They understand my position.”

“They have everything to gain here but they know their decisions will affect the community,” he said.

 

Allison Pries may be reached at apries@njadvancemedia.com. Follow her on Twitter @AllisonPries. Find NJ.com on Facebook.  

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