Sunapee sale plan surprised NH leadersBy DAVE SOLOMON
State House Bureau
June 07. 2018 6:44PM
CONCORD — State officials are in the dark about the recently announced deal between Vail Resorts and the operators of state-owned Mount Sunapee Resort, and are pressing for answers.
Gov. Chris Sununu and Attorney General Gordon McDonald have both expressed concern that the lease on the property and control of the ski resort could change hands for the second time in less than two years, with no approval from the state, which owns the property.
That concern is shared by environmental groups, like the Sierra Club and the Friends of Mount Sunapee.
“One of the things we are advocating is that, at this time, we take a break, have a pause, and get a better understanding of what’s going on with the sellers and buyers, and do an audit,” said Catherine Corkery, New Hampshire chapter director for the Sierra Club. “The state has every right to do that.”
The problem is, no one seems to know exactly what the rights the state has as the lease on one of its most prominent and valuable properties changes hands.
The ski resort within Sunapee State Park in Newbury was operated by the state until 1998, when it leased the property to Tim and Diane Mueller, who now operate three ski areas (Sunapee, Okemo in Vermont and Crested Butte in Colorado) under the corporate umbrella of Triple Peaks.
According to the 1998 agreement, the lease holder can’t transfer or sell the lease without state approval, which is what happened in 2008, when the lease was sold by the Muellers to a company called CNL Lifestyle Properties, even though the Muellers continued to manage the property.
That transaction was reviewed and approved by the state.
But when CNL was bought outright by a New York hedge fund in 2017, state officials had no say in the transaction and only found out about it after the fact.
The news was of some concern, since the hedge fund that now owns the lease, Och-Ziff Capital Management Group, was the target of more than $400 million in fines and penalties levied by the U.S. Justice Department and the Securities and Exchange Commission.
MacDonald explained to concerned Executive Councilors at the time that the Sunapee lease agreement allows the state to intervene if the company holding the lease decides to sell or transfer the lease to someone else, but no provision was made for the state to intervene if the company holding the lease is bought by another company.
Neither the governor nor the attorney general know if the deal with Vail is structured to activate the state’s involvement or preclude it.
Erica Mueller, vice president and director of communications for Triple Peaks, couldn’t answer that question. “I think it might be best for the lawyers to figure that all out,” she said. Tim Mueller, co-owner and president of Triple Peaks, was unavailable for comment.
According to the press release issued by Vail, the Colorado-based company will purchase Triple Peaks from the Mueller family for $82 million, and at closing, Triple Peaks will pay $155 million to Och-Ziff with funds provided by Vail.
Does that trigger the state’s power to intervene or not? Sununu has already spoken to Tim Mueller, and he still couldn’t answer the question.
“I got a call from Tim Mueller at 7:30 a.m. and he said in 15 minutes we are going to announce it,” Sununu told the Executive Council on Wednesday. “We’ll have to look at the stipulations as to what rights the state has to refuse such a transaction.”
Possible good partner
Even if the state does have rights, it can’t arbitrarily deny the sale of the operating lease by the Muellers or the property lease by Och-Ziff, without good cause.
Sununu spoke highly of Vail, which was not the case with Och-Ziff.
“Vail is one of the most reputable management companies in the world, so on the face of it we have a good partner here, but what is the face of their plans, the time line and everything else?” Sununu said.
The lease payments are not set in stone, but are tied to the resort’s financial performance, with the proceeds going to the state park management fund.
“Sunapee has been doing incredibly well and has been a financial boon for the state parks,” said Sununu. “The Muellers’ investments have paid off. The amount the state receives is terrific, but it’s critical to ensure we maintain the level of care the Muellers had.”
MacDonald believes it is also critical that the state renegotiate the terms of the lease to establish its right to intervene under any form of transfer or sale.
“This lease agreement needs to be changed to ensure that when that asset is transferred by means of ownership, the state is protected, it gets to weigh in,” MacDonald told reporters on Wednesday.
Steve Russell, president of Friends of Mount Sunapee, says his group appreciates MacDonald’s sense of urgency.
“There is a sensitivity by the attorney general to this,” Russell said. “I believe the state doesn’t want to be embarrassed again (as with the Och-Ziff deal), so the more transparency the better, and that’s what our organization is concerned about.”
Over the years of managing the state-owned property, the Muellers acquired privately owned parcels around the state park, the fate of which is also unknown.
Efforts to expand the park in the past proved controversial, as would any plan to develop those private parcels.
“Mount Sunapee is at a critical juncture because the Muellers have been involved in the mountain since it was first leased in 1998, so it’s a big change to go from a family-run ski resort to Vail, which is a huge corporation,” Russell said.
Corkery says there’s a narrow window for the state to take any action to protect its interests, as parties involved in the transaction move toward a closing.
“I don’t think the state has ever requested an audit, as allowed by the lease, and this would be a great time to do that,” she said. “This is a resort on a state park, and is one of the anchors in the state’s revenue. I don’t think it’s unreasonable to make sure the revenues reported are confirmed.”