To their credit, Hermitage Club officials have been pretty forthright about the their financial situation. Owner Jim Barnes and others have made the rounds in the community, talking about how the poor winter of 2015-2016, coupled with Act 250 delays in approving the Haystack ski area development master plan, put them behind the eight ball financially.
But the master plan was approved, and that was supposed to be the key to unlocking additional financing for the resort. That financing, according to Barnes, would get the Haystack development moving again and start the cash flowing.
To this point, that hasn’t happened. What is interesting about all of this is that the Hermitage Club’s delay in paying taxes on its properties makes everyone in the two towns creditors to the club, because taxpayers are essentially holding a note while the Hermitage Club gets its financial house in order.
There is certainly an irony in the club’s money mess that is not lost on many. The Hermitage Club caters to well-heeled, successful people who want to join an exclusive resort community. There’s nothing wrong with that, and for those who can afford to do so, more power to them.
But it is more than a little ironic that a resort that asks members to pay $85,000 to join and pay annual dues north of $5,000 can’t make its own payments. No doubt that is frustrating to those who have been impacted by the cash woes of the club.
And there are certainly many who have been impacted by the financial woes of the Hermitage Club. It’s not just municipalities. We’ve heard from plenty of business people in the valley, off the record, of how they are also waiting for payments from the Hermitage Club. We don’t know how much that total may be, but we’re guessing it rivals the amount owed in property taxes, or even exceeds it.
In fact, the lack of payments to businesses from the Hermitage Club is the valley’s elephant in the room. Everyone knows it’s there, but no one really wants to talk about it, at least publicly. We understand why owners or managers of a business wouldn’t want to go on the record about lack of payment. They may never get paid if they start carping in the press about a cash crunch.
But the reality is, if cash doesn’t start flowing soon, it can hurt just about everyone and drag down many. The Hermitage Club debt being held by local businesses and municipalities has created a house of cards that is propping up much of the economy of the valley, and no one wants to see it collapse.
Historically, Haystack Ski Area has had its ups and downs, both financially and with ownership. It was just a decade ago that the former owner pulled the plug on the first attempt to make Haystack into a private club. Prior to that, American Skiing Company owned the resort, and Haystack suffered along with all of the other resorts owned by the heavily-leveraged ASC, including Mount Snow. In the mid-1980s Haystack ownership under Don Tarinelli mis-timed the real estate bubble, lost money, and ended up having to sell the resort to ASC for pennies on the dollar.
Given that history, and how much has been invested into Haystack and other properties in the past five years, no one wants the Hermitage Club to fail. We’re all invested in its success, in one way or another.
But it can’t stay the way it’s going. Local governments and businesses cannot continue to be a de facto bank for the Hermitage Club. Ownership has to find a way to get current with its bills and rebuild confidence. If not, we all will pay the price, and that’s a check no one wants to write.