Gunstock Expansion Plans

[John Mercier]

So we punish the GAC and management team for what others did in the past?
WOW.

The new GAC, appointed by the current delegation with the blessing of Silber/Sylvia, could have made such a request... it chose to rehire the management team.

Your horse is dead.
The only open item on the agenda is the $30K.

No private entity with any financial backing is going to support an out of the way ski area that has no room for expansion in the food and accommodations area... even Sunapee had large lawsuits against the State on the issue.

[Cobaltdeadhead]

Sunapee under Vail is the perfect example of exactly what we don't want to happen to Gunstock. I'm sure it makes a lot of money, but Vail runs that place like garbage. Very slow and timid on snowmaking, horrible F&B operations, uncomfortably crowded and considerably more expensive than Gunstock.

[Major]

It is apparent that what I do not know about the legal entanglements between the delegation, the County Commissioners, the Gunstock Area Commissioners, and the full time staff can fill volumes. I appreciate the education.

However, at some level, doesn't the county delegation control the finances of the county budgets? And if so, are there mechanisms in place for setting salaries and awarding bonuses? For example, did the senior leadership of the Sherriff's department or the county nursing home receive merit bonuses. I guess I shouldn't have much heartache about the bonuses if they were awarded in a proper manner.

And why is the GAC and the full time employees against an audit? I was a managing partner in a law firm for 8 years. If one of my partners, or our firm's bank, wanted to audit our books, I would welcome such a request. If I went kicking and screaming against it, wouldn't that raise issues to the other stakeholders?

And finally, why is the GAC making political contributions? Shouldn't a government owned entity be agnostic?

[jeffk]

It seems to me there is a critical distinction between Gunstock and other government agencies. Gunstock is a profit generating business. Other government agencies are taxpayer funded necessary evils. Government usually does not “own” or run businesses and the current mess surrounding Gunstock is a prime example of why not.

The philosophy of a business is that it is profitable to all involved. Owners (in this case the County), managers, affiliated vendors, etc. It is absolutely normal that the management of a corporation vote itself bonuses and significant salaries. The expertise of these people is in demand and if the success and profits they generate are not shared with them, they will go elsewhere.

Government does not make a profit. It does not generally understand the necessities of business. They talk about “accountability to taxpayers” and demand audits so they can niggle over small things to assume control over something that they have NO idea how to manage. An example is the $500 campaign donation to Sununu. This is a typical action for a business to take. It is a TINY issue that would have been a Nothing Burger to a business. Even for Gunstock, this should have been a simple suggestion to management that in the future the Commission would prefer that no political donations be made. But government officials can’t solve problems like that. They must make it into some type of major, disruptive problem.

As to an audit, the Country is receiving $7+ M? in earnings from Gunstock this year and has gotten good money in the past years. The resort has a good reputation and improving facilities that draw more customers. Are the people wanting an audit saying that they get NO financial reports from management? That’s absurd. What an audit will be used for is to deep dive for spending that a business would routinely make but government might not. Then the government troublemakers will make ridiculous attacks on management.

Let’s think about the likely outcome of this. The current management gets fed up and leaves. Any decent managers would look at this mess and want nothing to do with it. They can make more money elsewhere. Gunstock would probably end up with political cronies that have no clue how to run the place. Profits would drop and the facilities would go downhill.

Instead of a fishing expedition audit, maybe the politicians should respectfully sit down with the management and ask them about any expenditures they might want more information about.

Government in charge of a business is a bad idea. Government micromanaging a business to government standards is a disaster.

[Descant]

Originally Posted by jeffk

It seems to me there is a critical distinction between Gunstock and other government agencies. Gunstock is a profit generating business. Other government agencies are taxpayer funded necessary evils. Government usually does not “own” or run businesses and the current mess surrounding Gunstock is a prime example of why not.

The philosophy of a business is that it is profitable to all involved. Owners (in this case the County), managers, affiliated vendors, etc. It is absolutely normal that the management of a corporation vote itself bonuses and significant salaries. The expertise of these people is in demand and if the success and profits they generate are not shared with them, they will go elsewhere.

Government does not make a profit. It does not generally understand the necessities of business. They talk about “accountability to taxpayers” and demand audits so they can niggle over small things to assume control over something that they have NO idea how to manage. An example is the $500 campaign donation to Sununu. This is a typical action for a business to take. It is a TINY issue that would have been a Nothing Burger to a business. Even for Gunstock, this should have been a simple suggestion to management that in the future the Commission would prefer that no political donations be made. But government officials can’t solve problems like that. They must make it into some type of major, disruptive problem.

As to an audit, the Country is receiving $7+ M? in earnings from Gunstock this year and has gotten good money in the past years. The resort has a good reputation and improving facilities that draw more customers. Are the people wanting an audit saying that they get NO financial reports from management? That’s absurd. What an audit will be used for is to deep dive for spending that a business would routinely make but government might not. Then the government troublemakers will make ridiculous attacks on management.

Let’s think about the likely outcome of this. The current management gets fed up and leaves. Any decent managers would look at this mess and want nothing to do with it. They can make more money elsewhere. Gunstock would probably end up with political cronies that have no clue how to run the place. Profits would drop and the facilities would go downhill.

Instead of a fishing expedition audit, maybe the politicians should respectfully sit down with the management and ask them about any expenditures they might want more information about.

Government in charge of a business is a bad idea. Government micromanaging a business to government standards is a disaster.

JeffK makes some good points. You may be right on different scales, BUT in NH there are examples of government run businesses that are successful. Obvious to most is the state liquor outlets. Another is the state park system which is self supporting. In Hillsborough County the county nursing home is a profit maker.

If I remember correctly, when Mueller, et al, started leasing Sunapee, it was pretty shabby and the renewable 10 year leases allowed them to invest in fixed assets that led to more skiers and other improved revenues. Nobody wanted to lease Cannon, but the money from Sunapee that went to Cannon improvements led to increased skier visits and revenues there too.

[rocket21]

Originally Posted by John Mercier

So we punish the GAC and management team for what others did in the past?
WOW.

I don't think anyone is suggesting the GAC and management team be punished for actions for which they were not responsible. The past is relevant to the delegation, in that they a fiduciary responsibility to ensure protect taxpayers by ensuring these problems don't recur.

Originally Posted by John Mercier

No private entity with any financial backing is going to support an out of the way ski area that has no room for expansion in the food and accommodations area.

Wachusett is one of the most successful ski areas in the country and its operator has virtually no ability to expand. The operator bid on the New Hampshire areas (Cannon/Sunapee) knowing they'd have to focus on existing operations.

Originally Posted by Descant

JeffK makes some good points. You may be right on different scales, BUT in NH there are examples of government run businesses that are successful. Obvious to most is the state liquor outlets. Another is the state park system which is self supporting.

The NH state park system is self-supporting in name only. It is heavily subsidized from the general fund on a capital basis and also has significant deferred maintenance.

Originally Posted by Descant

If I remember correctly, when Mueller, et al, started leasing Sunapee, it was pretty shabby and the renewable 10 year leases allowed them to invest in fixed assets that led to more skiers and other improved revenues. Nobody wanted to lease Cannon, but the money from Sunapee that went to Cannon improvements led to increased skier visits and revenues there too.

Both ski areas had numerous qualified bids. The Cannon lease was supposed to be awarded at the same time as the Sunapee lease, but an unknown party was able to get the state to pull it at the last minute.

Sunapee was a 20-year lease with two 10-year automatic renewals. Without the millions in Sunapee revenue (and millions in general fund dollars), Cannon would have been in jeopardy.

Originally Posted by Cobaltdeadhead

Sunapee under Vail is the perfect example of exactly what we don't want to happen to Gunstock. I'm sure it makes a lot of money, but Vail runs that place like garbage. Very slow and timid on snowmaking, horrible F&B operations, uncomfortably crowded and considerably more expensive than Gunstock.

Vail was a dumpster fire in New Hampshire last year. That said, Gunstock was no bargain at $96/day.

Originally Posted by jeffk

As to an audit, the Country is receiving $7+ M?

No, the county receives about $300K from Gunstock from the most recent fiscal year.

I believe the $7M figure is what's in the bank, which I suspect is a lot of "restricted" cash (e.g. 2022-23 season pass revenue). A much better situation than a few years ago, when Gunstock couldn't get through the off-season without a county-backed bridge loan.

[John Mercier]

Wachussets? A little different than out-of-the-way Gunstock.
And the operator, Okemo, sued the State for the expansion...
so what they ''knew'' seems to be different than what you are projecting.

But if you feel strongly about it...
Suggest to the GAC that you would like to lease the area...
Lay out formal proposal and bring forth your financials to show you can cover it... and maybe they will.

Other than that... the horse is dead.
The only issue is the $30k.

[rocket21]

Originally Posted by John Mercier

Wachussets? A little different than out-of-the-way Gunstock.

Both are mid-sized, day-trip areas located less than two hours from millions of people, and are facing capacity issues with their current footprints. Some might suggest that Wachusett has perfected the model.

Originally Posted by John Mercier

And the operator, Okemo, sued the State for the expansion...
so what they ''knew'' seems to be different than what you are projecting.

That's not quite what happened...

Originally Posted by John Mercier

But if you feel strongly about it...
Suggest to the GAC that you would like to lease the area...
Lay out formal proposal and bring forth your financials to show you can cover it... and maybe they will.

Members of the GAC and Belknap County Delegation have both expressed the opinion that they do not have the authority to lease the ski area.

[John Mercier]

One is 50 minutes, and the other wouldn't have any effect on hotels/motels/STR if it were closer.

So again the papers got it all wrong?

If they don't have the authority to private lease... then why are you focusing on leasing it like Sunapee?

[Cobaltdeadhead]

Comparing Gunstock to Wachusett is disingenuous. Wachusett has millions more people within an hour drive than Gunstock.

Rocket is focused on a lease for the same reason as Sylvia. That's his ideology. He has a website fully devoted to ripping the state for how they run Cannon. Even links articles from right wing propaganda "news" agency Granite Grok

http://www.taxpayersforcannon.com/news.php

[Descant]

Originally Posted by John Mercier

One is 50 minutes, and the other wouldn't have any effect on hotels/motels/STR if it were closer.

So again the papers got it all wrong?

If they don't have the authority to private lease... then why are you focusing on leasing it like Sunapee?

Right! Maybe lease is the wrong word? I'm sure if there were an RFP issued, two parties could come up with an imaginative agreement/arrangement. It just takes willing participants. With all due respect to the delegation,, not all members of the delegation are willing. At the state level, Administrastyive Services has expertise that the ;legislature can look to. I'm not sure Belknap County has a parallel body. There are/were some very experienced folks on the GAC. I hope a level of trust there can be re-established.

[John Mercier]

I think lease is the word...
But for it to be worthwhile... the county is going to want more than they are currently getting, and private company is going to want a return on investment that is not hampered by the preclusion of vertical and lateral integration.
Because that is the way that you expand the profit potential over time.

The old GAC, and I believe if they are honorable - the new GAC, will seek the same path.
It will be up to the county to work out a better lease with those improvements.

But as it stands... the $30k is the only thing really yet to be resolved.

[rocket21]

Originally Posted by John Mercier

I think lease is the word...
But for it to be worthwhile... the county is going to want more than they are currently getting, and private company is going to want a return on investment that is not hampered by the preclusion of vertical and lateral integration.
Because that is the way that you expand the profit potential over time.
The old GAC, and I believe if they are honorable - the new GAC, will seek the same path.
It will be up to the county to work out a better lease with those improvements.

The biggest obstacle for a lease arrangement would likely be the bureaucratic process, e.g. determining a legal method to pursue it (since I don't think any GAC member claims to have that ability). There are definitely ways for the county to maximize its net proceeds from Gunstock while offloading risk. That said, I think there would be huge issues if the county attempted to let a lessee pursue the ambitious master plan as presented last year.

Originally Posted by John Mercier

But as it stands... the $30k is the only thing really yet to be resolved.

It sounds like there are quite a few open issues that need to be resolved, but the legal mess does seem to be an open issue.

[John Mercier]

Originally Posted by rocket21

The biggest obstacle for a lease arrangement would likely be the bureaucratic process, e.g. determining a legal method to pursue it (since I don't think any GAC member claims to have that ability). There are definitely ways for the county to maximize its net proceeds from Gunstock while offloading risk. That said, I think there would be huge issues if the county attempted to let a lessee pursue the ambitious master plan as presented last year.



It sounds like there are quite a few open issues that need to be resolved, but the legal mess does seem to be an open issue.

Having the ability doesn't change the financials... and whether it is all leased, or just portions, the food and accommodations part will need to be on the table. The campground should be seeing net positive revenue... but the only way to expand that is horizontally over more acres... while the hotel would go vertical. We may see it at the lodge rather than the peak... but without disrupting operations, that would be really hard... and a very complex lease.

[rocket21]

Originally Posted by John Mercier

Having the ability doesn't change the financials... and whether it is all leased, or just portions, the food and accommodations part will need to be on the table. The campground should be seeing net positive revenue... but the only way to expand that is horizontally over more acres... while the hotel would go vertical. We may see it at the lodge rather than the peak... but without disrupting operations, that would be really hard... and a very complex lease.

I'm not understanding the first part of your message.

With regard to existing and future operations, as well as the campground, this has been encountered before. Mt. Sunapee also has a campground. I don't believe slopeside lodging in the park was ever a consideration with the lease.

I don't understand the push to build a hotel at Gunstock. What is the point of having a county-operated mega-resort? Doesn't Gunstock better serve county residents if it's an affordable, accessible, minimally-developed day-area?

I certainly get why certain developers would like to build a premium hotel up on the Overlook, but should county land be used for that purpose?

[John Mercier]

The leasee had attaching property that the State was not willing to allow either.
The lawsuit ended that.

To increase the accommodations at Gunstock in the current format, you would need to expand the campground (more acres) or build vertically at the lodge (disruption of current business).

And no, it better serves residents if it can support higher payments to the county... as most residents do not ski.

But even a private operator would tell the GAC/Delegation, that to keep slope fees low enough... with rising need for snowmaking and the amount of energy that goes to such... you are going to need something that subsidizes it.

[rocket21]

Originally Posted by John Mercier

To increase the accommodations at Gunstock in the current format, you would need to expand the campground (more acres) or build vertically at the lodge (disruption of current business).

To increase accommodations? There are essentially no accommodations during ski season, apart from two cabins that sleep a total of 8 adults.

Originally Posted by John Mercier

And no, it better serves residents if it can support higher payments to the county... as most residents do not ski.

If the primary goal of Gunstock is to provide higher payments to the county, then it should have been leased long ago.

Originally Posted by John Mercier

But even a private operator would tell the GAC/Delegation, that to keep slope fees low enough... with rising need for snowmaking and the amount of energy that goes to such... you are going to need something that subsidizes it.

If Gunstock were to maintain its current footprint, there wouldn't be much more snowmaking capacity needed. Likewise, there would be LESS energy needed due to advances in snowmaking energy efficiency.

The proposed hotel is not the panacea for the county. That said, it could be one heck of a moneymaker for a private developer, especially if the county foots the bill for the infrastructure (it won't be cheap to get the road and utilities halfway up the mountain).

[John Mercier]

Odd, Gunstock is showing winter camping.
https://www.gunstock.com/camping/winter-camping/

It could never find anyone with the financials to lease it.
The new GAC had the option to go that way... but I think they know that no private equity is willing to do so... if not they could talk to Goddard.

The same footprint will require more snowmaking... as we are seeing less natural snow. The efficiency increases will not keep up with the price increases.

All things being constant... slope fees will need to rise.
Lower fees for county residents would need to be offset with higher fees for non-residents.
If you lose some non-residents due to the higher fee, and other options for them, you have to increase the fees for the remaining non-residents starting the cycle again. At a certain point, there aren't any non-residents to transfer the costs to.

[John Mercier]

Originally Posted by Major

It is apparent that what I do not know about the legal entanglements between the delegation, the County Commissioners, the Gunstock Area Commissioners, and the full time staff can fill volumes. I appreciate the education.

However, at some level, doesn't the county delegation control the finances of the county budgets? And if so, are there mechanisms in place for setting salaries and awarding bonuses? For example, did the senior leadership of the Sherriff's department or the county nursing home receive merit bonuses. I guess I shouldn't have much heartache about the bonuses if they were awarded in a proper manner.

And why is the GAC and the full time employees against an audit? I was a managing partner in a law firm for 8 years. If one of my partners, or our firm's bank, wanted to audit our books, I would welcome such a request. If I went kicking and screaming against it, wouldn't that raise issues to the other stakeholders?

And finally, why is the GAC making political contributions? Shouldn't a government owned entity be agnostic?

The Delegation approves the County budget... but does not set salaries/etc; that is the County Commission, an elected body.

The GAC hires for Gunstock and approves their budget... the Delegation only has the authority to appoint the GAC members on a specified format.

Gunstock is independently audited every year and has been for many years. Ness stopped this year's annual audit... when he became chair. The full time employees/management hasn't really expressed opposition to the audit.

The political contributions were approved by the GAC... which approves the budget for Gunstock.

[Major]

Originally Posted by John Mercier

The Delegation approves the County budget... but does not set salaries/etc; that is the County Commission, an elected body.

The GAC hires for Gunstock and approves their budget... the Delegation only has the authority to appoint the GAC members on a specified format.

Gunstock is independently audited every year and has been for many years. Ness stopped this year's annual audit... when he became chair. The full time employees/management hasn't really expressed opposition to the audit.

The political contributions were approved by the GAC... which approves the budget for Gunstock.

Okay, I think we are getting somewhere. Thank you for the helpful information. I have a few more questions.

The Delegation approves the budget, I get that. I work better with analogies. In my firm, the firm's directors set salaries and bonuses for the firm's staff (assistants, paralegals, HR, IT, Accounting, etc.). As a member of the Management Committee, we reviewed the directors' recommendations and made changes that we saw fit to make. So I guess I'm asking does the Delegation have the ability to change a budgetary item or to make suggestions to expenses, including salaries? If so, it appears to me that the Delegation has some level of control of these issues. If not, then that's fine too, I guess.

I read today in the LDS that Gunstock is subject to an annual audit that is authorized by the GAC and conducted by a third party. In reading between the lines, it appears that the new leaders of the Delegation wanted to conduct its own audit with it's own third party auditors. Again, using an analogy, let's say Gunstock was a private entity, and was the subject of a sale to a Buyer. If Gunstock denied the buyer's request for an independent third party audit, but instead insisted that the Buyer rely on Gunstock's own third party audit, wouldn't that raise red flags? I go back to a statement that I made earlier, if I ran a business (which I do), I would welcome any and all audits to establish trust and transparency. The last thing I would do is rely on "we've always done it this way and you should be happy with it" mentality. And to my earlier points, wouldn't have the GAC and the full time management been better off taking this approach rather than being insulted?

And finally, you did not answer my question about the political contribution. I read, like you, that the GAC approved (and has always approved) this type of political contribution. I get it. That doesn't make it right. Gunstock cannot have it both ways -- being treated as a private entity and as a public concern -- it is a public concern and the appearance of impropriety of dolling out political contributions far outweighs its benefits.

[StevenGilford]

Originally Posted by Major

And to my earlier points, wouldn't have the GAC and the full time management been better off taking this approach rather than being insulted?

If you believe Silber, Ness and Strang, they were just "asking questions and providing oversight"

If you believe just about everyone else including the majority of Gunstock staff, Ness and Strang were using this sham "audit" approach as a way to legitimize their toxic micromanagement behaviors and harassment of the management team.

I believe the latter, so don't think that the full-time management team should have just gone along with it.