Park City Lease Dispute NEARS THE END
The Park City Mountain Resort (PCMR)/Vail Resorts/ Talisker lease drama is both a high-stakes gamble and a slow motion train wreck. One company is going to lose many millions of dollars, and even the winner will have spent tens of millions to achieve victory.

If PCMR’s lease is declared void, the company will lose control of the resort and most of the infrastructure it has built in the past 50 years. If the lease was renewed, then VR’s lease of Canyons--which made VR the landlord for the land occupied by much of PCMR’s terrain--looks very expensive, at $25 million a year. Especially since VR’s legal costs will approach $15 million.

The entire dispute turns on a single issue: does PCMR have a valid lease or not? The answer rests on a seemingly simple question: did PCMR renew its lease, as required by the lease agreement? Technically, no. Written notice was due on Mar. 1, 2011; PCMR delivered that notice on May 2, two days after the lease itself expired. It’s hard to believe that PCMR missed the deadline, but apparently it did.

Had PCMR “substantially” renewed the lease, as the company claims? After all, it was clear that the company intended to extend the lease. PCMR had been negotiating new lease terms with Talisker, its landlord, since 2009, and both sides have entered into a variety of agreements, with the town of Park City and others, that assume PCMR will continue as lessee.

Legally, though, that’s a difficult argument to make. Case law in Utah has established a “strict compliance” interpretation of lease agreements. In only a few instances (and not for decades) have the courts determined a lease to be renewed when the conditions of renewal have been “substantially” met.

Judge Ryan Harris had determined in an earlier ruling that PCMR must meet the strict compliance standard. But PCMR asked for a hearing on that decision, to argue its case for “substantial” compliance. After that hearing on Apr. 3, Judge Harris said that he might take longer than the usual 60-day limit he imposes on himself to issue his ruling. That deliberate approach may reflect both the large financial stakes involved and the complicated negotiations and agreements that preceded the written-renewal deadline.

If the judge upholds his earlier decision regarding strict compliance, Vail Resorts will become the lessee of the nearly 3,000 acres that currently are home to most of PCMR’s trails. And according to the lease agreement, any improvements--such as buildings, snowmaking and lift infrastructure--stay with the land. Vail Resorts would inherit all of that. PCMR has said it will remove as much of the infrastructure as it physically can, but just what must stay would probably be determined by the judge.

The base of the mountain, which PCMR owns, is another story. That base controls access to the mountain terrain, and houses the terminals of key access lifts. PCMR also owns water rights for snowmaking.

PCMR has said it will not sell any of this, and would establish a Woodward Park City training facility and program on the property. It has referred to this as the “nuclear option.”

For its part, Vail--which became involved in 2013, when it leased Canyons from Talisker and, as part of the lease, became the landlord for PCMR--has said that it will abide by the court’s decision. If the court rules the lease valid, VR hopes to work with PCMR, settle on new lease terms, and work cooperatively like a good neighbor. But if the court rules the PCMR lease invalid, VR intends to operate the terrain itself. That scenario led Vail to say it would offer to buy the base facilities and property from PCMR.

And there is a second ruling for Judge Harris to make. PCMR has claimed, most recently in an Apr. 8 hearing, that the VR lease with Talisker is really a sale, and that Talisker owed PCMR the right of first refusal on the land. Such a ruling could ignite years of additional wrangling over title to the land beneath the bulk of PCMR’s terrain. cont.
Oh, and whatever the judge rules in the next month or two, we expect the losing side will appeal to the Utah Supreme Court. This war has a few more battles to go.

Tamarack to Get New Life?
When Credit Suisse (CS) secured most of Tamarack Resort at a bankruptcy sale in March, it signaled the beginning of the end of the uncertainty around the resort’s fate. Credit Suisse, which was Tamarack’s main creditor, now owns nearly all of the resort: the lifts and trails, most of the developable property, and a handful of cottages and townhomes. The total cost: about $80 million. The only thing it doesn’t own is the unfinished base village, which reverted to the general contractor.

CS has engaged Replay Resorts to help it determine how to manage and, most likely, eventually sell the resort. Replay principals include several former Intrawest executives, so the company is quite familiar with winter resorts.

Before it can sell the resort, though, CS must wait for the one-year redemption period to expire. In the meantime, it has engaged the Tamarack Municipal Association (TMA), the homeowners group, to continue running the resort through December 2015. The group has operated the area for the past four seasons.

TMA’s efforts have kept the resort functioning, and that should help Replay and CS present the area in a good light. Operating four days a week as well as major holidays, Tamarack has seen 45,000 to 50,000 visits in recent winters, mostly from locals and families within a 100-mile radius.

balsams plan begins to take shape
There’s still a lot that has to fall in place before an ambitious reinvention of the Balsams Wilderness Ski Area takes place, but the stars are beginning to align. The governor and the state’s senators have declared support, as has the local county. Even the wind farm operator, whose turbines could complicate the development, has expressed willingness to do its part.

In late February and early March, the group led by American Skiing Company founder Les Otten began to detail some of its plans. Those call for quadrupling the size of the ski area, expanding from one to three peaks and increasing the vertical drop from 1,000 to about 1,700. To complete this vision, Balsams needs the buffer zone around a string of ridgetop wind turbines reduced, from 1,300 feet to 500 feet. The power company has said it is willing, so long as the reduced zone protects individuals’ safety.

More noteworthy, perhaps, is the Balsams’ intent to craft a full, active year-round program. The details remain sketchy, but Otten seems intent on incorporating activities and sports that will prove irresistible to Millennials and their kids. The initial news of Otten’s involvement, which was limited to a $35 million renovation of the historic Hampshire House at Balsams, now appears to be just the tip of the iceberg.

Interconnect: This Time It’s Different
When Ski Utah and representatives from Alta, Brighton, Canyons, Deer Valley, Park City Mountain Resort (PCMR), Snowbird, and Solitude declared their support for an over-the-snow connection between all seven resorts, called ONE Wasatch, it seemed like déjà vu all over again. Or is it?

While the interconnect idea has been around for decades, the latest plan (more concept than plan, actually) would put all lift and trail additions on private land. This simplifies the permitting process and reduces opponents’ opportunities for obstruction.

Critics raise three main areas of concern: water quality and conservation, encroachment on backcountry terrain, and introducing unprepared visitors into the backcountry. All three are legitimate concerns. However, the resorts have shown that they can build lifts and cut trails without contaminating the water supply. The addition of 1,000 acres of new inbounds terrain might cut into some current backcountry areas, but there will still be plenty of superb backcountry terrain available for those who seek it.

A final obstacle is more pragmatic: the snowboarding bans at Alta and Deer Valley. But even that need not break the deal. While Deer Valley has declared its intention to maintain its ban into the future, Alta has said it might reconsider its ban as One Wasatch unfolds. The current lawsuit against Alta’s ban might drive the resort to reconsider its ban in any case.

The attraction of One Wasatch is obvious. Connecting these resorts would allow interconnected access to more than 18,000 skiable acres, 100 lifts and 750 runs. That would make it the biggest complex in North America and rival the biggest of Europe’s “ski circuses.”

All it takes to put the concept into motion is acting on it. Who will take the first step?