By Jonathan Shikes
By Michael Roberts
By Jonathan Shikes
By Michael Roberts
By Michael Roberts
By Michael Roberts
By William Breathes
By Melanie Asmar
As officials of the Winter Park ski area prepare to raise the curtain on what's supposed to be a new era of accountability, questions continue to swirl about the finances of the city-owned resort.
The Winter Park Recreational Association, the secretive private board that runs the lucrative resort for the city, is scheduled to brief the city council September 9 on development plans at the ski area. That briefing was called for in a council resolution passed last May that attempted to pierce the shroud that has surrounded ski-area operations. In it, the council asked the WPRA to begin providing regular reports on its operations and, for the first time ever, to submit its balance sheets to the council.
The resort says it plans to turn over audited financial statements by the council deadline of September 1. But the fiscal picture at the WPRA, a non-profit corporation that last year incorporated two for-profit subsidiaries, is likely to remain hazy long after that.
As other Colorado ski resorts acquire new holdings and chart plans for further expansion, a critical development deal the WPRA expected to sign last May for Winter Park has yet to be finalized. Questions are mounting over whether the city may make a $1 million cash kickback to the WPRA to help it buy new real estate. And one city councilman, stinging from past clashes with the wealthy socialites who dominate the board, says he's afraid the group may try to renege on its financial commitments to Denver.
"I guess I'm rather skeptical with what is happening with the Winter Park area--whether we made the right decision in giving it away to them, in effect," says councilman Ted Hackworth.
In 1994, the WPRA, which that year pulled in just over $35 million in revenues, convinced the city to give it sweeping authority over real-estate development at the resort in return for an annual payment of $1 million plus 3 percent of total revenues. Now, Hackworth says, he fears that the recent consolidation in Colorado's ski industry--and the WPRA's determination to build a "base village" of condos and retail shops--may lead the board to try to worm out of its annual payment.
"I would anticipate a good possibility that Winter Park will come to us and say, 'You know, we really can't afford to give you $2 million,'" says the councilman.
Andrew Wallach, an aide to Mayor Wellington Webb who has served as Webb's point man on Winter Park, says he hasn't heard of such a proposal. Wallach says he "wouldn't be shocked" if the ski area made such a request but adds that he also wouldn't be shocked "if the city said no."
"I think both the mayor and the council would be interested in hearing those arguments and sort of thinking through the long-term consequences of any decision," says Wallach. "But I also think they're very interested in investment opportunities we have now for parks in the city." Webb has said he hopes to pay for a massive new Commons Park in the Central Platte Valley with money from Winter Park.
Hackworth says his fears that the WPRA may be looking for wiggle room in its deal with the city are based largely on a presentation made to the council July 10 by Denver investment banker Marshall Wallach (no relation to Andrew Wallach). At that briefing, Wallach, who advised Webb during the negotiation of the new lease agreement, stressed the importance of plowing profits back into the resort and described the intensely competitive nature of the Colorado ski industry, which in recent weeks has been shaken by the purchase of several new properties by the company that owns the Vail ski area.
Councilman Dennis Gallagher, another vocal critic of the city's relationship with Winter Park, says he, too, was troubled by Marshall Wallach's presentation. "What he talked about was how the culture is changing, and everybody's getting older and there won't be as many skiers," says Gallagher. "That made everybody squeamish, because if there aren't as many skiers and everybody's getting older, what's going to happen financially [at Winter Park]?"
Marshall Wallach didn't return phone calls seeking comment. But WPRA attorney Eugene Hohensee denies that the resort wants to skip a payment. "The payment is due September 1, and to the best of my knowledge and belief, the payment will be made in total," he says.
Hohensee, who has plotted legal strategy for the WPRA as it has consolidated control over the city's resort, says he's unaware of any plan to push for a renegotiation of the May 1994 agreement. But he's less firm on the question of whether the WPRA may ask for another form of relief from the city: a kickback of money Denver is poised to receive from the Moffat Tunnel Commission, another player at Winter Park.
The bluebloods at the WPRA and the elected members of the tunnel board, which actually owns the land beneath the area's existing base area, have feuded for years ("Still Railing," May 16). Earlier this year, the ski area successfully lobbied the legislature to pass a law dismantling the tunnel commission, but not before the tiny state body headed off what it called a "naked land grab" and cut a deal to sell its property to the WPRA at fair market value.
The ski area is already arranging financing for the $1.4 million transaction, which Hohensee says he expects to close in early to mid-September. (The resort has a healthy incentive to see that it does: Should the deal fall through, a lawsuit filed against the WPRA by the tunnel board seeking to boot the resort off its land could be resuscitated.)
But there is a scenario under which Winter Park could quietly recoup its expenditure. Proceeds from the sale of the tunnel board land will be distributed to the counties whose taxpayers helped build the railroad bore, and because Denver taxpayers footed most of the bill, the city expects to receive roughly 90 percent of the money. Would the WPRA then ask the city to subsidize the purchase by simply forwarding the money back to the resort?
"We don't have any final decision on that," Hohensee says. The Webb administration's Andrew Wallach says he's heard rumors that the WPRA may ask for the cash. "My reaction is I think it would be a difficult sell," he says. "But I'm assuming people would listen with an open mind."
Equally uncertain is the final resolution of the resort's base village. On February 27, the WPRA announced it had selected Hines, an international real estate firm, to build the village, a mix of condos, retail shops and a hotel. The resort added that a definitive agreement between the WPRA and Hines was expected within ninety days. But more than six months since the letter of intent was signed, there is still no definitive agreement, leading to speculation that the Hines deal may be in jeopardy. Hohensee, however, says the deal is alive and well.
"The delays are attributable to nothing more than the number of parties involved," he says. "We believe it'll be signed. It's just not ready to be signed." The lawyer adds that the WPRA has negotiated an extension of the letter of intent and expects the agreement to be signed in time to begin construction on the base village in 1997 or 1998.
Before it breaks ground on that development, though, the WPRA has a tougher nut to crack: the city council, which after years of ignoring the city's multi-million-dollar asset in the mountains is now beginning to ask tough questions. Hackworth, for instance, has been fighting to force the WPRA to turn over minutes of its board meetings, which the group claims are confidential. "If we don't get a lot more cooperation," says the councilman, he and his colleagues may subpoena the records of city parks manager B.J. Brooks, who holds an honorary seat on the board.
That means the September 9 meeting with the council may represent a break with tradition for the WPRA, which has grown accustomed to smooth downhill runs at city hall. For the city's controversial ski area, it could be all uphill from here.