1. Purchase Price
Sean Hayes has agreed to purchase 226 acres of Powder Ridge for $700,000. Where did the price come from? In a memo dated Feburary 27, 2012, Town Assessor Steven Hodgetts determined the property to have a restricted land value of $705,000.
The total value of the land was calculated by combining the value of 175 "undeveloped" acres at $1,200/acre with the 45 acres of the ski area at $11,000/acre for the total of $705,000.
Had the town not stripped the land of its development rights and allowed the property to be developed as residential buildings lots, Hodgetts wrote, the value could exceed $3 million.
(see attached document for more detail)
2. Payment Breakdown
Sean Hayes has provided the town with a $25,000 down payment on the property. If residents approve the agreement at referendum, Hayes must pay the town an additional $75,000 at closing, which by law must take place within three weeks of the referendum.
In addition, the agreement requires Hayes to make six (6) yearly installment payments of $100,000 to the town.
3. $225,000 to Middlefield Holdings
If the sale of Powder Ridge takes place before Dec. 1, 2012, the Town of Middlefield must pay Middlefield Holdings $225,000.
In the summer of 2008, Middlefield Holdings purchased Powder Ridge at auction for $2.75 million. Months later, the Town of Middlefield purchased the property from Middlefield Holdings for $2.55 and under a lease back agreement agreed to pay the company $225,000 if the town sold the property before Dec. 1, 2012.
While the town has not received a formal committment from Middlefield Holdings, the town's attorney has reached an understanding with Middlefield Holdings that would reduce the payment to $200,000. $100,000 of the payment would be due at closing, while the remaining $100,000 payment would be due a year from the closing date without interest.
4. Buyer's Obligations
Under the terms of the agreement, Sean Hayes will be required to make a miniumum investment of $2 million to restore Powder Ridge and provide downhill skiing by Dec. 31, 2014.
The agreement also requires Hayes to offer 10 consecutive years of skiing. Provided he meet a predetermined burden of proof that skiing is no longer commercially viable, Hayes may discontinue skiing at Powder Ridge but will be required to pay a fine of $50,000 every year until the 10 years has expired.
5. 2007 Referendum & Open Space
In April 2007, Middlefield residents voted 1,097 to 151 at referendum to bond up to $2.85 million to purchase Powder Ridge in order to preserve the area as ski, recreation, and open space land.
According to town regulations (04.03.06), Open Space is defined "as a parcel or parcels of land or an area of water or a combination of land and water that is permanently dedicated to the preservation of scenic or natural areas or cultural resources, outdoor education or recreation, forestry or agricultural uses."
(see attached documents for more detail)
6. Independent Financial Analysis
Last month, the Town of Middlefield conducted by Guilmartin, DiPiro and Sokolowski, a certified public accounting firm in Middletown.
The analysis found that Hayes has the funds available to purchase and restore Powder Ridge and has a demonstrated a viable business plan, according to selectmen.
(see attached document for more detail)
7. DECD Grant
A $500,000 grant has been awarded to the Town of Middlefield by the state's Department of Economic and Community Development for structural improvements to Powder Ridge.
The town will release the money once Sean Hayes has meet his obligations to invest $2 million into restoring the property as well as providing downhill skiing by Dec. 31, 2014. The agreement includes an idemification clause, which protects the town in the event that Powder Ridge closes after the money is spent.
8. Meriden & Wallingford Taxes
The Town of Middlefield currently pays Meriden and Wallingford annual property taxes for a small part of the Powder Ridge property which exists in those two towns. In December, the town will owe Meriden $8,744.44 and Wallingford $470.24, for a total of $9,214.68. If the property is sold, the buyer would be responsible for paying those taxes thus saving the town more than $9,200.
9. Insurance & Maintenance Costs
The Town of Middlefield currently pays $10,550 annually for insurance on Powder Ridge. The insurance covers liability only. If the property is sold, the buyer would be responsible for paying for insurance thus saving the town more than $10,000.
The Town of Middlefield is spending an average of $5,000 annually on various costs related to the maintenance of the Powder Ridge Property. The costs include oiling the ski lifts, seeding ski slopes to prevent erosion, tarps for roofs, plywood, etc. If the property is sold, these miscellaneous costs are eliminated.
10. Tax Revenue to the Town
Records show that at it's peak, Powder Ridge was taxed at about $32,000 annually. The town, however, forgave $481,724.08 in unpaid property taxes in 2008, making it difficult to calculate the actual average amount of taxes paid by the previous owner.
Officials have estimated that if the property is sold, the town should anticipate tax revenue beginning at $19,000 annually. This figure does not include personal property taxes or take into consideration improvements to the property.