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10 Facts About The Powder Ridge Deal

On Thursday, Middlefield and Rockfall voters will decide at referendum whether to sell Powder Ridge ski area to Sean Hayes, owner of Brownstone Exploration and Discovery Park. Here are 10 facts about the deal to consider before voting.

 

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.

Michael Hayes (Editor) August 15, 2012 at 03:26 PM
Lucy Dave has objected to an oral report, you're correct, but he agreed to accept the motion to accept the oral report.
Michael Hayes (Editor) August 15, 2012 at 03:36 PM
Just my opinion Everything that has been REPORTED on Patch is factual. Take from those facts what you will.
Mickey August 15, 2012 at 03:37 PM
I hope a sense of peace comes over the town at 8 pm tomorrow evening and we can be done with this issue.
Edward Bailey August 15, 2012 at 04:51 PM
As to your misleading comments: 1. The value of the property is what one is willing to pay for it. Why didn't the BOF vote to bond $5 million dollars to buy Powder Ridge in 2007 if it was worth $5 million dollars? Why didn’t the Town pay $5 million dollars for Powder Ridge if according the appraisal it was worth $5 million dollars? I suggest you research the actions and reasoning of the BOF in 2007 (the buyer). Why wasn’t other bidders at the auction to snap up such a deal? 2. If you read the contract the payment schedule is as follows: $100,000 at closing, $100,000 12 months later, $100,000 24 months after closing NOT three years after the closing. The remaining payments follow the same schedule. If the mortgage is not paid off early would be paid in full 84 months (six years) after the closing. Since you are the Chair of the BOF I though it importmant to clairfy this as you are resonsible for the Town budget. 3. The arrangement with Middlefield Holdings is between the Town and Middlefield Holdings not between the Buyer and Middlefield Holdings therefore any mention of this would not be in PR contract. Attorney Antin explained the agreemant to you at your August 2nd BOF meeting and was again explained at the August 9th Public Hearing. If you still do not comprehend this please give me a call and I will explain it to you again.
sue August 15, 2012 at 05:54 PM
Mr Brayshaw was offering Powder Ridge at a ridiculous low price years before Mr Hodgetts had a word to say about it. Where did he get his asking price? He offered it to Dan Frank for $500,000 and to Alpine for the same. I was shocked and angry at the low price so now to "save face" he has Mr. Hodgetts make an "appraisal" .Alpine wanted to lease ,to be able to put more money into the rehab and they felt badly about the low asking price so they offered a million dollars, Mr. Brayshaw never asked them for a million. It is unthinkable that taxpayers should be asked to bankroll this or any deal , a fair deal would have $0.00 impact on the taxpayers, another issue is that surrounding towns may benefit from Powder Ridge coming on line, I don't see Mr. Brayshaw networking the leaders of those towns and all of going to the state for a combined DECD grant which could get more money for the developer.A true business person would work all the angles for the benefit of his town.
Mickey August 15, 2012 at 06:08 PM
"They felt badly about the low asking price so they offered a million dollars" hahahahahahahahahahahahah You gotta be kidding? And a fair price- to pay Nothing for removing the development rights-the most valuable aspect to any land? Really, hahahahah again. Can't wait for 8pm tomorrow.
Michael Hayes (Editor) August 15, 2012 at 06:12 PM
Sue It's clearly stated above that taxpayers, in 2007, agreed to move forward with purchasing the property, so inherently they agreed to take on the cost of buying the property (up to $2.85 million). In order to achieve a $0 impact on taxpayers, someone would need to purchase the property for roughly $2.5 million.
Carol Schweitzer-Schilling August 15, 2012 at 06:20 PM
Please vote YES! As a resident I am tired of beating this horse to death. For heaven's sake: Give a proven successful business man a chance to turn things around for MIddlefield, this should not be a political issue, but one of common sense. Every year the lights are not on the "Ridge" makes me sad. I long for better days when winter will special in our town once again.
Michael Hayes (Editor) August 15, 2012 at 06:59 PM
I've attached the summary of a 2007 appraisal of the 246-acre Powder Ridge property, the last appraisal done on the property. In February 2007, the property was found to have a market value of $5.46 million. It's important to note, when the appraisal was done, $3.065 million of the value came from 110 acres of developable land under the assumption that as many as 67 houses could be built on those acres. Those development rights have since been stripped from the property. The ski area itself, or about 90-100 acres, was appraised a $2.4 million at a time when the appraiser felt the infrastructure diminished the value by 10-20 percent. In May, Hodgetts determined the buildings were in such disrepair he did not attach any value to them whatsoever.
Michael Hayes (Editor) August 15, 2012 at 07:00 PM
This is to say nothing about the differences in the real estate market between 2007 and today.
Peter Berry August 15, 2012 at 07:05 PM
Lucy I do not have a degree in accounting, but in 8+9 you state that the towm pays around 25K a year in taxes, insurance, etc., and will receive around 19K in taxes if it is sold. I get a net of 44K. Please explian if I am mistaken.
Michael Hayes (Editor) August 15, 2012 at 07:19 PM
In regard to the taxes, according to an analysis by selectman Ed Bailey, the average taxpayer currently pays about $112 per year for Powder Ridge. If the sale were approved, under its terms, the average taxpayer would pay about $63 annually for the ski area. The amount, if Hayes were successful and therefore paid increasingly more taxes to the town, would decrease.
Mickey August 15, 2012 at 07:53 PM
Michael, I admire your ability to continually answer, explain and re-answer all the questions that come up. I would be pulling my hair out by now - Thank you for your dedication to getting the facts out there. Even the ones that don't support my side of the argument- time and again you answer- thanks.
Edward Bailey August 15, 2012 at 09:48 PM
As to Peter Berry's comment: Lucy’s numbers are inaccurate. The taxpayers in our current budget are being taxed $25K for insurance, property taxes to Meriden/Wallingford and basic maintenance. We are paying taxes on a budgeted amount of $15K in legal fees. Add the tax revenue of 19K; 25K + 15K + 19K for a net of 59K. This means the taxpayer will not have to be levied $59K next budget year and in succeeding years. The average homeowner is currently paying $112 per year for all Powder Ridge costs. After the sale this will drop to $63 per average homeowner as it would relate to the current budget. This assumes spreading the sale proceeds over the 14 year life of the bond. BTW as of Sept 1 we will .owe $2.38 million on the Powder Ridge debt. We are currently paying $230K in principal and interest plus the $40K in PR related costs for a total of $270K in taxes collected. After the sale we will look at about $245K in bonding costs for 14 years. The taxpayer will save $25K a year plus add the tax revenues starting at $19K and will grow with construction and personal property taxes. Mr. Hayes (Sean) stated that they are projecting $100K in property and PP taxes 5 plus years down the road. Even if it is half that number it would equal $75K ($25K + $50K). Keep in mind that we will receive $500K from the sale. BOTTOM LINE: The taxpayers save. Skiing returns to Powder Ridge! Our youth have a healthy place to go and have fun!
Edward Bailey August 15, 2012 at 09:49 PM
P.S. Whoever are scaring our senior citizens by telling them that taxes are going up, please cease and desist! Be honest tell them they are going down!
Christy August 16, 2012 at 12:25 AM
It is time that MIddlefield had their ski area back, run by professionals, and able to provide the solid resource to the community. I say vote yes and stop this divisive squabbling.
Kathy Lowry August 16, 2012 at 02:44 AM
Michael, the property is only worth what a buyer is willing to pay. To date, the town has not had a buyer, with the restrictions the town is imposing, will to pay these high dollar amounts. The deal is fair and reasonable given the lack of infrastructure. Time to move forward and make this deal happen.
Michael Hayes (Editor) August 16, 2012 at 03:19 AM
I'm told the town has the water diversion permit. It's the easements and permits necessary to install a water pipeline from the pond that haven't been granted and would be Sean Hayes' responsibility, if I'm not mistaken.
Kathy Lowry August 16, 2012 at 03:36 AM
Blue haired brigade can't vote if they have heart attacks from miss information. Taxes going up, really? how? They will say anything to scare a no vote out of someone. It has been six years since the business ceased to exist, wow our taxes have risen tremendously in Brayshaw's tenure, oh wait, no they haven't. So let's skip the falsehoods, it is time to move this town forward and sell Powder Ridge.
Kathy Lowry August 16, 2012 at 04:39 AM
Let get facts straight, this property has been networked throughout the national ski community thanks to the efforts of Jen Brown and the Ad Hoc Committee. The Chairman, Dave Lowry, made countless personal phone calls to ski operators. Everyone that was anyone in the ski community received official mail, phones calls, or both. Elected officials including Brayshaw, Marybeth Johnson, Dave Lowry, Ed Bailey and Dave Burgess. All selectmen had an obligation to pursue the best possible deal. Did they all make and effort? Hum! Grant money was pursued and received from state Department of Economic and Community Development. Alpine Associates, Mary Johnson was quoted in an April 1, 2010 Middletown Press article that they “toured Powder Ridge back when former owner Ken Leavitt was trying to sell the property”. That begs the question why didn't they buy Powder Ridge at the bargain basement foreclosure auction price? Town negotiated with Alpine without required financial disclosure. Attorney John Corona, counsel for Alpine Associates, terms of the sale include a $1 M, with a $25,000 deposit due at contract signing, $275,000 at closing and seven annual installments of $100,000 each. Town of Middlefield to the $2 million mortgage for improvements. Town Times quote dated 2/1/2011 "Selectman Mary Johnson explained that the major part of any property’s value is its value for development, particularly residential development, and that Alpine has given up that value."
Edward Bailey August 16, 2012 at 05:22 AM
A few points: 1) The Board of Selectman was satisfied with the oral report from the financial advisor that Brownstone can meet the financial obligations of the contract. This oral report was consistent with previous financial advice regarding PR buyers. 2) The water diversion permit is in possession of the Town and is transferable to Brownstone. Unlike the Alpine deal the Town has no responsibilities to provide the necessary easements to build out the actual pumping and piping systems. It is actually planned out as far as the route and intake location in the lake are concerned. Once the DEEP is provided with the engineering drawings the lake easement is done. The Town will provide an easement under King and Powder Hill Roads for the pipeline.
Edward Bailey August 16, 2012 at 05:22 AM
3) The diversion permit was never an issue with Alpine. As with the current deal the diversion permit was in possession of the Town and transferable to Alpine. The issue was Alpine’s failure to provide the Town with the necessary engineering drawings so that the DEP could finalize the easement for a water intake structure in Lake Beseck. The Town was facilitating this easement with the DEP as per the requirements of the contract with Alpine, however without Alpine’s engineering drawings this could not be completed. Alpine stated that the Town failed to perform and refused to close on the property. This was completely false as it was Alpine that failed to perform and the Town kept the $25,000 deposit. Later Alpine sued the Town to get the $25K deposit. With advice from our attorney the BOS settled this matter instead of incurring significant legal costs. The Town DID NOT have to return a PENNY to Alpine. As a member of the BOS, I would have rather countersued Alpine and held them accountable as the Town’s position was correct, however, it is not my personal preference that was important but what was in the best interest of the Town financially; that was to settle the matter.
Kim Garvis August 16, 2012 at 01:12 PM
How about focusing on the up side of this sale, i.e. bringing more jobs into Middlefield; having a great place close by for everyone to get out and recreate.
Concerned Citizen August 16, 2012 at 02:30 PM
This is probably a stupid question but is Michael Hayes related to Sean Hayes?
Michael Hayes (Editor) August 16, 2012 at 02:40 PM
Concerned Citizen As they say, there's no such thing as a stupid question and as much as I would enjoy the comments to your question the answer is NO. We come from a different brood, entirely.
Michael Hayes (Editor) August 16, 2012 at 02:42 PM
Silly me, I should have made that fact #11
sue August 16, 2012 at 02:46 PM
I attended every BOS meeting for years and the insurance for Powder Ridge was never mentioned until very recently when people started asking, some information about the insurance has come forth but not all of it, Who is the insurance company? Why did we only insure it for liability? I sincerely feel that insuring for liability only put the town in a bad position penny wise ans pound foolish.
Mark Melmer December 15, 2012 at 12:50 AM
The BOTTOM LINE say's it all. I think most people in town are glad Powder Ridge will re-open. I'm one of them:)
Mark Melmer December 15, 2012 at 01:03 AM
Businesses don't cause Taxes to go up. New homes with all the new children do. Kids are great! I think Middlefield is trying to do the Town a service by keeping the town a beautiful, small, healthy and economically safe place to live.
Mark Melmer December 15, 2012 at 01:08 AM
That is definately a good up side.

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