A Boston investor that plans to buy the idled Saddleback Mountain ski area in Rangeley has asked the owners of the resort’s 121 condominiums to donate $5,500 each to help revive it.
Efforts by intended buyer Arctaris Impact Investors of Massachusetts to get condo owners and philanthropists to invest $5 million toward the property through donations to a nonprofit organization have raised eyebrows in the Rangeley community.
However, the prospective owners and new management said community involvement is needed for so-called “impact investing” in economically distressed communities, as it can show government partners that the community is interested in the project. Impact investing often involves outside parties such as philanthropists.
“The mountain has been idle for the last five years because investors who looked at it saw it requires a lot of capital and it is risky to invest in an economically distressed community,” said Andrew Shepard, the new general manager and CEO of the resort.
He said Arctaris has an eight-year plan to invest $38 million in Saddleback, which in turn will help with economic development of area businesses feeding off the year-round resort. Arctaris will buy the property for $6.5 million.
Of an initial $2 million to be raised by Dec. 16, Arctaris has commitments for $1.7 million from the condo owners, philanthropists and the community. Shepard said he expects the entire amount to be raised by the deadline, but if it isn’t, the sale is expected to close anyway Dec. 23.
The sale agreement was announced by the current owners, the Berry family, in early November. They have tried to sell the money-losing property for years. Experts say the resort, which at its peak attracted 110,000 skiers in a season, has the potential to revitalize the local economy.
“The biggest value our condo owners will see is that our home values will come back,” said Ray Zamagni, who lives in Massachusetts and has owned a condo at Saddleback since 2010.
Zamagni said he is optimistic after attending a meeting Dec. 7, when Shepard and Arctaris management met with about 200 condo owners and community members at the Saddleback base lodge to discuss the 8-year plan for the ski area.
“The response was very positive,” he said. Details of the meeting are on the Facebook page of the grassroots organization Friends of Saddleback Mountain.
However, there were questions about how an impact fund operates and why the Saddleback Mountain Foundation, a nonprofit organization, was handling the donations from the condo owners and other contributors to help fund the purchase by a private investment firm.
Shepard said the foundation’s charter, which originally was to support children skiing on the mountain, has been changed to focus on the sustainability of Saddleback Mountain as a community and economic engine.
In a letter to the Friends of Saddleback on Nov. 14 that was obtained by the Bangor Daily News, Arctaris founder Jonathan Tower said that no credible buyer stepped up in the past seven years to buy Saddleback because of its poor financial performance and high cost to reopen.
“This investment requires the unique approach of an impact fund, contributing its own capital alongside philanthropy from the community, foundation partners and state and federal government economic development agencies, to ensure a successful outcome,” he wrote.
To buy the resort, Arctaris is using New Market Tax Credit program, a federal program that provides an incentive to invest in low-income communities; loan guarantees from the Finance Authority of Maine; and the local support from residents, condo owners and philanthropies.
The local money will help boost the amount of cash Arctaris has at the closing and in turn increase the amount of tax credits it can use toward improving the property, Tower said.
Of the $38 million, Arctaris will supply $28 million in equity and debt. Another $5 million will come from the New Market Tax Credit program and $5 million from community donations.
The donations to help buy the property are tax deductible. Donors will not get any perks so they can get the tax break, Shepard said.
Shepard said that if the sale does not close, donations will be refunded. But if the sale is completed and Arctaris does not raise the remaining $3 million, the donations will not be refunded.
The additional money to be raised is composed of $2 million due by Jan. 31, 2020, for the New Market Tax Credit program closing and another $1 million by the planned December 2020 reopening date of the ski resort.
In his letter to the Friends of Saddleback, Tower said priority investments will be updating and replacing five outdated ski lifts.
Plans call for spending $3.4 million for a new fixed-grip quad lift with a capacity of 2,000 skiers per hour compared to 750 per hour for the previous double chair lift.
Another $810,000 will go toward a new alpine-style T-bar and $1.2 million to replace the double chair lift.
Other improvements include the lodge and pub.
While condo owner Zamagni remains optimistic about the plans, he said, “I’ll be concerned until Saddleback reopens. How could you not be?”