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Sale of ski area fading - By Carole Cloudwalker
This document was published online on Wednesday, February 15, 2006
A group of investors seeking to buy Sleeping Giant Ski Area has taken back its earnest money and the original deal has collapsed.
But if the sale price is reduced a deal still could be struck.
The ski area is in its second consecutive season of non-operation for lack of financing to replace a failed T-bar lift and complete other repairs.
Prolonged closure could result in loss of the Forest Service operating permit and permanent closure of the ski area, forest officials have said.
Bob Kudelski, one of several investors who put earnest money down to secure a “due diligence” period for inspecting the ski area, said the money was returned when the period ended last week.
No deal was made, but the group stil l is hoping they can negotiate with the ski area owners, Kudelski said.
Inspection of the facility, Kudelski said, indicated as much as $700,000 would be required to bring Sleeping Giant to a condition where it could be safely opened.
Kudelski said that would provide for removing the T-bar, which is no longer usable, and replacing it with a chairlift; removing some trees along the lift route; constructing a shop where hazardous materials like oil and paint could be stored; removing non-functional equipment and other items; and possibly building living quarters for a ski area manager and/or staff.
He said a used chairlift long stored in the parking lot of the ski area would be useable.
But he said $500,000-$700,000 in repairs would be necessary “in addition to the purchase price.”
When all the dollar amounts are factored in, the deal crumbled, Kudelski said.
“Now you're talking a significant amount, and the track record for Sleeping Giant is not good” in terms of generating revenue, he said.
Kudelski added that an income of $175,000-$200,000 per year would be needed “just to cover operating expenses,” and he's unsure whether that can be accomplished at Sleeping Giant.
“There are significant issues that need to be addressed,” Kudelski added.
He and his partners discussed possible ways of adding revenue, such as expanding into the summer season with an Alpine waterslide and adding snowmaking equipment to stretch out the ski season.
But he said Shoshone Forest officials were not encouraging about some of these proposals.
Thad Harper, recreation project manager for the Shoshone's North Zone, said expansion plans would have to go through a National Environmental Policy Act (NEPA) process, likely involving generating a lengthy and costly Environmental Impact Statement.
“And there isn't a guaranteed outcome,” Harper said.
He added that because Sleeping Giant is situated near Yellowstone Park in a designated primary conservation area for grizzly bears that is linked to their delisting efforts, and is adjacent to wilderness area as well, there would be environmental concerns about adding vertical feet or expanding uses at the facility.
Changing the existing use, such as adding overnight facilities for workers, also could be a problem, Harper said. He added that Sleeping Giant is “in the same situation economically as little ski areas everywhere.”
Owners “have to figure out all the angles on how to make things pay,” Harper said.
“I'm clearly disappointed,” Kudelski said of the situation. “I would like to see it open. But we're in neutral” on talks.
The purchase still could happen, but additional negotiation is needed to bring the price more in line with the cost of necessary repairs, he said.
Timing is not good for another reason, Kudelski added: the USFS is scheduled to conduct logging near the ski area this winter as part of its effort to thin and remove trees impacted by drought and insect infestations.
If Kudelski and his partners were to make the purchase they would aim for opening next winter, so repairs would have to begin immediately, he added.
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