DOVER—Mount Snow can’t access $52 million in foreign investment money because of an ongoing federal review of Vermont’s EB-5 Regional Center, a resort executive claims.
Timothy Boyd, president and chief executive officer of Mount Snow parent company Peak Resorts, said U.S. Citizenship and Immigration Services’ questions about the state’s EB-5 center don’t directly involve the Dover resort, its EB-5 projects, or associated funding from foreign investors.
Rather, Boyd said Mount Snow’s EB-5 approvals have been delayed only because of their association with the state’s program. And he predicted a positive outcome of the federal review, both for Mount Snow and for Vermont.
“We expect USCIS to complete its inquiry shortly, and that once completed, the status of the regional center will remain unchanged and the adjudication of investor petitions will proceed,” Boyd said during Peak Resorts’ quarterly earnings announcement Sept. 8.
A different opinion
Asked to respond to Boyd’s comments, state Commerce and Community Development Secretary Pat Moulton said she doesn’t believe the federal review is holding up Mount Snow’s EB-5 projects.
Moulton did, however, share Boyd’s optimism about the fate of the state’s EB-5 Regional Center. She disclosed that the federal inquiry “was all Jay Peak-related as well as seeking information about our EB-5 marketing activities.”
“We received a request for information from USCIS, and we have responded within the required time,” Moulton said. “We have no evidence to suggest any threat to our Regional Center status. We have received no notification from USCIS suggesting any threat to our Regional Center status.”
The federal EB-5 program allows foreigners to gain U.S. visas and eventual permanent residency by investing in job-creating projects in the United States. But the program is under scrutiny in Vermont after federal and state investigators earlier this year said they had uncovered massive fraud involving $200 million in EB-5 funds at Jay Peak Resort.
Moulton last month acknowledged that USCIS has requested information about the state-run EB-5 Regional Center. That center oversees and markets EB-5 projects, including Jay Peak’s and Mount Snow’s.
USCIS doesn’t comment on specific EB-5 projects, and a spokesperson has said only that the agency is “committed to ensuring the integrity of the EB-5 program.” State officials haven’t released documents related to the federal inquiry, citing a “litigation hold” on communications regarding Jay Peak.
In July, the EB-5 Regional Center’s director resigned.
Waiting for approval
As the drama involving Jay Peak and the state’s EB-5 program has continued to unfold, Mount Snow administrators have been waiting for federal approval to access $52 million in foreign investment raised via an EB-5 offering.
Federal officials approved Mount Snow’s EB-5 program in May, but final visa-application reviews are still pending.
The EB-5 money will be used to dramatically increase the Dover resort’s snow-making capacity and to construct a new lodge. Those projects have been slowed significantly, and administrators have acknowledged that the West Lake snow-making upgrade won’t be ready for the upcoming ski season.
Mount Snow’s long EB-5 wait — along with a poor ski season due to last winter’s warm temperatures — has created financial problems. Last month, parent company Peak Resorts announced that those two factors were the impetus for a $20 million stock sale to raise more working capital.
“The situation with approval of the EB-5 petition has constrained cash. We’ve funded more than $13 million for EB-5 related projects over the last year as we continue to wait for the first investor’s [visa] petition to be approved by the USCIS,” said Christopher Bub, Peak’s vice president and chief accounting officer.
On Sept. 8, as Peak announced earnings for the first quarter of its fiscal year, administrators disclosed several rounds of borrowing totaling $8.5 million to strengthen the company’s financial position.
Overall, Peak posted a net loss of $7.9 million for the quarter ending July 31, though administrators noted that losses are typical in the offseason.
“These short-term borrowings are expected to provide us with the liquidity necessary to manage through our slower season until the start of the 2016-2017 ski season,” Bub said.
Delayed by federal review?
During the same earnings-announcement webcast, Boyd spent much of his time talking about Mount Snow’s EB-5 issues. While Peak has in the past blamed the holdup on a backlog of visa applications at USCIS, Boyd on Sept. 8 pointed directly to the federal agency’s review of Vermont’s EB-5 Regional Center.
“The Vermont Regional Center received an informational request from USCIS concerning the EB-5 program in Vermont. We believe this review is the basis for the delay with our EB-5 investor petitions,” Boyd said.
Boyd took care to separate Mount Snow from the state’s EB-5 troubles, reminding investors that the resort’s plans already have the federal government’s approval.
“We are not part of the inquiry, but we are part of the Vermont Regional Center, and we believe that’s why our petitions are being held right now,” Boyd said. “It is also our understanding that this [federal] review should be completed hopefully by the end of this month.”
Pressed further on the matter, Boyd didn’t disclose how he knew any specifics about the federal inquiry. “Obviously, we’re not privy to the details of what the USCIS is asking of the Vermont regional center,” he said.
“Clearly, it’s public knowledge there’s been a lot of trouble at Jay Peak. Intuitively, you would think that there are some issues there,” Boyd added. “However, it is our understanding that this is primarily just a review of the economic activity that the Vermont regional center is generating for the state of Vermont, and that’s what this inquiry is about.”
Moulton — speaking one day before she left her state post to become interim president of Vermont Technical College — disagreed with Boyd’s characterization of the Mount Snow delay.
She said state officials “have no evidence that processing of any Vermont Regional Center petitions are being held up by the [federal inquiry] or for any other reason.”
“In fact, we know they have been processing petitions related to projects [that are] part of the Vermont Regional Center,” Moulton said.
Aside from citing a visa backlog at USCIS, Moulton could offer no alternative theories for the Mount Snow EB-5 delay. She said state officials are “mystified” by the problem.
“We recognize the challenges this has created for Mount Snow and other projects waiting for approvals of petitions,” Moulton said.