Mayflower Mountain Resort to receive up to $260 million in MIDA-approved bonds
Debt to be repaid by new value created by resort’s facilities
The military authority that controls thousands of acres around the Jordanelle Reservoir and is overseeing the construction of the planned Mayflower Mountain Resort voted on Tuesday to approve more than $250 million in debt to help finance the project.
The borrowing makes up a fraction of the $3.2 billion expected to be spent on the resort in the first five years of the project, according to documents accompanying a presentation to the Military Installation Development Authority, or MIDA. The vast majority of that money is expected to come from private sources.
The New York-based developer pursuing the project, Gary Barnett, flew in to attend the MIDA board meeting on Tuesday, telling officials he was “very, very confident” the project would be built and appealing to them to issue the debt.
The borrowing comes on top of $170 million that the resort has secured for constructing infrastructure, with work underway and significant aspects of it already completed. A groundbreaking is scheduled next week for the first hotel.
“It’s only been possible to get done because we have the support of MIDA, the support of the people of Utah, the support of our local team,” Barnett said. “And we’re very grateful and hopeful that you’ll be able to support this bond.”
Board members unanimously voted for a resolution to issue not more than $260 million in bonds for the project area.
MIDA’s eight-person board of directors is chaired by Utah Senate President Stuart Adams and includes one local representative, Wasatch County Councilor Steve Farrell.
Barnett is the force behind Extell Development, which is known for building New York City skyscrapers. Extell’s local arm, Ex Utah Development, is developing the resort.
The ski resort is planned for the eastern flank of Deer Valley Resort in Wasatch County. Plans call for two base areas, a handful of ski lifts, three hotels, 1,560 residential units and 250,000 square feet of commercial space.
One of the hotels will include 100 rooms dedicated to military personnel, a “military welfare recreation” facility that is the reason for MIDA’s involvement. The block of rooms is the latest plan to replace a small ski lodge near Snowbasin Resort that the U.S. Air Force used before the 2002 Olympics.
The former Hill Haus chateau has morphed into a multi-billion dollar resort that Barnett claims will be the first of its kind built in 40 years.
The land has long been contemplated as a natural expansion of Deer Valley and a new eastern access portal, though no agreement is in place for Deer Valley to operate the resort. Mayflower has an agreement allowing lifts to begin on its property and connect to Deer Valley. It remains possible that the resorts could operate as two distinct ski areas.
“What we have in mind here ideally is to enlarge the Deer Valley Resort, but it’s possible that it would be done with somebody else,” Barnett said. “But we’re in very active discussions now to turn this into perhaps the No. 1 ski resort in the country.”
The board voted to issue the debt against the future tax revenue expected to be generated by the resort’s facilities in an arrangement commonly known as tax-increment financing. As the planned hotels and luxury homes are built, the land’s value is expected to increase, along with the property taxes it generates.
MIDA will collect 75% of that increased tax revenue for 25 years, according to a presentation at the board meeting, and more than 50% for an additional 15 years. The balance of the increased property tax revenue is to be dispersed to local taxing jurisdictions including Wasatch County and the Wasatch County School District.
MIDA will also capture sales tax, resort communities tax and other fees and taxes generated at the resort, according to the presentation.
If the hotels aren’t built, the value of the land would remain the same and no tax increment would be created. To protect against that possibility, MIDA officials indicated that Barnett’s firm Ex Utah was guaranteeing the bonds, indicating his firm would create enough value in the area to cover the payments. According to the report, Barnett guaranteed the construction of two “cornerstone” hotels or their taxable equivalent.
“We are guaranteeing with our entity here, has a (net economic value) of over half a billion dollars, that’s going to guarantee at least the building of two hotels with associated residential,” Barnett said. “All of that together will provide sufficient coverage to cover the cost of the interest and principal on these bonds, assuming that we can get it done at the rates we think we can get it done.”
The newest round of funding is planned to result in around $170 million in “ski-centric” improvements, officials said.
Those are to include $115 million for the morale welfare recreation conference hotel and $53 million for another of the resort’s planned hotels, fractions of their expected $400 million costs. Other improvements the bond will fund include a public plaza, restrooms, a loading dock and other back-of-house uses, according to the report.
The bonds are also set to provide $57 million in working capital, $19 million in a debt-service fund and $6 million in issuance costs.
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