Steamboat Springs Grand Summit Resort Properties is prepared to fund improvements to Mount Werner Circle now that it has restructured a construction loan with Textron Financial Corp.
American Skiing Co. announced Wednesday that an agreement has been reached with Textron for loan defaults by Grand Summit Resort Properties, an ASC subsidiary that oversees the company's eight Grand Summit hotels including the Steamboat Grand.
Steamboat Ski and Resort Corp., which operates the Steamboat Ski Area, is a separate ASC subsidiary.
The Textron agreement relaxes amortization requirements on $42.6 million in outstanding real estate debt and helps Grand Summit Resort Properties with its liquidity.
"This agreement is a significant milestone in the restructuring of our real estate operations," said B.J. Fair, CEO of ASC. "Importantly, it allows us to meet our financial obligations to the city of Steamboat Springs for agreed upon Mount Werner Road and Transit Center improvements."
On Sept. 17, the Steamboat Springs City Council ruled that Grand Summit Resort Properties had defaulted on its agreement to share in the costs of improvements to Mount Werner Circle.
Mount Werner Circle is near the Steamboat Grand and provides access to Gondola Square, Ski Time Square and the ski area.
Initially, improvement costs amounted to $600,000, but Grand Summit Resort Properties officials said the city's requirements far exceeded the need and were too costly.
Last summer, plans were restructured and Grand Summit Resort Properties' costs reduced to $300,000.
But Grand Summit Resort Properties never signed the agreement, saying the company needed to restructure its debt to Textron before funds would be available.
Erik Preusse, ASC's senior financial analyst, said the $300,000 for the Mount Werner improvements is now available.
City Council President Kathy Connell welcomed news of the financial restructuring.
She said the City Council had to declare Grand Summit Resort Properties in default in order to protect the city's interests, but that she is anxious to resolve the issue.
"The city can either play hardball or try to work with (Grand Summit Resort Properties)," Connell said. "We want to work with them. I think everyone on the City Council wants and hopes we can get an agreement signed."
Under the existing agreement, Grand Summit Resort properties would pay $241,000 for improvements to Mount Werner Circle and $59,000 to remodel the Gondola Transit Center. The city will pay $127,000 for the Mount Werner Circle improvements.
Improvements on Mount Werner Circle include new sidewalks taking pedestrians into Ski Time Square, road widening, new turning lanes and landscaping.
Improvements to the Gondola Transit Center have not been determined. City Manager Paul Hughes said the city has agreed to match 50 percent of the contributions from Grand Summit Resort Properties and Steamboat Ski and Resort Corp., which has already agreed to contribute $100,000 toward the Gondola Transit Center.
"That means we are looking at a total of about $239,000 and we will have to sit down together and see what that will buy us," Hughes said.
It's unlikely improvements to Mount Werner Circle or the Gondola Transit Center could begin before next spring.
Preusse said the Textron deal should help the company accelerate sales of quartershares at the Steamboat Grand and the Grand Summit Hotel in Park City, Utah. About 50 percent of the quartershares in Steamboat and 25 percent of the quartershares in Park City remain unsold.
"With the loans in default, people interested in buying quartershares know that and it scares them off," Preusse said. "Those sales have slowed, and that's why it was important to get (the Textron) agreement signed."
The Textron agreement is not connected to ASC Resort Properties' negotiations with Fleet Bank. ASC Resort Properties and Grand Summit Resort Properties are separate real estate subsidiaries of ASC.
Last week, Fleet Bank filed documents seeking to foreclose on the Tennis Meadows, an undeveloped 44-acre parcel of land across Mount Werner Road from the Steamboat Grand. The Tennis Meadows is one of six properties American Skiing Company Resort Properties used to secure an $81.9 million loan from Fleet Bank in July 2001. The outstanding principal on the loan is $41.8 million.
Preusse said negotiations with Fleet Bank to resolve the debt are continuing.