Hermitage falls behind on payments

Cold Brook Fire District threatens to pull sewer/water allocations

Posted

WILMINGTON — The Hermitage Club has a few days to make a payment owed for a bond or the company could lose the ability to expand due to water and sewer rights being pulled.

Kimberly Hicks, administrator at Cold Brook Fire District, said the Hermitage asked the Prudential Committee for a week to get the money together. The committee, which governs the fire district, held a meeting Saturday.

"We gave them until Friday at noon," Hicks said.

The Hermitage runs a private ski resort at Haystack Mountain, a golf course, inns and restaurants. The sewer/water allocations, or rights, are important for building projects proposed by the company in its Act 250 master plan.

A lack of allocations would mean there's no wastewater plan in place, Zoning Administrator Craig Ohlson said.

"I think everything would come to a screeching halt," he said.

Cold Brook Fire District signed an agreement with the Hermitage to take out a $3.1 million loan from the Vermont Municipal Bond Bank on its behalf for improvements already completed. Upgrades were needed on Cold Brook's water and sewer systems in order to move forward with plans at the Hermitage. Under the agreement, Cold Brook does not make payments on the bond. The district enhances infrastructure based on development needs. Two payments from the Hermitage are due each year. In May, the bill was for about $49,000. The annual combined payment "balloons" to $320,000 in 2019, Hicks said.

The defaulted payment of $117,485 was Cold Brook's responsibility to resolve.

"We're trying to deter the precedent they're trying to set," she said. "The Prudential Committee decided that this was the way to go."

Hicks told the Reformer her group's attorney advised that since Cold Brook had to use money from a reserve fund to make the payment for Hermitage, an agreement between the fire district and Hermitage has been defaulted. That would require payments to accelerate, and could cause all remaining payments to be due as soon as possible.

Cold Brook is responsible should the Hermitage stop making bond payments. "We don't want the Hermitage Club to fail," Hicks said. "No one does. But we have a business to run as a municipality. We need to make sure they're given every opportunity. I would say we have been very, very accommodating."

As a municipality, Cold Brook has the right to hold tax sales. Hicks said future permits could not be secured without water and sewer allocations. She called the threat of taking allocations away "our biggest leverage."

Right now, Cold Brook has enough money in a reserve fund to make payments.

"We couldn't sustain it the way we would need to," Hicks said. "The Vermont Municipal Bond Bank is a bank that gives these to municipalities so they wouldn't want us to fail."

This summer, another bond proposal was shot down by voters in the district. Hicks said the plan involved borrowing $7 million from the U.S. Department of Agriculture but there were concerns related to the company's ability to make payments.

Issues with the Hermitage paying property taxes and contractors have been reported in the past. In October, the company announced it would be charging members a one-time $10,000 fee on top of regular dues to "provide some relief to several suppliers and vendors in town."

Cold Brook also recently sent the Hermitage shut-off notices, which go out once two water and sewer payments are missed. The company must pay $89,289 by Jan. 3 to avoid having services shut off.

Hermitage properties in jeopardy of losing water and sewer operations include the Clubhouse at Haystack, a golf course and townhouses that were built but not yet sold. All fire suppression systems would also be powered down.

"We plan on keeping payments with our obligations including the CBFD," said Jim Barnes, Hermitage founder and CEO.

Reach staff writer Chris Mays at cmays@reformer.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.


TALK TO US

If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.



Powered by Creative Circle Media Solutions