Hermitage members want to lease
"While this is beyond the scope of my engagement as receiver, I am allowing access to these members to facilitate their diligence," Alan
Tantleff wrote July 5 in his first report to Windham Superior Court, Civil Division. "I have indicated that at minimum, any agreement would require evidence of adequate funding, indemnities and court approval."
Judge John Treadwell appointed Tantleff of FTI Consulting as receiver in June after Berkshire Bank filed a foreclosure complaint against the Hermitage. His job is to look after more than 800 acres — including what had been a members-only ski resort at Haystack, a golf course, four inns and townhouses — with an eye toward potentially opening for the 2018-19 ski season if there is a buyer.
Tantleff said costs to do so would be significant and the bank is unwilling to fund such expenses. He estimated that ski lift maintenance alone would cost about $300,000 and require hiring three to four additional employees.
"Vermont has strict enforcement of maintenance and inspections of ski lifts, for obvious life safety and public interest reasons," Tantleff wrote. "I have learned that if lifts are not oiled, maintained, run, stretched and tightened on a regular basis, they might not be approved by the state's inspectors, or they will require substantial capital to be recommissioned."
His first visit occurred June 9. Tantleff said the bank had paid utility bills and real estate taxes, but phones had been disconnected and vendors had not been paid in months. Items including vans, golf equipment and snow-grooming machines had been repossessed.
"Disgruntled members, vendors, lenders, future deposit-paying guests and others contact me on a regular basis seeking payments or refunds," Tantleff wrote. "All have been denied in accordance with the receivership order, except for a few select services which I have deemed essential."
Tantleff said he told Hermitage managers that the golf course would not be partly operational in June as they had hoped. "As a result," he added, "maintenance has been reduced."
Tantleff said 74 golf carts, beverage carts and some landscaping equipment have been returned to lessors. He called the condition of most of the buildings "acceptable" but said minor repairs will be needed to address "some deficiencies and the fire alarm system."
"Most utility services have been discontinued," he wrote.
Tantleff noted that one employee is living with his family in an apartment inside the Doveberry Inn, a group of club members may have a senior lien on the Barnstormer Lift they helped fund to get installed, and the only employee left from the finance department is working out of the airport in West Dover that is no longer owned by the Hermitage because it has internet and an office. Tantleff has suggested Hermitage managers look into relocating the finance employee and all of the accounting books to the base lodge once internet service is reconnected.
Tantleff also made an agreement with Hermitage founder Jim Barnes to fund payroll for the eight remaining employees, with Barnes covering the costs for three of them and the bank responsible for the rest although it is expected to recoup those costs once the properties are sold. That staffing arrangement will allow Tantleff "to keep tenured professionals on site with knowledge of the property, community, and how to best preserve the subject properties," according to his report.
Employees will be reporting to Tantleff every Monday to go through an agenda focused on preventing theft, vandalism and damage from people, pests or weather. He said he found each employee to be "cooperative and in good spirits."
"I believe they ought to be commended in light of the hardships they have encountered," Tantleff wrote, pointing out one nuance of his work is understanding that the employees provide services to Hermitage properties that do not fall under the foreclosure action. "There is significant 'institutional knowledge' that would be impossible to replicate, particularly since there are so few employees. In other words, each knows the buildings, what needs to occur for them to be mothballed, where the 'skeletons' are, has been working on a 'shoestring' budget, has relationships with vendors and has the requisite skills to assist the receiver in the furtherance of its appointment."
On July 2, Tantleff received $81,000 from Berkshire Bank. He will be paid $32,500 for the first two months and $16,250 for each month after as well as an administrative fee. The bank will fund expenses on a bi-weekly basis using an agreed-upon 13-week budget including insurance and some utility bills.
Reach staff writer Chris Mays at email@example.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.
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