Mountains of Money

Jay Peak has long been loved for its above-average snowfall. Now a blizzard of foreign capital has transformed it into a four-season wonderland. And the bottom line? Jobs where they’re needed most.
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UPDATE: On April 14, 2016, the federal government announced fraud charges against Jay Peak owners Bill Stenger and Ary Quiros, alleging misuse of the EB-5 foreign investor money described in this story

Dribs and drabs. Some snow guns here, a new groomer there, fresh carpet for the base-lodge bar...

And with a few exceptions (Killington’s new summit lodge, Stowe’s ongoing Spruce Peak makeover), that’s what capital improvements have amounted to in recent years at the typical Eastern resort—even at big ones with proven markets and annual skier visits reliably numbering well into the hundreds of thousands. Since the Great Recession, resorts and lenders alike have been especially cautious when it comes to investment. As a result, New England skiers have grown accustomed to making do with the same old lifts, terrain, and amenities.

But way up in northern Vermont, close to the Canadian border, one ski area has been spending money at a clip that’s anything but cautious. Since 2008, the foot of Jay Peak has been the site of ceaseless construction. Around the base of its iconic tram, the resort known for its hardcore tree skiing and above-average snowfall has been adding hotels and amenities at an astonishing pace. And now a similar transformation has begun at its nearby sister resort, Burke.

Where does the money come from to fund such lavish development? And what has given Jay’s management the courage to take on debt on the order of $275 million during one of the nation’s worst economies? The key, says Jay Peak CEO Bill Stenger, is “patient capital.” The kind, simply put, that he doesn’t have to repay quickly—or even ever.

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The source of it is the federal EB-5 Immigrant Investor Program. Wealthy foreigners willing to invest at least $500,000 in specially designated low-employment zones are rewarded with green cards (and eventual citizenship, if everything works out) for themselves and their families, provided government overseers are convinced that their investment creates or saves 10 jobs. While the investors can be certain of obtaining their green cards, there’s no guarantee that they’ll get a return on their investment. That, Stenger says, gives developers like him the breathing room he needs to do long-term projects. “We have a lot of time to pay it back, and we’re not obliged to pay it back. We don’t have a gun to our heads because we don’t have a mortgage payment due, and that allows us to properly build the business.”

Critics deride it as a way for international one-percenters to bypass the immigration line. But its intent is to create jobs where they’re needed most by stimulating the economies of some of the country’s poorest regions. And in Vermont’s Orleans County, home to Jay, Stenger says it’s working.

He’s calling from Montreal’s Trudeau Airport, where he’s waiting, early on a November Sunday, to catch a flight for Mexico City. From there he’ll head to Buenos Aires later in the week. It’s a pretty typical eight-day trip to seek out more EB-5 investors to add to the 650 whose money he and his team have already attracted to Jay.

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“I don’t know how many miles I’ve logged, but it’s been a lot,” Stenger says. “Asia, Central and South America, all over the U.S. and Canada. I’m going to the Middle East again soon. I’ve been to Africa. I’ll go back to the Middle East later this year, and we’ll go to India in the first quarter. So we’re putting on a lot of miles and meeting people in lots of different parts of the world—a total of 74 countries worldwide.”

He’s been doing it since 2008, and along the way he’s gained a reputation as one of the country’s foremost experts on EB-5 investment. The money he’s raised has transformed Jay Peak from a shut-up- and-ski outpost beloved by bark-eating powderhounds to a bustling four-season resort. Three hotels, new lodge facilities, a massive indoor water park with retractable roof, an ice arena, a 200-car parking garage, a nordic center cum golf clubhouse, a new family center and beginner slope, and more than 200 freestanding condos—all of it was financed by EB-5 investors.

“All the things we’ve built—the water park, the ice rink, the hotels, etc.—none of that could have been built with commercial financing,” Stenger says, “especially when you go back and look at what was happening with the economy when we started. If it wasn’t for this, we’d be hanging on by our fingernails, hoping to have good winters, because none of these things were conventionally financeable.”

His resort, he says, has gone from about 200 beds to about 3,000. “But you can’t fill those beds unless you have substantial amenities.” The Pump House water park gets all the attention, but he also points to the hockey rink, where parents can enjoy a beer while watching their kids play.

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“Given our proximity to Canada and the New England hockey community, the ice rink has had an incredible effect. This weekend we had 16 teams up for a tournament, all from Westchester and Boston. Each team has 20 players plus coaches and parents, so we’ve got 600 people staying at the mountain.” Add to that a veterans’ convention, a wedding, and a number of Quebecois families down for the weekend to enjoy the spa and water park. “We’re 90 percent full on a weekend in early November when there’s no skiing.”

It’s the kind of weatherproofing and four- season diversification any ski resort would envy. Meanwhile, skier visits have grown from about 150,000 to 400,000. And Stenger says that Jay Peak’s sales are 10 times what they were eight years ago.

But with regard to the EB-5 program, the bottom line that matters most—at least to government overseers and the legislators who enacted it back in 1990—is job creation. Here again, the numbers are impressive. Before EB-5, Jay Peak employed about 400 wintertime workers, and its weekly payroll was about $120,000. In 2014, Jay employed five times as many workers, and its weekly payroll was well above $500,000 per week.

“And there’s a huge ripple effect within a 30-mile radius,” Stenger says. “All of our construction workers are local. All of our materials are purchased from local lumber and supply companies. We’ve spent almost $300 million, and almost all of that has been invested in the local community.”

By way of underlining EB-5’s trickle-down effect, he suggests asking the owner of the local Ford dealership whether there’s been a noticeable effect on sales. In fact, Mark Hayes of Hayes Ford Lincoln in nearby Newport says he hasn’t really seen a spike. But he hopes to, and he’s a strong supporter of both Stenger and the EB-5 program.

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“I can’t say business is booming,” Hayes says, “but I do feel positive about what’s going on. Bill’s done a hell of a job. He’s a shaker and a mover, and he’s won the confidence of folks in the area.”

And if recent labor statistics are any indication, Hayes may have good reason to be cautiously optimistic. A July report by Vermont legislative economist Tom Kavet showed that Orleans County led the state in job growth. “Benefitting from widely- publicized EB-5 supported projects,” Kavet wrote, “Orleans County is one of the few counties in which the labor force has grown since the last cyclical peak.”

Stenger’s tireless quest for international investment capital isn’t limited to the slopes of Jay and Burke. In nearby Newport, on the shores of Lake Memphremagog, Stenger and longtime business partner Ariel Quiros have ambitious plans to revitalize the downtown district with a hotel, conference center, and marina. And they’ve convinced a South Korean biomedical firm to move into a refurbished factory that once housed Bogner skiwear. EB-5 money is the key to both projects.

But it’s at Jay that the transformation has been most complete. “It’s kind of shocking,” says Catherine Dingle, a Burlington attorney whose three kids came of age on Jay’s slopes. “I don’t even recognize the road in anymore—everything’s all changed around.”

Dingle is a dual citizen who grew up in Montreal and has many Canadian friends who ski at Jay. “I go up there to get my Montreal fix,” she says.

Indeed, the Quebec market is vital for Jay. Spokesman J.J. Toland points out that it’s less than two hours by car to Montreal, and he says Canadians account for half of Jay’s skier visits. “Take a ride on the Green Mountain Flyer, and you’re going to hear liftmates speaking French on about seven of 10 rides up,” he says. “Our domestic visitors like that it feels like an international enclave.”

Dingle agrees. “Montrealers have Jay in their blood. As far as they’re concerned, Jay is part of Quebec.” And access to such a big, close-by market certainly bodes well for the resort’s long-term prospects.

Like a lot of Jay skiers, Dingle wonders where the on-slope improvements are. The plodding Stateside lift, she says, needs replacement. Toland says that’s in the works. The Bonaventure quad will be replaced by a high-speed six-pack, perhaps this summer. Meanwhile, there’s terrain expansion in the plans as well—the long-promised West Bowl development. “That’s the last nugget in the master plan,” Toland says, suggesting that it could open as soon as 2018.

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But that relies, of course, on Stenger’s continuing ability to attract patient foreign capital, which in turn relies on the efforts of EB-5 proponent Patrick Leahy, Vermont’s senior U.S. senator. The program has come up for renewal in Congress periodically since its inception in 1990, and it’s due again soon.

“There needs to be an extension beyond 2016,” Stenger says. “Fortunately for us, Senator Leahy is a true champion of the EB-5 program. We hope he’ll be able to get it extended again, and we believe he will.”

(Photos: Jay Peak Resort)

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