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When the Berry family decided to sell Saddleback Mountain ski resort five years ago, they wanted to sell it someone who cared as much about the mountain and the Rangeley area as they did.
The family's goal was "to find a buyer with the energy and the resources to continue to develop the mountain in a manner consistent with what we had envisioned," Mark Berry, of Farmington, told Mainebiz.
At the end of last month, the right buyer, Arctaris Impact Fund, closed on the sale, paying $6.5 million for the acquisition of 6,400 acres, including the ski area and its buildings.There is a $38 million, multi-year plan, with most of it being frontloaded in the first three years, said Tom Federle, of Federle Law in Portland, general counsel to Arctaris Saddleback, the ownership entity.
"It was the community that won over Arctaris," Federle told Mainebiz. "Each time that Arctaris visited the region it came away with a stronger understanding of how deep the community's commitment and desire was to bring Saddleback back. Without that demonstration from the community, this would not have happened."
Over the years the mountain was closed, the family was accused of being self-serving "and we were looking to benefit somehow by having the mountain closed," Berry said. "That was the farthest thing from our minds. Selling it wasn't the issue. Selling to someone that would continue running it as a ski mountain is what became the challenge.
"We had an offer from a buyer that wanted to purchase just the land for the appraised value of over $6.5 million, and an offer from another mountain owner to buy the lifts for $3 million. We actually could have sold it at any time," he said. "The future of the mountain in that scenario would have been devastating and not what we wanted to do."
Federle said that, as an impact fund, Arctaris looks to make investments that will socially and economically benefit a community. "It became increasingly clear that investing in Saddleback could have an enormous impact on the economics and the health and wellness of the region," he said. "Many of the challenges to be solved for are shared regional challenges familiar to anyone making a living and a life in rural Maine. The solutions require a lot of cooperation and coordination amongst many stakeholders.
"The Rangeley region has all of the attributes, and all of the committed partners, to succeed," he said.
The financing for the sale itself is a demonstration of that commitment, involving a variety of sources, including New Markets Tax Credits, a Maine Rural Development Association loan, a Finance Authority of Maine loan and guarantee, as well as support from grants, foundations and community donations.
"It is not easy to make the economic case for purchasing an independent New England ski area," Federle said. "Arctaris, as an impact fund, is bringing relatively low-cost and patient capital to this project along with a sophisticated stack of funding. The support of these programs and philanthropy stems from the recognition that Saddleback is not simply an iconic Maine ski area, but is a regional economic engine and a key component of western Maine’s outdoor recreation and tourism assets."
Among the financial support was a $2 million loan from Saddleback Mountain Foundation, which over the past several months got donations from the Rangeley region. The local nonprofit has been working to get the mountain reopened for several years.
The loan to Arctaris Saddleback will be forgiven upon certain milestones being achieved, Federle said. "Arctaris’s Impact Fund mission aligns well with SMF’s similar mission to impact the region in a positive way," he said. "It's a great partnership and we hope to build on our relationship and grow together."
When the Berrys bought Saddleback in 2003, its previous owners had spent more than two decades working on expansion while also struggling with the National Park Service over land acquisition issues surrounding the Appalachian Trail. In addition to its proximity with the trail, Saddleback, on the western edge of Franklin County, has other unusual attributes: The mountain is the third-largest in Maine, with more than a 4,000-foot elevation and a 2,000-foot vertical drop.
By the time then-owner Donald Breen reached a deal with the park service that would allow expansion, "the long battle with the government had consumed millions of dollars and nearly two decades of his life. Now in his 70s, Breen was ready to retire," according to New England Ski History online. The Breen family announced that they would either sell the resort or close it after the 2002-03 season ended.
The Berry family bought it out of "a wish to do something for an area that was struggling financially," Mark Berry said. The family had skied the mountain and owned a condo there.
"With the mountain closing at that time, we wanted to do something to help the area," Berry said. "It was more of a philanthropic play than a money-making venture."
Over the 12 years they owned the ski resort, they invested just over $46 million in building and developing it.
The bulk of that went to the 38,000-square-foot, $10 million lodge; a $1.5 million maintenance building; new roads, including the access road to the mountain; and five miles of new power lines and electrical service to the mountain.
"We doubled the number of ski trails and made numerous upgrades to existing trails," Berry said. They also added more than $5 million in a new snowmaking system, four Snowcats and two new quad ski lifts and rebuilt the the three existing lifts.
He said negotiating and planning for the 10-year plan, "cost millions in legal fees and engineering for the expansion and permitting of another 780 units, plus two hotels, a high-capacity septic system" that would serve planned condos as well as existing ones.
There was also permitting and development of the waterfront recreation area, restaurant, pub, rental shop, retail shop, ski school, child care and ski patrol facilities, as well as a yurt midway up the mountain.
"Additionally, we spent $4.9 million to operate and maintain the mountain during those years," Berry said, as well as an additional $4 million to hold and maintain the resort during the years it was closed so it would be turnkey for a new owner.
In all, the family spent at least $60 million total on the mountain. All profits realized from development were put back into the mountain, as well, Berry said.
But more was needed to keep the resort viable.
"Financially it was on the edge from year to year," Berry said. "We needed another 10,000 to 15,000 skier visits to make it work. The Rangeley double lift was the key." It had to be replaced to reduce crowding, which would allow more skiers, which would make the operation profitable, "or at least consistently break even."
"The inability to move forward was due to the unwillingness of the state and financial institutions to allow us the flexibility to move forward despite a very strong equity position," he said.
The strain was more than financial after the resort closed, including "the difficulty of the handful of people criticizing us publicly, mostly out of ignorance and personal animus, along with the constant threat of lawsuits from a few of the condo owners."
A potential sale to Majella Group, an Australian real estate investment firm headed by Sebastian Monsour dragged on after an an asset purchase agreement was signed in 2017. In 2018, Monsour was arrested as part of what eventually became a $10 million fraud case in Australia. Monsour was also recorded saying he "wouldn't lose any sleep" if the mountain never reopened. The Saddleback deal fell through.
Arctaris had first expressed an interest in buying the mountain in early 2018 as part of anticipated Opportunity Zone designations, which allow tax breaks for long-term funding. When the Rangeley area wasn't named as one of the designated zones in by Gov. Paul LePage in May 2018, the investment group pulled back.
"Arctaris has an investment fund that targets Opportunity Zone investments and it was through that lens that Arctaris first looked at Saddleback," Federle said. "When Franklin County was passed over by the former governor, Arctaris remained interested in the region but needed to re-evaluate the financial structure to make the economic case for acquiring the mountain through one of its non-OZ funds."
Arctaris re-emerged as a buyer in November, and closed Jan. 31.
Beyond upgrades to the resort, the new owner is working with town, regional and state leaders "on multiple initiatives" to help boost the workforce at the mountain, which they expect to reach 200 during ski season.
Plans include improving the access road, employee busing and customer shuttle service in and out of Rangeley, expansion of workforce housing on and off mountain, and new daycare options for the resort and the region's workforce. Federle said plans also include partnerships with summer tourism businesses to provide year-round employment for Saddleback workers.
"We intend to employ over 200 people, and that is going to have great ripple effect throughout the region," he said.
Owners are also exploring partnership opportunities to bring better cell service to the region, as well as become part of the effort to improve broadband access.
There's also an opportunity for a solar farm development that could completely offset the high energy demand of snow-making and lift operation at the mountain, he said.
"None of these things happen over night or in one year," Federle added. "We are taking a long view and are planning comprehensively while maintaining the agility to adjust and improve plans as we go."
Aside from the region, there are also plans for the 6,400 Saddleback acres. The ski area itself is on 500 acres, and most of the land associated with it is in four unorganzied plantations in a Planned Development District governed by the Land Use Planning Commission.
There are privately owned condominiums on the mountain, another 230 permitted for development, and several hundred more allowed in the zone. Hotel development is also an allowed use.
"We have been receiving a lot of interest from condo buyers, condo developers and hotel developers," Federle said. "Saddleback is a big mountain ski experience with only 120 condominiums on it. Our first focus is on bringing back a great skier experience."
He said a high-speed detachable quad, replacing the Rangeley chairlift, will "dramatically improve the uphill experience."
The cross-country ski area may be expanded, and a fat bike/mountain biking trail may be added.
Renovating the lodge for year-round use, including indoor and outdoor music venues and summer use of the quad are all planned.
Broker Dawn Klein, of Lakehome Group, in Belgrade, who represented the Berrys, said the most challenging part of the complicated transaction wasn't the business end.
"We had great attorneys, Severin Beliveau and Bonnie Martinolich of Preti Flaherty," she said. Chris Farmer, general manager under the Berrys "was instrumental in organizing the vast amount of information and his helping to provide it to the buyers expeditiously was so impressive."
"That part of the transaction was unbelievably smooth considering the scope," she said.
"The most challenging part for me was hearing the handful of people publicly, and far-reaching, criticizing out of ignorance," Klein said. "Especially when I knew the Berrys didn't have to put up with it, knowing they could move in the snap of a finger, eliminate the problem and make millions more."
She said that they sold the property for less than the appraised value of the land so Saddleback could continue as a ski mountain, and to support the local economy.
"The Berrys were always focused and strong," Klein said. "Without wavering, they saw the sale through even though it was not in their financial best interest and despite the criticism and threats. They always had the best interest of the mountain and the people of Rangeley in mind. I admire them greatly for the selfless decisions they made to benefit others."
Mark Berry said the family appreciates the people who had an understanding of some of the challenges and stuck by and supported them, and "the graciousness they extended, especially to Bill and Irene, will always be remembered," he said. "They encouraged us and trusted we were doing the right thing for the mountain."
Despite the financial and emotional strain of the last five years, Berry said, "The hardest part emotionally was knowing the community didn't have the benefit of Saddleback supporting the economy, the condo owners, and the people who worked there as well as the skiers that historically enjoyed the mountain."