Denver Post
Winter Park deal includes makeover
City gets millions, Intrawest
gets control under 50-year contract
Friday, September 06, 2002 - Winter Park ski area gets a multimillion-dollar face-lift. Denver gets $3 million upfront and about that in annual payments. And Intrawest gets the gem.
That's the core of a long-awaited and complex 50-year deal announced Thursday that puts Intrawest Corp. in control of operations and development at Winter Park, the crown jewel in the city of Denver's park system.
For skiers and Grand County residents, the deal means newer lifts, better snowmaking, a fancier base area with at least 570 new housing units, and a resort guided by the continent's leading resort developer.
"This is a good deal because the more Intrawest makes at Winter Park, the more Denver makes," said Gary DeFrange, president of the ski area. "This is really an exciting day for Winter Park."
Besides City Council approval, one major obstacle to the deal remains. Vail Resorts believes the deal violates a long-held contract it has with Intrawest at Keystone resort and is promising an immediate fight.
"Our interpretation of the agreement is that there is certainly no conflict," said Gary Raymond, Intrawest's head of development. "Vail thinks they have a problem. If we felt we had a contractual conflict, we would not be moving forward."
Denver City Attorney Wallace Wortham says he doesn't believe there is a problem either.
The issue with Vail Resorts revolves around wording in the contract that prohibits resort real estate development unless either operator has a "controlling interest" in the resort.
Vail Resorts chief Adam Aron sees a problem.
"Denver boasts it is not selling Winter Park. By definition, Intrawest must take the contract view," Aron said in a statement. "For if Intrawest has not bought a 50 percent or more controlling interest of Winter Park, then Intrawest is in contractual breach."
Another hurdle - a contract with Gerald Hines' resort development wing giving the Texas developer first dibs on any projects south of the 230-room Zephyr Lodge, which Hines built three years ago - has been taken care of.
"We have extinguished those rights in exchange for consideration," said Raymond, declining to explain what he meant by "consideration."
British Columbia-based Intrawest Corp., whose quiver of ski resorts will grow to 11 with Winter Park, has penciled in $99 million in capital improvements over the next decade, including a guaranteed $50 million for on-mountain upgrades. The company has made it clear that Colorado is its next proving ground, with Intrawest villages in Keystone, Snowmass and Copper Mountain, and Three Peaks golf community in Silverthorne.
"We are going to be at the resort for a very, very long time, and we will make sure everything we do works," said Raymond.
In the past decade, Winter Park has invested about $20 million in the mountain. Its gross revenue last season was $43 million; the season before was nearly $40 million. Intrawest is guaranteeing that 6 percent of annual gross revenue for the life of the lease will go into capital improvements.
Three years ago, Winter Park's leaders saw that the resort was lagging deep-pocketed competitors. They asked the city of Denver to either invest or sell the resort. Mayor Wellington Webb found another option in a public-private partnership with Intrawest.
The influence of Intrawest at Winter Park will fuel the resort's climb back into the race, Webb said.
"We could not compete with Vail as a city," he said Thursday. "This allows us to have a destination resort which is owned by the city."
For Denver residents, a partnership with Intrawest means an extra $3 million a year for park maintenance and upgrades in a time of budget cuts, not to mention the possibility of 76 years of annual payments solely aimed at keeping the city's parks idyllic.
The city's parks and recreation department is facing a 10 percent budget shortfall heading into 2003. New parks coming online in Lowry and Stapleton, as well as the need to increase park facility fees and charges, are further straining the parks budget.
"This comes at a good time, absolutely," said James Mejia, director of Denver's parks department. "We've got such a backlog of capital improvement projects. This will help us catch up with some of that. We're excited about the deal."
For the city of Denver it means someone else eliminates the resort's $17 million debt. And for the last-term mayor of Denver, a final jewel.
"This gives us the best of both worlds," said Webb, strategically positioned between two placards in Civic Center proclaiming "Mayor Saves Winter Park."
The contract goes to the City Council on Monday for final approval.
A team of lawyers spent the past seven months crafting the unique partnership. A three-member buffer - the restructured Winter Park Recreational Association, whittled down from 21 members - will guard the city's interests. Two existing association members will serve on the board, sources said. Webb will announce members on the new Winter Park association next week.
Last week, the association unanimously approved the Intrawest contract, effectively eliminating their voluntary, yet vaunted, positions as guardians of the 62-year-old ski area. Several sources said it was one of the few times in memory the board unanimously reached agreement.
The new Winter Park group remains the owner of about 150 acres of base-area land suitable for development. That land has zoning approvals for 1,000 units on 76 acres adjacent to the slopes.
In the new contract, the association will sell small chunks of the land for 3.5 percent of its estimated market value after it is fully developed. Intrawest must buy enough land to accommodate at least 570 residential units by 2012.
Ninety percent of the sale price of all land sales must go to pay down principal on the association's existing debt. Intrawest covers interest on the debt.
The developable acreage at Winter Park is divided into three parcels: the existing village area, a potential extension of the village area south of the base and additional land east of the base area.
In the existing base village, Intrawest will be required to maintain a certain amount of space for resort operation facilities like maintenance, administration and skier services.
The first phase of Intrawest's yet-to-be-determined development plan will focus on the mountain, with new lifts, snowmaking and skier services. Eventually, the base area will be developed to sustain a destination resort, with plenty of restaurants, condos and a hotel and spa, Raymond said.
"We have 75 years to get a return on our investment," Raymond said.
