Prospects that a Boston investment firm might purchase and reopen Saddleback ski resort have dimmed, after the buyer’s request to include the Rangeley area in a tax-friendly investment zone was rebuffed by the LePage administration.
In two letters to state officials this past winter, Jonathan Tower, managing partner of Arctaris Impact Fund, said the firm was prepared to invest up to $25 million to get the ski area up and running and another $75 million to $100 million over at least three years to expand the resort, which has been closed since 2015. Tower outlined a plan that included an expansion of skiable terrain, a new hotel and ski lifts.
“Our project plan would reopen Saddleback, revitalize the Rangeley community, and attract local and tourist visitors to the area’s winter and summer benefits,” he wrote in a March 5 letter to the Department of Economic and Community Development
To make that investment, however, the firm wanted the Rangeley area to receive an opportunity zone designation, which provides generous tax benefits for some investment in low-income areas.
“While Saddleback includes significant acreage among its many assets, this project requires a long-term view and the Opportunity Zone designation that we have requested is integral to completing this transaction,” Tower wrote.
Tower’s letter was among dozens of pages of documents obtained by the Portland Press Herald through a Freedom of Access request for material regarding the LePage administration’s selection of opportunity zones in Maine.
Tower, the Rangeley town treasurer and Crystal Canney, executive director of the nonprofit Saddleback Mountain Foundation, encouraged the LePage administration to designate the Rangeley area, referencing the possibility of investment in Saddleback.
Investment in the area might bring back 300 seasonal jobs that were lost when Saddleback closed in 2015, and revitalize the region’s tourism economy, boosters argued.
Despite support for Rangeley, it was not included among the 32 low-income census tracts selected to be opportunity zones by LePage, who had sole authority to select zones, according to federal law.
Rangeley wasn’t alone. Other towns, including Dexter, Newport and Howland, argued for, but did not receive, an opportunity zone, according to a review of the documents.
Lewiston city officials said a zone selected in their city differed from the neighborhoods they asked for.
Doug Ray, a Department of Economic and Community Development spokesman, said areas selected for the benefit were based on need but also as places most likely to receive investment.
“It is nothing against any of the ones that weren’t chosen,” Ray said. “Any of the ones that were chosen were deemed to have a realistic chance of success to bring in new investment.”
The department in March asked for statewide feedback about how it should select the zones and which areas should receive the benefit. Only 25 percent of eligible low-income areas could be selected for the program, according to federal law. That works out to 32 tracts in Maine.
The state’s zones include large swaths of Washington and Aroostook counties, distressed mill towns such as Rumford, Millinocket and Hartland, and neighborhoods in southern Maine like the Portland waterfront and Maine Mall area in South Portland.
LePage’s selection of some better-off parts of the state over economically struggling areas raised eyebrows in economic development circles and communities that were not chosen to receive the benefit.
“All the feedback was discussed,” Ray said. “It was all presented to the governor and he had the ultimate decision on which zones were selected.”
LePage’s office did not respond to a phone call and email asking why the governor did not select Rangeley as an opportunity zone.
Last year’s federal tax break law included a provision that allows investors to reinvest capital gains – profits from the sale of investments – into designated low-income areas tax-free for up to 10 years, then get a 15 percent tax break on the initial investment. Any profits they make annually through the investment are tax-free.
Saddleback closed almost four years ago when owners Bill and Irene Berry did not get $3 million they needed for a new chairlift.
Before it closed, Saddleback was Maine’s third-largest ski resort and one of the largest seasonal employers in Franklin County.
The Majella Group, an Australian development company, agreed to purchase the resort last year. The company has since been plagued with lawsuits and allegations it used the purchase to attract funding through a U.S. visa program for wealthy investors, a charge the company denies. It has yet to complete a purchase of the ski resort.
The Berry family, through a representative Friday, said there is no formal agreement with Arctaris to buy Saddleback.
Tower, Arctaris’ managing partner, stressed in an email that winning an opportunity zone was integral to the firm’s purchase plans.
“While I don’t pass judgment on the relative attraction of Rangeley as an opportunity zone versus other areas in Maine, it is fair to say the scope of our project plan would require greater patience than one would typically get from a traditional private equity or real estate investor,” Tower said.
“The door is still open” for the firm to buy the ski area, but it might require a public-private partnership, he said.
Peter McGuire can be contacted at 791-6325 or at:
pmcguire@pressherald.com
Twitter: PeteL_McGuire
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