Big Sky, Past and Future
Moonlight Foreclosure Leaves Big Sky in Limbo
Moonlight Basin Resort played a big role in the growth of Big Sky, and its comparatively conservation-minded approach to development and strong community outreach won it many friends. But with lender Lehman Bros. foreclosing on the property, owner Lee Poole and hundreds of employees and contractors face an uncertain future. This story is the final installment in a series about Big Sky produced by University of Montana School of Journalism students in collaboration with NewWest.Net.By Will Melton, Guest Writer, 9-20-09
The entrance to Moonlight Basin. Photo by Kip Sikora
Creating a major new ski-and-golf resort is no easy trick - there have only been two in the United States in the last 20 years - and for a while it seemed that Moonlight Basin, opened in 2003, had made it over the proverbial hump.
Moonlight’s vision of building a comparatively eco-conscious resort, one where wildlife could roam unencumbered and construction was concentrated in a few core areas while leaving lots of open space, seemed to be right for the times. The real estate sales that would fund much of the development looked solid at the outset. The settlement of a bitter conflict with Big Sky Resort, it's neighbor on the other side of Lone Peak, appeared to create a great opportunity in jointly marketing the two resorts as the "Biggest Skiing in America."
But Moonlight, like so many big development projects across the West, was not equipped to handle a sudden collapse of the real estate business, and the radical shift in the credit markets that went along with it. When lot and home sales stalled last year, Moonlight stopped making payments on more than $100 million in loans while it frantically sought a buyer. The resort's long financial emergency culminated earlier this month in a foreclosure lawsuit by its primary lender, the now-bankrupt Lehman Bros.
Lee Poole, Moonlight's owner, says Lehman has assured him that it will provide the money to keep the resort open while the long-term financing and ownership issues are resolved - a process that could take a year or more. One way or another, Moonlight will almost certainly survive in some form - and its fate will have a big impact on how Big Sky evolves as a resort community.
Enviro-Capitalism
Moonlight was started in 1992 when Lee Poole, Joe Vujovich and Keith Brown bought a 25,000 acre parcel from Plum Creek Timber Company. The majority of the land was contained in the Jack Creek drainage, an immense and impressive watershed sandwiched between two sections of the Lee Metcalf Wilderness area, deep in the Madison range. Because of this, much of Moonlight’s land is a crucial wildlife corridor for deer, elk, bears, mountain lions, wolves and more. Poole and Vujovich were both from Ennis, the small Madison Valley town that sits at the west end of the drainage, and knew the area well from hunting, fishing and hiking in the region.
In the Jack Creek drainage, Poole and Vujovich saw an area that could be developed while still maintaining and preserving the wildlife that made the area special. In fact, they would turn that wilderness feeling into a major selling point. They turned around and sold two-thirds of the newly acquired land to conservation groups and others willing to accept strict easements on the land. They worked with wildlife experts and conservationists to return areas of the property that had been damaged by decades of logging to their original state, and open the corridor to ease travel for wildlife.
In their 1997 book, Enviro-Capitalists, Doing Good While Doing Well, Terry Lee Anderson and Donald Leal focused on Moonlight as an example a developer preserving the environment by choice, rather than because of government regulation, stating: “the enviro-capitalists are taking care of the environment because they can contract for the sale of the amenities.”
One example that Anderson and Leal cite is that of the Jack Creek Road , a rough, gravel logging track that connected Ennis to the Moonlight. Business leaders in Ennis have lobbied for years to have the 20 or so mile road paved and straightened to create an easy route for the people of Ennis to reach the Big Sky area (and for the tourists in Big Sky to be able to reach Ennis).
The partners, however, had a different vision for the road. They did widen it a bit, but it remains gravel and, whereas previously it had been open to all comers, they put gates on either end, restricting access to property owners and a select few employees, contractors and others with pressing needs to get to Big Sky quickly and easily.
In doing so, they obliged people in Ennis and surrounding areas to drive over 100 miles to get to the area, but were able to appease conservationists worried about traffic on the road cutting off the wildlife corridor.
Of course, a ski resort, and especially a brand-new one based on second-home sales, is not by nature the most environmentally friendly undertaking in the world. Neither is a very expensive, fully private Jack Nicklaus golf course (nine holes of which are now open). And with most properties listing for more than a million dollars (according to www.montanarealestate.com, Moonlight’s in-house sales entity), it’s not exactly your regular Montana mountain experience.
Community Outreach
 |
|
Big Sky, the Southwest Montana community that is itself a symbol of the challenges and opportunities of the New West, is growing up, even as its economy teeters. This story is part of a series about Big Sky produced by students from the University of Montana School of Journalism in collaboration with NewWest.Net. Click on the headlines below to catch up with the other parts of the series.
|
Yet expensive real estate aside, Moonlight has done a good job building relationships with local skiers and snowboarders. There is, for starters, the simple fact that, as at Big Sky Resort on the other side of Lone Peak, the snow is great and the crowds are small. The ski area, which opened in the winter of 2003-2004, boasts 1900 acres of groomers, glades and chutes. When combined with neighboring Big Sky, which can be skied the same day on what’s called the “Biggest Skiing in America” ticket, the skiable terrain rises to more than 5,500 acres.
According to Alan Poole, the master plan will expand skiable acreage to around 4000 at Moonlight alone, and nearly 8000 between the two resorts -- by far the most acreage in the U.S., and close to Whistler-Blackcomb’s North America-leading 8500.
And Moonlight has done a good job of community outreach. One example is Moonlight’s M-BAR-T (Moonlight Basin Aspirations Reward Team), which rewards any student with at least a 3.0 GPA or any student who improves his or her GPA by .2 with a free season pass to the mountain. Parents often end up buying their own passes or buying their students lessons and food, which helps make the promotion more than just an altruistic effort.
In order to appease the residents of Ennis who may be unhappy about Jack Creek road being off limits, Moonlight allows the Madison County Ski Club, which is based out of Ennis, access via Jack Creek, and offers its members discounts on season passes. They also open the road to contractors with reason to go to the Big Sky area.
This outreach seems to have worked with Don Bowen, a Realtor in Ennis who says that whenever he has been showing a house in Big Sky, he has called Moonlight and they have given him the pass-code to get into Jack Creek. Bowen also seemed extremely impressed with M-BAR-T, saying that it has been a boon for local youth.
Uncertain Future
All of this, of course, could be academic if the new owners have a different view of how to develop the property. At a minimum, it seems unlikely that construction will resume on new lifts or the unfinished base area for quite some time, and it’s even conceivable – though probably unlikely – that the property could be mothballed until the real estate market comes back.
The foreclosure lawsuit filed in early September by the rump of what was once Lehman Bros. asks for the appointment of a receiver to run the property while the legal proceedings move forward. According to court documents, Lehman is still owed some $87 million of principal and interest on a $100 million loan extended in 2007; there is also other debt on the property, though Lee Poole would not confirm the details.
A number of contractors are also owed money, and they stand to lose out in the foreclosure proceedings. The court filing names Williams Plumbing and Heating of Bozeman (about $45,000), Sime Construction of Billings ($460,000), Kenyon Noble Lumber ($84,000) and Big Sky Fence ($20,000) among the dozen or so companies that have liens on Moonlight property. Poole also provided a personal guarantee on the debt, according to the court documents, and thus Lehman could ultimately pursue his personal assets in the likely event that a sale of the property does not yield enough money to cover what is owed.
Foreclosure proceedings are complex and time-consuming, and Moonlight has yet to respond formally to the foreclosure lawsuit. Lehman Bros. may end up as the owner of the property for a time, but in the long run it's likely to end up in the hands of a new owner - either a real estate development company or a large resort operator, or perhaps some combination.
Indeed, it's not clear if Moonlight is fully viable as an independent property; a resort management company, including possibly Big Sky Resort, could end up running the ski operations, for example, and some shrewd observers of the area think a well-financed consolidator might come in at some point and purchase a number of Big Sky developments as part of a comprehensive, long-term plan.
If Big Sky’s future as a community is in burnishing the appeal of fabulous skiing on the one hand and Montana charm on the other, Moonlight is certainly an important addition to the mix. But for Moonlight employees, homeowners, vendors, and patrons in Big Sky, a long period of uncertainty lies ahead.
Like this story? Get more! Sign up for our free newsletters.
Comments
Add your comment below
What planet are you from?
before YC, before MLB, before SP, it was hard to call Big Sky pristine. its like everyone talking about the beauty of early 20th century Montana but conveniently leaving out the mining and buffalo slaughters...
MLB will be a successful development. The only reason that MLB, YC, and SP have had difficulties is that they borrowed too much of their development capital and when sales stopped or slowed they couldn't make their payments. nothing too complicated about that really.
if MLB can get their debt restructured there is plenty of real estate left to sell to finish the development - perhaps not at the same level of construction as before, but certainly in an acceptable way.
Big Sky/Bozeman will be one of the most attractive areas in the U.S. for years to come.
From the consumers point of view, I don't think anything will change. Some people are funny, of course upper management will shift, but its not like Lone Mtn is going to implode on itself!
Now the hangover begins.
I can tell you right now what's going to happen: the lifts and other equipment will simply NOT receive routine maintenance or be repaired quickly if something should break.
Then someone will get injured - or worse, die - then there will be more lawsuits. That's when the resort will finally bite the dust.
Too bad we have completed all out scheduled maintenance on all of our lifts and equipment.
People seem to forget one salient point. Currently Moonlight Basin holds a tremendous potential value. 100-200 million dollars.
If Lehman or anyone else allows the place to devolve into what you predict, the values are cut by up to 75%.
If you were a potential owner, would you just mothball the place and see your values decline or would you spend a million or 2 to protect your ass?
Honestly, the people who comment here for the most part have no idea how any business let alone the ski business works.
You call what happened here business? How many sales have you had this last month? How is the golfing on Jack's great design? Ski/board terrain is great I will give you that. But, Sure seems like the ownership/management is not so great. Clearly, all the borrowed monies were not managed well. How much money did ownership funnel into other LLC's? It is the same old story take, take, take.... Numerous times in the valley I heard off hand remarks about when not if! For you to somehow defend the lack of business restraint shows ignorance. Time to wake up from your dream! Seems like more mortgages showing up?! Where was the ownership/management restraint to protect your current land holders? Again, like YC, out of control spending of borrowed money. Accountability is warranted.
all the looking back is irrelevant. For what someone can pick Moonlight up for today, it probably makes sense financially. Just like YC, dues will be higher, usage fees will be higher, but the ski deal will get cut with Big Sky, the golf course will get finished, higher density housing will be developed, and off we go.
the only way MLB doesn't make it in some form is if Big Sky becomes relatively less attractive than other areas, or if a new player can't raise the money. Neither of those seem likely to me.
It could be that at some point there simply will not be the available cash to maintain all the routine maintenance.
OR - the money being put in to MLB is not worth the money coming out.
Happens all the time.
Oh yeah - people will be spending money, just like that *SNAP*.
What "Recession"?
To those of you who are negative and going to be no matter what, that's fine. It's not worth arguing about. But for that crowd, I'd like to say that the community of Big Sky is strong. If you've never been there or apart of it before, you are under-estimating the people who live there big time. This is a community, that in one night can raise over $100,000 at a 'Pie Auction' of all things, for the local school. This community pulls together for a family with a sick child stuck in a Seattle hospital, fundraises to help them keep their business and pay their medical bills. This community, far after you leave it, still takes care of you holding fundraises, silent auctions and anything they can do even if you've moved to Washington, as a friend of mine had who's family was struggling with illness.
It's a magical place my friend. The will to survive and help your neighbor is far stronger than anything in Bozeman or Missoula, which I have lived both. I may be speaking over my head here, but I believe to the residents (yes, there are many hardworking residents that live in the "TOWN" of Big Sky) Moonlight Basin is their neighbor, and to many, their employer.
Many people seem to resent the Big Sky area. I seem to understand that to be because the economy where they live is struggling and they cannot afford to partake. I was looking for a new pair of tennis shoes for the last week in Missoula. They were all over priced. I just happened to be in Big Sky and found a pair of $100 shoes for $40. Kids get free ski passes, employers of all kind provide ski passes (even if you work for a gas station). It's more affordable than you think. You can choose to live however you want, but if you choose to not live where you can enjoy all the opportunities you complain about not being able to partake in, quit complaining. It was your choice.
In our economic times, no one should be happy about any business on the rocks. Gallatin County Resort 'business' also affects families in Billings, Missoula and even Kalispell. No matter where we live in Montana, we could learn a lot about Montana Community from Big Sky/Moonlight.
"I can tell you right now what's going to happen: the lifts and other equipment will simply NOT receive routine maintenance or be repaired quickly if something should break.
Then someone will get injured - or worse, die - then there will be more lawsuits. That's when the resort will finally bite the dust."
What you wrote is YOUR opinion. People reading this site may or may not realize that you have no knowledge of what is taking place at MLB. They could base their spending decisions upon your uninformed opinions. I simply wanted to get it out there that what you predict is not a fact.
We take the safety and well being of our guests and employees seriously and will not cut maintenance to save money.
MLB only has 6 lifts in operation at this time. It is very easy to maintain that number of relatively new lifts in the safest of ways and not break a budget.
Sharkbreathe, if it is not business, then what would you call it?
Never mind.
The rest of you can predict what you want, as it's not the history of Moonlight I'm arguing.
The housing bust sure did take it's toll, and the current owners may have made some mistakes, but it is what it is.
The simple fact is, MLB still holds great value, and even though were in a "recession" someone will gobble it up. Lehman is not going to shut the doors, because as MLB Employee said, the value would drop immensely. While they are liquidating, they are not brain-dead. They have the funds to sit on it until it sells.... hopefully....
Isn't MLB that place where the upper end of the ski lift has been built on a rock slide???
For now the loose rocks are working in its favor, but you wait: at some point, the ski lift will have to be completely re-done.
THAT will require mega-buck$ - and THAT's when the whole thing will TANK.
You heard it here first, kids.
Memmemnent, stuff needs replacing sometimes. They will probably just reinforce the foundation when it becomes unstable. Big deal.
As a matter of fact, I AM a geologist!
That Tram station replacement is going to cost mucho dinero.
And it's predicament is at the heart of this whole MLB fiasco: during the boom years, no one gave a rat's A$$ about the geologic integrity underlying a project. Rush-rush-rush, build-build-build.
MLB is just like that other Big Sky geo-disaster where the homes are falling into the ground.
In fact, just you wait, MLB's Sky Tram will end up being the alpine equivalent of the Titanic.
Why are you so adamant in your denial of the facts?
Sorry, but "The Emperor has no clothes" and "There's an 800 lb. gorilla in the living room".
MLB is set to go the way of Farrah Fawcett, Michael Jackson and Patrick Swayze.
A year from now I predict you will be working at another job.
So why not start get your resume in order now instead of lollygagging here on this website?
Which lift? 6-shooter, no.
Lone Tree? no.
Headwaters? no.
More confused ignorance. You are a geologist, that is great. You demonstrate little actual knowledge of what you are claiming.
If you are talking about the Big Sky tram, that is one thing. What is the MLB Sky Tram???? no such thing exists.
Back to the Big Sky tram, it was built on a rock glacier in 1995. It was designed to have a useful life span and to move with the glacier. The haul rope was replaced last year. I ride the machine near every week the winter. I am confident in the abilities of the Boyne maintantence crews to safely service and operate that machine.
You are getting silly now and I have better things to do than to help in your education.
Anyone concerned in resort development, I encourage you to join the resort's planning boards so you can actively have a say in what you are passionate about.
LOL@Employees in Foreclosure.Com
LOL@Greed and Stupidity.Com
Best of luck to you.
Ya think that MLB has been operating without any supervision from Lehman Bros this past year? If so you really are misguided.
Treeline Springs is completely funtional, funded and operating as always. (Waste water treatment & culinary H2o).
What about safety?
Our Lift Maint crew is the same in numbers and personnel as last year, and the year before that.
The Ski Patrol remains the same, all the programs people have come to expect at MLB, including MBRT remain the same.
You write, "If I was going down, could I transfer assets to my kids and friends or to my lawyer--that's what I would do--I'd shovel as much money as fast as I could and hide it. I'd get a local bozeman lawyer to do it for me--yes sir great plan, but it's just me thinking out load."
Load is right.
"I would loot that money first because most people would never look for it."
Maybe that is due to your lack of scruples, but that is just me, thinking out loud.
"Its an easy call this year. Until everything stabilizes, ski at Bridger Bowl I say."
Wonderful. I encourage you ski at Bridger Bowl this year. They are a fine area and I have many good friends who work there, they will be happy to have such a fine example of humanity at their area.
Again, you are a class act. And again, good luck to you and your family.
Why would any business risk operating without the proper maintenance/ safety inspections? That is not cost-effective.
But... What do I know...
Wait and see, Moonlights not going nowhere... ya heard it here first!
Is there a law that we all have to love moonlight people? Let me know where I can look that one up.
MLB will no doubt survive but it may have to become public like BB. That may not happen or happen soon if at all but what must happen is what happened at YC--the guys who took the big risks should take the big losses. They would have taken the big gains without blinking an eye or sharing it with anyone. They shouldn't share the losses with anyone.
The guys who put their blood, sweat and tears into improving the property must be paid just as the YC creditors' committee in bankruptcy has paid the local contractors.
Lehman is turning a blind eye to the locals, making them hire attorneys and incur unnecessary litigation expenses when it should be negotiating with them to pay them. In the legal field, this is known as determining "priorities." Sime, Williams, all the many others with construction liens are prior to and superior to Lehman. (Sime, by the way, is a Bozeman company--not a Billings company.) It's time for Lehman to recognize that. The rest of them are stuck with the reality of the economy, as they should be.
It took 18 months for the Y/C debacle to settle out. This too will take time.
Guess we will just have to wait and see.
RS, does that S stand for Sime?
Lehman wants to take over the resort because it thinks it can make it more profitable than Lee Poole. (Another risk voluntarily assumed--now it wants to be the developer and the banker). Lehman should only be allowed to do so AFTER it pays those whose interests have priority as a matter of law: the lien holders.
BTW, there is no executive or other person associated with Sime Construction who has the initials "RS."
Perhaps Sime and Moonlight Basin already have an agreement and both sides are comfortable with that? At any rate, I doubt the owners of any company would be too thrilled to have some anon. poster beating the drum on a local website on their behalf.
I want to ski the Headwaters this winter.
And I do like your idea that if Lehman does indeed take over Moonlight Basin, their first order of business is to pay off all accounts, 100 cents on the dollar and then they may begin to do whatever it is they will do.