News Analysis
Moonlight Bankruptcy: is it Yellowstone Club, or is it Tamarack?
By Jonathan Weber, 11-22-09
For U.S. Bankruptcy Court Judge Ralph B. Kirscher, the opening hearing in the Moonlight Basin bankruptcy case, scheduled for this Tuesday in Butte, promises more than a little bit of deja vu: it was just a year ago that some of the same lawyers appeared in the same courtroom to begin arguments in the Yellowstone Club bankruptcy case, and there are certainly plenty of parallels in the two situations.
Like the Yellowstone Club, Moonlight is a new ski-and-golf resort in Big Sky that got caught out with an unsustainable debt load when the mountain real estate market crashed. Like the Yellowstone Club, Moonlight is an important economic engine for Big Sky and greater Bozeman, and the outcome of the bankruptcy will have a big impact on the community. And as in the Yellowstone Club case, the opening chapter of the bankruptcy will likely feature a battle between management and a Wall Street lender over who controls the property while a broader solution is found.
Unfortunately for Big Sky, though, the closer analogy is the case of Tamarack Resort in Idaho. Like Moonlight, Tamarack was conceived by a charismatic businessman as a public four-season resort with high-end real estate sales at the heart of the business model. Like Moonlight, Tamarack found itself in the position of relying on an angry lender to continue funding the operation after the meltdown hit. Like Moonlight, Tamarack has been unable to find a new owner to save the day, with many questioning whether the resort is fundamentally viable. Tamarack is now closed, with a foreclosure trial scheduled for February.
Moonlight will in all likelihood remain open this winter, and compared with Tamarack it has one big advantage: a direct connection with the ski terrain of Big Sky Resort. That means that skiing operations could be maintained even in the absence of a broader financial solution. But the outlook for Moonlight creditors, and for resort founder Lee Poole, is not very bright.
The first stage of the Moonlight bankruptcy case will focus on the provision of so-called debtor-in-possession (DIP) financing, which is necessary to kept operations running during the court-supervised restructuring. Moonlight management, namely Poole and chief operating officer Russ McElyea, have proposed $21 million in DIP financing from a Connecticut-based hedge fund called Trilogy Capital. As with all DIP loans, though, the terms are onerous: 15% interest and a 2.5% fee for origination and another 2.5% when it’s paid back.
A document obtained by New West shows that a DIP loan in the $25 - $30 million range was being solicited even a few days before the bankruptcy filing, suggesting that Trilogy is not a potential financial and operating partner but simply an opportunistic lender.
Further, Lehman Bros., which loaned Moonlight a total of $170 million in two separate but related deals in 2007, is virtually certain to oppose the Trilogy DIP loan, because a DIP loan gets priority ahead of other debt and also gives the DIP lender enormous leverage in the bankruptcy process. Despite the fact that Lehman itself is in bankruptcy, people familiar with the situation say Lehman has access to capital, and thus it’s likely to propose its own DIP loan, though perhaps for a smaller amount.
Lehman also wants Poole out - in fact Moonlight filed the bankruptcy case just a day ahead of a state court foreclosure proceeding in which Lehman was seeking to have a receiver appointed to run the business. Lehman could ask the bankruptcy court to appoint a Trustee or seek other ways of forcing out management in conjunction with new DIP financing.
Poole argues that he and his team are doing a perfectly good job of running the resort, and that they have the interests of the contractors and the employees and the community at heart. Judge Kirscher, in the Yellowtsone Club case, showed that he considers community impact to be a very important consideration, and Poole will likely try to play up that angle. Poole is a long-time Ennis resident who worked his way up from ranch hand to resort mogul, and Moonlight has worked hard to be a generous community member and develop the property in a way that is relatively friendly to the environment.
Moonlight will also point out that the receiver that Lehman wants to appoint, Doug Wilson, was also the receiver at Tamarack, and he ultimately angered even lender Credit Suisse, which had urged his appointment, partly because of high fees. That’s not a promising precendent.
Yet some Moonlight property owners and others are fed up with Poole and what they regard as irresponsible management. Furthermore, Moonlight will have a hard time making the case that the Trilogy Capital solution will yield a better outcome for creditors and homeowners and others in the community. ((Ed - Lehman noted in a court filing Sunday evening that it had already agreed in the foreclosure proceeding to pay the holders of construction liens, notably Sime Construction, if they agreed to the appointment of the receiver.). In the Yellowstone Club case, the DIP lender supported by management - CrossHarbor Capital - was also a real buyer that wanted to own and operate the property. Trilogy is a very different kind of alternative.
Judge Kirscher, in the Yellowstone Club case, ultimately found the $375 million Credit Suisse loan to the club to be “predatory” and grossly irresponsible, in part because it allowed more than $200 million of the proceeds to flow directly to club founder Tim Blixseth and his then-wife Edra. Kirscher punished Credit Suisse for that, putting its claims at the back of the line and thus forcing a settlement. It was ultimately a happy ending: all of the vendors and contractors got paid, most of the employees kept their jobs, and the club is now well-financed and in a good position to ride out the recession.
At Moonlight, Lehman does not appear to have authorized Lee Poole to take money for himself. But $70 million did go to buy out Poole’s partners. Moonlight alleges that Lehman, which had been engaged as an investment bank to sell the resort and provided the loan as bridge financing, made a lot of promises that it didn’t keep. But whether Lehman or anyone else behaved badly, it may all be academic, since in the absence of a buyer there won’t be any money to pay anybody off.
Credit Suisse has been rightly pilloried for a foolhardy loan program that led directly to bankruptcy or insolvency at the Yellowstone Club, Tamarack, Promontory, Lake Las Vegas and a dozen other resort properties around the world. But in one respect, at least, the Lehman loan to Moonlight was even more ridiculous: it was made much later, in the fall of 2007, when the collapse of the real estate market was already underway. The CEO of Lehman at the time, Richard Fuld, actually has his own Montana real estate investments, near Whitefish, and I’m sure he wasn’t selling any property in the fall of 2007.
It’s not hard to see why both Lehman and Moonlight are now bankrupt. For Big Sky, the only certainty in this situation is uncertainty.
[End of article]If you have ever been to Moonlight Basin then you know what a special place it is. Although many are quick to comment on how it compares to Y/C - there are FAR more differences than similarities. As a member of the community and an employee of Moonlight Basin, I am grateful for the creation of such killer ski terrain, down-to-earth employees and a community of home owners who appreciate Lee's environmental mindset and his genuine approach. This situation is much more complex than most people will ever know. And that's ok. Those who know employees at Moonlight... know us as good people and community members, and they know we are working for a company that is built on intregrity and family. We are working for owners who are some of the most giving, caring individuals I have ever known. Thank you to those of you who look past the "drama" and conspiracy suggestions and understand there is more than what meets the eye. Let's focus on wishing the best to all those in OUR community who need some support and an opportunity to regroup in a challenging economy.
Comment By Mike, 11-22-09Actually It's really neither. It's unfortunate that Mr. Weber deems is necessary or helpful to try and paint similarities between these situations. What's the point? Is it to draw the arm-chair theorists and their conjecture and heresy based vitriol out of the woodwork once again? If that's the case we can all be sure that he will be highly successful here.
Are there some basic similarities? Sure. But are there as well similarities in virtually all bankruptcy and foreclosure cases both commercial and personal? Again, what's the point in supposedly illustrated that here?
That said there's a few things that I believe Mr. Weber has wrong here whether through lack of information or nuance of statement.
Lehman was not "angry" when they continued to provide funding for the past 2 years as the real estate market was tanking, in fact it could well be argued that their continued financing was a vote of confidence in the Moonlight management team that they were doing a good job running the asset through a difficult time. Keep in mind, Lehman did not just write checks and give Moonlight carte blanche to do as they pleased. Lehman required approval of budgets from Moonlight throughout that time.
The reason the loan was taken out in the first place was to (as Mr. Weber correctly states) allow Lee to pay off his two partners who wanted out, continue building amenities and infrastructure (something they thought at the time was the best course of action to promote further real estate sales) and keep the resort operating. Yes, the argument could be made that some people foresaw the depth of the market crash well in advance but a lot of extremely savvy and smart people did not.
Moonlight agreed to the terms of the loan which included Lehman's proposal and virtual guarantee to sell the resort within a very short period of time for $300-$400 million (again as collateral for a total of $170 million in loans). And barring completion of a sale, provide long term financing to keep the resort running. Lehman followed through with neither of these things AS PER the LOAN AGREEMENT. And in fact, it is my understanding that Moonlight themselves brought willing buyers/investors to the table on several occasions during that two year period only to be rebuffed by Lehman without even a vetting process. Again, any deal or transfer of money needed to be approved by Lehman so Lee's hands were tied.
I'm not sure how Mr. Weber draws the conclusion that Trilogy "is not a potential financial and operating partner but simply an opportunistic lender." just because the DIP Loan was solicited a few days prior to the bankruptcy filing. As far as I can see the only conclusion that can be safely drawn there is that Moonlight merely PLANNED on filing bankruptcy and wanted to assure uninterrupted financing to do things like pay payroll.
Mr. Weber's last statement further solidifies my question...what's the point? As of August 14th 2008 most people on the planet knew that Lehman was bankrupt. It's been common knowledge for almost two years now that Moonlight has been relying on Lehman for funding to run their resort. Where's the news here? Hard to see why? ...of course not, we've had a couple years to reflect on why.
For all of the bored folks who love to post negative comments on this board based on heresy, conjecture and assumptions, I would suggest checking out the now public documents available from the Madison County Courthouse to get some real information. It does no one, including yourselves, any good to spout off about things you really know nothing about.
And to all those that posted the supportive and positive comments on the last article (HWSkier)...love to buy you all a beer at the Madison Lodge some time. It's good to know some folks are actually willing to research a bit and get some information as well as realize this is about much more than Lee Poole or a ski resort.
Mike
My mom moved us to Bozeman in 1976. A single parent mom with an only child, putting herself through grad school while working four jobs. She was an example of perseverance, hard work, and determination. I have since looked back with such respect for what she went through. I grew up in Bozeman, and have loved this valley since my first day. Yet it was only when i moved to Los Angeles for nine years and came back did i truly begin to understand the uniqueness of this magical place we all love so much.
When i moved back to Bozeman in 2003, I had just sold a company i had started in L.A. and was looking for new opportunities to get back to what i loved - telling filmic stories. Bozeman was evolving quickly. New "millionaire" clubs were springing up everywhere. The first client i pitched my creative ideas to was Moonlight Basin. I approached Moonlight as i would any client. But the experience in working with Lee Poole and the family that he put together has proved to be anything but typical. Lee Poole had humble beginnings not too different from mine.
The very first time i went to Moonlight Basin with Mr Poole so he could show me what was being created, my eyes were opened. When i saw the look in his eyes as he scanned the panorama before him.... what reflected off of his eyes, is a look i too rarely witness: passion. He spoke with a reverent tone about the respect he had for this land. "Listen to the Land" he said.... he spoke unlike a developer.... he spoke of hidden rooftops and preserving view sheds... he spoke about the priorities - ALL families.... not just the rich ones... and the wildlife that deserve to roam free on a piece of land he cherishes so much... but wouldn't even call it "his." "It's much bigger than me" he said. It was this day that my insight shifted from client, to mentor. I was humbled to find that this kind of human being still existed. Not in it for the money. But for love... and vision. I left that day changed and inspired.
Lee has continued to offer support to me as a father figure and a mentor. He helped me pick out an engagement ring for my then-fiance. He's helped many business owners i know with his sage advice and has shown in so many ways how much he cares for those around him.
Since then, I have witnessed Lee's support of our local communities numerous times. Lee Poole CARES DEEPLY ABOUT MONTANA and the people within it. From his employees, to his vendors, to the families in his community, Lee has always put the BEST interests of Montanans first. Lee has offered generous mentorship for those around him, founded the M-T program that incentivizes kids to improve their grades by offering free skiing, and he and his wife Lathie have contributed significantly and proactively to over FIFTY non-profits across Montana.
When i read the articles written about Moonlight Basin... lumping them together with the "Big Sky became too big for their britches" stories of Yellowstone Club, Spanish Peaks, etc., i cringe. It is not another exclusionary resort for the rich only. There is something specific that separates Moonlight from the rest of their peers. Something so simple - yet powerful. It is because it is a family destination open to everyone - all inclusive... and owned by locals. Moonlight Basin is NOT just another Big Sky millionaire's club. It is a family run business, created by Montanans. The owners kids were raised here - they went to school here. They buy their groceries here. They pay their taxes here. And they invest in their community as if were their own. Because it is.
Lee and his team have fought hard to do the right thing for the land. He has turned down opportunities for a lot money just to keep his selfless vision for the land and its natural inhabitants in place. After taking an overly-logged piece of property that had been desecrated, he nurtured it and restored it to its original splendor, re-planting trees and food for wildlife, he succeeded in re-opening the largest wildlife corridor of North America so habitat would return to their native routes. And it's worked.
The founders of Moonlight set a goal of preserving 80% to 85% of the original land purchase. Through the help of conservation buyers, Moonlight Basin will meet their goal of protecting over 22,000 acres if the original 25,000 acre purchase. This is truly unique.
Moonlight just completed a self-imposed two year audit of all their business units to promote sustainability. The audit includes: energy use, water use, and hazardous materials. The audit resulted in a 50% reduction in operating waste, use of environmentally friendly cleaning supplies, using recyclable materials for food and beverage containers as well as composting of food wastes. In addition, Moonlight Basin offsets 100% of lift use with renewable energy credits from NorthWestern Energy’s E+ Green Power Program.
Moonlight Basin partnered with Skyline to offer free year-round public transportation between Bozeman and Big Sky. The partnership eliminated the equivalent of 2482 one-way trips through the Canyon in January 2008 or about 34 auto trips across America, saving more than 25 tons of CO2 emissions.
From the beginning, Lee's vision was to create a magical place for people of all ages... for families. I've witnessed multiple family memories being created right before my eyes. Memories that families still hold onto dearly, and will have forever... unique experiences designed for people to exercise their passions - yet it's the lifetime memories that are so priceless.
The tourism industry is one of Montana's top influencers for our economy. In 2008 10 million visitors traveled to Montana and they spent $3 billion in new money for the Montana’s economy. But only when a family has a memorable experience, do they want to come back and do it again. Moonlight's visitors have become loyal visitors because of the simple differentials that Lee has always created... handing out hand warmers when your car is parked. Walking through the parking lot lifting up every car's windshield wipers when it snows much to the surprise of the family that returns.... this never happens; And investing in the family experience as if it were for his own family.... because it is. It's where they live and play too.
What is at risk if Lehman Brothers takes control of Moonlight Basin? Can you imagine if this place is taken over by the wall street suits? Without any vested interest in the communities of Bozeman, Big Sky, Ennis, and West Yellowstone? Can you imagine the fine touches disappearing and being replaced with corporate "I don't care because i don't live here" attitudes?
Moonlight Basin is vital for our local economy. Lehman's effect on economy nationwide has been catastrophic. They have been a huge influence on the economic crash, and have completely paralyzed the resort / development industry. And now they want to force feed their great wisdom to our town. Moonlight supplies around 300 jobs, with approximately 1200 as it builds out. Moonlight pays employees above average wages (compared to local resorts), and is the largest tax base in Madison county. If Lehman takes control we will instantly lose jobs for the local community, as out of state management will be brought in.
It is NOT a coincidence that dozens of lawsuits are currently filed against Lehman Brothers (SEC, FBI, and FED are all investigating Lehman with a renewed scrutiny). The majority of the projects that Lehman have financed are in some stage of financial peril (Foreclosure, Bankruptcy, etc), and this is called predatory lending. They know what they are doing.
Moonlight Basin was founded upon some admirable principals: Environmental stewardship, Community Outreach, and Montana Hospitality. Not mere profit. But unforgettable experiences and preservation of a place that means so much to so many.
If Lehman Brothers takes over Moonlight Basin, one of Montana's truly unique diamonds will turn back into coal. A dream squashed. A tragedy. SUPPORT LOCAL BUSINESS, THE STATE ECONOMY, and THE AMERICAN DREAM. I would ENCOURAGE those of you who have a child who has benefited from the M-T program... or who have husbands or wives or kids who work at or have affected by Moonlight's generosity to write a letter to the editor in support of this company - one who cares.... and acts on it. Please... do the same. Act.
The common thread of MAGIC seems to run through so many economic (and religious) arguments these days......
Comment By Jonathan Weber, 11-22-09Hi and thanks for your comments. Mike, the point of the comparison is to help try and understand the legal and financial dynamics and how it might all play out. I think it's in everyone's interest to have as much understanding of the process and possible outcomes as possible, and in that regard the comparisons are instructive. It's certainly not my intention to be negative or sensationalist, on the contrary, for what it's worth I very much hope the situation evolves in a way that is positive for the community and everyone associated with Moonlight.
Comment By Yarrow Kraner, 11-22-09Jonathan - thank you for the additional insight. It's clear by the responses above that there are a lot passionate perspectives involved - The Moonlight family has cared about and made a large impact on Montanans. The comparison of Yellowstone stops at financial - the actual energy that Moonlight has invested into its community is not a comparison. Not even close.
Comment By Nameless, 11-22-09Seems to me like Lee's doing a good job of cashing in the last of his chips by asking for letters of reference. Am I a bad person for saying that I don't think it's going to work, and that I also think there are a lot of parallels between Moonlight and Tamarack? I love the skiing at Moonlight, but I don't think it's any better than Bridger or Big Sky, or even Redlodge on a powder day. I've also got a number of friends that work there, but I just don't think it's a viable operation. What exactly is Moonlight's market? The only locals I know of that ride there are the employees, or Ennis area folks that somehow have an "in" and got the gate code. Yes, of course there are a few exceptions, myself included once or twice a year. Catering to wealthy out of state money for real estate sales just didn't work. It's not going to work. I'm not a hater, just being realistic.
Comment By Mike, 11-22-09Thank you Jonathan. I do believe though that, to be fair, if you're going paint similarities you should bring to light the differences as well as they are just as pertinent to POSSIBLE outcomes as the similarities. You have obviously read at least some of the court documents pertinent to these proceedings. Just as obviously most of the folks who read your articles and post here have not.
I completely agree it's in everyone's best interest to have as much TRUE and HONEST information as possible. Conversely I don't believe it does anyone any good to speculate based on superficial similarities.
One of the biggest problems Moonlight faces is the fact that there have been, out of the dozens, probably hundreds of pending legal actions against Lehman, virtually none that have been ruled on in part because of their own bankruptcy filing.
There is really little or no precedent here and in fact, the further along these proceedings go, the more facts will surely come to light quite possibly even further diverting the similarities of Moonlight's plight from those of YC and Tamarack.
And if sensationalism is not your intent then don't make statements like "Yet some Moonlight property owners and others are fed up with Poole and what they regard as irresponsible management." When in fact, as a matter of public record, there were exactly two Moonlight property owners who provided pro Lehman Affidavits (quite possibly under duress) and 41 pro Moonlight affidavits from not only property owners but many upstanding members of the community as well as some of Moonlight's other creditors themselves!
My point is, that if you are truly interested in fair and honest reporting, then you need to have a better understanding of your audience and how your statements may play to them whether they are factual or most especially if they are based on your opinions or conjecture.
No Nameless, not bad at all. You're certainly entitled to your opinions of course. In no way did I mean that anyone who posts negative comments is "bad" or anything like that. You may, in fact, end up being correct. I think the chapter 11 filing validates your assertions to a point. Moonlight plans on reorganizing their business and development plan (now under the watchful eye of a federal bankruptcy judge) specifically BECAUSE the present one hasn't and going forward likely won't work.
My quarrel is with the folks here who hate without really knowing. Those who comment about Lee, portaying him as selfish and a "tycoon" and whatever are just clueless.
Will the real estate market rebound to it's former "glory"? Who knows. Maybe, maybe not. Will that mean that some day Moonlight may very well be worth $300-$400 million...maybe, maybe not. At this point speculating about that doesn't do anyone a bit of good. My (our) point here is why not cheer on a valuable part of our community to success rather than celebrate it's possible demise. There is, despite OPINIONS to the contrary, a lot more than Lee's wallet at stake here and he would be the very first in line to tell you that.
What is UNIQUE about Moonlight is the skiing. We need to get back to the reason the resort is so great to begin with, and that's access to some of the best ski terrain in the world. The Yellowstone Clubs and Tamaracks are all about the base area and the real estate. Moonlight is about the skiing.
To quote Jackson Hole economist, Jonathan Schechter - "The opportunity is in recognizing what is distinctive about your community and doing everything you can to embrace and nuture and sustain it for future generations."
That is what's at stake on Tuesday. If my kids don't get a chance to experience the North Summit Snowfield or Three Forks, or the Headwaters Hike, or the amazing tree skiing off of Lone Tree on a powder day....that will be the real shame. Not just for Lee Poole or the employees or the homeowners....but for all of us and all the future generations who love to ski.
If Moonlight is about the skiing, then why in the world is there a golf course up there? Seriously, when when the last year up there that it didn't snow 11 months out of the year, or twelve for that matter? Excess? I guess time will tell. Just a step or two inside their base lodge and well, in my opinion, it seems obvious it wasn't built for the skiers. I feel weird just being in it, like someone is going to make me pay for a $25 huckletini I didn't know I ordered. Not about the real estate like the YC and Tamarack? Hmmm, then why has it gone belly up? I just wish someone would step up and admit that they made some serious mistakes along the way. After all, the place was pretty much built out to its present state by the time the Lehman loan came through in 2007. If they can reorganize under chapter 11 and come through for the locals and the skiers then more power to them, but can they also promise that they won't aspire to become another YC, Aspen, or Deer Valley?
Comment By Juancho paczeko, 11-22-09MLB was heavily heavily promoted by Montana Real Estate Co--a really nice caring bunch and also a MLB subsidiary I think...
MLB:
it was too good to be true.....
a deal of a lifetime....
you know how the pitch goes.....
and it was...
some call it visionary....
some call it passionate...
some call it bad timing....
some are calling it fraudulent....
Time will tell....
Of course the business model that brought them to where they are now was based on real estate. No one, to my knowledge, ever denied that, especially not Moonlight themselves. No one there, to my knowledge, has ever said anything different nor denied making some mistakes. Do they need to shout it from the treetops to satisfy you?
As I've written here before it amazes me that because of the scale of the mistakes and the very public vetting of them folks feel free to crucify companies like this no matter the ACTUAL circumstances.
It's NO different than a retired couple who invested with Madoff without proper research and forethought and now find themselves without a life savings. It's NO different than a medium income family who were talked into an "affordable" ARM mortgage who now find themselves with a loan payment adjusted completely out of reach because a loan officer convinced them. All you need to do is actually READ the public court documents.
News flash people!.....these are human beings running this company...just like you and I, they put their pants on the same way each morning. They make good decisions and they make bad ones. Sometimes the bad ones have repercussions both very public and very far beyond what you or I could imagine dealing with. Why is it that some feel the right to judge them for this?
Just FYI Nameless...The Reserve was open and 9 holes where being played for just over 3 months this summer. Last summer it was about 4 1/2 months. Really neither here nor there just informational. Was it a "mistake" to break ground on it? Maybe. But with hindsight everything can be questioned by someone. The golf course was built as a private amenity. The ski hill was built for everyone.
If you've ever been in the lodge beyond a few steps then you'll know that there are families, hard core ski bums and yes probably some rich socialites as well. Folks drinking PBR and yes some probably drinking $25 huckletini's. If that's not your cup of tea then I'm sure Bridger is. Does that make Moonlight a bad place though? If so then I would wager the vast majority of the successful, self sustaining ski resorts in this country would be distasteful to you as well.
I can tell you without question that Lee Poole will do everything in his power to keep Moonlight from ever becoming even remotely akin the YC. He loves and respects the land too much for that and loves and respects this valley and the people here even more.
And as for you Juancho...only a few, like yourself, with no actual knowledge of the situation beyond what they read in the papers and on blogs think there is fraud on Moonlights part. You are correct in one thing though...time, will certainly tell.
Stay tuned!
Lee Poole is nothing like Tim or Edra. The comparison is odious and laughable. The bald eagle and the vulture might have some eating habits in common and they're both birds.
There's just no comparison here in the community.
Listen to yourselves try to justify one location, one owner, one opperator, one bank, when the circumstances are strangly similar to the YC debacle. Local government and business (that's YOU) pushed these whacked out plans, and now want to lay the blame somewhere else. Sad. Either you mothball the whole pathetic project, or you let the hedge funds take over, screw the locals who are owed money, and hope that a more realistic business model will slowly bring in buyers. Of course, with all of the inventory in the area, I figure you need roughly 1000 FAMILIES to move to the area. Let's revisit that plan in about 50 years.
Comment By Dave Skinner, 11-23-09Bottom line is this was a case where the uber-wealthy, like Blix, Poole, Lang and the rest, thought they'd found a niche insulated from the vagaries of the real world occupied by the rabble.
For example, the rumblings in the main markets for "normal" people preceded the drop in tippy-top RE by three or four years, leading the the idea that perhaps THIS time the stratosphere would remain pure and clean.
Well, it didn't. Even castles in the sky need a foundation on the ground.
Good article very interesting
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Here's the thing, Mike.
Bridger--where you'd like to send MLB's detractors--actually IS a successful, self-sustaining ski resort. Moonlight ISN'T. Whether they are selling $25 Mocktinis or PBRs, whether they are nice guys, locals, or great community employers, they can't make their $600,000+ monthly payroll on ski and lodging operations. That's what got them into this situation in the first place.
If Moonlight's next $21 million in financing comes through, and they can't pay that back in a year, then what? Sue that lender?
Lee may be a nice guy, and the company a great employer, but their business model isn't sustainable. If the court lets MLB get more money and moves another Out of State lender into the DIP role, they simply delay the inevitable: Ownership by an out of state lender.
All your 'inside' information on the 'real' story doesn't change the simple economic facts. Real Estate can't turn around fast enough to save anyone, nice guy or not.
btw - In my passion i have for Moonlight Basin and Lee Poole, I did not intend to downplay Yellowstone Club, or Spanish Peaks, and their contributions to the area - i meant only to to tell the story of being witness to an amazing story of a local-made-good mentor to many. A family man on a quest to create the ultimate family memory-making destination.
I am extremely thankful for YC's continued support of many organizations within Bozeman. I recognize that YC Club has been a major employer and supporter of Southwest Montana.
I'm simply emotional about the thought of losing Moonlight Basin, as a vital cog to our community. From someone who really cares about where he lives.
Environmentalists develop mountain sides and spread rural sprawl? Must be a new definition.
Comment By Mike, 11-24-09>makesenseplease<
Here's the other thing...
I have never once argued that Moonlight's business model IS sustainable. Just because I believe that they are nice people and the place itself is a great ski resort does not mean I believe that they can continue with the status quo up there and be successful. What gave you that idea? In fact in my last two posts I said as much with the references to the chapter 11 filing and the real estate business model comment.
My arguments here have merely been that folks should get some real information before passing judgement on what Moonlight (and Lehman for that matter) have or have not done wrong. People are so quick to pass judgement on the "evil" developer and cheer when things go awry for "moguls" and "tycoons".
Lehman screwed up a lot of things in this country with their greed and malfeasance. My opinion, after reading court filings in this case, is that they may have done some things here which pushed Moonlight over the edge or at the very least quickened the slide. That judge in Butte today may certainly disagree.
So, you're absolutely correct...at this point Moonlight Basin's present business model cannot be self sustaining. My hope, in part because they ARE great people AND important economically (via taxes and jobs) to this county and this state, is that they are allowed to restructure and come up with a truly sustainable plan for business moving forward. Would that really be a bad thing?
You are incorrect however about my wanting to send Moonlight detractors to Bridger. I was illustrating a point to Nameless about his feeling re: the Moonlight Lodge...and yes I realize Bridger is successfully self sustaining. No reason Moonlight couldn't be at some point either.
I have no idea what may happen to MLB in the future, in fact in the next few hours. All the detractors out there may have every cause to cheer. I just hope that, if that does come to pass, every one of them can remember, just for a second, that other peoples LIVES (and no, not just Lee Pooles), could be ruined and the county could lose a huge tax generator.
Oh and "Mike"...as a matter of fact a developer CAN be environmentally conscious. I can tell you about the conservation easements and forest rehab and wetlands protections and everything else going on up there if you'd like. And if you consider Moonlight Basin to be "urban sprawl" then I don't think I can help you.
I've wondered for years how you can develop land and say you are preserving it. If you want to preserve the land then don't build roads and lots on it. Seems simple. Maybe that was a sales pitch to the wealthy out-of-staters that don't know any better. It's a shame that the community has come to rely on development but that is where we are now and for everyone's sake I hope it all works out. But please, stop the bs'ing.
Comment By Fenske, 11-24-09Steve wrote, "I've wondered for years how you can develop land and say you are preserving it. If you want to preserve the land then don't build roads and lots on it."
If you understood more about the condition the Jack Creek drainage was in when Moonlight Basin Ranch bought the property, it would make sense.
If you understood the alternatives had another group purchased the property it would make sense.
That parcel was going to be bought and developed. The location and proximity to Big Sky pretty much sealed the fate.
I think ML can only develop like 20% of the land or something like that. That's a lot of land which, with most other developers, would be wall to wall homes. That's responsible, as far as development goes.
Comment By Mike, 11-24-09Sorry Steve but Moonlight is the exception to the rule. They bought the land from the Plum Creek Timber Co which had pretty much logged it into oblivion already. That whole basin was logging roads, slash piles and stumps. No need to take my word for that either, just ask some of the locals who hunted elk up there.
Moonlight cleaned it up, rehabbed a lot of the acreage and subscribed to a very low-density form of development. 80%-83% percent of the original 25,000 acres is already or will be put into conservation easements. There are also some stringent, self imposed wetlands protections and parameters within which those "wealthy out-of-staters that don't know any better" need to operate when building and such.
Unfortunately it does take money to care for a piece of property like that and that money can't just come from thin air. I am certainly NOT pro-development but in this particular case what's been done up there (and what's still proposed) is probably the best case scenario for that land other than a magic wand or a time machine (or yes, leaving it completely alone for the next 100 years or so but it was for sale...how 'bout we be just slightly thankful that someone didn't buy it and build condos and Starbucks on every square inch of it.)
I don't subscribe to Ted Turners politics either generally speaking but he HAS preserved a ton of land that otherwise may have been raped and pillaged by developers much less environmentally conscious than Lee Poole.
So I won't BS if you quit generalizing.
One factual correction: Moonlight is not the biggest employer or tax payer in Madison County. Big Sky Resort is--four times as many employees, and for decades and decades, the biggest tax payer.
Comment By Curiouser, 11-24-09Yarrow -
A follow-up to your follow-up: are you intentionally inviting comments on your organization's work? And involvement with Moonlight? You neglect to mention that Moonlight was a three-year sponsor of your "festival", pledging, what was it.... 100k/year? Something extraordinary. Those funds helped you buy all of the filmic (your word) equipment that you're able to use for your personal business.
People have been in Bzn just as long - or longer - than you have, and can well remember the circumstances of your leaving Bzn for LA. And your surprising return.
It's tough when the teat dries up.
Wow, that's laughable. HATCH is a non-profit. Never once has a purchase made for HATCH been used for our company CHISEL. We've been audited. I've personally invested over $150,000 of my own personal money into HATCH.
Sounds like you may have some facts mixed up.
I'm not sad the our well has dried up. But it is true that without Moonlight Basin, there would most likely not be a HATCH - which is not my festival, but Bozeman's. Over 200 volunteers every year pitch in to bring mentorship to MSU and the community.
Lee has been a mentor and someone i look up to, as i have watched him do some amazing things for many people and organizations.
Curiouser, Is this comment really pertinent?
How about sticking to the subject and the known facts.
In my opinion you are making a personal attack on someone while remaining anonymous. Mr. Kraner posted under his real name.
If you have an axe to grind at least have the courage to post under your real name.
Thank you.
I love the atmosphere and terrain of MLB as a ski resort. I know and respect people who work and worked there. I am also interested in seeing Big Sky continue to grow as a community, not just a landscape of high-end highly leveraged real estate developments.
From my viewpoint, it seems like Poole et al. need loans to keep them going until the real estate market picks back up. That's hard to imagine. But if that doesn't happen, then what? You can't pay back loans with good intentions.
As a person interested in the outcome, I'm not sure I know what outcome to cheer for.
agreed - i think we all want what's best for the community.
Yes, i do have a personal bias and affinity for Lee and the great team he has gathered. But I would think that a local - who raises their family here and has clear, vested interest in the local community would be the best choice to see the intentions through. Poole's intentions have always been community-driven.
Curiouser - if you have any more questions for me regarding my experiences with Moonlight, HATCH, or otherwise, feel free to email me directly -
Comment By Lance Olsen, 11-24-09Irrational exuberance puts money to all sorts of projects, with all kinds of boosters to cheer it on. Just look, see what politicians cheered when prospects looked good for resort development. Now they're as stuck with embarrassment by the disintegration of the mirage as anyone else. Does it seem far-fetched to think that the same (now-embarrasing) exuberance could sweep resort developers down the same path and into the same traps as anyone else?
Comment By Mehmnet, 11-24-09It's going to get a lot uglier before it gets better.
Moonlight/Poole tried to jump on a doomed financial bandwagon.
The world of Wall Street financiers making all things better is now history. It's never coming back.
Moonlight will slowly tank in the years to come as litigation makes it more and more unattractive to invest money.
It's not YC and it's not Tamarack: each financial collapse is always unique.
Its all over. (Yawn)
Comment By Mr T, 11-24-09I'm sure that at ground level there are a million meaningful differences between Moonlight and Big Sky Resort, but I have to say that from afar it's hard to imagine that MLB terrain and operations won't eventually just be assimilated into those next door.
Comment By Allyson Adams, 11-24-09My experience with the Poole's and Moonlight Basin has always been positive. They are kind and very, very generous to the surrounding communities, including one of my projects http://www.peaceisawomansjob.com. Just the employment base they supply is enough to want to keep them around. If it wasn't for them, half the valley would be out of work. The first time I went to Moonlight Basin, I was moved by the helpful, friendly, great customer service. People were amazing, all part of the Poole's philosophy. MLB is a wonderful organization with loyal employees because of their high standards and family orientation. It would be a shame to see them go under. But if anyone can pull it off, Lee and Lathie can!
Comment By ColoradoSkier, 11-28-09The common thread that runs through Moonlight Basin, Yellowstone Club, Tamarack, the ill-conceived Bitterroot Resort near Missoula and all the gated communities in my state and elsewhere in the Rockies is that TOO MUCH IS NEVER ENOUGH FOR THESE FOLKS. The developers and the deep-pocketed individuals whom they count on to invest and buy have not been easily satisfied. They lust after second or third or fourth homes with more square footage, more bedrooms, more bathrooms, higher ceilings, bigger fireplaces, fancier kitchens, more elaborate entertainment systems, multi-car garages, etc., etc. Even those who started life modestly have lost their sense of proportion. My sympathy for their plight is limited by the disregard they show for the landscape, for permanent communities of year-round residents and for the mountain culture they have perverted.
Comment By alan gor, 11-28-09As a lifetime skier I would like to reply to some coments esp. ColoradoSkier.
I came to the states from the european SkiCapitol. My US Skiing
initiated in TAOS. It was one of my most favorite Ski Resorts untill
It was FREED for boarding. I skied the Col. Summit, Aspen, etc,hh most of Utah untill someone steered me to BIG SKY. After Taos BIGSKY/MOONLIGHT became my Favorite.
Why? The people there are the most friendliest, most guests are very down to earth and the employees in both places especially
Moonlight are the nicest you can find.
Lee Poole and his Family could be your next door neighbors. Their Moonlight Lodge is just the nicest place to relax in after a day of
fantastic skiing. In my honest opinion, Lee's problem started with his partners when they wanted out. Has anyone here had Business Partners?
I am most impressed with Lee's concept of Development. No big Condo Complexes No dense homesites. Much better then Vail-Beaver Creek. Never would I put him in the league of Yellow Stone or the likes. Lee Poole is very aware of our environment.
Lee I wish you well.
From the original article above: "Ed - Lehman noted in a court filing Sunday evening that it had already agreed in the foreclosure proceeding to pay the holders of construction liens, notably Sime Construction, if they agreed to the appointment of the receiver."
If Lehman made this representation, it is inaccurate. Court records in Madison County show that Sime and perhaps more lien holders refused to "agree" to the appointment of a receiver, but rather, remained neutral as to whether a receiver should be appointed. Agreeing to the appointment of a receiver would mean that the agreeing entity had studied the financials in enough depth to conclude that MLB was at imminent risk of being "lost," the statutory requirement for appointing a receiver. Presumably, some construction lien holders could not reasonably afford to engage in such an endeavor.
It is bothersome that Lehman would make such a basic misrepresentation, especially regarding the largest lien holder.
Kindness, warmth, and good intentions don't repay loans. Cash repays loans. It doesn't take a brilliant financial mind to see the cash flow requirements for MLB's debt are staggering, not to mention their ongoing operating expenses. No one would have undertaken this endeavor without at least considering how the loans would get repaid. Was the cash going to come from lift tickets? Lift tickets and golf cart rentals...or from selling off chunks of property in the ever inflating real estate market. POP!!! As the proverbial bubble burst, so did any hope that these loans would get repaid. Now it's just easier to blame the lender. Point the finger at the big, bad evil bank. It's in the hands of lawyers now. I'm guessing the bank has the upper hand in that regard. Great employees, magnificant terrain, a "humble" lodge - none of that matters to the judge.
Comment By Yarrow Kraner, 11-30-09Yes, Real Native - but as a fellow native, we can still hope for the best outcome - who can take better care of the asset for long term win-win for montana and its communities? It is up to the lawyers and the judge, yes - but how were the terms to the loan set up? What were the triggers? a lot of details that are not common knowledge to be considered. i hope that the operation of this vision / asset remain in the hands of someone who has true love for our communtity's best interest.
Comment By Richard, 11-30-09Hello, Like a lot of you I have had many winter seasons in many resorts in the USA and abroad, and Moonlight is just one of the best, great terrain, whoever the planner was they knew what they were doing, the gladed trees took some time and came out great. The North face shadow that preserves the powder (cold in January isn't it?) And mainly the lack of crowds! So as long as the lifts run, we are in for an uncrowded great winter.
Comment By Jonathan Weber, 12-01-09Thanks again everyone for your comments.
I am writing another story about this, and I'm interested in talking with people who are willing to be on the record regarding their views of the situation. Yarrow, I appreciate your comments and your willingness to be public. If anyone would like to talk please drop me an email at , or call 406-829-1725.
Thanks.
Has there been a followup article since this one 11/22/09?
This article was printed from www.newwest.net at the following URL: http://www.newwest.net/topic/article/moonlight_bankruptcy_the_likely_scenarios/C35/L35/