Source: Catskill Heritage Alliance www.catskillheritage.org
Contacts:
Stephen Kent, KentCom LLC, skent@kentcom.com 914-589-5988
Kathy Nolan, Catskill Heritage Alliance kathynolan@earthlink.net 845-688-9702
For immediate release
AS DEC DECISION ON BELLEAYRE RESORT NEARS,
NEW STUDY SHOWS IT WILL FAIL ECONOMICALLY
UNLESS IT’S SCALED BACK
[Pine Hill, NY – July 29, 2014] The New York State Department of Environmental
Conservation is now in the final stages of environmental review and permitting
decisions for the largest real estate development in the history of the Catskills: a giant,
629-room luxury ski resort development planned by developer Crossroads Ventures
which would adjoin the Belleayre Mountain Ski Center. The project has caused
continual controversy since it was first proposed over a decade ago. If permitted to be
built at the excessive size and high-elevation location the developer has insisted on, the
proposed resort would not be feasible, could not meet its economic projections and
would cause economic as well as environmental damage to the region, according to a
new economic analysis conducted by Public and Environmental Finance Associates
(PEFA), which was commissioned by the citizens’ group Catskill Heritage Alliance
(CHA).
The PEFA study critiques the recent economic analysis commissioned by Crossroads
(available on request, see below) as part of its application to the DEC and conducted by
Crossroads’ consulting firm HVS. PEFA’s report finds the HVS analysis “critically
flawed, erroneous, and unreliable for decision-making purposes,” “reflect[ing] yield
optimization and goal-seeking” rather than objective evaluation. Among other
problems, the HVS analysis grossly underestimates costs and grossly overestimates
revenue.
PEFA found HVS underestimated construction costs by hundreds of millions of dollars.
HVS assumed construction costs well below those of other similar base area resorts,
failed to cite for comparison any actual construction costs of similar resorts and failed to
show that its construction cost estimate met the criteria of being within reason or
supported by similar projects.
PEFA also found that HVS estimated other expenses to be unreasonably low with
respect to comparable resorts. HVS demonstrably lowballed room expenses,
administrative and general costs, marketing costs, operations and maintenance, and the
cost of a planned golf course, PEFA found.
Meanwhile HVS grossly overestimated room revenue by asserting that Belleayre will
command the same revenue per available room (RevPar) as top-tier world-class 5-star
base area ski resorts in the Rocky Mountains that attract visitors from around the world,
such as Aspen, Vail, Telluride, Deer Valley and Jackson Hole. But as PEFA points out,
that’s a misleading comparison and a gross overestimation of Belleayre’s likely room
revenue. Compared to Belleayre, the Rocky Mountains have superior snow, much
longer ski seasons, much more terrain, slopes with greater vertical drop, much closer
proximity to major airports, and better facilities built to a much higher standard, with
construction costs two to three times what HVS estimates for Belleayre. RevPar for
Northeastern ski resorts has also been falling since 2008.
In general, PEFA’s analysis shows that the data HVS cites not only fails to make the case
that the Belleayre Resort as proposed by Crossroads would succeed economically, it
indicates that the resort would either fail outright, or at best cannibalize visitorship from
existing tourism businesses along the Route 28 corridor and be a net loss for the region.
That’s because the 629-room full-build-out scenario the developer advocates would
increase the room count along the Route 28 corridor by 200%, flood the local tourism
market, and involve spending millions in public funds on costly and environmentally
damaging high-elevation development on Highmount, which objective economic
analysis shows the resort could not recoup.
PEFA therefore finds that “approval of the proposed resort and expenditure of State
and/or BMSC funds to facilitate the Highmount element is not supported by HVS’ new
analysis and is not in the public interest.”
At the same time, PEFA notes evidence that the project would be more feasible
economically if it followed a lower-build, less capital-intensive scenario compatible with
less expensive alternatives proposed in the Draft Unit Management Plan for Belleayre. A
lower-build approach at the resort would place only about 250 rooms lower down the
mountain at Wildacres, raising the local room count by only 80%, an increase the local
economy could better absorb.
“At this size, the project would [still] rank among the largest base area developments in
the Northeastern region,” the PEFA study states. “It would maintain the viability of the
existing lodging sector in the Route 28 corridor along with the character of its existing
communities, hamlets, and villages that are dependent thereon. Finally, a more
appropriately-sized resort would enable the State to forego taxpayer-supported outlays
to acquire the adjoining defunct Highmount ski area and avoid imposing additional
operating costs on BMSC.”
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Note to editors and producers: The PEFA study is available here. Spokespeople
for the Catskill Heritage Alliance are also available for comment. To request an
interview, a copy of the HVS analysis that the PEFA study critiques, or other
information, please contact Stephen Kent, skent@kentcom.com 914-589-5988.
The Catskill Heritage Alliance is a grassroots organization dedicated to preserving the
harmony between people and wilderness in the central Catskills.