WILMINGTON — The Deerfield Valley, which saw a hopeful economic uplift with the development of the private Hermitage Club ski and golf resort, is now faced with uncertainty due to a quagmire of lawsuits, foreclosure proceedings and the closure of Hermitage properties. Hermitage Inn Real Estate Holding Company, the resort’s parent company, founded by Connecticut businessman Jim Barnes, purchased the defunct Haystack ski area and golf course in October 2011 for $6.5 million. He had previously bought and renovated the upscale Hermitage Inn in 2007 and said in a 2016 interview he had “no further plans at that time.” However, as the economy went south, he found himself “buying additional real estate around it.” When the previous Haystack Club owner, forced to close due to the recession, knocked on his door, Barnes said it was “a compelling price,” a case of an “offer you can’t refuse” that led to his acquiring the recreational assets. Since 2011, millions have been invested in mountain upgrades, including a $21 million clubhouse and a $7.5 million six-passenger bubble chairlift among other improvements. Several townhouse projects were completed and Barnes purchased or leased nearby inns to provide places for potential members to stay until more resort accommodations could be built. Now, the inns, golf course and clubhouse, including fitness center, pool, bowling alley, movie theater, spa, child-care center and restaurants, are closed. The Vermont Department of Taxes closed the properties for failure to pay rooms and meals and sales taxes. A public notice posted at each property in March reads in part: “Hermitage Club LLC failed to post the bond required by the Vermont Commissioner of Taxes … and may not conduct business at this location.” On June 26, Will Baker, general counsel at the tax department, confirmed that Hermitage properties “are not in good standing and are not authorized to operate.” Foreclosures, lawsuits On June 25, the Inn at Sawmill Farm was sold at a public auction for $1.2 million to the mortgage holder Ivmja LLC of Wildwood Crest, New Jersey, Windham County Sheriff Keith Clark said. Clark noted that there was much interest and another close bid and that a couple had appeared to be interested in a portion of the property, but it was not a tax sale and the foreclosure auction required selling the entire property. The mortgage holder had foreclosed on Hermitage due to being owed $1.36 million and had previously paid delinquent taxes to avoid a town tax sale. The property is assessed at over $2.3 million, according to news reports. Clark called the inn a nice property, noting it had a great restaurant and location and with upgrades done by Hermitage has a lot of potential. In August 2017, Barnes told the Wilmington Select Board his company was recovering from the 2015-16 snowless ski season and would not have sought tax relief otherwise. "I can tell you, we needed help and it was tough to get through the last couple of months but we're getting through," Barnes said, according to Bennington Banner reports. Barnes said he’d invested $70 million of his own money in addition to equity investments by members. Hermitage instituted a board of eight directors and the club had 664 members, he said. Barnes also asked club members to pay an extra, one-time fee of $10,000 to help pay off debts to local suppliers, vendors, contractors and towns. Berkshire Bank initiated a foreclosure action Feb. 23, 2018, for the company’s failure to make payments on $17.1 million in loans — a $15 million “base lodge” (clubhouse) note, a $1 million bridge note in June 2016 and a $1.1 million bridge note in July 2017. That filing also cited back taxes owed to the town of Wilmington ($800,000) and 35 liens for money owed to contractors and vendors, according to news reports. A bank representative said she could “not comment on an ongoing internal investigation.” May hearings in Windham County civil court resulted in a receiver being appointed to oversee the properties despite objections from Hermitage officials, who claimed a loan was in the offing to resolve the issues. It didn’t materialize, but Judge John Treadwell allowed Hermitage to retain possession of business records for efforts to restructure and obtain a loan that could satisfy the bank. The receivership can be dissolved if the bank and the Hermitage reach a resolution, the judge noted. The receiver, attorney Alan Tantleff, of FTI Consulting, said his goal is to ensure that the properties are “preserved and maintained while the court proceedings are underway.” Providing “essential services are the focus of the receivership,” he noted. They include things like trash removal, basic maintenance of the golf course and paying taxes, assessments, insurance costs, utilities and staff salaries, he said, explaining he gets funding from the bank to pay expenses. Tantleff emphasized he has been in touch with law enforcement and fire departments in Wilmington and Dover to ensure the safety of the properties and small staff working to maintain them. “These properties are being preserved so they don’t deteriorate ... and to avoid theft, damage and vagrants. ... One goal is to provide adequate security. They are not abandoned,” he said, adding staff are keeping them in good condition. “Judge Treadwell was very careful in crafting the receivership order. It was a thoughtful decision that keeps the buildings, equipment and ski lifts maintained and protects the community also,” he said. Tantleff clarified he is not dealing with Hermitage debts; he gets calls from people “but can’t provide those answers.” Tantleff is not charged with reopening the properties and noted that the foreclosure is a legal process and the judge will decide when the receivership terminates or a possible sale of the properties occurs if a resolution is not reached. He sees the receivership as “the best solution to a difficult situation” and reiterated that he wanted to assure the community that the properties will be cared for until matters are resolved. Complicating matters are several lawsuits against Hermitage Inn Real Estate Holding Company and Jim Barnes, ranging from payments on townhouses that were never built to purchasers of residences who never received their units because Hermitage could not convey a clear title due to mechanics’ liens and other encumbrances. (The judge ordered Hermitage to transfer ownership within 15 days, but it can’t do so unless the liens are addressed first.) Among other lawsuits: a former chief financial officer claims Hermitage owes him $159,000 for unpaid wages and bonuses; a discrimination case by employees; and a $1.4 million claim brought by a vendor. Additionally, in April an attorney for the Hermitage Club sought to withdraw his representation because his client "failed substantially to fulfill an obligation” regarding his services (fees). It was granted. Bob Rubin, the former vice president of construction and development, was appointed interim president of Hermitage in February. He was charged with day-to-day operations so Barnes could concentrate on restructuring. Rubin did not immediately return efforts to reach him. However, Clark expressed confidence in him, saying, he’s a “great guy for the job and doing all he can do for the community.” Opportunity, Plans, Hopes Although most Vermonters find Hermitage membership fees and dues out of reach — an $85,000 entry fee for a family and annual dues of $8,500 — people welcomed the economic development, jobs and business that Hermitage plans would bring to the valley. Sources say high net worth individuals are considered good for local businesses — from vendors and contractors to shops and restaurants. They also report a general belief that the private club model can still work and hope for the reopening of the resort and inns. Mount Snow purchased Haystack in 1994 and sold the ski area in 2005 with the stipulation it be a private club. However, Mount Snow Communications Manager Jamie Storrs said that requirement was for a period of 10 years, so a new owner might not have to keep the ski area as a private club. “Mount Snow does not have any plans to purchase Haystack,” Storrs said. “We are seeing more of Hermitage Club members playing on our golf course,” he added. Sheriff Clark said that as a Windham County resident, he was hopeful that with good management the Hermitage Club would be successful, adding that “would be beneficial to the entire county.” But he also voiced concerns for contractors and vendors owed money, especially smaller businesses. Should it come to a sale, the potential in the Hermitage Master Plan, which received an Act 250 permit in 2017, might be enticing to a potential buyer. The plan includes 36 additional trailside homes, more townhomes, and three hotels for a total of 550 residences (including existing homes) and a total club membership of 1,500. The Hermitage Club did attract 664 members and the company was “the fastest growing privately owned company in the state for three years and was listed as #133 on INC. magazine’s top 5000 list for 2016," according to Brendan McGrail, former director of communications in a 2016 interview. The properties themselves are valuable with the clubhouse being one of the most spectacular buildings found at any ski resort in the Northeast and the ski area, golf course, amenities, and land likely worth more than the debt.

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