August 3, 1997 in Nation/World

Schweitzer Family Ties Cashed Out Employees Praise Tradition, But Welcome New Ownership

Kevin Keating Angie Gaddy Contribut Staff writer
 

Faced with a mountain of debt, Schweitzer Mountain Resort has found a savior in Harbor Properties, a Seattle firm with deep pockets. And residents here say they’re relieved.

The company is poised to buy Schweitzer and pump some much-needed cash, marketing and development into the ailing ski hill.

The purchase will end the resort’s 34-year tradition as a locally owned ski hill founded by Sandpoint’s Jim Brown family.

Financial trouble during the last five years, including $21 million owed to U.S. Bank, forced a fire sale to settle the resort’s debts.

“The Brown family has been like my family. They are very dear to me and provided me a job for 30 years. I love them, but I think the mountain needed this,” said John Pucci, the resort’s ski patrol director.

“I think they (Harbor Properties) can make this place blossom like it has the potential to. It’s got to be better than what has been going on the last few years.”

During the last few years, it wasn’t uncommon for resort employees to get paychecks that couldn’t be cashed because payroll deposits were late. Management had to scrimp on grooming runs and other skier services because the resort lacked cash. Some suppliers would only deliver goods to the mountain if they were paid on the spot.

The resort still owes money to some 200 creditors and is saddled with a total debt of about $27 million.

“I think the sale is a great move. There are a lot of repairs that need to be made as far as facilities and lifts and they (the family) didn’t have the money to do it,” said seven-year ski instructor Beth Allen. “I think it will be better managed by people who know and are in the ski business.”

Harbor Properties Inc. operates the Stevens Pass ski area, a 1,125-acre ski resort in Skykomish, Wash., in the Cascades. The private company also owns large real estate holdings in downtown Seattle, but does not disclose its specific holdings or earnings. However, chief financial officer Ron Cook said 1996 gross sales for the Cascade ski area topped $10 million.

Harbor President Robert Holmes joined the company in the last year or so after working for Intrawest Corp., a high-profile Canadian real estate development company that has taken on projects in Keystone, Colo., Squaw Valley in Tahoe, Calif., and Whistler in British Columbia. Intrawest reported ski operation revenues of $231.5 million last year.

Holmes’ experience in that kind of operation made the Schweitzer purchase more viable, Cook said.

In February, Schweitzer was placed in receivership, a step short of bankruptcy. The Brown family and U.S. Bank agreed to appoint attorney Ford Elsaesser to run the mountain and find a buyer.

Harbor Properties stepped up this month with a nearly $18 million offer. The deal is expected to be made final by a judge later this month or in September.

“Overall the business community is looking forward to getting the sale over with so the resort can start being a positive aspect to the community again,” said restaurant owner John Klager.

Constant rumors in recent years about the resort going belly up made people think the whole town was not thriving. It affected local business and people held off buying property on the mountain wondering if the resort would survive, Klager said.

“When you have a corporation of that size … hearing day after day that it might be going under gives a negative feeling,” he said.

Harbor Properties hasn’t announced any specific plans for the mountain yet. Officials did say skiers can expect improvements to the 80-room hotel, the ski terrain and lifts, with the possibility of a new high-speed chairlift to get skiers up the backside of the mountain.

“Every ski area has its own personality and character that attracts people. We need to spend a year trying to understand the personality of Schweitzer before we announce plans,” Cook said.

The company has retained the right to purchase other land on the mountain to make a path for a gondola. In the proposed agreement the bank will be paid about $14.1 million. How the rest of the bank debt will be paid is still under negotiation.

Of the debt owed to other businesses, about 80 cents for every dollar will be paid by Harbor Properties and the other 20 cents paid by the Brown family and the bank, according to the sale agreement. The Brown family will also retain a 10 percent ownership in the resort.

“I think that is probably the most positive aspect of the deal, that it continues the family investment,” Elsaesser said.

Considering the financial shape of the resort, he said, the agreement is good for the family, the community and the bank.

“You have to remember Silver Mountain (in Kellogg) was sold for pennies on the dollar. This is for fair value and the family retains a portion.”

A huge plus for businesses here is Harbor’s ability to market Schweitzer in the Seattle area where the company is based. There will be a marketing “splash” to bring in more skiers, Cook said.

“We never really have been able to get people out of the Seattle area and would have to spend a lot of dollars to do it. They (Harbor) know how to do it and have the capital,” Nancy Hanson said. She is CEO of Sand-Ida Services, which owns and operates several hotels and restaurants in Sandpoint.

“I’ve known the Brown family my whole life and feel bad they got in the hole the way they did. When you see a family-run business get bought out it’s a shame, but I think Harbor is going to be a real positive for the area.”

Schweitzer employs about 500 people during the ski season. Harbor officials said those jobs will be safe, but a few management changes are expected.

“We do have our own philosophies about customer service and levels of staffing but I don’t think current employees have anything to worry about,” Cook said. “We are going to need, keep and find every capable body we can.”

Pam Auletta has worked eight years at Schweitzer. It will be a relief to have the financial struggle on the mountain over with, she said.

“They (the Brown family) have given it their all, but it’s an end of an era,” she said. “New blood is good and everyone is looking forward to a change.”

, DataTimes MEMO: Cut in the Spokane edition

Two sidebars appeared with the story: 1. SAFE HARBOR? Harbor Properties Inc., operates the Stevens Pass ski area in Washington’s Cascades, reporting 1996 gross sales topping $10 million. The private company also owns large real estate holdings in downtown Seattle.

2. WHAT’S NEXT The deal is expected to be made final by a judge later this month or in September.

The following fields overflowed: BYLINE = Kevin Keating Staff writer Staff writer Angie Gaddy contributed to this report.

Cut in the Spokane edition

Two sidebars appeared with the story: 1. SAFE HARBOR? Harbor Properties Inc., operates the Stevens Pass ski area in Washington’s Cascades, reporting 1996 gross sales topping $10 million. The private company also owns large real estate holdings in downtown Seattle.

2. WHAT’S NEXT The deal is expected to be made final by a judge later this month or in September.

The following fields overflowed: BYLINE = Kevin Keating Staff writer Staff writer Angie Gaddy contributed to this report.

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