A court ruling over Silver Mountain Ski Resort’s lease was put on hold Monday, but serious questions about the ski area’s change in ownership last year could develop into a nasty legal fight.
The city of Kellogg transferred the lease to Silver Mountain to Eagle Crest Partners in May 1996. The previous operators, Von Roll AG of Switzerland, lost nearly $17 million in bonds it secured because the resort didn’t make any money in the first six years of operation.
The company that owns most of the land under the ski runs cried foul. Lawyers from Mission Mountain Interests Ltd. said they never were consulted about the new lessee, Eagle Crest.
At stake is the deal that gave Silver Mountain new life as a ski resort, and kept the Silver Valley’s tourism efforts off life support.
Kellogg City Attorney Charlie Cox argued to Shoshone County District Court Judge Craig Kosonen that the city didn’t need to ask Mission Mountain’s permission.
Mission Mountain acquired the lands from Bunker Hill Limited Partnership, and with it, Cox said, the original agreement between Bunker and the city. That agreement gave the city the right to transfer the lease to the ski resort, if the resort faced foreclosure, to another party without talking with the landowner, now Mission Mountain.
Mission Mountain attorney Alan Blakely said court records show the city asked the permission of Sunshine Mining & Refining Co., which owns a small portion of the lands that make up the resort, for its approval of the Eagle Crest deal.
“Why didn’t they ask us if they asked Sunshine?” Blakely said.
The parties found themselves in court over the building of logging roads across the ski runs. Mission Mountain wanted to thin some timber on the fringe of the ski area, but the roads would hurt Eagle Crest’s efforts to smooth and lengthen ski runs.
The city asked Kosonen to declare the city’s deal with Eagle Crest legal under the rules of the original lease with Bunker Hill. The judge ruled that the two sides finish gathering depositions before he makes a decision, which could take several weeks.
The lease itself, Blakely argued, doesn’t exist. Under the terms of the city’s agreement with Von Roll, the lease would expire when Von Roll was paid back the $16.7 million in bonds that it guaranteed to build Silver Mountain.
Documents show that Von Roll retired the bonds, albeit with its own money instead of expected revenues from the ski resort, in April 1996. The deal with Eagle Crest closed in May of last year.
“There wasn’t any lease to transfer,” Blakely argued.
Cox said that issue wasn’t pertinent to what lay before Kosonen Monday.
Blakely contends the city breached the lease in several other ways, issues that could be brought up as the case develops.
If the court sides with Mission Mountain’s interpretation of the lease, Eagle Crest may be forced to renegotiate with Mission Mountain, or perhaps pay rent on a resort that already has high overhead costs.
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