In Pandemic, One Vermont Ski Town Found An Economic Growth Catalyst

The picturesque ski town of Killington, Vermont, was hit hard as the Covid-19 pandemic swept across in the U.S. in early 2020. Vermont urged visitors to quarantine; bar closures sapped the fizz from skiing’s après ski fun.

Killington’s fortunes have improved dramatically since. Working from home has taken off nationally, increasing the number of year-round dwellers and spending in the resort town; outdoor recreation has at the same time gained appeal; and property prices have spiked on limited supply. Underscoring the spirited atmosphere in Killington of late, skiers were still on the slopes at the same time as mountain cyclers at the Killington Ski Area on Saturday, June 4, the longest ski season at the Killington Ski Area in a quarter century.

The upshot: the same pandemic that cast a cloud over the region two years ago is among the catalysts for long-stalled infrastructure plans and new village real estate investment. A program named “Killington Forward” combines five goals: a reconstructed road to ease traffic, a water system to increase supplies and improve quality, affordable housing to help counter a big shortage of workers and space for them to live, and the biggest piece of all — a new proposed village to be called “Six Peaks Killington” that would host 1,500 residences, creating a new community centerpiece conveniently located along the road that winds along the resort’s main ski lifts.

The town hopes this month to nail down final approval from the Vermont Economic Progress Council for a $62 million financing plan, known as tax increment financing or TIF, to pay for infrastructure otherwise beyond the means of Killington’s 1,400 full-time residents. To succeed with Killington Forward, the town also needs investment in Six Peaks; Toronto-based real estate developer Great Gulf Group is poised to agree, conditional on TIF funding. If Killington Forward comes together, however, it would increase the value of real estate in the area by more than $285 million in the next two decades, according to a town estimate, creating a new economic era from the out the depths of Covid.

“In this area, Covid has had a positive impact – as much as you really don’t want to say those words together in a sentence,” Killington Town Manager Chet Hagenbarth told Forbes. “This is a once-in-a-lifetime (moment), where all of the stars align and this could come to fruition.” Shovels will hopefully break ground on the central Vermont mountain early next year, he said.

The good vibe at Killington this year is part of a larger rebound in the ski industry after the onset of the pandemic. U.S. ski areas enjoyed an increase of 3.5% skier visits in the 2021-22 season, totaling a record 61 million, according to the National Ski Areas Association. “Skiing and snowboarding have rebounded in the wake of the Covid-19 pandemic, providing economic relief and thousands of jobs to communities across 37 ski states,” the association said. “Strong season-pass sales and a continued desire for outdoor recreation are two of the primary contributing factors to the season’s record-breaking results.”

Killington is one of 24 ski areas in Vermont, ranked the No. 8 state in the country. Tourism matters a lot to the Vermont. It’s a $3 billion business that accounts for 10% of all jobs. Last year, the U.S. had 462 ski areas in operation – down from 845 back in 1980, owing to changing weather and consolidation. New York led the way with 49, followed by Michigan with 39.

Vermont still boasts independently run ski areas, yet the biggest resorts are owned by larger companies that have made acquisitions in recent years. New York-listed Vail ResortsMTN
, the Broomfield, Colorado, operator of 13 ski areas in the U.S., Australia and Canada, purchased Stowe and Okemo; privately held, Denver-based Alterra Mountain, the owner of 15 ski locations in six states and three Canadian provinces, bought Stratton and Sugarbush Resort. Vermont’s investment environment has been tainted by one of the state’s worst scandals that involved two ski areas: Jay Peak is now under receivership in connection with the misuse of immigration funds that cheated foreign nationals and elsewhere out of millions of dollars. Three businessmen received jail sentences this year, while a co-defendant remains at large.

For its part, the town of Killington has long an outsized spot in the state’s history. The state of Vermont was christened by the Reverend Samuel Peters atop a peak there in 1763, The mountain early on was known as Mount Pisgah, a time when many Vermont mountains were given biblical names, according to a book published in 1990, “Killington: A Story of Mountains and Men.”

Killington first opened for business in 1958, led by Preston Smith, who embodied a ski industry where entrepreneurs often had more passion than cash. With financially savvy partners, he built up a Nasdaq-traded business known eventually as S-K-I before selling it in the mid-1990s to American Ski Company.

Privately held Powdr, headquartered in Park City, Utah, bought Killington and the nearby Pico area in 2007 and currently has 12 resorts in North America. When it took over Killington’s ski operations, Powdr mostly left the other real estate it owned to SP Land, a Texas-based investment company, which now owns the property where the Six Peaks development is slated. Under the arrangement between the two, Killington owns 20% of SP and SP owns 20% of Killington.

Powdr’s done well in Killington by not overpromising and adding stable business, a contrast to the difficulties American Ski ran into, Mike Solimano, president of Killington/Pico Golf & Ski Resort, told Forbes. Powdr is currently building a new base lodge worth $34 million.

Powdr has also invested in bicycle trails to bring in business year-round. “When I first got here, it was a ghost town” in the summer, Solimano said.

Killington’s appeal these days is clear in the real estate market. Six homes sold in Killington in the first three months of 2022 at an average price just over $1 million, a year-on-year increase of 30%, according to brokerage Prestige Killington. Seventeen condos sold at an average price of $413,000, more than 67% higher than the average last year and the highest average price ever.

Six Peaks, the centerpiece of the planned Killington revitalization, will sprawl across the bottom of two mountains, Snowshed and Ramshead, connecting the two with a ski bridge, and transform the main road to the Killington base lodge. Powdr, the owner of the resort operations, largely doesn’t do property development, and neither does SP Land, which is looking for a developer for the Six Peaks project.

Great Gulf Group, the development company founded by Toronto businessmen Elly and Norman Reisman, appeared at a meeting on May 26 with state officials to say that it had reached an agreement to acquire SP Land’s in Killington. A green light for groundbreaking requires public-sector funding.

“It’s not even close to reasonable” for a town Killington’s size to spend $62 million for infrastructure upfront, said Hagenbarth, Killington’s town manager. “There has to be a public-private partnership.” Great Gulf declined to further comment on the outlook for the project.

Another possible obstacle: Lack of affordable housing. It’s not part of the $62 million tax incremental financing program. It’s already in such short supply that Killington Ski Area has bought local hotels to house temporary workers during the winter season. Killington staffing is “a constant struggle and really depressing,” said Polly Mikula, editor and co-publisher of Mountain Times, a local print weekly. Vermont’s unemployment rate in April was 2.5%.

Vermont’s housing shortage is a Catch-22, said Stephanie T. Clarke, a vice president at White + Burke Real Estate Advisors, a consultant to Killington. “We can’t afford to build housing because the laborers aren’t here because they have nowhere to live,” she said.

If the Vermont Economic Progress Council approves the TIF plan this month, a final vote to kick off the first loan will be put to voters in November. Killington’s town selectmen have already backed the plan, and construction would be poised to start next spring.

See related post:

Vail Resorts Profits Climb By 36% Amid Easing Pandemic

@rflannerychina

Full coverage and live updates on the Coronavirus