The non-profit group that wants to buy Shames Mountain wants the federal and provincial governments to write off hundreds of thousands of dollars in outstanding loans owed by the private company that has the ski operation for sale.
If that happens, the sum My Mountain Co-op will pay for the ski operation would be reduced an equivalent amount by the Shames Mountain Ski Corporation from its current asking price of $1.29 million.
As it is, the co-op is currently looking to raise $2 million to buy Shames and have a cushion for capital and operating expenses.
Shames Corp. president Gerry Martin says part of the complex deal revolves around an unpaid loan that dates back to the late 1980s to when the mountain opened under its current ownership structure.
“When we were getting the money together to open the mountain, there was a joint federal provincial loan program called the tourism development agreement loan program, and we were part of that,” said Martin.
The original $550,000 loan amount was to have been paid back over 10 years with a final lump sum due at the end.
“We made 10 years worth of payments, but when it came to the lump sum payment, we deferred that, and that’s what they’re (Friends of Shames) asking for forgiveness on,” he said.
Martin estimated the outstanding amount is now between $375,000 and $400,000.
Co-op representatives have already recruited the Kitimat-Stikine regional district for help in making their loan forgiveness pitch to the federal and provincial governments.
Regional district directors decided to write a support letter during a meeting Feb. 25.
“It’s in our best interest to see if we can get those loans reduced, forgiven written off….because that will reduce the purchase price,” said co-op representative member Linda Parker.
Martin also made it clear the potential price drop applies to only the co-op; any other entity would have to pay the list price.
The ski corporation also owes money for land use fees, which comes in the form of paying two per cent of its lift revenue to the province each year. Martin said there were some outstanding dollars owed on that, but doesn’t think the province will be willing to forgive these annual payments.
Although unable to comment directly on the matter, a spokesman for the natural resource operations ministry, which is owed that money by the Shames ski corporation, said it would require “all outstanding royalties, taxes and any other monies owed to the province would be paid in full prior to our approval of an assignment of the operating agreement to a new purchaser.”
David Currie said the province feels there would have been no purpose serviced in closing down the financially-troubled hill, especially since the owners are trying to sell it.
“The province supports community ski hills throughout the province and we recognize that smaller ski hills, like Shames Mountain, are important contributors to the quality of life in rural areas,” he said.
“Other ski areas have financial challenges from time to time so the ministry works with them to develop payment plans to they are able to stay an ongoing entity,” Currie continued.
My Mountain Co-op representatives have yet to officially appear before city council but the mayor and council have already signaled their intentions of providing some kind of help.
The city is already providing the co-op free office space for six months.
As of late last week, the co-op had raised more than $25,000 in membership and donations. The money is being put in a trust and will be returned if the purchase falls through.