DALLAS - The sale of Park City Mountain Resort to Vail Resorts for $182.5 million is a positive credit factor for Park City, Utah because it resolves litigation that could have led to the ski resort's closure, according to Moody's Investors Service.
"The resort's closure would likely have diverted some out-of-state visitors to resorts in other states, resulting in both direct and indirect fiscal and economic losses," Moody's analyst William Oh wrote in a bulletin.
Moody's rates Park City Aa1.
According to documents included by Park City Resort in a 2012 legal filing, the resort generated about $3 million in sales and use taxes for the state and 11% of Park City's tax revenues. Officials calculated the total economic effect of the resort at more than $400 million for the state, including 4,600 jobs.
The litigation arose from the Utah resort's failure to renew its lease on more than 2,800 acres of land from the Canadian company Talisker Land Holdings at the end of April 2011.
Under its expired lease, the resort had an option to renew its lease in 20-year increments through 2051 for $155,000 annually. After the resort failed to renew its lease, Talisker gave notice to resort owner Powdr Corp. to turn over the land.
Talisker then leased the land at the top of the mountain to Vail Resorts while Park City Resorts operated on the lower part of the mountain. That prompted lawsuits between Vail and Park City resorts.
Park City Mountain Resort later sued Talisker for compensatory and punitive damages and threatened to remove all ski infrastructure from the area, including ski lifts, making the resort effectively inoperable.
On Sept. 9, just two days before the announcement of the sale, PCMR declared that it would pay a $17.5 million bond to Talisker and Vail Resorts to remain open for the 2014-15 ski season, which begins in late November. Although the payment, which would have been due on Sept. 12, would have allowed PCMR to operate for the upcoming ski season, it would not have resolved the lawsuit.
"In addition to removing a potentially significant credit-negative development, the sale of PCMR to Vail Resorts will likely add to the appeal of Park City as a winter recreation destination," Oh said.
Vail's "Epic" season-pass holders will allow access to PCMR for the upcoming 2014-15 ski season, and
Vail Resorts expects to link PCMR and the adjacent Canyons resort via lift access for the 2015-16 ski season, which will create one of the largest ski resorts in North America.
The sale also includes 687,000 square feet of land zoned for residential and commercial development. Given a median home value of $751,000, development of this land would add significant value to the city's tax base.
