Official: NH should pay off Cannon's capital fund deficit
CONCORD - State Treasurer Catherine Provencher is recommending that lawmakers "stop the bleeding" and pay off a $372,000 deficit in the Cannon Mountain Capital Improvement Fund.
That fund - which is separate from Cannon's operating fund - pays for principal and interest on bonds issued for capital projects at the state-owned ski area in Franconia Notch State Park. There is currently a $372,000 shortfall in the account, and "it's projected that the deficit will continue to grow," Provencher told the New Hampshire Sunday News.
Here's why: When lawmakers agreed to lease Mount Sunapee ski area to a private entity starting in 1999, the revenues from that deal were designated for the Cannon Mountain Capital Improvement Fund (CMCIF) to improve Cannon's ski area. The state is authorized to issue bonds of up to $6 million to pay for capital improvements at Cannon, according to Provencher.
But in some years, the payments from Sunapee, which are based in part on a percentage of sales, have lagged behind the debt service for Cannon projects, even as new debt was incurred for improvements at the mountain.
"Over the years, additional bonds have been authorized for snowmaking equipment, trail-grooming equipment, a new base lodge, all those things that need to occur to have Cannon Mountain continue to be a viable destination for skiers," Provencher said.
And as a result, she said, "the lease payments from Mount Sunapee have not been sufficient to cover the debt service."
Provencher recently told the Cannon Mountain Advisory Commission, on which she serves, that it's time to "stop the bleeding" and fix the system for good.
She points out that Cannon actually operates at a profit but that revenues from Cannon go to support other parks that do not generate revenue. "Our parks fund was intended to be self-supporting, so I have to say Cannon and the Hampton meters pay for an awful lot of our system of parks that we can all enjoy," she said.
For the fiscal year that ends June 30, Cannon will transfer $650,000 to the state parks division and an additional $50,000 to New Hampshire Fish and Game to pay for rescue efforts, according to Philip Bryce, director of the state Division of Parks and Recreation.
"The New Hampshire model is that we have a few parks that support the rest of the parks system," Bryce said. The state is fortunate, he said, to have "special places like Franconia Notch State Park, like Hampton Beach ... fantastic places, so they can generate that revenue to support the rest of the parks system."
Provencher is recommending that Senate budget writers amortize the current $372,000 deficit in the CMCIF over five years to pay it off out of Cannon's net revenues. She also proposes using Cannon's revenues each year to first make up the difference between the Sunapee payments and the Cannon debt service before any funds go into the general parks fund or to Fish and Game.
Once the CMCIF deficit is paid off, Bryce said, he anticipates that revenues from Sunapee would cover the debt payments for Cannon projects.
Meanwhile, since Sunapee payments into the CMCIF are based in part on the previous season's proceeds, the state expects to get less revenue for the fiscal year that ends June 30 because of the poor ski season in 2011-12. Sunapee revenues are estimated at $505,456, while the Cannon bond payments total $642,357.
In contrast, after the record-breaking 2010-11 ski season, Sunapee sent $620,815 in revenues to the CMCIF for FY12; Cannon bond payments that year totalled $612,705.
And this year's healthy ski season is expected to close the gap for the next fiscal year. "We've already projected that that (Sunapee) payment will go up $80,000 for 2014," Provencher said.
The CMCIF deficit has been a long-standing point of contention for those who want to see the state give up management of Cannon and turn it over to a private company, as was done with Mount Sunapee.
Senate Majority Leader Jeb Bradley, R-Wolfeboro, has been a chief proponent of exploring the private-lease option for Cannon.
He argues that given the vagaries of New Hampshire weather, it's time for the state to get out of the business of running a ski area.
But Bradley says he's given up that fight - at least for now - after the House "hijacked" a bill he sponsored last year to develop a master plan for Cannon Mountain and Franconia State Park, including an analysis of the lease option.
The Senate ended up killing the bill when it came back from the House with Bradley's master plan gutted, replaced with a "non-germane" amendment. "The bill had changed so much there wasn't much left to it," he said.
Bradley said using Sunapee lease proceeds to fund improvements at Cannon made sense a decade ago. But given the state's fiscal challenges, he'd like to see state leaders have another conversation about leasing Cannon, as well.
"I totally get that folks don't want to see the state park undermined or huge condominium developments," he said. "But that being said, should there be a discussion about whether the state should be in the business of running a ski area and all the risks?"
Still, Bradley said, he backed off in the face of "strident opposition" both in Concord and the Franconia region. "I was climbing uphill with an avalanche coming down at me."
Bryce said he would not want to sever the link between the two ski areas. "The whole justification was to lease one to get investment in the other," he said. "And then investment in Cannon will allow Cannon to generate even more revenue in the future."
But he said perhaps the state could do a better job of "providing adequate information so that folks like Senator Bradley understand what the actual financial picture at Cannon is."
"We have a wonderful mountain," Bryce said. "Anybody I've spoken to who skis there says it was great conditions, great people, a great time."