Program to fast-track U.S. citizenship for foreign investors could help restore The Balsams
The Balsams Grand Resort and Hotel, though still a majestic presence in the North Country, also remains empty for a second straight summer as the owners seek investors to help fund a substantial restoration project.
"We know there's a lot of people pulling for us. We know there's a lot of people that want us to succeed," said Scott Tranchemontagne, a spokesman for the ownership group Balsams View LLC. "We've made great progress in terms of permits and being ready to go. We have all the permits we need."
Now all that owners Dan Hebert and Dan Degasse need is money to complete the project that they have been planning since before they purchased the Balsams and its 7,700 acres for $2.3 million in December 2011.
Listed among The National Trust for Historic Preservation's "Historic Hotels of America," the new owners had hoped to be opening as early as this summer, but have had to adjust the original financing plans and are looking at new ways to come up with about half of the estimated $30 million to $35 million needed for the project.
One possibility is a federal program that allows foreign investors to obtain a U.S. residency visa in exchange for significant capital that would generate new jobs or preserve them in a rural area struggling with unemployment. Dixville Notch, about 20 miles south of the Canadian border, would likely qualify because the largest employer in the area - The Balsams - has been out of business for nearly two years.
The EB-5 program has existed since 1990, and interest has picked up because of the struggling domestic economy. It was used to help fund major developments at Vermont's Jay Peak, including an indoor water park that has helped turn the ski area into a year-round destination.
"We have some bank financing committed provided we can get some more pieces in place," Tranchemontagne said. "We're very actively seeking equity partners - investors who want to help us restore this historic gem as a world-class resort."
Hebert and Degasse have declined to speak about the project, hiring Tranchemontagne and his Manchester-based firm, Montagne Communications, to speak on their behalf.
Tranchemontagne said Balsams View has been exploring EB-5 as an option and has been in contact with an out-of-state company that has successfully set up projects with capital using the federal program. The investors have to undergo a stringent approval process before getting approval by U.S. Citizen and Immigration Services, a branch of the federal Homeland Security Department. Federal officials must determine the funds have come from legitimate means and, according to the USCIS, the approval process can take as long as a year or two.
He said the talks have only been preliminary to see whether EB-5 is a viable option for Balsams View, which still hopes to get construction underway before winter hits the North Country.
"We've started discussions with them to see what they think," said Tranchemontagne, who declined to release the name of the company because no formal agreement has been reached. "We need to fill a gap. That's not to say that Balsams won't contribute more capital to what they already have. We're trying to get some partners who want to be a part of this."
Tranchemontagne said Balsams View has bank financing commitments for about half of the estimated $30 million to $35 million project, but needs to come up with the rest - or a significant chunk of it - before setting construction crews loose on the property that has been ready for about a year.
They figured it would take 18 months for a proper upgrade, which includes winterizing the buildings that will remain, wiring the rooms for Internet access and installing a new biomass heating system that will make the entire property significantly more efficient. Although progress has been slow, much of it has come in the past eight months and allowed Balsams View to be more active in courting potential investors.
The Coos County Planning Board approved a building permit for the project in late March, three months after the New Hampshire Supreme Court officially put an end to a lawsuit filed in May 2012 attempting to undo the sale. The case took up time and money, especially in the form of hampering efforts to find investors while the lawsuit, eventually tossed out by a judge, made its way through the system, according to Tranchemontagne.
"Investors don't like uncertainty about an investment they're about to make," Tranchemontagne said. "When something is being litigated, there is uncertainty."
A judge dismissed the lawsuit in November, ruling the plaintiff had no legal standing to try and nullify the sale. The New Hampshire Supreme Court upheld the decision.
Another setback was missing the June 30 deadline of this year to apply for federal tax credits that could have closed a significant gap in the funding needed to get to work, Tranchemontagne said.
"It puts the onus and focus very squarely on getting private equity. We're not at Square 1 because we have gone through the permitting process. We have some bank financing in place, and we have completed some demolition work," Tranchemontagne said.
Hebert and Degasse have invested enough already that they have no plans to scrap the redevelopment plans, even if construction cannot begin until next spring, he said. Both grew up in Colebrook and both worked at The Balsams in their youth, when the resort was a premier vacation destination with a staff of about 300 catering to guests who sought the tranquil setting along with the amenities of a grand East Coast resort.
"They know this property and they have personal connections to it," Tranchemontagne said. "Quite frankly, they want to restore jobs up there."