In a 1998 letter to lawmakers, then DRED Commissioner Robb R. Thomson wrote that the Sunapee lease, "will permit infrastructure improvements on a continuing basis, allowing Cannon the financial flexibility enjoyed in the private sector." In rejecting a proposal to lease Cannon, Thomson noted that, "Cannon is an integral part of Franconia Notch State Park, and Franconia Notch State Park is the crown jewel of the park system. Cannon cannot be separated without causing major disruption within the park system and within DRED. The park system would actually lose money...if Cannon were leased."
State-Owned, But Not the Same
State officials said that Sunapee was relatively easy to lease because it was essentially a standalone ski area adjacent to a state park. Its summer operation consisted primarily of Lake Sunapee beach, which was not part of the leased area.
In contrast, Cannon is at the heart of Franconia Notch State Park. Franconia Notch State Park and Cannon Mountain ski area are operated as one unit, with shared assets, resources, personnel, marketing, costs, maintenance and infrastructure. The Tramway that carries skiers to the summit of Cannon in winter is a major tourist draw in the spring, summer and fall. Echo Lake, at the base of Cannon, is a summertime attraction for swimming, boating and fishing.
Today, as in 1998, state officials say that separating Cannon from the state park would have long-term negative operational, logistical and financial effects on both Franconia Notch State Park and the Division of Parks and Recreation. In fact, it is estimated that the state would have to shoulder a $2 million expense to separate the ski area infrastructure from the rest of Franconia Notch State Park.
The Sunapee Lease
Mount Sunapee was leased to the operators of Okemo Mountain in 1998. Thanks to the lease, improvements have been made at Sunapee, its skier visits are up and, as designed, lease payments totaling around $5.5 million have flowed to Cannon's Capital Improvement Fund. But the lease has not been a model of success.
Questions of Fair Value
Per the 1998 Mount Sunapee lease agreement, the state receives only $150,000 in base rent annually, plus 3 percent of gross revenues. The base rent is adjusted for inflation, so it now runs around $200,000 per year. Since 2007, the total annual Sunapee lease payment to the state has averaged around $530,000.
Yet in 2008, CNL Lifestyle Properties paid the original leaseholder $19 million for the lease and related assets. The original leaseholder continues to operate Sunapee. In return, the original leaseholder pays CNL annual rent of $1.72 million under this “leaseback” agreement. That's three times the amount the state receives from the lease annually.
In 2011 Cannon's operating profit of more than $1.1 million eclipsed the $566,000 lease payment from Sunapee -- despite Sunapee's significantly higher pass and ticket prices and substantially higher skier visits (288,000 for Sunapee vs. 142,000 at Cannon).
All this raises questions of whether the state of New Hampshire -- and taxpayers -- are getting a fair deal for the leasing of Mount Sunapee.
Yet in 2008, CNL Lifestyle Properties paid the original leaseholder $19 million for the lease and related assets. The original leaseholder continues to operate Sunapee. In return, the original leaseholder pays CNL annual rent of $1.72 million under this “leaseback” agreement. That's three times the amount the state receives from the lease annually.
In 2011 Cannon's operating profit of more than $1.1 million eclipsed the $566,000 lease payment from Sunapee -- despite Sunapee's significantly higher pass and ticket prices and substantially higher skier visits (288,000 for Sunapee vs. 142,000 at Cannon).
All this raises questions of whether the state of New Hampshire -- and taxpayers -- are getting a fair deal for the leasing of Mount Sunapee.
Ongoing Lawsuit Costs Taxpayers
In 2001, after obtaining an option on neighboring private property, the leaseholder proposed an expansion of trails and lifts to serve a planned development. When the state rejected an expansion of the lease boundary to accommodate the development, the leaseholder sued. The suit is still winding its way through the courts. As of February 2012, the Attorney General's office has spent 3,500 hours and $437,000 of taxpayer money defending the state against this lawsuit. (For more information, see the Friends of Mount Sunapee blog and this news release from the Society for the Protection of New Hampshire Forests.) Meanwhile, the lease has been transferred several times over the years. Although Mount Sunapee technically remains state property, the leaseholder has used the lease as collateral to help it secure loans for improvements at Sunapee, Okemo and the acquisition of Crested Butte in Colorado.
Development Pressure
Park advocates rightly remain concerned about the continued threat of expansion at Mount Sunapee. "The character and intensity of development within Mount Sunapee State Park, as we have seen, can have far reaching impacts affecting the park's culture and traditional values," Friends of Mount Sunapee notes on its blog.
Conservation groups -- including Conservation NH, the Society for the Protection of New Hampshire Forests and the Appalachian Mountain Club -- and the Friends of Franconia Notch State Park have expressed concerns that a potential lease of Cannon would lead to commercialization and development pressure in Franconia Notch State Park.
And it's no wonder: The Sunapee lease holder has expanded summertime activities to include a canopy tour zip line, aerial adventure park, disc golf, Segway tours and miniature golf.
