Vernon council, MUA approve Mountain Creek settlement

The Vernon Township Council and the Vernon Township Municipal Utilities Board both voted on Thursday night to approve a settlement agreement with Mountain Creek to resolve the resort’s $28 million sewer debt.

The settlement was approved in bankruptcy court earlier Thursday.

“We are emerging from the darkest financial crisis this township has ever faced,” Vernon Township Mayor Harry Shortway said on Friday.

Shortway said the deal not only safeguards that Mountain Creek’s $28 million in sewer debt owed to the Vernon Township MUA, which in turn is owed to the Sussex County MUA, which holds the bonds, will not fall on township taxpayers.

Council President Jean Murphy said the VTMUA will receive the first payment within three weeks, representing the 7 percent fee Mountain Creek has been collecting since September 2018.

The second payment of $918,000, the amount owed from 2018 is expected to be made by Oct. 31.

"Since being directly involved in the mediation process, I'm glad to see this issue moving forward with a favorable outcome for the taxpayers of Vernon," Murphy said.

According to a document filed by Mountain Creek attorneys, the revised settlement will make payments of $600,000 in 2020, 2021, 2022 and 2023 and $300,000 in 2024 and through the time where the sewer debts are paid in full.

The minimum payment shall be secured by the Vernon Letter of Credit and a lien on the land from 2024 until the debt is satisfied.

“I think it’s a good deal,” Shortway said. “Is it perfect? No, but it does give us an opportunity to go forward and it gives Mountain Creek an opportunity to develop.”

Shortway said Joe Hession, president of SNOW Operating, which was originally brought in to manage the resort in November 2017, was instrumental in getting a deal made. By November 2018, SNOW had negotiated a controlling interest in the resort.

Hession is a Vernon native and still has family in the township.

“Joe’s team is embedded in this community,” Shortway said. “They made negotiations so much more possible and were willing to make concessions for the health and well-being of the community.”

Hession’s local ties ran deep as Murphy’s husband was his brother’s little league coach and Shortway was his brother’s football coach.

“My family has always lived in Vernon,” Hession said. “Because I’m a community-minded business person, I am glad we found a way to cover 100 percent of the sewer debt and it doesn’t get thrown back on the taxpayers.”

On Wednesday night, the Sussex County Board of Chosen Freeholders voted to approve the renegotiated settlement. The parties were sent back to the negotiating table in January when the county filed an objection to the previous settlement agreement.

County officials were concerned that the previous agreement did not have a mechanism for Vernon Township to put a lien on Mountain Creek if it did not honor its obligations.

If the payments are not met, Vernon can put a lien on the land with written notice of at least 5 business days.

Murphy said the council plans to adopt an ordinance that will be tied to the agreement that will include covenants tied to the property regardless of who owns or operates the resort.

“Mountain Creek will make good on every dollar owed to the township,” Shortway said.

Mountain Creek originally filed for bankruptcy in May 2017. Negotiations to resolve the sewer debt began before Shortway took office in 2016. He had his first meeting with the resort three weeks before taking office and expected the debt to present a problem.

Shortway said, the resort wanted extensions before the bankruptcy, but he dug his heels in.

“When they declared bankruptcy, I wasn’t going to kick the can down the road,” Shortway said. “It’s been a long road to get this deal done.”

Hession said the agreement sets the resort to get out of bankruptcy over the next 60 days as the sewer debt was the main hold-up.

“It can stabilize business and allow us to focus less on bankruptcy and how to better serve our people and our guests,” Hession said. “Hopefully down the road this can lead to some long-term development.