Keeping up with the discoveries of disrepair
and maintaining what they can has kept new Balsams Grand Resort owners Dan
Hebert and Dan Dagesse busy ever since their December 2011 purchase. What
started out as a demolition and rebuild plan at a budget of around $12-$13
million has built to a $37 million project, according to Dan Dagesse, who spoke
at length with the Chronicle this week.
Speaking of the project, Dan said, “It’s not for the faint of heart, let me put it that way. All we can do is keep our heads up and keep moving forward. We think we’re going to make it go and will give it our best.” He also revealed that an investment plan is nearing completion and, when completed, it will be in the hands of finance firms who will seek out the investors that are needed to com-plete the necessary work at the hotel and ski area. “When you do a project of this size, you can’t simply say that you need an investor of $8-$10 million. This needs to be done professionally—we hired a firm from Portland, Maine, and their marching orders are to finish what the total project costs would be,” said Dagesse.
He also said, “If we can’t raise the money, if I can’t be successful and somebody else can, I will be the first one to walk away” (and let someone else try). “My goal is the jobs. If they can’t get the equity partners, I would sell it all the next day.”
He said the partners have put over a million dollars into the resort so far. “And it’s probably $400,000-$500,000 with the firm just to get the banking partners,” said Dagesse. “I sit back every week and take the punishment, then see where it goes next.” The partners are expecting that report to be used as a way of reaching out to equity partners, but they need the investment guide first.
“We also hired Pinnacle—it’s like the gold standard in the hotel business,” said Dagesse. “Banks will look at us much more favorably if we are working with Pinnacle.” The company, he said, will review the income and expense projections and work with the investment banking firms hired by Hebert and Dagesse. The partners have interviewed three different hoteliers to create their business projections for the resort. “We’re probably looking for an investment partner in the $10-$12 million range. They tell us that they feel as though they can get three or four individuals they can present this to. Our goal is to not have much more than $8 or $9 million in debt,” said Dagesse. “All of this takes time. There’s a reason why it closed—it was losing $2.5 million a year. There was an outdated biomass plant and the energy costs were the biggest focus on why it was losing money,” he said.
Hebert’s team has been taking a very close look at the work that needs to be accomplished and made some discoveries around the resort along the way. “Our initial plan was to rehab the hotel.
But after a review of the Wilderness Ski Area,” said Dagesse, “the snow making equipment was absolute junk, there was a mud slide inside the ski lodge, then Dan found the roof is in disrepair; he had to find out what all new snow-making equipment would cost us.” Dagesse said the snow-making guns were basically held together with duct tape and that repair per-sonnel were brought in to look over the equipment, advising that they not be used again—putting on hold any thoughts to open the ski area this coming winter. “We’re not going to spend all the money were going to spend and not be able to open eventually. It’s now at almost $3 million in repairs for the ski area, with a roof that’s 35 years old, so we add that to the list,” he said. Hebert, in the meantime, managed to clean the mudslide out of the main floor of the lodge.
While Hebert and Dagesse balance plans for rehabilitating the hotel and repairing the ski area, work is almost completed with the removal of the old biomass plant—Dagesse said they expect it to be finished in about two weeks. Inside the hotel, he said, “Dan did strip the old cast iron radiators out, and all the bathrooms. They sold the old radiators for scrap, but it’s all just junk that we have to get out of there.” A small sale was held of plumbing items and miscellaneous furniture re-cently, but there are many more old toilets and other items that Dagesse said they would be glad to dispose of.
Before the auction of the hotel’s furnishings recently, Dagesse said that every antique listed with the hotel’s insurance company was locked up and stored away so that they would-n’t be sold. “The only thing we sold that you could call ‘antique’ was some of the old single beds that were Ethan Allen furniture—with the stamped logo,” he said, adding that Ethan Allen has offered to replace the furniture when the time comes. “We got a call from Farooq Kathwari at Ethan Allen—he said he would bring in all his decorators and give us a discount on the furniture if we let them do everything. We are interviewing two or three different companies for that,” he said.
Rehabilitation of the hotel, said Dagesse, includes removing almost 6,000 square-feet of buildings, adding a 7,000 square-foot convention center, a spa, an indoor/outdoor swim-ming pool, new bathrooms for every room (there are 148). “And we’re replacing 1,100 windows at the Balsams, all the stucco at the Hampshire House is going to come down and we are going to re-stucco the same color,” said Dagesse. Plus, “All of that cheap aluminum siding on the rest of the Balsams is coming down and being replaced with four-inch insulation and then stucco over that,” he said, so that it matches the Hampshire House. “There will be all-new roofs throughout the whole place. It is a lot of work. But the only way that Dan Hebert does things is the right way. We have to bite our lip when people say things like, we could have opened the next day,” he said.
He said that the fact is the Balsams they purchased “is in such disrepair. We deeply care—we want to make this work. We had to get bonded for this job. It’s not a small million dollar job. When you get bonded, you have to meet cer-tain requirements. We have had to overcome hurdles. Our goal is to move forward with our plans—if it was that easy, then the other people that tried to buy the Balsams before us would do it. All you have now is two individuals. When you get to $37 million, that’s a lot of money. And that’s what we’re putting into it,” he said.
Another discovery that needs big repair, he said, is the 150-year-old waterline coming from the top of the mountain—which feeds the water to the hotel. “That pipe has been laying on top of the ground and it’s all rusty and leaking like a sieve. Now we’re going to have to go up to the top of the mountain and blow ledge in order to put in a new line. That thing is leaking everywhere. At some point you will have no more water.” He said they discovered the water problem when they got into the hotel and were ready to shut power off and turn on sprinklers, that’s when they found the and we found water is leaking. “So we go three-quarters of a mile up the mountain to see the penstock—which was running all the time so it wouldn’t freeze in the winter. The only way to do that right is to spend a million dollars or more” in repairs said Dagesse.
The Balsams Panorama Country Club and golf course, he said, appears to be in good shape. “We spent about $200,000 this year just to keep it maintained. We have to keep the greens up, even though it wasn’t opened. We had four people there mowing and doing everything that was needed to maintain it—and the clubhouse is beautiful,” he said.
In the end, said Dagesse, it is expected to be a 16-18 month rehabilitation for the grand hotel and resort, no matter when it starts. He said that he and Hebert are in hopes that once they start the search for investors, perhaps work could begin in late October or early November. More publicity is anticipated regarding the pro-gress over the next few weeks.
“I pray to God we can get our stuff done in the next 10 days and be in front of developers. I believe it will be a profitable venture. Will it be easy? No. I think hiring this private invest-ment banking firm from Port-land, and with the two other firms working with us on this, by the end of this week we’ll be heading to our investors,” he said, adding this about his partnership with Hebert, “I’ve never seen a guy work as hard as Dan Hebert to get this done. He’s dedicated, I can tell you that.”
The Balsams sits patiently waiting for the renovations needed to bring the old hotel back to life.