Jay Peak's tram can't run before $4.5M upgrades

Jay Peak's iconic aerial trams need $4.5 million worth of work -- including overhauling the arms that attach the cabins to the cables above --  before the state will allow the system to operate this summer.

The repairs are a large expense amidst uncertainty about the resort's future after the Securities and Exchange Commission and the state filed charges accusing owner Ariel Quiros and chief executive officer Bill Stenger of massive fraud. The SEC said Quiros and Stenger misused $200 million from the EB-5 program, which allows foreign nationals to gain U.S. residency if they invest $500,000 in projects that create jobs in economically depressed areas.

On Thursday, Michael Goldberg, the federal receiver appointed to oversee Jay Peak in the wake of the SEC accusations, said he was planning to file a motion in federal court by Monday to gain approval for the expense.

"It kind of sucks that has to happen now," Goldberg said Thursday, shortly after flying back from Burlington, where he was meeting with Jay Peak subcontractors to discuss money owed to them by the resort.

Records obtained by the Burlington Free Press show the state's concerns over the condition of the tram began as early as last year, when the state Passenger Tramway Board brought in Doppelmayr, an international company that manufactures ski lifts, to provide an engineering assessment.

Last June, Doppelmayr's president, Mark Bee, wrote a letter to Stenger, saying the tram had been carrying too much weight at once since 1966, due to a mistake in the original operating manual.

Bee recommended Jay Peak reduce capacity on the tram, which the resort did.

"Of greater concern to us is the condition of the carriages," Bee wrote in his letter. "To our knowledge there are no records to indicate that the carriages have been subject to regular and thorough [non-destructive testing] inspections."

Records obtained by the Burlington Free Press show the state's concerns over the condition of the tram began as early as last year, when the state Passenger Tramway Board brought in Doppelmayr, an international company that manufactures ski lifts, to provide an engineering assessment.

Last June, Doppelmayr's president, Mark Bee, wrote a letter to Stenger, saying the tram had been carrying too much weight at once since 1966, due to a mistake in the original operating manual.

Bee recommended Jay Peak reduce capacity on the tram, which the resort did.

"Of greater concern to us is the condition of the carriages," Bee wrote in his letter. "To our knowledge there are no records to indicate that the carriages have been subject to regular and thorough [non-destructive testing] inspections."

The carriages connect the cabins to the cables running up and down the mountain. Bee's letter recommended Jay Peak perform a thorough inspection of the carriages before allowing the tram to carry passengers.

Stephen Monahan, who oversees the tramway board, said he wasn't sure if the absence of records indicated a lack of testing or a lack of documentation. He said he began insisting on more formal record-keeping when he took over the ski lift safety board about two years ago.

Monahan added that discussions about upgrading the tram began before he took over, but wasn't sure exactly when his organization began expressing concerns to the resort.

J.J. Toland, the director of communications for Jay Peak, said the resort has done every test the state asked of the ski area.

In most cases, the thorough inspections recommended by Bee involve complete disassembly of the carriages, but Doppelmayr offered interim solutions that, combined with daily inspections, allowed the tram to run for the 2015-2016 season.

Monahan emphasized he would not allow the tram to run if his inspectors had safety concerns, and if Jay Peak did not begin the $4.5 million in carriage overhauls, as well as electronic upgrades, he would not allow the lifts to run for the summer season.

Toland said the resort flew in a Swiss technician to conduct non-destructive testing last year and found no corrosion or anomalies.

Shortly after receiving Bee's letter, Stenger wrote to Monahan assuring the state that Jay Peak was planning an electrical system upgrade and a carriage overhaul for the 2016-2017 ski season.

Before Jay Peak was able to finalize plans to do the needed work, the SEC filed its fraud complaint, freezing the resort's assets and placing control in the hands of a Miami federal court.

The resort is just beginning normal spring maintenance now, Toland said, which should be complete by June 15. Once the work is done, the state will conduct an inspection after which, Toland said, the resort will begin running the tram as a scenic ride.

The electronic upgrades and carriage overhauls will take place over the next 12 months, he said.

"The tram is definitely an icon of Jay Peak and maintaining it and maintaining its ride safety is of paramount importance to us and the state of Vermont and the tramway board," Toland said. "The Passenger Tramway Board is a pretty rigorous organization -- because you’re putting people in the sky.”

http://www.burlingtonfreepress.com/story/news/2016/05/23/jay-peaks-tram-overhauled/84596778/

Mentions

• Vermont EB5 Regional Center
• Jay Peak Resort - Tram Haus Lodge
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION
• Ariel Quiros
• Bill Stenger

Litigation Cases

• State of Vermont vs Bill Stenger & Ariel Quiros
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Ariel Quiros & Bill Stenger

States

• Vermont