I was surprised to see the news that Eldora, in Boulder County, is up for sale. What caused the sale of Eldora. What does this mean for real estate in Nederland, CO? Why is the town of Nederland buying a ski resort? Is this even a good idea? Are property owners on the hook for the purchase?
A Brief History of Eldora
Powdr corp acquired Eldora in 2016 and has put substantial money in to upgrade snowmaking, lodges, etc… Prior to their acquisition it was owned by private partners for the last 25 years. In 2018 Powdr teamed up with Alterra to offer the Ikon pass at Copper and Eldora.
Why is Powdr corp selling Eldora?
From the press release: “To strategically manage POWDR’s portfolio in alignment with our founder’s and stakeholders’ goals, we aim to balance our ski business with new ventures in the National Parks sector and Woodward,” the company wrote in a statement. “Over the coming weeks, we will list three of our ski resorts — Eldora, Mt. Bachelor, and SilverStar — for sale.”
What is the real reason Powdr is selling Eldora?
My gut says the real reason is that Eldora is not very profitable ( I have no information other than what I have read and my personal observations going there). It is a daily drive up resort that attracts guests primarily from the front range as there is no lodging at the resort. Drive-up skiers as considerably less profitable than destination skiers so to make money with solely a drive up resort is nearly impossible with all the costs involved.
The town of Nederland buying Eldora
A small Colorado mountain town of about 1,500 people, Nederland, has announced plans to purchase a popular ski resort currently under corporate ownership.
The town of Nederland announced last Tuesday that it will be buying the 680-acre Eldora Mountain Resort from Powdr Corp, a privately held company based in Park City, Utah.
How is Nederland financing the purchase?
Nederland is using revenue bonds are primarily secured by the revenue generated from the specific project they finance, not the full faith and credit of the issuing government or entity. Therefore, the entity responsible for paying back the bondholders is the issuer of the bond, and their liability is limited to the pledged revenue stream
What benefit is there to Nederland from purchasing Eldora?
This definitely perplexes me, why does a small town want to buy a ski resort? The downside risk is considerably greater than any possible upside risk to the town and there are no real advantages to a town owning a ski resort.
A cautious lesson from Steamboat and Howelson Hill
I can almost guarantee how the purchase of Eldora will end for the town of Nederland. The city of Steamboat Springs owns Howelson hill, a small ski resort in downtown Steamboat. Howelson is a money losing proposition and every year taxpayers are essentially subsidizing the mountain. Don’t get me wrong in Steamboat there are huge benefits to the community as thousands of kids train via the winter sports club. This will not be the case in Nederland.
Downside risks abound for Nederland.
Eldora is a mid sized ski resort that relies on a much larger company, Powdr, to make it profitable from ticket sales to infrastructure to maintenance, etc… Furthermore have multiple resorts buffers revenues for example copper could have a good snow year while Eldora had a mediocre one. With only one resort, it is impossible to hedge against weather which amplifies the risk. Furthermore, being held by a town will require huge expenditures to upgrade lifts, base areas, etc.. and where is all that funding coming from? Long and short, I can guarantee that Eldora over a 5 year period will not be profitable to own and operate as a stand alone ski resort that relies on drive up traffic.
What does this purchase mean for real estate in Nederland?
I don’t see any upside to real estate in Nederland as a result of the purchase. The downside risk is that as Eldora becomes a money pit for the town it will ultimately result in lower resale values in the surrounding areas. The caveat is that Nederland is not that far from Boulder so that should buffer values a bit. Long and short, there is no upside from the purchase and there is a slight downside risk.
Nederland buying Eldora is a bad idea
The role of local governments is to take care of critical items that are not efficiently handled by the private sector like roads, water, sewer, fire, etc.. Unfortunately, Nederland is stepping way outside the box to buy a ski resort. This is a terrible idea and way outside the scope of any city. Furthermore, there is no vote needed as they are going to issue separate bonds that will not raise taxes so citizens don’t really have a say in this proposal. I can guarantee over a 5 year period Eldora will not be a great buy for the city of Nederland as they don’t have the capital and size to make Eldora successful. If a publicly traded company can’t solve this issue, then how can a small Colorado city? They can’t as we have seen in Steamboat with a much smaller resort, Howleson Hill.
For real estate there is no upside potential due to the purchase only downside risk as Eldora is less profitable under city ownership. The wildcard is if there can be liability to taxpayers down the line when things go south. According to the press release there will not, but I’m not fully convinced without seeing all the details.
Additional Reading/Resources
- https://www.axios.com/local/denver/2024/06/28/alterras-acquisition-arapahoe-basin-ski-area-federal-inquiry
- https://coloradohardmoney.com/what-colorado-ski-town-is-outperforming-others-which-colorado-ski-town-is-the-best-investment/
- https://www.denverpost.com/2024/08/22/powdr-company-selling-eldora-ski-resort-colorado/
- https://coloradohardmoney.com/major-ski-area-in-colorado-up-for-sale/
- https://www.postindependent.com/news/we-are-buying-eldora-nederland-announces-plans-to-purchase-popular-colorado-ski-mountain/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. He is the owner of Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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