Ocean Properties expected to buy The Balsams in 2 or 3 months
June 23, 2011DIXVILLE — Ocean Properties Ltd. of Portsmouth and Balville, LLC, are now expected to buy The Balsams Grand Resort later this summer, explained Tillotson Corp. president Tom Deans of North Conway in a Friday morning telephone conversation.
August is the earliest that this transaction is likely to take place but the closing could be pushed into September, Deans said.
"We want to make the transition as smooth as possible for employees," he said. The Balsam's general manager Jeff McIver is committed to operating the hotel in the coming weeks.
Anne Edwards, Director of the state Division of Charitable Trusts of the Attorney General's Office, has concluded in a letter dated June 17 that three amendments made to the original Purchase and Sale Agreement that Ocean Properties, Balville, and the Tillotson Corporation signed this spring and approved by Edwards on May 6 are in the best interests of the North Country and will serve to further Neil Tillotson's desire to have the Grand Hotel and its surrounding property continue to be a regional economic driver.
The Tillotson Corp. is wholly owned by the Neil Tillotson Trust which is in the process of winding up its existence and distributing all of its assets to charitable entities as directed by the terms of the late Mr. Tillotson's will and trust documents.
Edwards points out in her two-page ruling, dated June 17, that "the AG's Office is well aware that, over the years, the marketing of the Balsams Hotel has been a challenge for the Trust. Mr. Tillotson's dual interest in having the Balsams Hotel operate as a hotel that employs local people and also serves to maintain the special character of the North Country has been difficult to honor given the significant capital investment needed for the hotel, the downturn in the economy, and the lengthy travel distance from urban centers."
Edwards also notes that the hotel has been operating at a loss, requiring the Tillotson Corp. to provide sufficient monies to cover the shortfall.
"As the Corporation's assets are part of the Trust, it is especially important to sell the property in order to end these ongoing losses as soon as practicable to preserve the Trust's assets so they may be used for the charitable purposes intended by Mr. Tillotson," she writes in her June 17 letter.
Edwards refers to meetings with Deans and lawyers representing the Tillotson Corp. and the late Mr. Tillotson earlier last week, as well as the study and consideration of information and materials provided by one of Mr. Tillotson's sons, Rick Tillotson of Colebrook. One or more other offers to buy the hotel and its properties were apparently on the table.
Edwards notes that she questioned Deans and the Corp.'s lawyers and consulted with others in the AG's Office but that these queries did not result in her changing her mind that Ocean properties, a New Hampshire-based company that owns and operates high-end hotels and resorts and has made a commitment to own and operate The Balsams, has come up with the best offer to purchase the property. Deans described the three amendments as representing "slight changes," but at this point neither the Purchase and Sale Agreement nor its amendments are public documents. The agreed-upon purchase price is not known.
When Deans was asked what would prevent Ocean Properties from "flipping" The Balsams and its surrounding acreage, he replied that New Market Tax Credits Program (NMTC Program) would be used by Ocean in the financing package and that this it takes seven years to realize that mechanism's benefits.
The P & S Agreement also includes a claw-back provision, designed to prevent Ocean from flipping the property.
Deans said that the trustees who worked hard to make these hard decisions remain convinced that Ocean Properties has both the hotel management expertise and the financial resources to make The Balsams a profitable venture so that the hotel and resort can continue to provide good-quality employment to area residents.
In addition, Deans points out, conservation restrictions will be placed on approximately 4,190 acres of the 7,700-acre property, which is more than half the total acreage. Then, within two years of closing, Ocean Properties will add 500 acres to the restricted area, bringing the total restricted property to 4,690 acres. At that point, only 3,010 acres would remain unprotected by a conservation easement prohibiting development.
The easements will be written to allow traditional uses: timber-harvesting and recreational uses, such as cross-country skiing, walking, hunting, fishing, and snowmobiling.
Ocean has done an extraordinarily thorough due diligence, Deans explained. The company has been given four extensions at its request.
In the end, however, the Tillotson Corp. and Ocean decided not to exclude several landfills from the sale by creating four subdivisions. Ocean will assume whatever liability might arise, so the Coös County Planning Board for the Unincorporated Places will not be asked to approve three subdivisions. The potential problem with that scenario is that the Tillotson Corp., after it had given all its assets to charity, would not have funds on hand to pay for a cleanup, if needed. The county commissioners apparently would likely have had to require that either a bond be maintained or an escrow account be established.
The Tillotson Corp. will, however, go ahead and ask the Planning Board to exclude two potential wind farm sites as well as the house and a five-acre parcel owned by Tom Tillotson, a Dixville resident who with his wife also maintains a residence in Boston, Mass.
The Planning Board is scheduled to meet on Tuesday, July 5, tentatively at 5:30 p.m. in the state Fish and Game Building on Rte. 3, north of Lancaster.