Since the start of the COVID-19 pandemic, the state of Vermont has awarded more than $330 million in public funds to private businesses with the goal of helping them survive forced shutdowns and a slowed economy. To get a better sense of how Vermont’s coronavirus relief programs were conducted and how the money was spent, VPR examined aid that flowed to one well-known and heavily impacted sector of Vermont’s economy – the $1.6 billion ski industry.
In a normal year, more than 75% of Vermont’s 4 million annual skier visits are from out-of-state visitors, and the Vermont Ski Areas Association forecasts Vermont ski areas sustained about $100 million in losses between February 2020 and February 2021. Via two funding channels set up by the state to direct federal coronavirus relief funds – the Economic Recovery Grant program and the Vermont Ski Area Recreation Safety Grant – Vermont’s roughly 20 alpine ski areas have received at least $5.3 million in aid so far.
Thirteen Vermont alpine ski areas received direct payments from the state through economic recovery grants. And 21 also received Vermont Ski Area Recreation Safety Grants, set aside to help ski areas comply with COVID-19 requirements for the 2020-2021 season.
The Agency of Commerce and Community Development and Department of Taxes oversaw these two funds; they represent just a sliver of the programs that provided relief to various Vermont businesses. (Vermont’s agencies of agriculture, administration and human services also oversaw relief programs).
In most cases, ACCD Commissioner Joan Goldstein says state agencies built business relief programs from scratch.
“[There was] very little precedent for this, both in terms of the magnitude, the breadth of it and the intensity of it,” Goldstein said. “This is clearly the biggest relief effort that I think the state’s been involved in.”
VPR’s study of the relief programs utilized by the ski industry found the following:
- Some economic recovery grant awards seemed to fall outside the program parameters. There were two significant limits on the economic recovery grants. Statute dictated that these programs should serve businesses based primarily in Vermont, and they were subject to a $300,000 cap. But the the rules used by state agencies to assess these metrics allowed some businesses to get around them. Three entities under Jay Peak’s receivership each received the maximum award allowed for a single business, totaling $900,000. And the program's definition of domicile allowed Stratton Corporation and Sugarbush Mountain Resort, Inc. – both owned by Alterra Mountain Company, which owns 14 resorts across the United States and Canada and is headquartered in Denver – to each receive the maximum award of $300,000.
- The Economic Recovery Grants and Ski Area Recreation Safety Grants reportedly evaluated applicants’ financial need based on their tax information, but statute renders their applications and the income details they contain confidential. While some of the state’s COVID relief programs – like the Ski Area Recreation Safety Grants – require recipients to report how they spend their awards, the Economic Recovery Grants program does not, giving private companies virtually free rein to spend public funds, with little opportunity for public oversight. For example, there is no way for the public to know how Killington spent its $300,000 in economic recovery grants, or what Magic Mountain did with its $150,000 award. The state auditor is investigating the program and whether its metrics sufficiently evaluated financial need.
- Big corporations and wealthy private clubs seemed to fare as well or better than smaller businesses. Looking at the Vermont Ski Area Recreation Safety Grants, the Hermitage Club – a member-owned private ski area in southern Vermont with a $50,000 initiation fee – received the maximum award of $175,000. In contrast, Cochran’s Ski Area in Richmond, which offers $19 day passes and primarily serves about 400 local families, received a grant of just over $8,600.
- Some ski areas big and small say the programs helped them stay in business and comply with new COVID restrictions. For example, Bolton Valley president Lindsay DesLauriers said the $175,000 Bolton received from the Ski Area Recreation Safety Grants program helped the resort move its ticketing system outside, and switch from paper passes to RFID scanning for contact tracing.
The guidelines and scale of the Economic Recovery Grants program, designed to replace businesses’ lost revenue, raised a red flag for State Auditor Doug Hoffer, who is now auditing the program.
“A program of this size cannot be ignored, especially with eligibility criteria that were questioned by some legislators, the Legislature’s economist and my office,” he said.
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Back in June 2020, as the programs were being crafted, Hoffer argued it was reasonable for the state to investigate the financial health of businesses that applied. This was ultimately deemed impractical by the Legislature.
About 5,000 businesses received economic recovery grants. Then-Deputy Commissioner of ACCD Ted Brady said approximately half the awards made were to small businesses with fewer than four employees, for $1,000-$5,000. Some 62% of program funds went to businesses that reported less than $1.5 million in revenue in 2019.
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Once awarded, recovery grant recipients could spend grant funds on anything that fell within their normal business operations, a rule Hoffer critiqued as vague in a June memo to the Legislature. Beyond Hoffer's audit, the Scott administration says it has no plans to conduct a comprehensive review the grants and enforce the rule now that the awards have been made — though ACCD says it will recapture funds if the agency discovers they have been made in error.
As the state continues to roll out COVID relief to businesses on the basis of revenue loss, Hoffer says Vermonters should be asking whether the programs are having the intended consequence: addressing businesses’ financial need. (The program has also been critiqued by the Joint Fiscal Office.)
Hoffer declined an interview for this story, citing his office’s ongoing audit, but he said he hopes to complete his report by the end of the current legislative session.
“The point here is not whether applicants met the guidelines, although we will be checking that," Hoffer said. “The real issue is whether the guidelines fairly represented ‘need.’”
A bill developed at 'Usain Bolt speed'
Per capita, Vermont ranks third in the nation when it comes to federal stimulus funding – receiving about $6.32 billion overall. About $1.25 billion came from the Coronavirus Relief Fund, paid directly to state and tribal governments nationwide based on population.
Federal guidelines placed an initial layer of parameters on how Coronavirus Relief Funds could be spent – including a spending deadline of the end of 2020, which was later lifted. But states were given tremendous leeway to direct their awards. Locally, programs were set up quickly and overseen by a multitude of state agencies, from ACCD to regional planning commissions.
In Vermont, supporting local businesses emerged as a central goal for legislators.
“We were faced with an economy on the brink of collapse, small business owners who were at their wits end and worried about not just closing temporarily, but closing permanently,” said Tim Ashe, who was Vermont Senate pro tem at the time.
In 2020, the Legislature allocated more than $330 million in CRF funds to the Agency of Commerce and Department of Taxes to create the Economic Recovery Grants program.
“The real meat of the work [to develop the legislation] took place in the course of about three weeks, which, again, for the Legislature is like Usain Bolt speed,” Ashe said. “It is so far from the normal legislative process that it just shows the importance that we put on getting the money out the door fast.”
The Legislature left it to the ACCD and Department of Taxes to come up with the finer metrics by which money would be allocated. Hoffer recommended at the time that the Joint Fiscal Committee give final approval to the more detailed program guidelines. Instead, ACCD was simultaneously empowered to create the program and execute it.
The rollout of economic recovery grant funds started in July, with eligibility criteria that included a $20 million annual revenue cap. That cap was lifted a month later.
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Rep. Michael Marcotte of Newport is chair of the House Committee on Commerce and Economic Development. He said the Legislature asked ACCD to raise the revenue cap so that ski areas would be eligible.
“I have Jay Peak in my area, and they were going through $60,000 a week in payroll, with no revenue coming in. And you can only keep that up or so long,” Marcotte said. “People think of the ski areas as these big, money-making deals, but when you’re blowing through that kind of money every week, it doesn’t take long to tap your reserves and drain them.”
Demand was high for economic recovery grants and in October, the Legislature funded a third iteration: the Expanded Economy Recovery Grants program.
This time, awards were based on business revenue lost between March and September 2020, as compared with the same period in 2019. However, additional resources, like the financial power of a parent company, were not taken into consideration.
“The reason we emphasized revenue loss was because we believed that it most closely linked to whether or not the government telling someone they had to close or significantly curtail their operations was the reason their business was doing so poorly,” Ashe said.
Grants were capped at $300,000 total for the program. Statute dictated that no business was supposed to get more than that, or to be able to file under multiple subsidiaries. But Alterra Mountain Company and Jay Peak Resort scored far more than $300,000.
Some awards seemed to fall outside the program requirements
Located about 10 miles south of the closed Canadian border, Jay Peak Resort is Vermont’s largest lodging operation, with 900 beds. It’s also in receivership – and it’s for sale, a process that’s largely been stalled due to COVID-19.
Records show the Jay Peak Receivership was awarded $900,000 in economic recovery grants — three times the maximum award intended by statute for a single business.
In total, Jay Peak Resort was awarded $600,000 in economic recovery grants, under two separate filing names, both listed under the Jay Peak Receivership: $300,000 went to Jay Peak Hotel Suites Phase, II, LP and $300,000 went to Jay Peak, Inc.
Burke Mountain Operating Company & Subs – also under the receivership – received a $300,000 grant through the program, too.
According to an interim report from Jay Peak’s receiver, the mountain earned $11.29 million in revenue in 2019 — making it eligible for all rounds of the Economic Recovery Grants. But its awards appear inconsistent with the state law that created the program, which prohibits subsidiaries of a single business from earning multiple awards.
Brady said ACCD and the Department of Taxes used federal employee identification numbers to determine whether businesses were distinct entities. Any apparent duplicates in the list of awardees, he says, must have had different EINs — which are private information.
Rep. Marcotte said the EIN system is efficient, and helped the state get much needed aid out quickly.
“I think using the federal ID numbers worked fine,” he said. “Looking at Jay Peak, they have multiple different businesses there, but they were all in the same boat … I think it hopefully helped keep Jay Peak going, and other larger businesses. I don’t see a problem with it.”
When asked whether Jay Peak Hotel Suites Phase II, LP, Jay Peak Inc. and Burke Mountain Operating Co. & Subs were functionally under the same business umbrella, Jay Peak General Manager Steve Wright said, “It is in terms of the way that the receiver looks at and manages cash flow. But operationally, the two entities [Jay Peak and Burke Mountain] are still distinct.”
JJ Tolland, Jay Peak’s director of communications, said the awards were key to keeping Jay Peak’s operations in business this year, as the mountain braces for a 60% decrease in revenue for the 2020-2021 season.
“It’s not a windfall, because we are the largest hotel operator in the state, as well as being a winter resort operator,” he said.
Other Vermont alpine resorts appear to have gotten around a requirement that a company be based primarily in Vermont before receiving aid. Stratton Mountain and Sugarbush – both owned by Alterra Mountain Company, which operates 14 resorts across the United States and Canada and is headquartered in Denver – each received $300,000 in economic recovery grant funds.
Similarly, Killington and Pico, owned by Utah-headquartered Powdr Corporation, also received a $300,000 economic recovery grant from Vermont. A spokesperson confirmed that, despite their ownership being based out-of-state, the resorts are domiciled in Vermont.
When asked about how Sugarbush and Stratton met the requirements for domicile, Brady said he hadn’t seen their applications, but that “they must have clearly met that requirement when the reviewer went in and looked at them.”
Further, he pointed out that domicile is not clearly defined in state statute, though the Legislature asked the administration to define it for the purposes of the program. Key factors reviewed included: whether senior business officers are based in Vermont, and where company records are kept.
“We use the tax department’s guidance,” Brady said. “Our handbook specifically explained what domicile was. You looked at their tax returns, found out whether or not they had permanent employees, found out whether or not they had Vermont assets, found out what percentage of the company’s business was in Vermont.”
This metric allowed Sugarbush, Stratton and Killington to qualify for aid because their management teams are based in Vermont, despite the fact that their parent companies, with which their revenues are intertwined, are based elsewhere.
Businesses were given free rein to spend public funds, and key records remain confidential or nonexistent
VPR filed public records requests seeking the applications filed by all Vermont alpine ski areas who received economic recovery grants. But the state refused to release the records, and says the program applications — which led to 5,000 businesses receiving public money — are confidential, because they contain private tax records and payroll information. The State Auditor’s Office has access to those applications. But beyond the auditor’s eventual report, many program details will remain confidential.
Back in June, Hoffer called for the Legislature to authorize the Joint Fiscal Committee to evaluate and approve the program rules, saying it would “provide Vermonters with greater accountability.”
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Ashe said he was comfortable with the level of transparency built into the program, and that the Legislature felt it was consistent with past treatment of public record law for relief programs.
“You know, like with anything, and especially in the case of a program like this, which was meant to sacrifice some perfection in order to do the most overall good, it does require a vigilant executive branch to make sure that the money is being used the way it was intended and the way the law is written,” Ashe said.
While applications remain confidential, some of the aid programs ACCD and other agencies set up, like the Ski Area Recreation Safety Grants, require recipients to file reports, detailing their expenses. For example, records show Bromley Mountain spent just shy of $95,000 to expand its outdoor dining offerings, and Sugarbush spent about $65,000 on PPE and cleaning equipment.
In the ski industry, some big corporations and private clubs fared better than small businesses, nonprofits
Unlike Economic Recovery Grants, which were open to all sectors of Vermont’s economy, the Vermont Ski Area Recreation Safety Grants program was tailored specifically to assist Nordic and alpine ski areas across the state.
Of the 36 applications the state received, 34 were funded. Nearly all of the $2.5 million allocated was awarded – and resorts collectively requested nearly twice that amount.
Resorts who applied to this program had to demonstrate their revenue gains and losses during the pandemic. Brady said projects that created or protected jobs scored higher, and had detailed plans about feasibility and budgets. Geographic diversity was also a consideration in making the awards.
The Hermitage Club is a private ski area at the old Haystack mountain that fell into bankruptcy a few years ago. Today, skiing at Haystack Mountain is open to members of the Hermitage Club only. The initiation fee is $50,000, and membership costs $15,000 in dues per year thereafter.
This year, the club’s food and beverage sales are down, but real estate and membership – which drive the mountain’s operating budget – are up. General Manager Bill Bennayen said membership grew by about 20% over 2020, and many of the club’s 220 members — of which 80% are out-of-state second homeowners — relocated to the Hermitage Club during the pandemic.
ACCD records show the Hermitage Club, open only on weekends and holidays, used its $175,000 Ski Area Recreation Safety grant award to purchase hazmat suits for ski patrollers, install air filters in the lodge and create brand-new outdoor dining facilities. For example, the ski resort built 20 “family cabanas” for private, heated outdoor dining.
Another private ski area, The Quechee Club, received a $106,000 award. According to general manager Brian Kelley, the pandemic has piqued interest for the second- and third-homeowners they serve as members.
“Home sales within our community have basically turned over by an increase of 30%, year-over-year,” Kelley said.
The Hermitage Club and The Quechee Club said they believe they would likely have been able to comply with state regulations without the awards.
While the Hermitage Club is using RFID pass scanning technology for contact tracing, at Cochran’s Ski Area in Richmond, it’s being facilitated through a pass scanning system set up by a parent volunteer for the kids’ racing program.
About 440 local families have season passes at Cochran’s. Lift tickets are $19 – kids under 5 and seniors ski free, and much of their usually vibrant alpine racing season was shut down or spectator-free.
Cochran’s received an $8,600 Ski Area Safety Recreation Grant, a fraction of what Quechee and the Hermitage were awarded. Though GM Jimmy Cochran says they didn’t apply for much, and it doesn’t bother him that larger resorts like Killington, Jay Peak and Bromley all received the maximum award of $175,000 – even if they’re owned by larger companies.
“The state really supports us,” Cochran said, “but I can see how for the state of Vermont, making sure that a place like Stowe, or Sugarbush or Killington has everything they need might be a bigger priority.”
He pointed to the economic impact those areas have on Vermont – about $1.6 billion annually, according to the Vermont Ski Areas Association, and 13,000 jobs – and to the market benefit their presence has on small feeder mountains like Cochran’s, which only employs about 44 people to Killington’s 1,800.
“Our goal was to help these businesses open safely for their communities, their employees and their customers,” said former ACCD Deputy Commissioner Brady. “And whether you’re talking about a Killington, Cochran’s or Hard’ack – all of these places were facing some obstacles – and so we did not discern between the type of access they provided. We discerned based on: Are you a ski area? Do you serve customers? Are you a business or nonprofit? If you are, then you’re eligible for the program.”
Some ski areas say state programs delivered critical aid
The National Ski Areas Association estimates the combined impact of an early shutdown in March 2020, along with diminished summer business, left a $2 billion dent in revenue industry wide – largely due to canceled conferences, weddings and other events.
“We rely on the Canadian market for about half our audience,” said Jay Peak General Manager Steve Wright in late December. “And they physically can’t get here.”
As a result, revenue at the resort has dropped precipitously, and there is no indication the border will open anytime soon.
In neighboring Jay and Montgomery – both towns of just over 600 people – that revenue loss translates to 1,000 fewer jobs for the 2020-2021 ski season, with spotty hours for about two-thirds of the remaining workers on payroll.
Wright serves on the board of the Vermont Ski Areas Association. He’s part of a industry group that met with ACCD every week in the months leading up to the start of the season, and was instrumental in developing the ski industry-specific reopening guidance all resorts have to follow.
Jay spent about $100,000 of its $175,000 Ski Area Recreation Safety grant on revamping its food service to comply with COVID-19 restrictions, and new heated outdoor seating and dining areas.
Communications Director Tolland says the economic recovery grants Jay received helped the business meet its bottom line, and keep the lights on.
“We’re still in a state of emergency,” Tolland said. “I think we’ve gone from a four-alarm fire, to a two-alarm fire at this point.”
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Several other ski areas say the state’s aid programs were instrumental in allowing them to comply with COVID-19 guidance and reopen this year.
Bolton Valley President Lindsay DesLauriers said the $175,000 Ski Area Recreation Safety Grant the resort received allowed them to switch from issuing paper lift tickets at an indoor counter to pre-loaded, scan-able cards, and to move their lines out-of-doors.
The timing, she said, was key: “The award was extremely helpful … What we had this summer was smashed almost to nothing. So the idea of having to lay out a bunch of money, to sort of change how we operate to get ready for COVID, was really posing a challenge for us.”
DesLauriers said the program was “right-sized” for a resort like Bolton – locally owned and bigger than Cochran’s, but smaller than Killington by a long stretch, with mostly Vermont-based clientele and limited early season cash-flow in a good year.
In Londonderry, Magic Mountain owner and general manager Geoff Hatheway said the $175,000 Ski Area Recreation Safety grant the resort received was hugely helpful.
“The state covered about 80% of our need to implement our safety protocols,” he said.
Day ticket sales at Magic Mountain are down 25% over last season, but season pass sales are up by 50%, with much of the growth among Vermont residents. Hatheway said the state’s coronavirus reopening guidance created new jobs and allowed the mountain to remain fully staffed at 100 employees, most of them locals.
With new federal funds comes more opportunity for review
ACCD Commissioner Joan Goldstein says the magnitude of Vermont’s coronavirus relief effort is unprecedented in the state’s history. Even the 2008 financial crisis pales in comparison.
“I was around during [the 2008 recession], and … the stimulus was done through already existing federal stimulus programs, and I think very little of it went directly to businesses. It was a very different situation,” Goldstein said.
In that case, it was largely the federal government which set requirements for eligibility, not the Legislature.
Not everyone in the state has been supportive of the Economic Recovery Grant program’s eligibility metrics.
In a report last November, Joint Fiscal Office senior economist Joyce Manchester and fiscal analyst Graham Campbell critiqued the state’s method of evaluating business need, saying it lends itself more to distributing funds with expediency than to targeting where need is greatest within the economy.
“’Need’ as it is used in the context of the program does not attempt to measure economic despair for these businesses,” the report reads. “Rather, it is simply a measure of a revenue loss from 2019 to 2020. It does not indicate whether or how many of these businesses would fail without state assistance.”
But Goldstein defended the metric, saying, "We took our cue from the federal guidance governing the use of CRF funds, which expressly stated that revenue loss was a permitted use. ACCD and the Legislature didn't go into more granular [detail at the cost of] potentially taking on more compliance risk with federal guidelines."
The Legislature will again have opportunities to decide how aid is distributed across Vermont’s economy. Congress passed a $1.9 trillion coronavirus relief package in early March, bringing more CRF funding to Vermont.
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Former Senate Pro Tem Tim Ashe said a perfect relief program, developed over months rather than weeks, might have dug deeper to evaluate each applicant’s finances. But legislators knew the Economic Recovery Grants program had to be executed fast to be effective.
He says he stands by the program, and said he would vote for it again.
“Crafting these grant programs for businesses, we were faced with the very early choice: Do we live in fear that there will be one business that maybe is on the edge of really deserving a grant that gets it, and as a result, slow down the process for thousands of other businesses? Or do we do something that is simple, can be executed quickly, that will provide tremendous benefit almost entirely to businesses that are in desperate need, and accept that there will be some imperfections?” Ashe said.
He added: "I really don't even want to think about what we'd be looking at right now in terms of the health of Vermont's economy if we had chosen the former option, which was paralysis.”
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