Mountain Creek seeks to shed Vernon debt

Resort makes court motion to relieve itself of $28M owned to township MUA

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Editor's Note: This story is updated with quotes from Mountain creek CEO Jeff Koffman and differs from the version in the print edition.

By Mike Zummo

Mountain Creek filed a motion on July 16 to walk away from the 2012 sewer agreement between the resort and Vernon Township.

According to court documents, Mountain Creek Resorts, Inc. owes the township $28 million.

According to the agreement, MCRI was allocated 166,000 gallons per day of sewer capacity allocation and court documents say the resort does not require it to continue current business operations.

"We inherited a decade-old contract from our predecessors, who have since left the community," Mountain Creek Chief Executive Officer Jeff Koffman said in an emailed statement. "We have invested and intend to continue to invest millions of dollars in Mountain Creek and the surrounding land."

Vernon Township Mayor Harry Shortway said the township also agreed to waive the fee to connect to the sewers for further development. Vernon and the Sussex County Municipal Utility Authority issued bonds to finance construction of a sewer system to make sewers available for promised 1,500 new condos and an indoor waterpark.

According to court documents, MCRI says the sewer contract obligations exceed the benefits the resort receives.

“We're going to have to sit down and come up with an alternative plan,” Shortway said on Wednesday. “It's still going to be a very long haul.”

Vernon has until July 31 to object to the motion and a hearing is scheduled for Aug. 7 in Newark.

Shortway said in a letter to council members that the township MUA has incurred an unsustainable debt of $40 million due, in part, to the township's partnership with MCRI to operate and maintain the sewer system.

If the judge rules to relieve Mountain Creek of its debt to the township, the burden of repaying the debt to the Sussex County MUA will fall to the Vernon Township ratepayers.

“Mountain Creek is worried about their pocketbooks,” Shortway said. “I'm worried over 1,400 pocketbooks. Someone has to fight for the taxpayers in this town and I don't believe the government should be subsidizing private business.”

Shortway also said the resort will not rebuild the failing wastewater facility near the Black Creek and he said an overflow into the stream will result in an “environmental disaster”.

“This is an asset,” Shortway said. “We've fulfilled our obligation. We're not subsidizing. If you sign a contract, it means something.”

Koffman said the resort's ownership sought to renegotiate the contract with the township to assure Mountain Creek's fiscal health, but no progress had been made. He said Mountain Creek is the largest employer and taxpayer in the community.

"The delay by the town to not reasonable negotiate the contract has delayed the company's emergence from bankruptcy and overall investment plan," Koffman said. "We could not come to an agreement so we were forced to reject the contract."

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