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The Whitetail purchase

April 09, 1999

For years local governments have run recreational facilities like parks, ball fields and even swimming pools. But does it make sense for the Mercersburg, Pa. General Authority to run a multi-million-dollar ski and golf resort? Officials insist that the taxpayers won't be at risk. To that we say officials need to remember that promise, if the arrangement runs into financial difficulties in the future.

Borough Manager Jim Leventry says there won't be any taxpayer obligations because the purchase will be financed by $42 million worth of tax-exempt revenue bonds. The bonds will pay for the Whitetail ski area, a golf course now under construction and to build a reserve fund to help the resort in the event of a fourth consecutive warm winter. Financing will also fund $1.7 million in capital improvements.

Will the deal work? The chances will be a lot better if the coming winters are cold ones, though when the golf course is completed, there'll be some revenue coming from that source in spring and summer. The continued development of housing in and around the resort should also help the resort's cash flow.

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The real money-maker, however, has got to be the ski area. Only one foursome can play on a golf hole at any given time, while the ski slopes can accommodate thousands of people at once. Another difference between golf and skiing: While most golfers tend to have their own clubs, while many who visit Whitetail's slopes rent their equipment, providing more revenue.

Whitetail seemed to have its act together with an aggressive marketing and advertising program, and its easy access from Interstate 70 made it an easy drive from the Washington suburbs. The resort also put together off-season activities like mountain biking to keep the paying customers coming in.

But no matter how much a warm winter saves local residents in terms of lower heating bills, it doesn't do much for a ski resort. This deal is, in essence, a bet on the weather. As long as it's the bondholders and not taxpayers making that bet, we wish them well.

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