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Much testimony and information has been offered about the issue of leasing Cannon Mountain to a private operator. Unfortunately, much of the rhetoric that has circulated has been rich with emotion, but lacking in an honest and factual analysis of the proposal. In 1998, the state of New Hampshire confronted this very same argument relative to the leasing of the Mt. Sunapee Ski area. A careful and thoughtful review of the historical arguments in opposition to the proposed legislation and an open-minded analysis of the success or failure of this “Sunapee Experiment” can provide a clearer and more reliable picture of what might be in store for Cannon.

Information for this summary was gathered from conversations with Mt. Sunapee management, and community members and business leaders in the Mt. Sunapee Area Chamber of Commerce. Additionally, minutes of the Mt. Sunapee Advisory Committee, correspondence from the Society for the Protection of NH Forests, and other historical documents have been utilized to prepare this report.

The original arguments voiced in 1998 in opposition to considering a lease of either Cannon or Mt. Sunapee were:

1. Loss of control over the ski area
2. The state will not save any money
3. A tenant will not care for the infrastructure, maximize profit, and neglect maintenance
4. Local economy will suffer
5. State offers better pay than a private entity
6. What a private company can do, the state can do just as well

The facts are as follows:

Loss of control over the ski area – legislation was enacted that required the operator to prepare a Master Development Plan that would be revised and updated every five years with oversight by the Mt. Sunapee Advisory Committee. It is important to remember that the Muellers are tenants, legally bound by the lease arrangement that was approved by the state that governs the scope and limitations of their Mt. Sunapee operations. Just as with any rental agreement, the landlord retains control of the property and permits the tenant the liberty to conduct business in accordance with the lease. The selection of responsible tenants and the crafting of a mutually acceptable lease agreement will result in a win-win relationship for both tenant and landlord.

The state will not save any money – the following graph offers a graphical comparison between revenue earned by the state’s operations at Cannon Mt. and the revenue paid to the state by Mt. Sunapee.

In the each of the past four years, the state has lost money with Cannon Mt. operations resulting in a deficit totaling $1.6 Million. Meanwhile Mt. Sunapee over the same time period has paid nearly $2.7 Million in lease payments, Room & Meals taxes, and Business Enterprise & Profits Taxes.

In addition Mt. Sunapee has paid $835,013 in local property taxes.

Clearly, the state and local communities have benefited significantly from the “Mt. Sunapee Experiment” with much of the revenue being directed towards infrastructure improvements for Cannon Mt.

A tenant will not care for the infrastructure, maximizing profits and neglecting maintenance – Mt. Sunapee has seen capital improvement totaling over $15 Million since 1998, much of the investment being used to update or replace old equipment that dated back to 1962. The following capital improvement projects have been completed at Mount Sunapee:

· $2.7 Million Summit Express Quad
· $1.0 Million Sun Bowl Quad
· $400,000 Energy Efficient Snowmaking System
· $3.0 Million Sunapee Lodge
· $200,000 addition of 11 acres of ski trails
· $900,000 Clipper Ship Quad
· $500,000 Two New (Snowmaking) Water Pumps
· $100,000 Learn to Ski Moving Carpet
· $850,000 Children’s Ski School & Daycare
· $130,000 Alpine Racing Competition Center
· $250,000 Two New Snow Groomers
· 50’ Moving Carpet for Ski Wee Program
· Numerous Environmental Improvements

The Muellers have clearly cared for and improved the infrastructure of both Mount Sunapee and contributed to improvements at Cannon Mountain.

Local economy will suffer – In 1998 110,000 visitors traveled to Mt. Sunapee. In 2005 – 2006 nearly 250,000 visited the mountain, contributing to the region’s economy. It is unclear exactly what the actual financial impact is on the local economy, but the state could conduct an analysis of the Room & Meals taxes collected beginning in 1998 through 2005 from dining and lodging establishments in the immediate vicinity of Mt. Sunapee as one measure of the economic impact the region has experienced. Anecdotal reports indicate that Mt. Sunapee has and is currently viewed as having a significantly positive impact on the area’s economy.

Mt. Sunapee has donated nearly $300,000 to the local communities since 1998.
· Seven 4-Year Scholarships each year @ $5,000 each
· Four 1-Year Scholarships year @ $1,000 each
· Donations to local schools and Colby-Sawyer College
· Support of the Newport Opera House
· Support of the Newport Library Arts Center
· Support of the Kearsarge Regional High School Chorus
· Support of the Newport High School Chorus
· Environmental Education Partnerships with the Lake Sunapee Protective Association
· “Cares and Shares” canned food drives resulting in five pick-up trucks of food for local pantries twice a year in December and April.
· Numerous donations of lift tickets in support of local fundraisers and charitable events
· Donation of class room space for 150 students of the Bradford Elementary School when the school was closed due to mold infestation.

State offers better pay than a private entity – In 1997, under state control, Mt. Sunapee had 14 full-time year round employees with a gross wages of $946,000.

In 1998, under the Muellers, 12 of the 14 existing FTYR state employees were retained (2 self-selected out), an additional six new jobs were created and gross wages increased to $1.7 Million.

In 2004 - 2005 Mt. Sunapee employed 28 full-time year round staff with gross wages of nearly $2.8 Million and full benefits including health insurance and 401K with an employer match of 1:2.2 employee contribution.

What a private company can do, the state can do just as well – The philosophy of a private operation versus a state operation appears to be very different. In the case of Cannon, major operational decisions often require approval from management personnel in Concord. Since the state operates on a legislatively defined budget, flexibility may at times be compromised. A Cannon employee disclosed that Cannon Mt. has a budgeted amount for snowmaking operations, and once that budgeted amount is depleted snow making operations cease. It would appear that management decision-making relative to the day-to-day operations of Cannon are not necessarily made on-site and at times are restricted due to the budgetary constraints imposed on a legislatively mandated and governed budget.

In conversations with Mt. Sunapee management, a more flexible and responsive style of management was described. Management and operational decisions are made by senior management personnel at the mountain and with a greater emphasis on the potential to generate revenue rather than in compliance with a predetermined budget.

A case cited was that Mt. Sunapee had in past decided to overspend it’s snowmaking budget by approximately $20,000, but in doing so realized an increase in revenue of over $200,000 due to it’s ability to attract skiers who responded to the perception of well maintained snow conditions.

Historically, Cannon Mt. has been one of the earliest ski areas to close in part due to it’s having exhausted it’s operational budget, while many other ski areas choose to remain open and continue to enjoy late season revenue. This April is an example of Cannon's management shortcomings. Despite excellent ski conditions and nearly 100% skiable terrain, Cannon opted to close while other ski areas were choosing to continue to remain in operation.

Three concerns were identified associated with the Mt. Sunapee Experiment.

1. Weekend traffic congestion during peak ski weekends – due to the location and approach corridors to the Mt. Sunapee Ski area was cited as a problem. It appeared that many residents were accepting of this minor inconvenience and recognized the need to adjust travel patterns during peak periods. Since Cannon Mt. has direct access from I-93 at two Interstate exits, traffic congestion will likely not be an issue as it is at Mt. Sunapee.

2. Recently proposed expansion of the ski area to the West Bowl. The Muellers have purchased significant private lands on the western slopes of Mt. Sunapee with hopes to develop a Mittersill-like community that would provide direct ski access to Mt. Sunapee via a “West Bowl Expansion”. It appears that this expansion which was encouraged by the Department of Resource and Economic Development and includes significant donations of private land to the state of New Hampshire. This land transfer and ownership by the state will result in an actual expansion of the Mt. Sunapee State Park and is a much more complex issue than has been portrayed in the brief news reports. Suffice it to say that this appears to be an issue that is unique to Mt. Sunapee and would never become an issue for Cannon Mt. for the following reasons.

a. Cannon is surrounded by the White Mountain National Forest and is therefore federally protected.

b. Mittersill Resort has historically already broken ground with regards to “residential” development on the flanks of Cannon Mt. and co-existed with the state operated ski area for many years. Many, including the state, view an expansion to the Mittersill slopes as beneficial to the continued growth and success of Cannon.

c. Development in Franconia is already happening off the slopes of Cannon with numerous residential communities under construction. The management of Cannon by a private operator is totally irrelevant to the development that has and will continue to occur in Franconia. Management of development within the town of Franconia is dictated by the guidelines defined by the town’s planning board and select board.

3. An existing belief of opponents to the idea of leasing Cannon (or Mt. Sunapee) that the state parks should be managed by the state for the benefit of all the citizens of New Hampshire and that the surrendering of the ski area’s operations will result in a loss of “ownership” of the state’s “crown jewel” as Governor Lynch has described the Franconia Notch State Park.

Of all the concerns, the latter is probably the most emotionally-based and most challenging to overcome of all the concerns. While the state is uniquely qualified to manage the N.H. State Park system it would appear from the last four years of operations, that it may not be the best operator in the highly competitive arena of ski area operations.

A precedent already exists at Cannon that demonstrates the state’s willingness to lease out at least a limited aspect of the ski area’s operations. Boston Culinary, a company based in Cambridge, Massachusetts has been contracted to provide food services at Cannon Mt.

The state would not be losing a State Park, just as a landlord doesn’t lose a building when he/she leases out the space. The state should be viewing any relationship with a private operator as opportunity to work collaboratively and cooperatively with a knowledgeable and skilled partner in ski area operations. Mt. Sunapee is a perfect example of what can be achieved when such a partnership is realized.

Opponents of leasing are basing arguments on fear and self-interest. We are hearing arguments like leasing “violates the public trust”, “the park was dedicated as a memorial”, and the term “crown jewel”.

The decision to lease Cannon does nothing to violate the public trust, tarnish the state park as a memorial or dull the luster of Franconia Notch. Under the bill, the state retains ownership of the ski area, only leases out operations. According to the state legislature, the state park system exists “to encourage and support tourism and related economic activity within the state”. It says nothing about who manages operations of a ski area.

The entire state park was dedicated as a war memorial in 1928. The state didn’t construct the ski area until 1938 and saw no harm to the image of the state park as a war memorial. Why would the issue of who operates Cannon be disrespectful to the memory of our veterans. Franconia Notch State Park is New Hampshire’s “crown jewel” of which Cannon is only one individual jewel…and a tarnished one at that with millions of dollars of capital improvements that have been identified and unfunded for years.

Opponents argue for their own self interest. They argue that under a private operator Senior Citizens wouldn’t be able to ski free, lift tickets prices would increase, or the mountain would become crowded. Cannon Mt. was developed as an attraction to bring visitors to the area, not as a private ski area for local residents. The fact that it has become such a valuable community asset is terrific. Is it true that some want to enjoy the benefits of a full service ski area but don’t want to pay for the service or want the service provided at a subsidized rate. A successful and profitable ski areas should have visitors clamoring to ski its slopes and market forces should drive the price of tickets. Is it any wonder that Cannon is losing money if everyone is skiing free or at prices below what other ski areas are charging. The ski industry is a highly competitive industry where profit and loss can turn on a weather report. The management at Cannon is handicapped by the limitations of being state controlled resulting in early closure of the ski area, and the termination of snow-making when the budget is exhausted.

Opponents argue that “change is bad”. Opponents are afraid of the area “losing it’s charm” or massive development coming to the area. The issue of development has nothing to do with who operates Cannon. Because the ski area is surrounded on three sides by federally protected White Mountains, and Mittersill resort on the other, the issue of development isn’t a consideration. None of us want a North Conway-like community, but the regulation of development rests with the local planning boards not the operator of Cannon. Development is already occurring in Franconia and it isn’t currently being blamed on the state.

Ten years ago, opponents based arguments against the lease of Mt. Sunapee on the fear of the negative financial impact leasing the ski area would have for the community. Mt. Sunapee’s success and the financial benefits realized for the State and the region have eliminated those arguments in this debate.

Opponents, today are only able to offer emotional arguments against leasing. They provide no facts, figures, or concrete evidence that leasing would be a bad idea.

In closing, it appears that based upon the experience at Mt. Sunapee’s:

1.) The lease of Cannon to a private operator will result in significant capital improvements to existing infrastructure at the ski area.

2.) The lease of Cannon Mountain to a private operator will result in a positive cash flow to the Department of Resources and Economic Development instead of the significant operating loss that has been experienced in recent years.

3.) The lease of Cannon Mountain to a private operator will result in NEW revenue for the Town of Franconia in the form of local property taxes.

4.) The lease of Cannon Mountain to a private operator will result in NEW revenue for the State of New Hampshire in the form of Business Enterprise and Business Profit Taxes.

5.) The lease of Cannon Mountain to a private operator will result in increased revenues to the State of New Hampshire in the form of increased Rooms & Meals taxes and increased payroll taxes.

6.) The lease of Cannon Mountain to a private operator will likely result in more corporate good will in the form of contributions and donations to the local community.

7.) The lease of Cannon Mountain to a private operator will likely result in increased tourism and tourism spending in the Franconia area and in the North Country.

8.) The lease of Cannon Mountain will provide the Department of Resource and Economic Development with additional revenue in support of the non-ski area State Parks across New Hampshire.

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