Turnaround team starts work Tuesday in Searchmont

After meeting 42 times since March of this year, Searchmont Ski Association has finally succeeded tonight in its bid to gain control of the popular ski hill.

The deal went down shortly after 5 p.m. at the Bay Street offices of Wishart Law Firm, with SooToday.com on hand to record the moment as Duane Buchanan, chair of Searchmont Ski Association, turned over a $500,000 non-refundable deposit cheque to lawyer Gord Acton, representing Searchmont owner Jack McDermott.

Less than two hours earlier, City Council agreed at a special meeting to approve new conditions for its contribution of $350,000 to the association.

The City cut a cheque immediately and Buchanan scurried to deposit it in the bank and get a certified down payment cheque for $500,000 to rush over to Acton.

George and Frank Shunock offer line of credit

Buchanan told SooToday.com that his turnaround team will be at Searchmont tomorrow morning to start the intensive work necessary to prepare the resort for a Christmas opening.

A work crew from Barrie, Ontario ski lift manufacturer Poma Leitner is expected to arrive later this week to get the lifts certified for the upcoming season.

The triple lift on the main hill is a major concern and will have to be completely taken apart and re-assembled.

Under its agreement with McDermott, the ski association has one year to pay the full amount of $2 million to purchase the ski hill.

That, coincidentally, is what McDermott paid to buy the resort in May 2002.

He's since invested more than $1 million in the property.

Fratesi throws cold water on the deal, quits board

Today's special meeting of City Council was called by Mayor John Rowswell after Council reached the decision at a special meeting called after George and Frank Shunock offered to give the association a $350,000 letter of credit for its purchase of Searchmont Ski Resort.

In an interesting related development, Joe Fratesi, the City's Chief Adminstrative Officer, today asked that he be replaced on the ski association's board.

The following is the full text of an e-mail sent by Fratesi today to Mayor John Rowswell and members of City Council:

********************** Re: Searchmont

The Searchmont Ski Association met this morning at 8 a.m. after receiving a reply from Aime Dimatteo of the Northern Ontario Heritage Fund Corp. (NOHFC) regarding their $350,000 contribution.

As advised earlier, the association asked NOHFC to reconsider the condition that was attached to the $350,000 (ie: that it was not to be paid over to the association until 80 percent of the total required to purchase and upgrade the resort had been raised in the amount of approximately $3.2 million.)

The response that was received from NOHFC confirmed the condition but provided another option which would involve the money being paid over immediately on condition that the association sign a loan agreement, backed up by a letter of credit that would see the money repaid to NOHFC in the event that it was not able to close the purchase.

The board also was advised that Frank Shunock, a local entrepreneur, was prepared to provide the letter of credit for the $350,000 on condition that the board agreed to assign its rights in the agreement to Shunock in the event it is unable to raise the funds.

The board had a significant discussion.

Many board members including myself felt that there was little possibility, at this stage in the season, to successfully repair the lifts, open for Christmas, have a profitable season and raise more than $2 million over the next 12 months.

We felt that completing this transaction on these terms was next to impossible and that we were destined to fail.

Obviously some board members who are more passionate about skiing felt more optimistic.

NOHFC inserted its condition as a protection for the investment of public funds.

Dimatteo and board members are not convinced that this can be successfully pulled off, given the time constraints and the money that needs to be raised in a very short period of time.

The board voted with a result of 6 to 5 in favour of walking away for very good reasons after trying our best.

After all this group has met on 42 occasions since March trying to put a reasonable proposition together.

Unfortunately we are not dealing with a vendor who understands the reality of the situation.

After the vote was taken, I left the meeting, only to learn one hour and a half later that Frank Shunock had addressed the group and that the mayor had been contacted and advised the group that the City's commitment of $350,000 would be forthcoming, notwithstanding that NOHFC had added conditions to its money.

Given that I have been the City's representative on the association for the last several years and that I, along with Bruce Strapp had encouraged City Council to support a contribution of $350,000, only on condition that NOHFC provide its money with no strings attached, I strongly suggest that Council needs to meet and by resolution confirm its contribution.

Things have changed significantly since Council approved the $350,000.

NOHFC has attached what I believe conditions to its involvement because of its concern and a private sector interest is not involved, notwithstanding that all of the funds upfront are public funds.

Before the City' $350,000 can be provided to proceed a City Council resolution will be required confirming its contribution in the context of the new arrangements.

By copy of this e-mail to the mayor, I am suggesting that he call a special meeting of Council authorizing $350,000 with these new terms.

Neither I nor the City's treasurer feel comfortable providing a cheque in this amount without Council having an opportunity to consider these new circumstances.

If Council decides that it wishes to continue and allow its money to be used, then I would ask that Council consider replacing me on the board of the association as I do not have the confidence that what lies ahead is at all achievable.

Yours truly,

Joe Fratesi

********************