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August 30, 2001

Sugar Loaf is staging a comeback

- Remo Polselli reopens beleaguered ski resort, expects it to be in tip-top condition for ski season
By BILL ECHLIN
Record-Eagle staff writer

     
      CEDAR - Sugar Loaf Resort near Cedar reopened today, a year-and-a-half after it closed, as Remo Polselli, head of the property's ownership group, takes another shot at getting the ski, golf and conference center back into the black.
      Laura Paliganoff, a long-time Polselli associate and Sugar Loaf's new managing director, has been working with a small crew for the last month to get the sprawling facility into shape with the aim of being ready for ski season in November. The resort closed in March 2000 after a string of bad winter seasons sharply cut into business. Earlier managers said the resort also had problems attracting business groups and conference business after the state Liquor Control Commission denied Polselli's application for a liquor license two years ago.
      In June, Huntington National Bank sued to foreclose a mortgage it holds on the property, saying it is owed $3,039,412 on its original $4 million note. Under foreclosure laws, the bank would have the right to put the property up for sale by auction if the debt is not paid within six months. The owners, Polselli and a number of investment partners and groups, were also behind on state property and Employment Security Agency taxes when the suit was filed, the bank said. Polselli and his investor group had purchased the resort in late 1997 with financing from Empire National Bank. ENB was later acquired by Huntington.
      Paliganoff said she believes all the major problems with the property will be resolved soon.
      "Remo is funding the reopening and we are working on getting the lifts repaired and getting them re-certified by the state," she said. "We are also working on refinancing and we know we need to do that before December. We are working with a couple of lenders and we think we'll do that well before then. We are in communication with Huntington and they are aware of what we are doing."
      Paliganoff said the liquor license problem is not her first priority, but added that there are several options the owners are looking at that could resolve the matter.
      The state Liquor Control Commission said two years ago Polselli did not appear to have sufficient equity capital to qualify for a license and that the capital he listed in the application appeared to be the same he used in applications for licenses at other properties, which is not allowed.
      "We are now working with attorneys about that and there are a couple of avenues we might pursue," she said. "But our main priority, while we work on refinancing, has been to get the lodge up and running and next, to get the ski lifts in good shape and approved."
      Another knotty problem for Paliganoff and her team is getting vendors and service providers to agree to do business with the resort again. Many local businesses were burned when one of Polselli's many companies, Mountain Management Co., filed for Chapter 7 liquidation on Aug. 25, 1999, in federal bankruptcy court in Detroit, listing $1.2 million in unpaid bills. Mountain Management had virtually no assets and many creditors ranging from contractors to food services were left hanging. Because the management company itself had no ownership interests in the property, it was not considered an asset for purposes of liquidation. The resort is owned in part by another Polselli entity, Pacific XIX, a Michigan limited partnership with Polselli as general partner.
      "Vendors haven't been shy about the bankruptcy and we weren't going to go and ask anybody for credit," Paliganoff said. "We're rebuilding relationships and want to get back on our feet and we've laid out a significant amount of capital to do that. We know that a lot of money was lost on both sides."
      Ski Resort Management Co., another company owned by Polselli, is now running the place, according to one of the resort's staff members.
      Meanwhile Paliganoff, who has been with Polselli for 12 years, working as a turnaround specialist for troubled properties, is looking for help to staff the resort for the upcoming ski season. The operation needs help in all departments, she said.
      "We're putting together a really good team," she said. "Right now, we're just putting together a sales team, which we have to do to get ready for the ski season. And in the next couple of months we'll be putting together the team we'll need for operations during the ski season."
      The resort has opened a Web site, www.sugarloafresort.com, with discounted ski pass prices for those who buy early. Sugar Loaf has 150-room hotel-ski lodge plus another 130 or so condominiums, some in rental management programs and available to the resort's guests.
      Eighteen miles northwest of Traverse City, it has the largest ski hill in Leelanau County with spectacular views of Lake Leelanau and Lake Michigan. There are 12 meeting rooms with a maximum capacity of 500 for meetings or banquets. It also has indoor and outdoor tennis courts and an indoor-outdoor pool. Guests will have access to two adjacent golf courses owned by a previous owner of Sugar Loaf.