Issue #46, February 23, 2007

BIG TROUBLE FOR 50-STORY SKI MOUNTAIN HERE

By Dan Rattiner

It looks as if the 50-story tall artificial ski mountain proposed for Riverhead might not get built after all.

It’s been a pretty fantastic idea. Year-round indoor artificial ski slopes have been pretty big business in Kuwait, Japan, Australia and elsewhere. We ought to have one here in the United States — at the former site of Grumman Aerospace in Calverton.

Talking about this for the past few months has been a Scottish entrepreneur named Tom Stewart, who arrived out here two months ago to begin the process of bringing exactly that to the East End. He had a meeting set up for the Riverhead Town Board to make his proposal later this month. But first he had to go to Turkey to take title for a similar project there. There was going to be a big ribbon cutting and celebration. The President of Turkey was going to hand over the deed to 240 acres of vacant land in the province of Afyon. And then, after that was done, which would be on February 14, he was going to fly back to Riverhead to meet with the town board.

Stewart’s plan for both projects was pretty much the same. There would be villas, a 4,000-room hotel, a sport center, a ski training center and a shopping center. An estimated 30,000 visitors would come to the ski mountain in Turkey that first year. Triple that number would come to Riverhead in that first year. The total cost in Turkey, which also would include a 74-acre artificial lake connected with canals traversed by gondolas, would exceed $600 million. Here in Riverhead, the project could probably be built for less than half that.

So Stewart went to Turkey and on February 14, the event was postponed. He would need to transfer $15 million into a bank in Turkey before they could proceed. That didn’t happen. They extended the time when they could offer the property to him for three months.

“It’s a wait-and-see situation,” Stewart told reporters on Saturday as he embarked back toward Riverhead.

Here’s some additional information that you might want to know. It’s come out in bits and pieces.

Newsday has found out that the company Stewart heads has only about $500,000 in assets. He also is in bankruptcy on some earlier venture, and will remain in bankruptcy until August, which is okay as long as others on his board make the decisions. He’s very close to announcing some European backers for his project, but not just yet.

The day before the expected closing in Turkey, an article in Hurriyet, an Istanbul newspaper, headlined WHAT IF THE $700 MILLION IS A FAKE? It is believed that it was that, and one other thing, which made the Turkish officials hesitate to hold the deed transfer.

The other thing was that it was widely reported that Stewart plans to use the Turkish property, which he would be paying $14 million for but over an extended time payment, as collateral for the Riverhead project. And Turkish officials say that would not be possible.

Turkey had gone ahead with the approvals for this sale because of an unusual Turkish law. In Turkey, if you buy property with plans to develop it and then don’t develop it, the property reverts to the State. And then there are financial penalties to be paid, and there might even be jail time. That can happen in just twelve months. Apparently, after learning of the bankruptcy and his lack of funds, the Turks came to the conclusion that, in spite of the law, they would want to see he had the $15 million somewhere in a bank in their country. Otherwise they felt that he would have almost no prospects in creating a $700 million development. And of course, with the encumbrance of the law, the land could not be used as collateral for another project until it was fully paid for and the development fully in place.

But you know what? You never know. An attorney for Stewart in England said that Stewart is still working every day to get the “seed capital” for the project. When the $15 million is raised, everything flows from that. Stewart is a big man with grand plans. He is not thinking small. Riverhead has postponed their meeting with him, awaiting developments.