MONTPELIER >> Vermont has set up a special loan program for businesses short on cash because they haven't been fully paid for work done on a hotel and conference center and other northern Vermont construction projects that are at the center of a fraud investigation.
Miami businessman Ariel Quiros, owner of Burke Mountain and Jay Peak ski resorts, and Bill Stenger, Jay Peak's president, were accused by Vermont and the Securities and Exchange Commission in April of misusing about $200 million raised from foreign investors for various developments through a special visa program. Both men have said they'll be cleared of any wrongdoing.
An estimated 30 to 40 contractors and subcontractors for the Burke and Jay Peak projects are still owed a total of about $5 million to $5.5 million, said Pat Moulton, Vermont secretary of Commerce and Community Development.
A majority of the contractors have filed liens.
The Vermont Economic Development Authority and Northern Community Investment Corporation could lend up to $500,000 to each contractor for a six-year term depending on their liens. The first year will be an interest only payment and then the businesses make payments on the loan at a variable rate that is now 4 percent. One loan application has already been approved.
"While borrowing money is not ideal it at least puts some cash in their hands until those assets are sold and they can be paid," Moulton said.
A court-appointed federal receiver is now overseeing operations at both resorts, which he expects will be sold. A Kansas-based management company is running them. A new hotel and conference center at Burke Mountain Resort is slated to open this fall although many contractors have not been fully paid for their work.
Blanc and Bailey Construction of Charlestown, New Hampshire, did all the wood framing of the building, completing it the work in June of 2015 but is still owed about $406,000 and has filed a lien, said owner Matt Blanc.
"It certainly has tightened our cash flow and we've just been very conservative since we finished that project," he said Tuesday.
The company is not seeking a loan from the state but could in the future depending on how far it goes into debt with legal fees related to the project, he said.
Moulton said one contractor told her if something didn't change the business would have to lay off some employees.
Another business, Abatiello Design Center in Rutland, put in all the tile flooring in the hotel, completing the work at the beginning of the year but is still owed $32,614, said president Rod Cioffi.
"Obviously that money should have been in here and it would make cash flow a lot easier," he said.
He said Tuesday he was in the process of filling out the loan application.