[Added 9-9-2019 by Ord.
No. 19-01]
WHEREAS, Mountain Creek Resort, Inc. ("Mountain Creek") owns
and operates a four-season resort located in the Township of Vernon
("Township") that is commonly known as the Mountain Creek Resort ("Resort");
and
WHEREAS, Mountain Creek owns and/or leases multiple parcels
of real property to operate the Resort, all of which are listed on
the attached Appendix A and are incorporated herein ("property"); and
WHEREAS, Mountain Creek intends to further develop the Resort,
and its contemplated development requires additional wastewater capacity;
and
WHEREAS, Mountain Creek requested the Township to acquire the
additional wastewater capacity from the Sussex County Municipal Utilities
Authority ("SCUMA") and build the infrastructure necessary for the
additional wastewater capacity ("project"), which would facilitate
development of the property; and
WHEREAS, the project was funded by the Township and SCUMA issuing
bonds ("sewer bonds"); and
WHEREAS, the Township and Mountain Creek entered into an agreement
dated October 24, 2005 ("2005 Sewer Agreement"), pursuant to which
Mountain Creek agreed, subject to the terms of the 2005 Sewer Agreement,
to pay the debt service on the sewer bonds, plus the costs associated
with the development, construction, operation, and maintenance of
the project less the revenue obtained by the Township for sewer charges
on an annual basis; and
WHEREAS, the Township and Mountain Creek entered into a sewer
funding agreement dated July 18, 2012 ("Sewer Funding Agreement"),
which modified and superseded the 2005 Sewer Agreement; and
WHEREAS, the Sewer Funding Agreement, among other things, modified
Mountain Creek's obligation to pay the debt service for the sewer
bonds and thereafter required Mountain Creek to pay 63% of any yearly
budget deficit incurred by the Vernon Township Municipal Utilities
Authority ("VTMUA") in relation to the project; and
WHEREAS, subject to the terms of the Sewer Funding Agreement,
Mountain Creek's obligations under the Sewer Funding Agreement continue
annually until the sewer bonds are paid in full; and
WHEREAS, Mountain Creek filed a Chapter 11 petition in the United
States Bankruptcy Court for the District of New Jersey ("Bankruptcy
Court") on May 15, 2017, and the Chapter 11 case is pending under
Case No. 17-19899 (SLM) and thereafter Mountain Creek did not pay
certain obligations (the "past due obligations") provided for under
the Sewer Funding Agreement;
WHEREAS, Mountain Creek has not paid the past due obligations;
and
WHEREAS, the Vernon parties (as defined below) and Mountain
Creek are engaged in certain litigation (the "litigation") in the
Bankruptcy Court concerning the Sewer Funding Agreement and claims
asserted by the Vernon parties arising under and related to the Sewer
Funding Agreement;
WHEREAS, the Township and the VTMUA (together "Vernon parties")
and Mountain Creek have entered into a settlement agreement (the "Approved
Settlement Agreement") to resolve the litigation and all claims related
to the Sewer Funding Agreement, which settlement agreement has been
approved by the United States Bankruptcy Court for the District of
New Jersey; and
WHEREAS, the Approved Settlement Agreement has been approved
by the authorized representatives of the Vernon parties; and
WHEREAS, subject to the terms and conditions of the Approved
Settlement Agreement, Mountain Creek has agreed to pay the following
obligations owed to the Vernon parties pursuant to the Sewer Funding
Agreement: (i) Mountain Creek's 63% share of the yearly budget deficit
(the "VTMUA Budget Deficit Obligations"), if any, incurred by the
VTMUA; (ii) payments on Mountain Creek's accumulated past due debt
under Section 6.02 of the Sewer Funding Agreement for the period January
1, 2012, through December 31, 2016 ("past due sewer obligations");
(iii) payments on the debt service attributable to the Vernon bonds
as defined in Article 5.02 of the Sewer Funding Agreement ("Vernon
bond obligations"); and (iv) Mountain Creek's obligation ("pump house
obligations") to reimburse the Township for the costs associated with
the design, permitting and construction of the Sand Hill Road Sewage
Pump Station ("Pump Station"). The past due sewer obligations and
the Vernon bond obligations are hereinafter referred to as the "Fixed
Sewer Agreement obligations." Together, the Fixed Sewer Agreement
obligations, the VTMUA budget deficit obligations and the pump house
obligations are hereinafter collectively referred to as the "Sewer
Agreement obligations." Appendix B attached hereto lists the Fixed
Sewer obligations and the estimated VTMUA budget deficit obligations.
The actual amount of the VTMUA budget deficit obligations will be
calculated annually in accordance with Approved Settlement Agreement.
The pump house obligations are not yet determined but shall be determined
as set forth in the Approved Settlement Agreement. Once the pump house
obligations are determined, Appendix B shall be updated to include
those amounts.
WHEREAS, pursuant to the terms of the Approved Settlement Agreement,
a recreational service fee (referred to in the Approved Settlement
Agreement as the "Vernon municipal fee") will be collected from Mountain
Creek or any other operator offering recreational activities (as such
term is defined in the Approved Settlement Agreement) on the property
to pay the Sewer Agreement obligations.
[Added 9-9-2019 by Ord.
No. 19-01]
NOW, THEREFORE, BE IT ORDAINED by the by the Township Council
of the Township of Vernon as follows:
A. The aforesaid recitals are hereby adopted and incorporated herein
as if repeated in full; and
B. To satisfy the Sewer Agreement obligations, Mountain Creek, and/or
any operator licensed by or in contract with Mountain Creek (including
any successor to Mountain Creek) to operate/manage any recreational
activity, or any person or entity that offers recreational activities
("Resort Operator(s)") on the property shall cause to be charged and
collected from every customer purchasing a ticket for admission (whether
such ticket is an individual ticket or included as part of a group
sale or ticket/admission package, in which case the Recreational Service
Fee will be charged to the recreational activity portion of such ticket/admission
package) for any recreational activity a fee equal to 7% of the gross
ticket price related to such recreational activities (the "recreational
service fee(s)"). In the event there is a shortfall in collections
of the recreational service fees (the "shortfall") necessary to repay
the annual Sewer Agreement obligations due in any calendar year, Mountain
Creek and/or any resort operator shall, from the first day of the
calendar year immediately following the shortfall, cause to be charged
and collected from every customer purchasing a ticket for admission
for any recreational activity a fee equal to 8% of the gross ticket
price related to such recreational activities until such time as the
shortfall for the prior year(s) is fully paid. If the shortfall, if
any, is paid, Mountain Creek and/or any resort operator shall reduce
the fee to 7% of the gross ticket price. Recreational activities subject
to the Recreational Service Fee include skiing/snowboarding, snow
tubing, water park admission, admission to the bike park and the Oktober
Fest offered by Mountain Creek, any of its affiliated companies or
successors or assigns or any resort operator at the property. The
Recreational Service Fee shall not include any activities or sales
with respect to which a sales tax is applied as of the effective date
of this article. In the event that a sales or similar type of tax
is applied to any recreational activity after the effective date of
this article, the obligation to charge, collect, and remit the Recreational
Service Fee shall continue. Recreational activities shall not include,
and the Recreational Service Fee shall not apply to, sales for lodging,
food, beverages, parking, apparel and other retail items, equipment,
land, banquet-related services, and other similar good or services;
and
C. The Recreational Service Fee shall be collected until the Sewer Agreement
obligations are paid in full; and
D. Except to the extent set forth in Section 2(vi) of the Approved Settlement
Agreement, until such time as all of the Sewer Agreement obligations
are paid in full, the recreational service fees that are collected
shall constitute the property of the Vernon parties and shall be held
by Mountain Creek, and/or any resort operator that manages or operates
the Resort or offers recreational activities on the property, in a
separate interest-bearing account ("Recreational Service Fee account")
in express trust for the Vernon parties for the specific purpose of
paying the Sewer Agreement obligations in accordance with the terms
of the Approved Settlement Agreement. Nothing herein shall be deemed
to apply to Mountain Creek's regular quarterly sewer usage fees or
property taxes; and
E. Subject to the terms of the Approved Settlement Agreement, on or
before January 1, April 1, July 1, and October 1 of each year, commencing
October 1, 2019, Mountain Creek, and/or any resort operator that manages
or operates the Resort or offers recreational activities on the property,
shall disburse the recreational service fees held in Recreational
Service Fee Account as of December 1, March 1, June 1, and September
1 towards payment of the Sewer Agreement obligations owed for that
calendar year; and
F. Subject to the terms of Section 2(vi) of the Approved Settlement
Agreement, if the recreational service fees in the Recreational Service
Fee account exceed the Sewer Agreement obligations owed for a calendar
year, Mountain Creek, and/or any resort operator that manages or operates
the Resort or offers recreational activities on the property, shall
hold the excess recreational service fees in the Recreational Service
Fee account and paid and applied to the Sewer Agreement obligations
due in the following year(s) in accordance with the timeline in Section
2(v) of the Approved Settlement Agreement; and
G. If the amount held in the Recreational Service Fee account exceeds
the amount equal to twice the Sewer Agreement Obligation owed for
the preceding year, Mountain Creek, and/or any resort operator that
manages or operates the Resort or offers recreational activities on
the property, shall be entitled to use the amount in excess of twice
the Sewer Agreement obligation owed for the preceding year ("excess
Recreational Fee") in its sole discretion. The excess Recreational
Fee shall not constitute trust funds held for the benefit of the Vernon
parties; and
H. If the funds in the Recreational Service Fee Account are not sufficient to pay in full the annual Sewer Agreement obligations in any particular calendar year, the recreational service fees collected in any subsequent year shall be applied first to satisfy the shortfall and Mountain Creek, and/or any resort operator that manages or operates the Resort or offers recreational activities on the property, shall increase the amount of the Recreational Service Fee to 8% in accordance with Subsection
B above. When the shortfall for the prior year(s) is fully paid, Mountain Creek, and/or any resort operator that manages or operates the Resort or offers recreational activities on the property, shall reduce the fee to 7% of the gross ticket price or gross admission price.
I. Subject to the terms of Section 2(v) of the Approved Settlement Agreement,
the Vernon parties shall have the right to audit the Recreational
Service Fee account at any time by an auditor solely of the Vernon
parties choosing during reasonable business hours, on at least seven
business days' advance written notice and at the sole expense of the
Vernon parties; and
J. The obligation to charge, collect, and remit the Recreational Service
Fee consistent with this article shall be a continuing obligation
imposed by the Vernon parties on Mountain Creek and/or any resort
operator that manages or operates the Resort or offers recreational
activities on the property; and
K. The obligation to collect and disburse the recreational service fees
pursuant to this article and in accordance with the terms of the Approved
Settlement Agreement shall be a condition of operating or conducting
any recreational activities on the property until such time as the
Sewer Agreement obligations are paid in full; and
L. Upon payment in full of all Sewer Agreement obligations neither Mountain
Creek nor any resort operator shall have any obligation to charge,
collect, or remit to the Vernon parties the Recreational Service Fee.
To the extent any recreational service fees remain in the Recreational
Service Fee account at the time all Sewer Agreement obligations are
paid in full, Mountain Creek or any resort operator shall be entitled
to retain the funds in the Recreational Service Fee account for its
exclusive use and the Vernon parties shall not have any entitlement
to any portion of the excess funds; and
M. This article shall not prohibit the Township of Vernon from obtaining
or enforcing any lien pursuant to the Approved Settlement Agreement.
N. This article may only be amended by an affirmative vote of 3/4 of
the Township Council.
O. Each section of this article is an independent section, and the holding
of any section or part thereof to be unconstitutional, void or ineffective
for any cause shall not be deemed to affect the validity of constitutionality
of any other sections or parts thereof.
P. Any ordinances or parts thereof in conflict with the provisions of
this article are hereby repealed as to their inconsistencies only.
Q. This article shall take effect immediately upon final passage, approval,
and publication by law.