Traverse City Record-Eagle

April 25, 2010

Hope, skepticism mingle over Sugar Loaf

BY SHERI McWHIRTER
Record-Eagle

CEDAR — This village tucked in a rolling, wooded stretch of southern Leelanau County doesn't feature much hustle and bustle these days.

The grocery store, gas station and tavern meet locals' needs, and lots of folks show up each year for a festival that celebrates Cedar's strong Polish influence.

But there's little tourism-based vibrancy, not since Sugar Loaf Resort wobbled and finally collapsed 10 years ago, victim of warmer winters and the early chill of a state headed into a decade-long recession.

Cedar's tourism well dried with Sugar Loaf's demise, and for years the community longed for someone, anyone, who could breathe life into the shuttered ski hill and golf resort.

"Ever since it closed in 2000 our winter months — from November through the end of March — our receipts have been down 50 percent. The summer is still strong, though it would be stronger if Sugar Loaf were open," said Pete Bardenhagen, who's owned nearby Sugarfoot Saloon for 23 years with his wife, Karen.

"We lost our location, location, location when it closed."

Sugarfoot formerly served as the closest off-site watering hole for resort guests and employees. But those customers are long gone.

That's why the prospect of Las Vegas entrepreneur Eneliko "Sean" Smith's purported $10 million deal to reopen the hotel and ski resort this year set off a flurry of excitement around Leelanau County.

Many hope he succeeds and wish him well. But their hopes are tinged with skepticism.

Weighted by community's hopes

Smith stood at Sugar Loaf's locked main entrance last week and chattered about the building's beautiful stonework and the need for updated wall sconces.

He's 39 years old, new to the area, a brash wheeler-dealer in the hospitality business who carries a bit of baggage, including a pending criminal charge for failing to pay taxes on an out-west property.

Words spill from his mouth in rapid succession. He's having trouble sleeping of late, he said. The weight of a community's hopes rests on his shoulders.

But he said he's up to the challenge.

Smith came upon Sugar Loaf in February while on vacation in northern Michigan. He's operated several hotels, has owned some, and has had a few deals fall flat. His past is nothing more than the evolution of a businessman, Smith said, and he's learned lessons from his mistakes. He's not interested in making another one.

Now he's tweaking his business plan and pitching the project to investors after weeks of study and trying to line up the deal. He wants a Sugar Loaf hotel open by summer, followed by a ski resort overhaul in time for the next winter season.

"I'd rather open ugly than close pretty. It's not going to be the Bellagio," he said.

Smith acknowledges he's never run a ski resort or a golf course, but he reached out to experts for advice. It's a gamble the Vegas-based businessman is willing to make.

Sugar Loaf's $10 million price tag includes the resort property and ski hill, supporting water treatment plant and adjacent golf course, with a land contract balloon payment due in five years. Beyond that, it's going to take much more cash to do something with the site, Smith said.

The ski hill could need $5 million in renovations, including a new high-speed chair lift. Then there's a $2 million makeover on the lodge and grounds. Combine that with $250,000 for treatment plant upgrades and $150,000 to spruce up the golf course.

The total: between $18 and $20 million.

"That's all first-year expenses," Smith said. "Buying is one thing. Operating is another."

The property sale hasn't yet closed, but Smith expects to have a better handle on closing in about two weeks, when he'll also know whether he'll be able to open the hotel in July.

Smith traveled to Las Vegas and Los Angeles this weekend for interviews with potential investors. He needs a partner for the ski resort and is pre-selling lift tickets online to help finance a new chair lift that must soon be purchased if he wants it installed in time for the upcoming ski season.

"I have 25 investors who want to look at this, but I haven't shown them yet because I've had some unanswered questions. I don't want to false-start this," Smith said.

Smith has business ties to Remo Polselli, the resort's former owner and a convicted felon who spent a year in prison after pleading guilty to tax evasion in 2003. Polselli said he's not in on Smith's deal, but his wife, Hanna Karcho Polselli, retains a financial stake in Sugar Loaf.

Locals don't fondly recall Polselli's years as Sugar Loaf's owner and Smith required some local media prodding to acknowledge their previous business contacts, which included discussions over a Las Vegas hotel deal.

"I was a little bit distressed he hid some things, the connection to Polselli. If he's connected, fine, but say so," said Bill Ross, a nearby resident.

Smith faces grand theft and embezzlement charges in California after allegedly failing to pay thousands in taxes on a hotel he owned there. His attorney said a plea deal is in the works that would reduce the charge to a misdemeanor.

None of that will matter if Smith resurrects the resort and recovers it's past success, said Greg Bunting, who owns Bunting's Cedar Market.

"We're all behind him, everybody in this town, this county, this community. If he gets her up and running, that will do it," he said.

Waiting for 'reality'

Patt Bronson lives in a subdivision across from Sugar Loaf, where she worked for 16 years in the merchandising department. She once presided over the resort's homeowners' association.

Bronson wants to see the weathered resort re-opened, but isn't holding her breath.

"I won't believe it until it is up and running for six months. Then I'll know it's a reality," Bronson said.

She's heard big plans for Sugar Loaf before and remains skeptical about Smith's proposed venture.

"Who wouldn't be? We've been bitten too many times," she said.

But Bronson said she wants to give Smith a "fair chance," because the area could use a boost in jobs and tourism.

Ross and his wife Becky live just north of Sugar Loaf, between the resort property and Sleeping Bear Dunes National Lakeshore by Little Traverse Lake.

"We need the jobs. I'm not sure if he's the guy, but we should give him the benefit of the doubt," Bill Ross said. "The guy has to have some staying power for a couple years. It's going to take three to five years to build it back up. He's got to have deep pockets. Let's hope this is the guy. If it isn't, I won't be surprised."

Bardenhagen said he believes Smith has good ideas, so he's optimistic.

"It's tough after 10 years, though. I'm going to give him a shot. I'm not going to make a prediction," he said. "I've got to believe it would work. It worked before."

More substantial?

Smith has an ambitious goal to re-open Sugar Loaf's hotel this summer and the ski resort in time for Christmas, said Bunting, whose market is nestled in Cedar's modest downtown.

"He seems pretty optimistic. With him being optimistic, it makes us optimistic," Bunting said. "We've been let down before. This time seems more substantial."

A revitalized Sugar Loaf would mean "everything" to Cedar, including jobs and increased tourism traffic, he said.

"He seems to have been a mover and a shaker. Hopefully he can move and shake things here," Bunting said.

Across the street, Ellen Stachnik sat at the bar in her family's longtime business, Cedar Tavern.

She believes a revitalized Sugar Loaf would be good for the town's business and its sense of pride.

"I think it would make people happy just to see it open again, rather than sitting there empty," Stachnik said. "Now it's kind of, 'If it opens, it opens, but if it doesn't, well, it's been 10 years.'"

Tavern bartender and waitress Jen Plamondon said some customers chuckle about this latest attempt to rekindle Sugar Loaf.

"They've been told so many times it's going to open. I guess we'll see what happens. I don't think anyone would be displeased. It will bring in money and taxes," she said.

Rich Zywicki worked at Sugar Loaf as a teen and said it would be great for the resort to open and provide much-needed jobs.

"Look at what it would do for tourism in this town," said Zywicki, who owns Cedar Hardware. "Anything is better than nothing."

A healthy dose of skepticism makes sense considering the resort's history, Zywicki said. But Smith might be able to pull it off.

"I've never met the guy. He's got high hopes. I do too, but this has happened before," he said.

Local chef Aaron Ackley sees no downside to Smith's Sugar Loaf plans.

"I believe it would do nothing but help the situation here. We stand to gain," said Ackley, who manages the Cedar Rustic Inn.

Everyone in the community wishes Smith well, he said.

"It's undeniable that a $10 million mortgage is suffocating and the only way to service that mortgage is to fully utilize the development. The flip side is with the economics of it, you also stand to gain," Ackley said.

"One thing is for sure: Nothing will happen if he doesn't do it."