By 7:20 a.m. Tuesday, parking at the Best Western was already scarce, and the line for the breakfast buffet was long and chatty. The breakfast count was 220, though at times it felt like more. That’s quite a nice crowd for a morning in Kingston, quite a crowd actually, for a Chamber of Commerce breakfast just about anywhere. The changing and slightly younger face of the county’s business community was in evidence.
The numbers or the early hour weren’t as important as the subject matter. The audience was waiting to hear from Ken Pasternak, the new face that would be speaking for Crossroads Ventures, LLC’s long-controversial Belleayre Resort project.
The old Crossroads Ventures face, of course, belonged to Dean Gitter, formerly of Big Indian but now relocated to the Southwest. Presciently pre-Trumpian in style, Gitter was Crossroads’ founding principal and visionary, the famously combative developer who repeatedly over the years used these same Chamber breakfasts to attack his project’s critics and the state’s regulatory process. The long-stalled project, first formally proposed in 1999, has the distinction of being the lengthiest ongoing review in the 42-year history of New York State’s SEQRA process.
Former county legislature chairman and Chamber president Ward Todd opened the breakfast with some light housekeeping business, introducing new members including a well-spoken guy in a cream-colored suit, a dead ringer for Sir Richard Branson, who stood to say a few words about his new, local web business. “I moved here from L.A. about a year ago,” he said. “And I’m not leaving.”
The crowd chuckled delightedly. Egg-and-baconed and all coffeed up, the room settled in as Todd, upbeat as always, introduced Ken Pasternak.
Ken Pasternak’s involvement
Tall and quiet, in his mid-sixties, Pasternak’s a native or near-native of our region who has done quite well in the world of finance. Founder and chairman of the global financial services firm Knight Capital, he’s more recently been working with the KBR group, a private-equity real-estate company. Long an investor in Crossroads, he used to speak occasionally about running for governor of New Jersey. He does seem a more modest and normal personality than one’s average big-state governor.
Pasternak’s family, he explained, moved to the Catskills in 1959. His father served eight terms as mayor of the Delaware County village of Fleischmanns. Pasternak talked about his values grounded in his small-town roots, the difficulties of seeing his childhood hometown deteriorate, and the challenges faced by families trying to stay in the Catskills and make a living.
In the Nineties, Pasternak saw the need to create a destination resort, and started buying land outside Fleischmanns, near the state-owned Belleayre Mountain Ski Center. He said he soon “ran into a secret competitor,” investor Emily Fisher and her business partner, Dean Gitter. Rather than compete, the three “decided to work together.”
In November 1999, their project was first proposed publicly. It turned out that over the previous 18 months they’d acquired 1960 acres surrounding the ski center, and were proposing a 720-room hotel and time-share project, originally featuring three golf courses. It was at the time, and still is, the largest commercial development ever proposed for Ulster County, for the five-county west-of Hudson NYC watershed, and for the state’s Catskill Park.
How the project got stalled
Initially projected to cost $360 million, the project has been through a number of plans and iterations. Over time, the number of golf courses has dropped from three to one, and the developed acreage from 573 to 218 acres. By other measures however, including square footage of new construction, or by the number of hotel rooms and time-share bedrooms, what’s proposed now is about 15% larger than what was first proposed in 1999. And while that is smaller than the 2004-2007 plan, whether it constitutes a “downsized” project clearly begs the question “compared to what?” It is, essentially, a similarly-scaled project to what’s always been proposed from a construction standpoint, except it’s now slated to be built on a smaller, a more dense development footprint, about 90% of which is in Shandaken, and 10% in the Delaware County town of Middletown.
“The good news,” said Pasternak about the evolution of the plan, “was that we had an activist governor, Eliot Spitzer.” Spitzer brought the project’s stakeholders together, he said. “We met in Albany for about a year, and we came up with a plan…The concession we [Crossroads] made was to give up the east face of the mountain…so that the ‘modified resort’ would be two hotels and the time shares, about one million square feet of vertical improvement.”
A problem with Spitzer’s plan, known as the “Agreement in Principle” (AIP) was that its creation under the governor’s executive authority, required the suspension of key elements of the project’s lawfully required environmental review. Although most of its permitting process has been completed, a number of DEC’s administrative actions in the matter are still under review, currently by a five-judge appeals court in Albany. Regarding the project’s current status, Pasternak said that “CHA [the Catskill Heritage Alliance] has challenged us, and they’ve lost on appeal. We’re highly confident we will prevail before the end of the year.” He described the project’s legal opposition as “a small group of people, seeking to effectively hijack the chance for an economic driver for the central Catskills.”
On the edge of being too small?
CHA’s president, Kathy Nolan, was present on Tuesday, and rose to question Pasternak. “It’s clear,” she said, “that you’re intending to do something very good here, and you want to create a legacy. I appreciate that. What isn’t clear is why you won’t allow for exploration of a smaller alternative, and why that alternative isn’t something you would support. Because that…that would have let this move forward twelve years ago.”
“With all respect,” Pasternak answered, “For CHA, smaller is always better. We need this project to have an economic yield to do two things…to attract capital and to attract the lending to get this built. I think we’re on the edge of being too small.”
Nolan, who is running for a county legislature seat this year, suggested that a smaller project might be less problematical to businesses in Shandaken’s hamlets.
“Rents may go up, that’s true,” responded Pasternack. “Traffic will go up, that’s true. You might not be able to park on the streets so easily, that’s true. That’s economic activity. I want there to be a parking problem in Phoenicia. I do, I do consider everything you say, carefully. And I rejected it.”
How might climate change affect the project?
“I’m not a denier of climate change,” answered Pasternak. “We’re a four-season resort, and I’m a data-driven guy. It’s a challenge, though. Most people who are investing are looking at it that way.”
For the question “What can we do to help you?,” Pasternak was clear, almost grateful. “I can’t say it too many times. Fund the UMP [the Belleayre Mountain Ski Center’s Unit Management Plan]. If they [the state] put $75 million into Belleayre, it’ll fund everything.” Pasternak said earlier that governor Andrew Cuomo had “personally committed to me, to this project.” He believed the governor would commit funds consistent with the UMP for the next three or four years.
Only time will tell whether budgetary commitments or executive actions or the courts will ultimately prove the charm for the project’s developers. If approved, Crossroads’ intention, according to Gitter, had always been to sell the permit package to “a major international resort operator” such as Marriot or Hilton.
In addition to the legal issues with DEC and with SEQRA compliance, there is also a separately contested legal issue challenging the project’s compliance with Shandaken’s zoning laws. Filings by all parties in that matter are expected to continue through the summer.
Brian Powers was the publisher of the now defunct Phoenicia Times and Olive Press.