(Bloomberg) -- Deer Valley Resort, the winter playground for the Kardashians and others searching for slopeside luxury, is on its way to becoming one of the largest ski resorts in North America.
A five-minute drive from Park City, Utah, and under an hour away from the nearest international airport, a new development is expected to more than double the resort’s ski terrain with an additional 3,700 acres, 16 new lifts and a 10-passenger gondola.
A special district designed to fund public infrastructure is expected to borrow $300 million of high-yield municipal debt on Wednesday to support the resort. Proceeds of the bond sale will finance projects related to the development’s new addition called Deer Valley East Village.
The project, under a partnership between skyscraper builder Extell Development Co. and resort owner and operator Alterra Mountain Co., will be North America’s first luxury alpine village to be developed in more than 40 years.
It will feature eight hotels, more than 1,200 condominiums, as well as nearly 500 estate homes, townhouses and chalets, plus 250,000 square feet of retail and commercial space. Extell has teamed up with Four Seasons to build a property including ski-in, ski-out private residences, in a deal announced Tuesday.
Such developments have become more common in the state and local government debt market, which traditionally funds public school construction or highway upgrades. This year, muni investors helped finance a vacation-home golf enclave in Florida, a resort near Zion National Park and a hotel on Saint Thomas in the US Virgin Islands.
Secured by certain future property and sales-tax revenues generated by the project, the municipal bonds are unrated and will be sold only to qualified buyers — an indication of a higher-risk security. Piper Sandler Cos, the lead underwriter on the bond sale, said investors will likely be high-yield shops as well as those with an affinity for fresh powder.
“We’ll have some good traction given the size of the deal, the location of the deal and the mix of revenue sources,” said Mike Sullivan, managing director in the special district group at Piper. The rarity of a ski resort offering adds to the allure, he said.
The bonds, issued by the MIDA Mountain Village Public Infrastructure District, may cover infrastructure including ski lifts, snow-making equipment, parking lots and housing for workers, according to Extell.
“We don’t want to put pressure on the local housing market so we’re also going to be building workforce housing,” said Gary Barnett, Extell’s founder and chairman.
Still, the majority of residential units within the development will be second homes, according to bond documents. And those properties don’t come cheap. The average sale price of a home in Park City broke $2 million in 2020 and climbed north of $4 million in 2023, a real estate analysis included in the documents said. In the new development, the 16 “ultra-luxury chalets” will have an average value of $8.7 million.
With infrastructure development already underway, the bonds would provide Extell with additional capital to speed up construction, especially as Salt Lake City is slated to host the Winter Olympics in 2034, according to Kristin Kenney Williams, a MIDA spokesperson.
Utah Growth
Utah has been growing rapidly and more than 500,000 new residents are expected to move to the state over the next decade, according to recent projections. Offices for tech giants like Adobe Inc. and Microsoft Corp. have helped drive the boom, earning the Salt Lake area the moniker Silicon Slopes.
Nearby Colorado, home to a number of ski meccas, already has a large market for high-yield deals for public infrastructure, according to Piper’s Sullivan. “Utah, in a lot of respects, is just getting started in that arena,” he said.
There are risks of course. Climate change is one for any ski destination, as is the resort’s ability to lure in hotel guests. Finding people willing to pay up for the high-end real estate will also be key.
“It’s an interesting sector of the high-yield market that provides an opportunity for decent returns,” said Dan Solender, head of municipal securities at Lord Abbett & Co. “That risk needs to be analyzed closely because this part of the market depends upon real estate being sold, which is a more volatile area.”
Still, the project’s backers would like to move ahead at a rapid clip. MIDA hopes the core of the East Village will be near completion in the next 10 years, “if not sooner,” Williams said.
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