The head of a state-backed economic development agency said yesterday that it will take another three years to stabilize the Rocky Gap Lodge & Golf Resort, which has lost $18.9 million since 1999.
Hans F. Mayer, executive director of the Maryland Economic Development Corp., said the agency and Rocky Gap bondholders "have been trying to work out a transaction that provides stabilization for the project."
"As a result of exchanges yesterday and today, we are very close to doing that," Mayer told members of a House Appropriations subcommittee.
Rocky Gap lost $5.5 million in its fiscal year that ended June 30, 2002, compared with a $3.5 million loss the previous year, a report by the Department of Legislative Services says.
The report also reveals that Rocky Gap's liabilities outstripped its assets by $6.4 million at year's end, a sixfold increase from the prior year, while revenue fell 9.3 percent.
Despite the losses, the Rocky Gap bondholders are being paid, Mayer told members of the House Appropriations Subcommittee on Education and Economic Development. "They have great confidence in the project - they still do," he said.
He said the bondholders, three mutual fund companies, met with him a week ago.
Mayer didn't give specifics about the meeting, and he declined to explain how Rocky Gap, a $54 million state-backed project, will turn its operations around.
"I think we are well on the way to crafting something so that next year we won't have the same conversation," Mayer said.
Mayer attended the hearing to discuss MEDCO's projects and answer questions about Rocky Gap's losses and prospects.
He was asked during the hearing why MEDCO doesn't sell Rocky Gap.
"We can't sell it. We don't own it," he said.
Mayer said the bondholders own the rustic retreat, about eight miles east of Cumberland.
"These mutual funds want the bonds to remain tax-exempt," he said. "There is every reason in the world for them to want to work with us to bring it to stability."
Rocky Gap received funding in 1996 when MEDCO issued $31.1 million in revenue bonds and the state kicked in $16.4 million.
The resort has a 220-room hotel, restaurant, conference center and 18-hole Jack Nicklaus signature golf course nestled in the mountains of Western Maryland beside Interstate 68.
The project's main proponent was then-House Speaker Casper R. Taylor Jr., an Allegany County Democrat who saw it as an economic boon for his constituents.
Supporters believed the resort's golf course alone would attract people from around the world. But Rocky Gap has faced several obstacles, including a delay in the opening of the golf course and a succession of management companies.
"Rocky Gap started with its foot in the bucket when we didn't have a golf course until a year later," Mayer said.
In April, it hired its third manager, Barcelo Crestline Corp., which is based in McLean, Va.
The bondholders "have great confidence" in the management company, Mayer said.