The Town of Smithers

The Mountain is located in the Town of Smithers, British Columbia. Smithers is situated in northwest British Columbia in the Bulkley Valley, midway between Prince Rupert and Prince George on Highway 16 and is a regional transportation, tourism and service center. It has recently experienced an economic resurgence and is now often referred to as the “Mining Centre of the North” with an influx of mining investment over the past several years. Of the nearly $416 million of mineral exploration investment in British Columbia in 2007, the northwest region received $170.2 million (or 41%), the highest proportion of any region.

Smithers is part of a regional and national transportation network.  In addition to Highway 16, the Town is located on CN Railway’s transcontinental route linking to the new container port under development in Prince Rupert.  Smithers is home to the regional airport which serves much of northwest British Columbia, with Air Canada and Hawk Air offering daily flights to Vancouver. The airport’s runway will be lengthened in 2008 and the latest navigation system is being installed. Jet service and flights from new markets are expected to follow.

The Bulkley Valley is known internationally for outstanding recreation activities, both winter and summer including fly fishing, mountain biking, hunting, hiking, snowmobiling, ski touring and various other summer and winter activities.  Smithers is the gateway for tourism in the region with nearly all outfitters, recreation operators and heli-ski operations using it as their base. As well, Smithers’ community services, amenities and expanding airport attract many of the northwest’s resource companies. 

Smither’s population grew in 2007 for the first time in 10 years and is now approximately 6,000 (with a similar number living in the surrounding area).  As well, the number of business incorporations in Smithers grew by 26.9% in 2007.  Local area home prices increased by nearly 50% between 2005 and 2007, and 2008 residential property assessments rose by an average of 26.6% from 2007.

Hudson Bay Mountain

Smithers lies at the foot of the Mountain.  The Mountain rises to 2,589 metres (8,494 ft) and has the potential to develop over 4,000 vertical feet of snow covered trails, placing it among the largest in North America.  The Mountain is operated by HBMA under the name “Ski & Ride Smithers”.  Skiing was first introduced to this area in the early 1960’s, with lift development occurring in the mid to late 1970s.  Since that time, little development has occurred, although the ski area has remained popular with residents of the Bulkley Valley. On average, the Mountain is open 120 days/year, with skier visiting averaging approximately 41,000 annually. The snow quality is unusually dry given the Mountain’s location, with an average annual snowfall of 500 to 600 centimetres and an average annual snowpack of 250 to 300 centimetres.

The Mountain currently has four lifts (handle tow, two T – bars and a triple chair) on its south and east sides, serving approximately 117 ha of skiable terrain containing 30 ski trails (12 Green - Easy, 14 Blue - More Difficult and four Black Diamond – Most Difficult).  These T-bars and triple chair were installed between 1973 and 1980.  A handle tow was added in 1995 to service skiers in a location adjacent to the main base area and the ski rentals and ski school.  The Mountain also has a day lodge and parking for approximately 400 vehicles adjacent to the Panorama Lodge and an additional 80 vehicles adjacent to the Skyline Chair.   

Adjacent to the existing day lodge facility is a small subdivision of recreational cabins, called the Cabin Colony, containing approximately 100 cabins.  This development was created by the Province of British Columbia over 25 years ago, and has limited services.   No other residential development is available on the Mountain. 

Development at the Mountain

HBMA has committed to a long term vision to transform the existing ski area into a multi season, regional resort.  The initial step in this process is the preparation, review, approval and implementation of a new Ski Area Master Plan (the “Master Plan”).

The intent of the Master Plan is to establish a plan for the provision of additional lift capacity and ski terrain on the Mountain, while at the same time providing an initial offering of residential properties within the future village area on the Mountain.  The Master Plan contemplates a three phase expansion program, which at build out would potentially see nine ski lifts serving over 72 ski trails on approximately 270 hectares of ski terrain, plus a mountain village that will include a mixture of residential types with commercial and retail facilities. 

Under the Master Plan, as a result of existing and future investments in ski lifts and other infrastructure on the Mountain, HBMA will become entitled to acquire land for the development of residential housing at the Mountain, as well as supporting commercial facilities for restaurants, shops and tourism related facilities.  The ongoing completion of such ski lifts and infrastructure will allow the release of additional lands on the Mountain from the Province of British Columbia for development by HBMA.

Currently, there is a limited amount of base area development at the ski area at the Mountain.  The release of development lands is based on “bed units”, pursuant to British Columbia’s All Season Resort Policy, which is applicable to the Mountain.  The Alpine Skiing Bed Unit Calculation Model is used to determine the number of bed units, and is primarily driven by the developed ski area which is serviced by ski lifts.  Upon approval of the Master Plan, HBMA will be entitled without further action or expenditures to 1,376 bed units (equivalent to approximately 229 single family housing lots). As mountain resorts build lift capacity, they become eligible to build a specified number of bed units.  Pursuant to the Master Plan, HBMA’s plan is to develop sufficient serviced ski area to qualify for an additional 621 bed units at the Mountain.  This is planned to result in the further release of development lands with a capacity for approximately 103 lots over a three year period.

Purchases of the Properties

The Hudson LP will enter into purchase agreements (the “Purchase Agreements”) with HBMA for the purchase of Properties slated for development with single family residential lots and other residential lands.  The purchase price for such Properties will be based upon the fair market value thereof, which may be supported by an appraisal conducted by a qualified appraiser. 

The Projects

The Hudson LP will undertake the development of the Properties, by way of supplying and constructing services such as roads, trails and utilities, applying for and obtaining approval for the subdivision of the Properties into single family building lots and selling such lots to arm’s length purchasers. The Hudson LP intends to acquire approximately 70 acres, either in one purchase transaction or in a series of transactions.  This is intended to be developed with 143 single family lots, in three phases of 88, 30 and 25 lots, respectively, over a period of 30 months.  Of the 143 lots, 118 are planned to be approximately 10,875 square feet and to be listed for sale at starting prices estimated at $125,000. The remaining 25 lots are planned to be approximately 21,250 square feet and to be listed for sale at starting prices estimated at $295,000. The average lot price is expected to be $188,426, for total sales proceeds of approximately $26,950,000.

The Hudson LP will have the rights to acquire sufficient land for the development and subdivision of up to 160 single family residential building lots.  For this reason, the maximum Offering has been set at $5,499,900 (6,111 Units), in order to provide the Hudson LP with sufficient equity for this additional development.  The Hudson GP will determine whether or not to proceed with the purchase of such additional lands based on ongoing market conditions, the cost of development and subdivision, the pace of lot sales and the purchase prices achieved in the initial phases of the Projects.

Development Financing

The Hudson LP intends to finance a portion of the cost of acquiring the Properties and developing the Projects with development financing provided by a chartered bank, trust company, credit union or other lender.  The terms and conditions of such financing will be negotiated by the Hudson GP on behalf of the Hudson LP and will be market-driven.  The development financing will be secured by Mortgages.  Such Mortgages will be non-recourse to the Trust.