Investors Claim $76M in EB-5 Debt Tied to Utah’s Powder Mountain

Netflix founder Reed Hastings may need to dig himself out of a $75.9 million crevasse at North America’s biggest ski resort.

The streaming giant’s former CEO is wrangling with a group of EB-5 investors who say he’s on the hook for unpaid debt tied to Utah’s Powder Mountain, according to a lawsuit filed in Manhattan Supreme Court in April.

The immigrant-backed fund has been fighting since 2021 to recoup its $42 million investment, plus interest, in Powder Summit, a floundering utopian ski venture launched more than a decade ago by tech entrepreneur Greg Mauro and Elliott Bisnow, the co-founder of media and events company Bisnow Media. The focus shifted abruptly to Hastings after he took the helm of the development in 2023, something the EB-5 investors say they should have been consulted about, according to proceedings in Utah and New York.

After retiring from Netflix in 2023, Hastings paid $100 million for a controlling stake in Summit Mountain Holding Group, the subsidiary that owns the mountain and its debt, according to court filings obtained by The Real Deal in the New York case, which is under seal.

Publicly, Hastings has set out to bring a bit of St. Moritz to Utah, announcing the launch of Powder Haven, a high-altitude private ski colony for the ultra-wealthy.

With Hastings in charge, Powder Mountain’s new slogan is “Escape the Masses.” The project’s developers have so far added a few chair lifts to the mountain and raised the price of admission dramatically from $750 in 2023 to $1,599 for an adult season pass while closing off sections of the property to the public to provide exclusive access to families purchasing homes in the future private ski village. (The nearby Park City resort, which has double the number of slopes as Powder Mountain, charges only $1,051 for a season pass.)

The new vision replaces Mauro and Bisnow’s defunct Powder Summit, which, for its part, was the latest in a line of failed efforts to develop the pristine expanse of mountain slopes spanning 8,464 acres about 50 miles north of Salt Lake City. The partners bought Powder Mountain in 2013 for $40 million.

The site is “a hidden gem literally between the towns of Eden and paradise,” Mauro said in a 2017 TED talk promoting the venture. The plan back then was to make Powder Mountain the new homebase for Summit Series, a conference series founded in 2008 billing itself as a sort of bohemian version of Davos.

The Powder Summit partners soon found a lender that believed in their vision to make a rugged mountain town prosper: KT Capital’s Tang Tang, a regional fund manager who saw Powder Mountain as a prime candidate for the cash-for-greencard program known as EB-5. Tang, who is now part of the legal effort to claw back the funds he helped raise, declined to comment on the case.

The visa program, which went through regulatory changes to increase oversight in 2022, has been a popular source of capital for real estate developers, with ski resorts like Vermont’s Jay Peak forming a specialized subgenre.

Powder Summit’s partners signed a loan agreement in 2016 to receive up to $120 million in EB-5 funding, with concessionary terms that encouraged matching capital from outside sources. The fund would be overseen by Mountain States Center for Foreign Investment, Utah’s first EB-5 regional center, with KT Capital serving as the fund manager and Cottonwood acting as the loan servicer.

Crucially, the loan provides a completion guarantee and recourse indemnity, which would soon come into play.

Powder Summit started heading downhill a few years after the EB-5 fund launched. The developers managed to add a road and several structures on the high-altitude site, but the promised 80 condos and townhouses plus 214 hotel keys never came to fruition. Instead, Powder Summit stopped making payments on its EB-5 loan in January 2019 after raising just $42 million worth of investment, almost all of it from families in China, according to court filings.

The debt came due in June 2021 and workout talks quickly fell apart, triggering a default notice later that year. Things became more acriminious from there, with Powder Summit filing suit against its EB-5 lenders and putting off its debt obligations longer as the litigation played out. The EB-5 investors successfully fought off Powder Summit’s accusations of unfair business dealings, then hit back with counterclaims.

The case was still winding its way through a Utah Supreme Court in 2023 when Hastings bought the flailing development.

A spokesperson for Summit Mountain Holding Group did not make anyone from the company available for an interview and declined to answer specific questions about the EB-5 investors’ claims.

“The pending litigation relates to claims that predate the current ownership’s acquisition of the company,” the spokesperson said in a statement. “Ownership has always been aware of these claims, however, no individual owner is personally liable for potential obligations of the company.”

Powder Haven’s development timeline will not be impacted by the litigation, regardless of its outcome, the spokesperson added. Lawyers for Hasting’s firm are asking a judge to dismiss the lawsuit, according to a motion filed in June.