CHARLESTON, W.Va. -- The news that Canaan Valley Resort is getting a $21 million overhaul didn't exactly sit well with the neighbor seven miles down the road.

The owners of Timberline Four Seasons Resort say the state shouldn't subsidize renovations at Canaan Valley, a state park, unless the state also provides tax incentives to help Timberline upgrade its resort.

"Why can't we have something to create a fair and level playing field?" said Fred Herz, vice president and co-owner of Timberline. "This is a situation of direct state competition and state subsidy. Any kind of unfair competition is going to directly impact our bottom line."

Earlier this month, the state Economic Development Authority authorized a $160 million bond issue that will pay for improvements at state parks, universities and the state Capitol complex. Lottery revenues will repay the bonds.

Canaan received $20.8 million to build 100 new guest rooms. The existing "modular" rooms were originally constructed in the 1970s.

Herz doesn't begrudge Canaan wanting to improve its facilities, but the state also should pony up to help Timberline finance renovations and expansion, he said.

Timberline officials have been talking with state officials about financial incentives for five years. In February, the resort's owners met with state Secretary of Commerce Kelley Goes and other Manchin administration officials.

Timberline has asked the state to authorize tax increment financing for Timberline's proposed renovations. Such a public financing plan uses future expected property tax gains to pay for current improvements.

In West Virginia, the state allowed Cabela's to use $78 million in tax increment financing to build an outdoors store and warehouse in Ohio County in 2003.

"TIF is simply creating a level playing field in a unique situation that is not a conflict in any other state park or state entity in terms of there being state-funded competition against private enterprise," Herz said. "If they're going to be doing all this at Canaan, there's no reason we can't also receive assistance. We've proposed a way it can be done quite efficiently."

Herz said state officials gave Timberline's tax increment financing proposal a cool reception. Instead, administration leaders suggested the resort pursue other economic development incentives - programs that Timberline doesn't believe measure up to tax increment financing.

"They were understanding of our dilema, but the fact is, they were absolutely re-directing the conversation," Herz said.

Commerce Secretary Kelley Goes said last week that the state approves tax increment financing for water, sewer, road and other "off-site" infrastructure improvement projects.

"We typically don't do retail and residential development," Goes said. "Our philosphy with TIF is you exhaust all other funding allocations, and TIF fills the gap," Goes said.

Goes said state officials have suggested that Timberline's owners pursue tax credits under the state Tourism Development Act.

The program allows resorts and other tourism-related businesses to recover up to 25 percent of project development costs over 10 years through consumer sales and service tax credits. In recent years, Oglebay Resort in Wheeling, The Resort at Glade Springs and WinterPlace ski area in Raleigh County, and American Mountain Theater in Elkins have funded renovation and expansion projects through the program.

Goes said she remains open to additional discussions with Timberline's owners. She said Canaan Valley Resort's improvements would enhance Tucker County tourism and possibly spur additional development in the area.

"We're not trying to put anyone out of business," Goes said. "We're trying to bring as much investment to that area as possible. We would hope to work with Timberline to bring additional services and activities to the area."

Timberline is Tucker County's largest private employer with 380 workers during the ski season.

The resort also more acreage -- 350 acres -- available for real estate development than any other ski resort in West Virginia, Herz said. Timberline also could increase slope capacity by 70 percent, he said.

Each year, Timberline pumps all of its profits - mostly money made from real estate sales - into capital improvements at the resort, Herz said.

Timberline not only competes with Canaan Valley Resort, but also against out-of-state ski areas, such as Wisp Resort in Maryland and White Tail and Liberty Mountain resorts in Pennsylvania.

"It would be a significant boon to make Timberline a bigger and better destination to draw people to the state," Herz said. "Timberline has the biggest potential for this market but is the most undersubsidized. It would essential be the magnet that draws a significant number of skiers from the Washington, D.C. area."

Timberline, which opened 23 years ago in Davis, has a 22-room lodge and offers 150 area homes for rent.

"It's probably one of the last family-owned businesses in the ski industry on the East Coast," Herz said.

Timberline had 17,000 skiers its first year in business, compared to 90,000 at Canaan that same year, Herz said. Last year, Timberline had 90,000 skiers, while Canaan had 35,000, he said.

Timberline's owners have spent more than $20 million over the years to upgrade the resort. Not a dime came from the state or federal government, Herz said. 

He said the state should be spending money on improving infrastructure - things such as water and sewer projects - not "using its deep pockets" to subsidize development that hurts private businesses, such as Timberline.

"The raw potential is really there at Timberline," Herz said. "Unfortunately, the economy and the real estate market is working against us. It seems the state should be the last thing we have to worry about."

Reach Eric Eyre at erice...@wvgazette.com or 304-348-4869.