City not planning legal action against writer of R.E.T.T. laws
City officials, scrambling to figure out how much trouble a recently filed lawsuit could mean for Aspen, are apparently not contemplating legal action against a former city attorney whose work is the target of the suit.
According to officials at City Hall, there are no plans to sue Ron Stock, an attorney who worked for the city in the late 1970s and early 1980s.
It was Stock who, according to current city attorney John Worcester, wrote the wording of a city tax law that is now being challenged in court.
But, Worcester said, there is no way of knowing whether Stock came up with the wording himself or was acting on direct orders from the City Council.
“He was just an attorney who didn’t do his job particularly well,” added City Manager Steve Barwick. Asked if anyone at City Hall has suggested suing Stock, Barwick said, “Nobody’s ever mentioned that.”
The city is facing a lawsuit by the owners of the St. Regis Hotel, and the hotel’s former owner, Savanah Limited Partnership. They claim that the city has overcharged the hotel’s management for nearly $2 million in local taxes.
The suit, which was filed in mid-January in Pitkin County District Court, accuses the city of improperly computing the hotel’s annual payment into two real estate transfer tax funds.
According to attorneys working for St. Regis and Savanah, the law enacting the taxes covers only the value of land, but not any improvements (buildings or other development) on the land.
The R.E.T.T. laws were passed in 1980 to fund the renovation and operation of the city-owned Wheeler Opera House, and in 1989-90, when the city created a tax to pay for its affordable housing program.
The language of the law dates back to 1974, Worcester said, when the city first tried to pass an R.E.T.T. that was rejected by the voters.
But in 1978 the city of Avon, near Vail, adopted the state’s first R.E.T.T.; Aspen’s voters followed suit a year later.
According to Worcester, “the wording of the 1979 law … is identical to the 1974 law,” but does not match the wording of the Avon law. The Avon ordinance, he said, clearly states that both land and the improvements on the land are subject to the tax.
That wording in the Aspen law, according to the lawsuit, defines “real property” as “all lands or interest in lands within the City of Aspen.” The lawsuit maintains that this definition covers only the land itself, not buildings or other improvements.
And, according to the suit, more than $160 million was paid for the hotel, and the owners were assessed a total of $2.253 million in R.E.T.T. fees. But, the suit continues, only about $20 million of the purchase price applied to the land itself. Thus, the suit maintains, the owners of the property have overpaid taxes to the tune of $1.9 million.
Worcester, however, said the city has been assessing the tax for more than 20 years based on the belief that it applied to both land and improvements. That assessment has never been challenged, he said, which is an indication that the belief extended beyond the walls of City Hall, to the local voters who authorized the tax and the property owners who have paid it.
“It’ll help us,” Worcester said of the history of unchallenged payment of the tax. He also added that the minutes of the City Council meetings where the tax was first discussed clearly indicate that the plan was to tax land and improvements.
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