SVRA could drop retail tax in deal with Town Council
May 23, 2002
The Snowmass Village Resort Association is moving closer to dropping its civic assessment, or tax, on retail stores in exchange for the town agreeing to sell the resort’s conference center to the association.
The SVRA would also agree under the deal to support the passage of a townwide sales tax of 2 or 2.5 percent to be dedicated to marketing the resort.
The deal, which could be agreed upon today in a Snowmass Town Council meeting, would effectively remove marketing as one of the duties of the SVRA and leave it to focus on selling group business and managing the conference center.
Earlier this year, the organization got out of the central reservations business, merging its operation with Aspen Central Reservations to form Stay Aspen/Snowmass.
The pending deal also removes a key hurdle – the SVRA’s assessment – from the political path the Town Council hopes a proposed marketing tax will take, including being approved by Snowmass Village voters in November. The townwide tax would include businesses in the Snowmass Center, the proposed Base Village and the on-mountain restaurants, which are all today outside the “West Village” boundaries of the SVRA.
The assessment that SVRA levies on stores and restaurants on the Snowmass mall has long grated on local merchants. It has risen steadily the past few years from 1.5 percent to 3.25 percent, pushing the total sales tax burden over 10 percent, and the money has not been applied to promotional efforts, such as special events, that the SVRA has said it would be.
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As spelled out in a May 17 letter from Hiram Champlain, the SVRA board chair, the current deal on the table starts with the town agreeing to sell the conference center to the SVRA for $2.58 million, which is what’s left of the debt on the building.
That deal is complex by itself, in that the town’s ownership of the conference center is somewhat technical in nature. When the bonds were issued to pay for the conference facility, it was cheaper to have the town own the center on paper. However, the SVRA has been paying on the debt. The association has so far paid $5.5 million due on the center and has another $760,000 held in reserve to ensure that its bond payments are made.
The financially strapped SVRA needs to “buy” the conference center from the town so it can refinance the $2.58 million in debt and lower its annual payments on the building. And the town is using its leverage in the situation to get the SVRA to drop its civic assessment and support the townwide tax.
Under the deal, the SVRA will use the $760,000 in reserve to refurbish the conference center. It will also agree to stop levying its retail assessment for five years, although it will still levy its lodging assessment. And it will require a vote of the SVRA membership, and not just the board, to reinstate the tax.
How much of a majority would be required in five years was a sticking point on Monday, when the council last discussed the deal. Instead of a simple majority of 50 percent of the membership plus one, the council proposed raising it to at least 60 percent and requiring that any one block of votes could not count for more than 30 percent of the total votes.
“It is simply a way to give people assurance that no single person has too large a share to reinstate the tax,” said Councilman Bob Purvis.
Bill Burwell, owner of the Silvertree and Wildwood hotels and a group of condos under Village Property Management, controls about 20 percent of the votes under the SVRA’s membership structure.
“It is important to give people the comfort that it would not be easy for SVRA to reinstate the tax, but at the same time, it’s important to give SVRA the knowledge that if their membership feels strongly about it, they have the flexibility to reinstate the tax,” said Purvis.
Another deal point the council hopes to get SVRA to agree to is that if the civic assessment is reinstated by SVRA’s members in five years, it cannot push town sales taxes on mall merchants above 3.25 percent. For example, if the voters approve a 2 percent townwide sales tax, the reinstated civic assessment could only be as high as 1.25 percent.
The SVRA will also agree, if the deal is made, to support a question of the town marketing tax on the November ballot, pending review of the final ballot language.
The $2 million to $2.5 million raised by the marketing tax would be ultimately controlled by the town but spent on marketing, public relations and special events by a special commission appointed by the council. Today in Aspen, revenues from a lodging tax are spent independently by the Aspen Chamber Resort Association, but the Aspen City Council retains control of the money.
If the deal is cut between SVRA and the town, and if the voters approve the townwide sales tax, SVRA will be a much different organization that it traditionally has been in Snowmass.
“If we are only doing group sales, that will be the most streamlined model possible for the SVRA,” said SVRA President Brett Huske. “Everything we would do would focus on how to get more and better groups to the village.”