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Resort tax board discusses semantics of ‘destination ski resort’

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Begins initiative to allow for two-year funding cycle

By Sarah Gianelli EBS Associate Editor

BIG SKY – In the opening public comment session of the Big Sky Resort Area District board meeting Aug. 17, Ciara Wolfe, executive director of Big Sky Community Organization, reported that the organization did not receive a $921,056 Montana Transportation Alternative Program grant that would have funded the construction of the pedestrian tunnel under Lone Mountain Trail.

The required match of $142,765, secured from BSRAD appropriations, was contingent on receiving the grant, so BSCO will not be utilizing those allocations this funding cycle.

Wolfe said that MTAP deemed the tunnel a valid project, but ultimately BSCO was not awarded the grant because there isn’t yet a trail on the other side of the road, and there was no data to prove it is a high-use area. According to Wolfe, MTAP likes to see approximately 20 crossings per hour at the proposed site to validate the project’s necessity.

BSCO will continue to pursue funding opportunities for the tunnel and will look to BSRAD during the 2018-2019 appropriation cycle to assist in the endeavor. However, Wolfe said that at this time, if funding is secured, the earliest the tunnel could feasibly be constructed is summer 2019.

Related to long-term construction projects, Wolfe also voiced her support of the board’s allowance of a two-year funding cycle for appropriations. Currently the resort tax board only guarantees funding in one-year intervals.

Following the board’s discussion of changing the ordinance, Big Sky Fire Department Chief William Farhat asked that the verbiage be expanded to include large capital purchases, in addition to large-scale capital construction projects. He said it often takes longer than a year to design and build a fire engine, and a longer timeframe for the allocation of funds would be helpful in such circumstances.

The board clarified that a two-year funding cycle would not be obligating a future board’s funds, but rather that appropriations awarded could be doled out over the course of two years. Currently, if resort tax funding is not used within one year, it stays in the resort tax board bank account and becomes part of the available appropriations in the next funding cycle.

It was decided that the board’s legal counsel, Betsy Griffing, will draw up a draft of a new ordinance that would allow for a two-year funding cycle in very specific cases and would require the recipient to provide regular progress reports, and to undergo a thorough mid-cycle review. An internal deadline was established to have a new ordinance approved in time for the next appropriations in June 2018.

In a new business item, Candace Carr Strauss, CEO of the Big Sky Chamber of Commerce, reiterated the joint interests of the chamber, Visit Big Sky and Big Sky Gateway Foundation to acquire the 4.2-acre corner lot at the intersection of Highway 191 and Lone Mountain Trail.

The three entities are looking to partner with the resort tax board in a three-phase effort that entails purchasing the land, building a new visitor center with a museum component, and sustaining its operations once opened. Strauss said they have formed a campaign committee, are looking to the state for funding, and are in the beginning stages of the fundraising process.

The board determined it would not be able to consider providing resort tax funding until the formal appropriation application process next May.

From his newly elected position as chair, Mike Scholz laid out a timeline for how the board will address the big issues currently before them. These include the definition of a destination resort, changing the ordinance governing taxation when it comes to home owner association dues, and private club fees and services across upcoming meetings.

“It’s an elephant in the room,” Scholz said. “You can’t eat the whole thing. You’ve got to take it by bites.”

The discussion at this meeting focused on the definition of a destination ski resort. Vice chair Kevin Germain recused himself from the discussion citing a conflict of interest because his employer owns two clubs, referring to Spanish Peaks Mountain Club and Moonlight Basin. Germain is vice president of planning and development for Lone Mountain Land Company.

“It’s going to be hard for me to be quiet,” Germain said. “[But] I think it’s in the best interest of the board and myself just to be silent on this issue and listen.”

Attorney Griffing said there is no legally binding definition of “destination ski resort.” Clarifying this definition is critical because it determines what type of entities, goods and services in the community are taxable.

The main question to be answered by the board is whether the term “destination” applies to a geographical area or to specific types of businesses.

“If it’s a geographical area,” Scholz said, “someone could say the whole resort tax district was, and that would make it [applicable] to everything we do and that would make it, quite frankly, a general sales tax.”

While all of Big Sky is arguably a “destination resort,” Scholz said that was never the point of implementing a resort tax.

“If we start stamping this whole area, and making it a general sales tax, we’re really defeating the initial purpose that all resort taxes had: How do you get revenue from the people that you are serving with services and giving public health and safety?” Scholz said. “It’s hard enough to live here for people that work in the area without having regressive sales tax and that’s what a designation that would say ‘all’ would do to us.”

After lengthy discussion parsing apart the meaning of “destination ski resort” and “destination recreational facility,” it was decided that more research would be done into existing definitions, and the characteristics of entities, goods and services that are currently taxed.

The board agreed to revisit the matter at the next meeting on Sept. 11.

In the closing public comment session, Steve Johnson, a community member who sits on numerous community boards, suggested the board request the formal opinion of the state attorney general to help with the interpretation of Montana law, as it applies to what constitutes a luxury item or service.

“To me, the essential quality of Big Sky is a destination,” Johnson added. “Nobody bumps into Big Sky accidentally. People come here because of this place and the mountain and that to me is the essential quality of what ‘destination’ means.”

The next meeting of the Big Sky Resort Area District tax board will be held at 8 a.m. on Monday, Sept. 11, in the resort tax office located in the Town Center RJS Building at 11 Lone Peak Drive, Suite 204.

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