What’s a Town Council to do with $3.6 million in loans out that are likely to never be recovered? Write ‘em off. And that’s what Mammoth did with a large portion of that amount during Wednesday night’s last regular meeting of 2012.
The decision came as part of a review of the pre-audited financial status of the General Fund, part of which included a summary of the Town’s interfund loans and receivables.
Of the various notes, most were left as is, but Finance Manager Cyndi Myrold proposed scrubbing two in what she said was an effort to “clean up the books.” Those included an Airport note for $3.2 million, intended to cover the cost of airport operations over several years. According to Myrold, the Town currently subsidizes those operations, and repayment of the note hinged on the Hot Creek development, the agreement for which was officially cancelled earlier in the evening as part of the Town’s settlement with Mammoth Lakes Land Acquisition (MLLA).
Myrold said it’s not possible to use Federal Aviation Administration dollars to repay any part of the loan. She did, however, point to $96,000 in Capital Improvement Project money collected that could be put back into the General Fund. Council has been mulling how to fund a currently vacant Permit Technician position in Community Development, and might consider using some of that money to accomplish that goal. The money, Myrold added, could also be used for match dollars for Airport Capital Improvement Project grants.
Mammoth Lakes Contractors Association President Jesse Baldwin reiterated his organization’s desire that the Town hire a Permit Tech. Town Manager Dave Wilbrecht cautioned that, while Council is “looking for every nickel and dime” to fund the position, the $96,000 is a one-time windfall, and the Permit job would be ongoing.
Mammoth Lakes Housing (MLH) had petitioned for Council to also add on forgiveness of a $900,000 loan for Aspen Village Workforce Housing, which is still on the books. Originally loaned from Transient Occupancy Tax funds, MLH Director Pam Hennarty and the organization’s Board of Directors pointed to the loan’s previous history, and a document from 2006 that would have converted the loan to a grant.
In 2004, according to Hennarty’s documentation, Council authorized the loan to support construction of the Meridian Court workforce housing project. When that was completed, the loan funds were reinvested into the Aspen Village project, via Resolution 06-38.
According to language in that resolution, the Town Manager (then Rob Clark), was authorized to convert a portion or all of the $900,000 loan to a “grant,” though that’s not how it appears on the books today. This past June, a request was submitted to the Town asking for the conversion to be finally made. The Town’s response was that it would wait to take action until there was a settlement with MLLA.
“The Town is [MLH’s] primary sponsor,” Councilmember Rick Wood, who also sits on MLH’s Board of Directors, commented. “The loan comes from us. Unless someone can point to some other source of revenue, I see no reason to keep it on our books.”
Myrold acknowledged it is within the Council’s ability to grant the request, but Deputy Town Manager Marianna Marysheva-Martinez recommended leaving the note as is. “The Town is the source of funding, but MLH does have assets,” MMM mentioned. “Perhaps an agreement could be worked out to allow the Town to participate in some of its assets.”
Wood agreed that it’s a “appropriate” to reevaluate MLH’s priorities, but wanted to be clear that, “The Housing entity is NOT our enemy. We are the Housing entity and it is us.”
“The years between 2005 and 2007 were different times. If we could have known the housing crash was coming, we all would likely have made different decisions,” Hennarty told Council. “MLH has changed, and will continue to change.”
Council opted to hold off on forgiving the loan until it has a chance for further review. Councilmembers Jo Bacon, Michael Raimondo and Mayor Matthew Lehman all agreed to revisit the topic as part of a scheduled restructuring workshop with MLH set for Feb. 6.
Single-family rentals study a go
As opposed to the complete lack of single-family home nightly rentals proponents at the Dec. 12 Planning Commission meeting, more were on hand to voice their views before Town Council Wednesday night. As part of its review of the Town’s Zoning Code Update (ZCU) status, Council took a lukewarm Planning Commission recommendation, passed on a 3-2 split vote, and with its own split vote, gave lukewarm approval to have staff proceed with a study of financial and other impacts of allowing a change in zoning to permit nightly rentals of single-family homes.
Currently, Town zoning code prohibits such rentals.
Not much new was revealed in terms of public opinion on the matter, though many proponents’ pitches tended to play on Council’s heartstrings, suggesting that there is a dearth of large-format rentals for large parties of potential renters. That lack, they said, costs Mammoth visitation and related dollars that are being spent elsewhere.
Planning Commissioner Dave Harvey, who voted to recommend the analysis, said he thinks the Town should not only be recovering illegal TOT, but showing illegal renters “a path to get them on the TOT train ASAP.”
Other supporters suggested that having condos taxed, but not homes isn’t fair. David Page mentioned the issue of infrastructure, suggesting putting a full-time property manager’s name on the home’s business license. “Codify it; put a manager’s name on the permit, so we can go them and show them how it’s done,” he said.
At least a few of the proponents’ pitches contained some factual inaccuracies, including one assertion that homeowners’ property taxes, not lodging partners’ TOT dollars, are the Town’s financial lifeblood. (At 60% or more, TOT represents the largest single slice of the Town’s revenue pie.)
Opponents for the most part focused on not needing 600 more units of lodging options in an already saturated market, adding their take that large-format rental products are currently available, and that even if the zoning is changed, at least 75% of the HOA bylaws governing potential home rentals either don’t allow them, or are at least unclear on the issue. Town Legal Counsel Andy Morris added, however, that there might be a provision under state law allowing homeowners to amend bylaws in the absence of an active HOA.
Speaking for the Mammoth Lakes Lodging Association, John Morris said he thinks vetting would be a long process, and questioned whether the time was right. “I recommend tabling it for now,” he suggested. “With the lodging that’s already here, there’s no question … we know it’s a net positive for the town. With SFRs, it’s a question of if it’s a net positive for the town. Enforce the TOT rules as written first.”
Lodging owner-operator Teri Stehlik pointed to a recent study by the Strategic Marketing Group’s Carl Ribaudo, made public this October, which she indicated showed a marked decline in TOT in South Lake Tahoe, that was at least partly attributed to an increase in SFRs and a glut of product going unused. (The study, for reference, used data compiled prior to the bad snow season of 2011.)
One proponent, Jeanne Terwilliger, who rents her home but is part of the Town’s TOT enforcement process, suggested the Town consider a variation of the single home overlay process, recently adopted by Mono County. Homes could apply and be considered on a case-by-case basis, as opposed to subjecting the entire town to a one-size-fits-all zoning change.
Principal Planner Ellen Clark, who is overseeing the Zoning Code Update process, said that part of the grant money could be used for staff hours to conduct the SFR analysis, since it technically is a zoning issue.
“I’m happy to see a dialogue on this,” Wood noted, adding it has been very emotional, but criticizing it for not being fact-based enough. “There is lots of data out there that shouldn’t be ignored, but the downside of it [analyzing it] takes time.” Raimondo agreed. Lehman also voted to move forward, but with the caveat that the ZCU is the priority.
Dissenting were Jo Bacon and John Eastman, both stating that they don’t consider the analysis a priority for staff right now, and that there already is an inventory of large homes (Stonegate, Tallus, etc.) if people want them.