Come next November, Mammoth Lakes voters will hit the polls to vote on, among other things, the Presidency, State Assembly representative, and Paul Cook’s successor in the House of the Representatives. Also included on that loaded ballot: more taxes.
Mammoth’s Town Council voted on Wednesday to float a 1% increase to the current Transient Occupancy Tax (TOT) in town, bringing TOT to 14% on its own, and 15% if TBID is included in that figure.
The decision to increase the tax was the result of a presentation by Town Manager Dan Holler on exploring “special” taxes that would generate revenue for a specified purpose. In this case, the funds would be designated for housing, something Holler referred to as “a pretty big nut in terms of the Parcel project.”
“The focus is not on how to fund a single project,” wrote Holler in his report, “but on creating a revenue stream to address a larger community need.”
“Special” taxes, as the name would indicate, have a different set of requirements for passage than a general tax. In the case of a general tax, voter approval required to pass the tax is a simple majority – but then, you have to trust your elected representatives to fulfill their promise as to how the funds will be designated. In the case of approving a special tax, like Measure R, voter approval would need to land at or over two-thirds – but elected representativeds can’t go back later and decide to spend it on something else.
In addition, funds from special taxes must be placed into a separate account and the taxing agency must publish an annual report outlining the tax rate, revenue collected and expended, and the status of any project that the special tax funds are used for.
The proposed November 2020 voting date isn’t necessarily the fixed date, as special elections may be called for special taxes, with the Town of Mammoth Lakes footing the bill. Sponsoring an election on the matter could the Town somewhere between $50,000 and 60,000, per Town Attorney Andrew Morris.
It’s much cheaper to pair the special tax with a scheduled election.
Other options for consideration besides increasing the TOT were General Obligation Bonds, “IOUS issued by public entities to finance large projects” and backed by an increase in property tax revenue, and a Transaction and Use Tax (TUT) which is similar to a sales tax. That proposal was estimated to generate $17.5 million over twenty years.
Another possibility was the creation of a new type of tax altogether, a Lift Ticket (Admissions) Tax. Holler referenced areas like Breckenridge (4%), Vail (4.5%), and Santa Cruz (5%), which draw on admission and registration charges for attendance at events and activities. Crested Butte added 4% to any event that starts, finishes, or enters town limits.
In the case of Mammoth Lakes, a potential lift tax would be applied to lift tickets and could generate $12.5 million over 20 years. This choice also came with a number of unknowns, including length of ski season, dynamics in the sport, competition, and the taxability of the IKON pass.
Prior to designating a means of collecting revenue with a special tax, the council first had to vote to approve a tax, a designation for that tax (housing), and a timeline, all of which were unanimously approved.
Councilmember Kirk Stapp said that while he could support a TOT increase, “We also need to look at a lift tax.” Stapp saw Mammoth Mountain’s status as the biggest employer in the region as a key factor in the housing issue. He repeatedly referenced to the Mountain’s decision to bus its employees to and from Bishop as a point of contention, citing environmental impacts along with the lack of affordable housing in town. Councilmember John Wentworth countered that the unknowns involved in a lift tax made it much more complicated to implement and regulate, noting additional reliability concerns.
Tom Hodges, Vice President of Mountain Development at Mammoth Mountain, took the podium to give his opinion and pushed for (shocker) focusing on the TOT as opposed to implementing a lift tax. Hodges pushed for laying out the needed amount of money along an implementation plan. He also urged council to “consider incremental TOT developments that will be generated by very large hotel developments.”
Hodges referenced the Mammoth Hotel at the Sierra Center Mall and the Limelight project adjacent to the Westin as TOT boons, potentially bringing in an additional $1 million in TOT from each project. “We absolutely gotta get housing in this town”, said Hodges. “We’ve got to support it.”
Wentworth agreed, “Housing in the destination world is a cost of business … Aligning tax with TOT makes the best sense.” He saw TOT as a “revenue stream that likely is going be the most reliable.” Wentworth expressed the view that a TOT increase would be “sellable to the community.”
“In order for us to be successful,” said Wentworth, “we have to lean on the visitors coming up here.
Councilmember Cleland Hoff advocated for moving the special election to November 2022, with concern that the busy election cycle in 2020 could take attention away from the tax increase. “When there is a lot to vote about, if it’s not one of the issues that [voters] really think about. I think that could work against the town,” said Hoff.
Other councilmembers pushed back, with Wentworth noting that “It’ll be a very exciting election”, with increased “enthusiasm for voting.” Stapp cited an estimated need of 506 units by 2022 as reason to keep the tax increase on the ballot in 2020. “We need to get funding in place,” said Stapp, “It’s going to have a huge impact on our budget if we do this funding program.”
Mayor Bill Sauser closed out councilmember comments, noting that his problem was “with the Mountain itself and a distrust of things that they do and how they do business.
If they decide they’re gonna hose us and pull out of TBID,” continued Sauser, “We could be hosed far worse putting the lift tax on than not.”
In the event that the Mountain were to attempt to circumvent the special tax, “Boy, I’m more than ready to tax the …” Sauser decided to stop himself there, leaving the end of that particular sentence to the imagination. He also cautioned the other councilmembers repeatedly that “this may come back to bite us.”