A state senator has sent a letter to each of the seven ski resorts utilizing state land asking them to renegotiate leases, but the closing paragraph he included has some lawmakers concerned he has issued a thinly-veiled threat to raise their taxes if they do not agree.
Chittenden County Sen. Tim Ashe, a Democrat and the chairman of the powerful Senate Finance Committee, sent the letters on Senate letterhead last week to Bromley, Okemo, Killington, Stowe, Smuggler’s Notch, Burke and Jay Peak. He signed each letter as chairman of Senate Finance.
Ashe’s letters follow the release of a report by State Auditor Doug Hoffer last month that found the resorts’ lease payments to the state have not kept pace with the resorts’ economic growth.
The long-term leases with the resorts range between 50 and 100 years. Bromley was the first resort to strike a deal with the state in 1942.
Over the last 50 years, resorts that once had just a handful of lifts and few facilities have become year-round enterprises. Many are now owned by large out-of-state corporations, according to Hoffer’s report. The resorts now feature lodges, hotels, condominiums, retail stores, golf courses, waterparks and other amenities that generate significantly more revenue than the fledgling days of Vermont’s ski industry.
Between 2003 and 2013, development at the seven resorts led to increases in sales of goods and services, property values and revenues from excise taxes, all of which contributed to more state revenue.
But lease payments for the 8,500 acres of public lands used by the resorts have not kept the same pace of growth this decade as other tax revenues generated from the resorts. The leases were designed to capture a percentage of revenue from lift tickets - typically 5 percent of lift ticket sales. However lift ticket sales became a secondary source of revenue as the resorts evolved, according to the report, and the leases only generate about $3 million a year for the state.
Ashe’s letters ask the resorts to willingly open negotiations, even though most lease agreements do not expire for several more decades. Bromley’s lease, for example, expires in 2032. Ashe pointed out in his letter, as Hoffer’s report did, that renegotiating makes sense because “the ski world of the lease’s origins would be unrecognizable today.”
“It is for that reason I ask you to renegotiate voluntarily your lease terms or agree to amend your lease to have it expire on December 31, 2016. Either of these options would allow for thoughtful, unhurried negotiations between the State and you to arrive at modern lease terms reflecting the great changes in the ski industry and in the revenue streams it features,” Ashe wrote.
It is the closing paragraph that has drawn the ire of some fellow lawmakers, however:
“From time to time, the Legislature considers various proposals that would have an impact on various classes of taxpayers. In terms of the ski industry, I have heard Legislators propose eliminating the property tax exemption on snowmaking equipment and other assets, and suggest creating a special non-homestead tax rate for ski areas. It seems to me that voluntary renegotiation of your lease with the State is a far superior method of striking the right balance of proceeds for the right to use public land,” Ashe wrote.
"It is very concerning when those in power look to interfere in contractual agreements using overt threats." - Rep. Patti Komline, R - Dorset
Rep. Patti Komline, R-Dorset, whose district includes Bromley Mountain, said Ashe’s letter is a clear threat to try to eliminate tax exemptions currently enjoyed by ski resorts if they refuse to scrap their current leases.
“It is very concerning when those in power look to interfere in contractual agreements using overt threats," she said. "This is an overreach and I hope it doesn’t create a precedent that will affect the credibility of our state’s reputation."
Komline said she learned about the letters Wednesday and planned to reach out to officials at Bromley and work with the Vermont Ski Areas Association to help ease any concerns the resorts have.
Rep. Heidi Scheuermann, R-Stowe, said she, too, found out about the letters on Wednesday after officials at Stowe Mountain Resort sent her a copy. Stowe’s lease is good until 2057, Scheuermann said.
“I think it’s inappropriate. That said, he can do it. I’m sure Stowe will have a response for him. They have a legal lease that is extremely beneficial to the state of Vermont and I expect they are going to maintain that lease,” she said.
Ashe said Wednesday his letters are not a threat and should not be seen as one.
“It’s reading the auditor’s report and saying that even though they are under no obligation to open their leases … it seems to be maybe appropriate that they do so,” he said. “It’s not about a threat. It’s hoping they’ll just do it.”
"It's not about a threat. It's hoping they'll just do it." - Sen. Tim Ashe, D- Chittenden
Making a threat to strip away tax exemptions should the resorts decline to renegotiate leases would be bad policy for the state, according to Ashe.
“I would never threaten a taxpayer, because I don’t think that’s a very good tax policy. But rather, saying, in thinking about the use of public lands, it’s better to voluntarily step up because the proposals that are from time to time directed at them or any other industry are usually sort of inartful,” he said.
Still, lawmakers question the tax exemptions every year, and Ashe said he wanted to point out that some lawmakers could look to use it as leverage to ensure the leases are fair.
“People gravitate to that … and say, ‘Why do we do that?’ It raises this whole issue about why that equipment and stuff is exempt,” Ashe said. “And then, there’s always the discussion about, ‘Well, they do get a pretty sweet deal.’ People articulate it in different ways.”
Senate President Pro Tem John Campbell, D-Windsor, said he was not aware that Ashe was planning to send the letters. He said would discuss the matter with him.
“I have not had an opportunity to discuss this with Sen. Ashe, nor have I seen the letter,” he said Wednesday. “It’s certainly an issue that I will discuss with him.”
"There has to be a balance here. I don't want to do anything to jeopardize Bromley's ability to attract people to Bennington County." - Sen. Brian Campion, D - Bennington
Bennington County Democratic Sens. Dick Sears and Brian Campion, whose districts include Bromley, both said they had concerns with Ashe’s approach.
“There has to be a balance here. I don’t want to do anything to jeopardize Bromley’s ability to attract people to Bennington County,” Campion said.
“Right now people are in a desperation mode. They’re looking (for revenue) in every corner,” Sears said. “I don’t think I want to force ski areas. I don’t want to do anything that impacts the tremendous relationship with our ski areas.”
Parker Riehle, president of the Vermont Ski Areas Association, said Wednesday the ski resorts were still crafting a response to Ashe. However, he said all are comfortable with the lease agreements in place.
“We certainly still stand by the leases and their terms as still a very good deal for both parties and a very favorable deal for the state of Vermont,” he said. “Overall it’s a really strong partnership.”
The federal government only gets 2.5 percent of lift ticket sales, on average, according to Riehle, and neighboring states get about 3 percent of lift ticket revenue.
“Vermont’s actually way ahead of the game and there’s been a couple of reports issue in that regard that back that up," he said. "We certainly are very comfortable and confident in the leases."
Additionally, the ski industry generates an estimated $100 million in various tax payments to the state, and provides about 12,000 jobs during the winter when other industries are typically laying workers off.
“You can’t just focus on the lease payments and think that they look to small,” he said.
Given the what the ski industry provides to the state, Riehle said the resorts should not be facing the threat of higher taxes.
“In light of the numerous revenue benefits to the state, we certainly don’t see a need to look for any additional tax burden on the ski areas," he said. "We certainly don’t want to see anything like that hanging over our heads."
This story was originally published by the Vermont Press Bureau and reprinted under a partnership with the bureau.
