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'Assessing' the TBID : Many questions linger

February 13, 2014

John Urdi, director of Mammoth Lakes Tourism and the force behind the TBID initiative. Photo/George Shirk

The Tourism Business Improvement District (TBID) is not a tax, though it walks and talks like one in Mammoth Lakes.

 

The TBID is an assessment on businesses. And for anyone, like myself, who is not versed in the jargon of finance, this only raises more questions—and unanswered questions often lead to doubt.

 

The team here at the Mammoth Times started to notice various objections and questions stirring around town in this unusually dry (and economically stagnant) winter—but somewhere in the mix there were also answers and ideas.

 

The following is an attempt to voice concerns, ask questions, and find some of those answers.

 

With the TBID in place since last September, almost every person who passes through the new town monuments will spend money on the assessment—but few of those can say they voted on it.

 

The fact that the TBID is an assessment, and not a tax, means that it is not up to a public vote. But there it is, at the bottom of my receipt. Could it just be a tax dressed up in assessment clothing?

 

The way all TBIDs work is on a weighted assessment, said John Urdi, Executive Director of Mammoth Lakes Tourism (MLT).

 

Businesses are given a weighted vote, based on the financial obligation of that business to the assessment.

 

 “Each business has a percentage vote based on their total revenues. In order to have been able to present the TBID to town council, we needed to receive at least fifty-one percent of the revenue voting” in favor of the assessment. 

 

Seventy businesses voted, representing sixty-eight percent of the revenue base (Mammoth Mountain Ski Area represented fifty-five percent of the revenue, but could only supply forty percent to the vote).

 

The businesses can then, in turn, choose to pass that cost on to the consumer. 

 

Mammoth was the 80th TBID in California, and the first in the state to include retail and restaurants in the assessment.

 

Seventy-four percent of the town’s budget comes from the transient occupancy tax (TOT) and sales tax. Sixty-four percent is just from TOT.

 

“Lodging has really carried the burden of charging and collecting TOT,” said John Morris, Director of Operations at Snowcreek and board member for MLT.

 

Prior to the TBID, the town’s marketing budget came from Measure A funds, which come from TOT—and that was already a 13 percent tax on lodging. Sales tax is 7.5 percent for retailers and restaurants. 

 

In the lodging industry, this affects how they can raise prices, Morris said.

 

Morris was on the committee that worked to form the TBID. The inclusion of retail and restaurants, he said, came from the thinking that Mammoth is a bit unique, and virtually everyone derives his or her income from tourism.

 

“If we didn’t have the tourism level that we have [in Mammoth], every household would be paying $3,300 dollars more in taxes [per year] to have what we have,” like plowed roads and other services, said Urdi. 

 

“That’s the highest in the state.”

 

The TBID passed the town council in a narrow 3-2 vote. One of those nay votes was from Mayor Pro Tem, Jo Bacon, who said she thought it should have been even more broadly based, including other industries like services and professionals.

 

One of the more vocal forces at town council meetings prior to passing the TBID last September was Greg Simas, owner of Grumpy’s Sports Restaurant.

 

“We’re fighting for a shrinking traveler’s dollar,” Simas said, “in the most taxed state in the Union.” 

 

Simas noted the additional strain from drought, the stunted economy—and that Mammoth Lakes is an expensive winter vacation for visitors. 

 

“Our customers are precious commodities,” he said, “and they are finite.”

 

Though an outspoken opponent in the beginning, Simas now calls himself a “reluctant supporter.”

 

“We’re all in this together. We should make the best of it and give John [Urdi] a chance … and see if MLT can deliver,” he said.

 

Right now, it’s about taking a leap of faith, Urdi said. But for some, this is more difficult.

 

“We’re not saying whether the TBID is right or wrong,” said Michael Lish, co-owner of Community Skis. “What we’re saying is we don’t know where the money is going.”

 

Lish, along with co-owner Kristin Broumas, is seeking exemption from the TBID because they are a manufacturer, not a retailer.

 

The two have chosen to pay the assessment rather than pass it on to their customers because they said they feel they cannot justify or explain the additional 1.5 percent cost to someone buying skis from them in Sweden or Australia.

 

“We would even be proud to say to someone coming from Sweden that we have this tax that goes to improving our community,” Lish said. 

 

But, he said, he doesn’t know where that money is going.

 

Mammoth Lakes Tourism’s activity budget detail for this first year can be found on page 58 of the TBID implementation plan—which can be downloaded via a link on mltbid.com at the bottom of the page.

 

It lays out how $2.3 million allocated for marketing and sales will be divided, and shows a total of $2 million going to the airport subsidy.

 

But this doesn’t necessarily abate concern over what all that money is, or isn’t, going to do.

 

Due to processing times, Urdi only collected the first round of TBID funds last month, for the September-November period—and almost all of that went to the airport subsidy. 

 

The airport subsidy used to be the sole responsibility of Mammoth Mountain for the winter, and shared with MLT and the county for the summer. 

 

Now, the subsidy will come out of the TBID funds, though the Mountain still maintains liability insurance and the lines of credit required by the airline, Urdi said—which are “ridiculously expensive.”

 

The Mountain also elected to add a two percent TBID to lift tickets and ski school, which effectively pays the subsidy, as that alone amounts to nearly two million dollars, Urdi said.

 

Community Skis, however, is not likely supported by this tourist demographic, Lish said, and he doesn’t think it actually brings that many people to town.

 

Roughly 30-35,000 people fly to Mammoth per year, which amounts to about five percent of visitors, Urdi said. Twenty percent of the passengers are locals.

 

However, air passengers bring 10 percent of total direct spending to town, amounting to about $40 million, Urdi said.

 

For a ski town suffering from a drought and losing scores of tourists, forking out all that money to cover an airport subsidy might seem wasteful—in hard times it is most difficult to look beyond the short term goal of surviving a bad winter—and it is hard to quantify the exact economic impacts of the airport. 

 

However, most of the other destination ski towns with which Mammoth desires to compete have one.

 

“It’s difficult here because in the winter we have a ski area, we have winter-based recreation,” said Urdi, who recently spoke at a ski industry conference in Denver about ski town diversification. His team is focusing on rounding out the year, bringing more people in the summer, shoulder seasons, and midweek in the winter. 

 

In the last three years, the month of June has grown 46 percent in TOT, he said.

 

Given the poor snow conditions this year, Urdi said, they saved their money until it snowed, then put out a blitz of marketing to tell people when it did.

 

Lynn Altieri-Need, who owns Lakanuki with her husband, Stuart Need, said she would like to see a shift in marketing to lifestyle and experience, citing that though it has been a low snow year, she has been able to go downhill and cross country skiing, as well as road biking.

 

The problem, then, is one of infrastructure. 

 

Altieri-Need said Mammoth should be putting money toward adding infrastructure, such as a high altitude training center, which would draw more tourism—independent of the winter snowpack.

 

“Due to the lack of snow, it is very difficult for MLT to market Mammoth without these facilities that we’re lacking,” said Need.

 

TBID funds are specifically set aside to bring people to town, Urdi said. This means the town can’t “pilfer” those funds from MLT (a non-governmental organization).

 

This also means the allocation of those funds is set by the decision the town council made when it enacted the TBID, back in September, Urdi said, because those funds must show they will benefit the businesses who are paying. 

 

However, funds could be set aside from Measure A to fund a facility, if he and his board decided to do so.

 

In all of this, Altieri-Need said she is seeing a shift from what the Mountain can do for the community, to what the town and its surroundings can do for the community.

 

“I think John [Urdi] just picked the worst year to start a TBID,” said Need.

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