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Commisioners taking refuge behind sales tax to avoid common sense

While the development proposed by the Silverleaf Corporation (the “Ridge”) is not in my backyard, I am extremely concerned about the precedent this development establishes with respect to the location of commercial activity on property zoned residential. Some members of the Board of County Commissioners have taken refuge behind the application of Colorado sales taxes to avoid the common sense issue presented by this project. That common-sense issue is that the County is establishing a precedent that would allow Hilton and Marriot hotels, major players in the business of interval ownership, to establish destination interval ownership resorts in neighborhoods that are otherwise single-family residential.

The Silverleaf Web site describes its business as follows: “Silverleaf Resorts, Inc. engages in the development, marketing, and operation of Getaway and Destination timeshare resorts in the United States. Its resorts offer an array of country club-like amenities, such as golf, swimming, horseback riding, boating, and various organized activities for children and adults.”

Basically, Silverleaf is not simply in the business of selling condos to multiple owners, it is in the business of providing customers with enjoyable vacation experiences. This is certainly a valuable business from multiple perspectives and a business that could compliment other business activities in Grand County.

However, before we get carried away with the benefits, we should ask whether or not this business should be located on property zoned residential Perhaps the property in question is not properly zoned.

If that is the case, there is a procedure for seeking a zoning change. The problem is that the planning process has ignored the underlying nature of the Silverleaf business operation and is excluding processes designed to protect the property values of local residents.

The logic that leads some on the BOCC to the conclusion that this activity is not commercial seems to be the following: (a) the application of Colorado sales taxes provides a guide as to what is a commercial use of property, (b) lodging tax (a type of sales tax according to the website of the Colorado Secretary of State) is collected on rentals of less than a month, and (c) property rented for less than a month is being rented commercially. However, (d) there are many units in Meadow Ridge that are rented for less than a month, and (e) the County is not going to change the zoning in Meadow Ridge and, therefore, (f) the Silverleaf project is residential.

The are many errors in this tortured logic, but let’s only focus on the first step: sales taxes are sales taxes and property use is property use. Sales taxes are not collected on the provision of services, therefore, under the logic that seems to appeal to some members of the BOCC, service industries can be located on residential property. Clearly the application of the sales tax is not a reliable guide to what is commercial activity. It is equally clear that no one, including County Attorney Jack DiCola has been able to come up with a definition of “Commercial Land Use.”

Absent that definition, it seems to me that we need to use some common sense. I think most of us can agree on what land use is commercial as opposed to residential.

For example, if a real estate sales person uses a home office to research properties or draft contracts, that activity would seem to be consistent with “residential use.” However, if that home office housed five real estate agents and was the location of frequent client meetings, the use would be commercial. Similarly, it would seem to me that someone who owns a condo and rents it to offset expenses is not operating a commercial activity on that property. This has been the perspective in many resort communities in Colorado including our own, and I think most would agree with this position based on common sense.

In contrast, a corporation that is involved in the business of the development, marketing, and operation of Getaway and Destination timeshare resorts is clearly a commercial operation, such as Hilton or Marriot, and most of us would agree with that conclusion based on common sense.

A common sense approach certainly involves grey areas where it becomes difficult to draw the line between residential and commercial.

However, the mistake that we are making here is to not use our common sense when the alternatives are black or white. A corporation that is involved in the operation of resorts is involved in the operation of resorts, and the operation of a resort is not a residential land use. Further, the tortured quasi-legal logic that some members of the board have bought into based on the application of sales taxes has little foundation in either law or logic.

The problem is that, at the end of the day, county commissioners will be responsible for defending their own conclusions, and the sales tax argument is not a refuge.

John Ehlen

Fraser


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