CPY Document

BEFORE THE UTAH STATE TAX COMMISSION ) FININGS OF FACT, CONCLUSIONS ASC UTAH, INC dba THE CANYONS ) OF LAW, AND FINAL DECISION Petitioner ) Appeal No. 03-0267 ) Tax Type: PropertTax/ocally Assessed BOARD OF EQUALIZA nON OF SUMMIT COUNTY ) Tax Years: 2001 , 2002 STATE OF UTAH ) Judge: Davis Respondent. Presiding: G. Blaine Davis, Administrative Law Judge Palmer DePaulis, Commissioner Marc B. Johnson, Commissioner Appearances: For Petitioner: Mr. Maxwell A. Miler, from the law firm of Parsons, Behle & Latimer Mr. Randy Grimshaw, from the law firm of Parsons, Behle & Latimer For Respondent: Mr. David E. Gee, from Parr, Waddoups, Brown, Gee & Loveless Mr. Michael Hoppe from Parr, Waddoups, Brown, Gee & Loveless Mr. Steve Hale, from Parr, Waddoups, Brown, Gee & Loveless Ms. Jamie Brackin, Deputy, Summit County Attorney This Order may contain confidential " commercial information " within the meaning of Utah Code Ann. 59- 404, and such information is protected from disclosure pursuant to the Protective Order included herein. STATEMENT OF THE CASE This matter came before the Utah State Tax Commission for a Formal Hearing on March 15 , 16 , 17, and 18, 2004. The parties were then given time to fie briefs, and the last brief was fied on April 30, 2004. Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its: Appeal No. 03-0267 FINDINGS OF FACT 1. The tax in question is propert tax. 2. The years in question are 2001 and 2002, with a lien date of January 1 2001 and January 1 2002. 3. The subject propert is fourteen (14) separate parcels of land located in the resort core of The Canyons ski resort. 4. Petitioner appealed the valuation of the 14 parcels of propert because the 2001 values on the tax notice increased substantially over the values for the year 2000. The values for the year 2000 and the values stipulated to by the parties for purposes of sending the appeal to the Tax Commission for 2001 and 2002 are as follows: Item Tax il No. 2000 Values 2001 Values 2002 Values PP- 484 000 950 000 950 000 PP- 450 400 875 000 875 000 Intentionally omitted PP-73- 184 000 050 000 050 000 PP-74- 849 000 923 375 923 375 PP-74- 222 000 338 840 338 840 PP-75- 500 000 832 085 832 085 PP-75- 522 000 715 320 715 320 PP-75- 344 000 942 500 942 500 PP-75- 250 000 640 000 64() 000 PP-75- 8,459 876 414 480 414 480 PP-75- 881 000 060 000 060 000 PP-75- 471 000 726 200 726 200 PP-75- 300 000 338 840 338 840 PP-75- 223 000 953 250 953 250 TOTALS 658 776 759 890 759 890 Appeal No. 03-0267 5. Petitioner did not stipulate that the above values for 200 I and 2002 were correct, but instead stipulated the Board of Equalization could enter an order for those values so that the matter could be forwarded to the Utah State Tax Commission. 6. ASC Utah, Inc., dba The Canyons (herein referred to as "The Canyons ), is a subsidiary of a publicly traded company that acquires, develops and operates large destination ski resorts throughout the United States, and develops, operates and markets real estate projects adjacent to those ski resorts. The tax parcels at issue in this proceeding constitute land upon which The Canyons plans to develop commercial, lodging and residential real estate projects to be used and marketed as part of The Canyons Resort. In The Canyons Resort Core, where all of the 14 appealed parcels are located, 90% of the allowable building density is classified as hotel lodging. Throughout the entire SPA Agreement area (as defined below) more than 80% is designated as hotel lodging. The remaining area in the Resort Core is designated for commercial/retail use. 7. The Canyons assembled and acquired ownership interests in at least 68 tax parcels which were part of or in the vicinity of the old Wolf Mountain resort (the " 68 Tax Parcels ) on which The Canyons and its affiliates are developing a destination ski resort similar to Park City and Deer Valley. While some of the 68 Tax Parcels may be owned in fee by The Canyons, its interests in mor of the 68 Tax Parcels were acquired pursuant to a certain Ground Lease Agreement dated July 3, 1997 between Wolf Mountain Resorts, L.C., as lessor and seller and The Canyons, as lessee and buyer (The "Wolf Agreement" Pursuant to the Wolf Agreement, The Canyons leases from Wolf Mountain certain land with an option to purchase portions of the land of Wolf Mountain on which The Canyons desires to constrct buildings or improvements. The Wolf Agreement provides that The Canyons will pay all real estate taxes and assessments on the leased land. Appeal No. 03-0267 8. To facilitate the development of The Canyons Resort and the adjoining real estate projects on the 68 Tax Parcels, Summit County and The Canyons, together with another affiiate of The Canyons named American Skiing Company Resort Properties, Inc. ("ASCRP" and certain other landowners, entered into a Development Agreement for The Canyons Specially Planned Area (SPA) Plan dated July 6, 1998 (the "Original SPA Agreement") which was enacted as the zoning ordinance for the 68 Tax Parcels by Summit County Ordinance No. 333. The Original SPA Agreement included numerous exhibits which established certain "Project Sites " to be developed in the future. The Canyons SPA is a 7 750:3 acre area containing the ski terrain and all planned resort development for The Canyons Ski Resort. The SPA includes over 20 separate land owners, the largest of which is American Skiing Company (ASC). Most of the SPA is dedicated as open-space and ski terrain, but about 500 acres at the base are dedicated for the resort development core planned with high density resort accommodations. As of 2001 , the Canyons development project was approximately three years into a 20-year development horizon. It contains considerable vacant but entitled land. 9. To faciltate the expansion of the resort and create a master planned resort community as depicted in "The Canyons SPA Plan Book of Exhibits" which was attached to the Original SPA Agreement, the Original SPA Agreement was amended and restated by an Amended and Restated Development Agreement for The Canyons Specially Planned Area dated November 15 , 1999 (the "SPA Agreement"), which was enacted as the applicable and amended zoning ordinance for the 68 Tax Parcels by Summit County Ordinance No. 333A. 10. The SPA Agreement functions as a specially created zoning ordinance for the 68 Tax Parcels and other additional surrounding tracts of land. The area which is subject to this special ordinance and the SPA Agreement is commonly referred to as the "SPA" or "The Canyons SPA" Appeal No. 03-0267 11. The SPA Agreement as enacted by Ordinance 333A contains numerous limitations and restrictions regarding the types of projects and build-outs that may be undertaken the project mix between accommodation and commercial/retail space, the phasing of projects and the sequencing of infrastrcture and improvement systems. The SPA Agreement also vests development rights in the 68 Tax Parcels and streamlines and simplifies the normal zoning and land use requirements generally applicable to properties in the County. Prior to the SPA Agreement, the 68 Tax Parcels were zoned in a manner that allowed for much lower density and The Canyons had few vested rights in development approvals. 12. Pursuant to the SPA Agreement, any development must start in the resort core area . For every three (3) square feet developed in the core area, one (1) square foot may be developed outside of the core area. The SPA Agreement requires that this 3: 1 ratio must be maintained so this imposes some development restrictions on the properties in the SPA area. 13. The SPA Agreement provides and contemplates that phased development wil occur by "Project Site . Some of the Project Sites cover more than one of the 68 Tax Parcels, and multiple Project Sites cover twelve of the fourteen tax parcels at issue in this proceeding. Under the SPA Agreement and the SPA Zoning Ordinance, a functional subdivision is created which is unrelated to the historical parcel boundaries. Therefore, instead of purchasing a present tax parcel, a potential buyer would want to acquire a Project Site designated to permit land uses the purchaser would want to develop. Accordingly, until a project is specifically planned for a project site, the size, configuration, height, tenant mix, and density requirements for a particular parcel of land cannot be determined. Those factors wil all affect the final lot configuration and subdivision platting after the development is completed. , . Appeal No. 03-0267 14. Section 5. 12. 1 of the SPA Agreement permits The Canyons to sell propert in combination with the applicable development rights intact. Specifically, Section 5.12.1 of the SPA Agreement provides that: "Developers shall be entitled to sell or transfer any portion of the propert subject to the terms of this Amended Agreement upon written notice to the County and acknowledgment signed by the transferee and the County. 15. Pursuant to the provisions of Utah Code Ann. 59- 103, tax liens were placed on the 68 Tax Parcels as of January 1 2001 and Januar 1 , 2002 for ad valorem tax purposes. 16. In early 2001 , the Summit County Assessor (the "County Assessor ) retained Mr. Paul W. Throndsen ("Mr. Throndsen ) of Appraisal Group, Inc. to conduct the cyclical commercial appraisals required once every five years pursuant to Utah Code Ann.

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