Friday, August 3, 2012

Sun Valley cautious about new LOT

City considering ballot measure to support air service

Express Staff Writer

A Horizon Air flight takes off from Friedman Memorial Airport in Hailey. Express file photo

The Sun Valley City Council has decided to meet yet again to discuss Fly Sun Valley Alliance's proposed five-year, 1 percent increase to the local-option tax to support air service to the valley.

The council discussed the topic extensively and entertained many public comments during a special council meeting Wednesday. However, council members agreed that the issue deserves additional review. The council opted to continue its discourse during a special meeting Thursday, Aug. 9.

Much of Wednesday's discussion revolved around the joint powers agreement that would govern the use of the levied funds, should the voters of more than one Wood River Valley city approve ballot measures this November approving the new tax. Currently, Hailey, Ketchum and Sun Valley's city attorneys are working to put together a document whose language is satisfactory to the councils of all three cities.

The idea is to place the funds under the control of a board composed of representatives from each of the parties involved—the cities of Hailey, Ketchum and Sun Valley (assuming all three pass the ordinance), Blaine County (as an airport co-owner) and Friedman Memorial Airport. Each seat's vote would be weighted differently depending on how much each city contributes to the fund and on how highly valued the airport owners' and the airport's seats are deemed.

During the meeting, all four council members expressed differing concerns with the language of the current draft of the joint powers agreement. They directed City Attorney Adam King to make changes that would protect Sun Valley in the event that one or more of the other cities does not pass the tax increase. The Ketchum and Hailey councils will likely request their own corrections to the draft.

< By state law, the cities must have the language in final form by Sept. 7 if it is to appear on the November ballot.

Fly Sun Valley Alliance is pushing hard to get the ordinance on this year's ballot, touting it as a "golden opportunity." The group would use the funds from the tax to bolster air service to Friedman, in part by funding minimum-revenue guarantees to commercial airlines.

But some people feel things are moving too quickly. The city of Sun Valley, concerned about leaving the city vulnerable to a lawsuit for misuse of public funds, is approaching the proposal with caution.

"It feels rushed," Councilman Nils Ribi said in an interview. "The worry is that if we were sued for misuse of public funds, we might lose our ability to collect any local-option tax at all, not just the additional 1 percent. Right now, the LOT comprises 28 percent of our budget. That would be unaffordable."

Ribi said the Legislature is "just itching" for Wood River Valley cities that collect local-option taxes to "mess up."

"They dislike us having our LOT," he said. "A few other Idaho cities have LOTs, too. The state is not keen on them, but they particularly don't like the LOT in our little blue dot on the Idaho map."

Other Idaho cities that collect local-option taxes include Donnelly, Driggs, Lava Hot Springs and Stanley.

Idaho law allows resort cities to collect local-option taxes to offset costs to the city incurred by visitors who don't pay property taxes. However, local governments are not supposed to use public funds to support private organizations.

The Idaho Attorney General's Office recently released an opinion that it would be legally "defensible" for cities in the Wood River Valley to use local-option tax funds to support air service to the valley, as long as an agreement between the three cities were entered into with "great care" and for the "public purpose" of specifically increasing air service.

Brennan Rego:

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