LASC Asset Transfer Options
Recently, the LASC Board and representatives from Los Alamos County and Sipapu met to discuss a new joint model for the management and growth of skiing at Pajarito Mountain. Discussions are in their early stages, but if approved by the membership and the County, the new model would involve the majority of the LASC land being transferred to the County. The County would then enter into a long-term lease with Sipapu to manage and operate the ski area, and a much smaller parcel of land around the base would be transferred directly to Sipapu. This model would closely match many others in the ski industry, where land is often leased from the forest service, in conjunction with a small private parcel on which the core buildings are situated. As with the previous transfer options, codicils and other contractual arrangements would be written to ensure that the land would continue to be used as an active recreational and ski area, and that the public had generally unfettered recreational access. Many details need to be refined, but at this time this option is the preferred one of the LASC Board, the Los Alamos County representatives, and the Sipapu investors. An update on this option is expected by April 16, 2014.
The Los Alamos Ski Club as a Charity
As many of you may know, the LASC is currently a not-for-profit company, otherwise known as a 501(c)4. It is less well known that for a long period prior to this, LASC was a registered charity (known as a 501(c)3). The IRS changed our status after a complaint that we did not meet the requirements for such an organization.
A few years ago the Board explored the option of returning LASC to its former status as a charity. The advantages appeared substantial. For example, charities do not pay gross receipts tax (about 6% currently on almost all of our income), can receive donations that are tax-free to the giver, and can obtain a wide variety of grants not available to not-for-profit organizations. The downsides appeared minimal: a change to the articles of incorporation, some legal fees, organizing some more educational events each year, and refraining from taking part in almost all aspects of any political process.
Additionally, research revealed a number of other ski areas in the US that were charities and this proved that it could be done. However, about that time, the Board was exploring closer ties with the County in an effort to get a pipeline, or other source of water, to the snowmaking pond to ensure full snowmaking capability irrespective of the previous winter. One of the reasons that the County can provide limited help to a private organization is through increased gross-receipts tax revenue. The Board therefore felt it was unwise to suspend gross-receipts tax payments to the County at that time by transitioning to a charity. Time has now passed and further discussions with the County have occurred that lead the Board to believe that this previous problem is not now as severe as once it was. Therefore, had the winter of 2013-4 been snowy, it is probable that the Board would be recommending to the Club Members that we transition back to being a charitable organization. However, given our current financial problems and therefore urgent need to explore options for land and asset transfers, now is not the time to be distracted by this issue.
Donations to LASC
Various members have inquired about donating to the Los Alamos Ski Club in the hope that this would help the current financial situation. While the Club would never turn away legitimate donations and every little bit helps us pay our bills, it should be remembered that as a 501(c)(4) (see above), donations to LASC are not tax deductible. Additionally, if as recommended by the Board and subject to a member vote, all assets are soon to be transferred to a third party who would then run the Ski Area, donations at this time could be viewed as eventually fiscally benefiting the third party.
Looking at recent history, as a long-term plan to fix the finances of the LASC, donations seem unlikely to make a substantial difference. After the devastating Las Conchas fire of 2011, during which the Ski Area property suffered extensive damage, our then treasurer opened a fire donation fund at the Los Alamos National Bank. After some advertising, the grand total raised was approximately $4000. This evidence implies that donations are not likely to make a large difference to LASC income.
The staff and Board of Directors of Pajarito Mountain are committed to keeping Pajarito as an operational ski hill in Los Alamos, and to maintaining access for year around recreation.
The long term fiscal management of Pajarito is complex, and the board, mountain staff, and other advisors have invested an immense amount of time to vet information and to diligently pursue the options which we believe will lead to the sustainability and longevity of our ski area. Many ideas and options have been considered, including converting to a 501(c)3, selling dirt, options with the cell towers, adding programs, and asking the membership for funds outright. The conclusion of the Board was that these avenues were at best temporary fixes and would not lead to long-term stability for the club. Therefore, a more drastic solution must be implemented or the ski hill will be forced into bankruptcy.
We have no intention to simply giving away our assets or to change the overall focus of our ski area. Our goal is to keep the ski area operational and to gain sufficient capital investment and stability to sustain the ski area for the long term. Any future option for the ski hill will include contractual obligations for maintaining the hill property as a recreational site (skiing, biking, etc), and will allow access for users outside of operating hours (people skinning or biking up the mountain). Volunteers will still be an integral part of maintaining the mountain trails for skiing and mountain biking.
Any final decision will only be made with the necessary and desired input from the membership. We are narrowing in on a recommended path forward and will share further information with the membership at the March 25th meeting.