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Placer County Tells Resort Association, Your Duties Just Got Halved

The county’s move to strip the organization of two of its major functions has the NLTRA up in arms
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At the end of March, the North Lake Tahoe Resort Association received a letter from the Placer County Executive Office outlining its proposed budget for the organization, a letter the NLTRA always receives this time of year since the budget is due May 31. But this year, there was a striking difference. In the letter, the county casually stated that it would only be funding the marketing arm of the NLTRA, and that it was taking over transportation and infrastructure services, which the organization had been managing since its inception in 1996.

“The budget figure for FY 2017-18 is $3,614,817 and is for marketing services only,” wrote Deputy CEO Jennifer Merchant in the March 31 letter. “Transportation and infrastructure services previously provided by the North Lake Tahoe Resort Association will now be provided by Placer County.”

Placer County says these changes are a long time coming and are necessary to address a dysfunctional organization that does not adequately represent the community as a whole, and to ensure that tax dollars are being appropriately and efficiently spent. The announcement, however, came as a shock to the NLTRA, and has created an uproar among its board of directors and members, who are fuming at Placer County for ordering this significant change without any discussion. The NLTRA views the county’s move as an attempt to weaken the association and gain more control over TOT (transit occupancy tax) dollars, and says this takes away a strong voice for the community and further erodes residents’ dwindling trust in Placer County.

History

Before the NLTRA was formed in 1996, TOT revenue collected in North Tahoe, which is paid by short-term lodging guests, was spent almost entirely on marketing. Many locals felt they did not have a say about how the tax money was spent and that there was a lack of services from Placer County.

“Many of the tourist-serving businesses at North Tahoe were frustrated that we had very little input in the decision-making process for TOT expenditures,” wrote Roger Kahn, who served on the NLTRA’s first board of directors for six years, in a May 1 letter to the Placer County Board of Supervisors. “We realized much of the local infrastructure was aging and we felt Placer County had neglected our area.”

The NLTRA was created to remedy this issue and give locals more input and control over how TOT dollars were spent. A key part of that was the 2 percent increase in TOT — approved by voters in 1996, 2002 and 2012 — to fund infrastructure and transportation projects in North Lake Tahoe, for a total 10 percent TOT. Of the original 8 percent TOT, half of that goes to the Placer County General Fund, while the other half goes to the organization contracted by the county to manage TOT for North Tahoe, which has historically been the NLTRA. This gives the resort association oversight of 6 percent of TOT.

Over the last 20 years, the NLTRA, which also includes the Tahoe North Visitors and Convention Bureau and the North Lake Tahoe Chamber of Commerce, has spent $37 million in TOT funds and leveraged $265 million in matching grants on 100 projects in North Tahoe, such as bike trails, parks, sidewalks, beaches, and transportation services.

The County’s Case for Change

Placer County says it’s time for a change within the NLTRA, and one of the main reasons is accountability.

“We want to continue our relationship with this organization, but there are areas where things have been mismanaged,” Merchant said. “If Placer County focuses on transportation and infrastructure and they limit their focus to marketing, maybe they can make improvements to accountability.”

Merchant cites an independent audit of the 2013/14 fiscal year that examined the NLTRA’s contractual obligations with the county. The audit found that of 16 contractual tasks, the organization had only completed two. Some of the violations included failing to hold a competitive bidding process for contracts of $25,000 or more, not having contracts with grant recipients, and keeping $380,000 of leftover money instead of returning it to the county as required by the contract.

“This stuff concerns me,” Merchant said. “Why aren’t they managing the contract and doing what it says?”

Merchant also says the NLTRA has violated public meeting rules and its contract with Placer by rarely posting its agendas on its website and doing a poor job of notifying members of meetings, as well as leaving materials out of meeting packets.

“This is confounding to me,” she said. “The resort association has not been accountable and continues to not be transparent. This is indicative of problems we have had with the organization since its inception. Eight of the last 20 years we have made significant contract changes because of a lack of accountability.”

Supervisor Jennifer Montgomery, who along with the other four supervisors will have the final say on the NLTRA’s future, also expressed concern about the contract infractions.

“The NLTRA is obligated to meet the terms of their contract,” she said. “Our obligation is for the county to make sure that taxpayer dollars are being spent as appropriately and effectively as possible.”

Another area that the county views as problematic is that the NLTRA makes tax dollar-spending decisions yet does not adequately represent the community. The chamber has 429 members who elect nine members of the board (two other members are appointed by the county), yet there are 10,000 residents in eastern Placer County. And Merchant points out that close to half of the chamber’s membership comes from outside the county — 177 members are based in Truckee, South Lake Tahoe, Incline Village, and Reno.

“You have an organization that doesn’t represent the full community making recommendations about how to spend county tax dollars,” Merchant said. “That is a concern. The chamber is a sliver of the community.”

Supervisor Montgomery agrees.

“The resort association board is a self-selecting group of people. It is not a broad scope looking at the area,” she said. “Most people in the community have no idea what the resort association is or does, while most people who are part of it have a vested interest in preserving what’s there, which is normal.”

The county has proposed replacing the NLTRA’s Capital Investment/Transportation Committee (CIT), which reviews and recommends projects to the Board of Supervisors, with a new stand-alone committee tentatively called the North Lake Tahoe TOT Grant Review Committee. This 15-member committee would be made up of six members from local business organizations, such as the Donner Summit Community Organization and West Shore Association, and representatives of the arts, parks and trails, and transit, as well as two county appointees. According to Placer, this will help address another issue with the NLTRA — the fact that its board tends to be Tahoe City-centric.

“The resort association board is not very spread out geographically,” said Merchant. “The furthest east is Agate Bay Realty. There is nobody from Kings Beach or Tahoe Vista business community.”

Out of the current nine elected board members, six represent businesses from Tahoe City (although JMA Ventures is listed as Tahoe City, it could be considered as Homewood). The other three board members are from the Village at Squaw Valley, Northstar Resort, and Agate Bay Realty.

Lastly, Placer County says there is not as much need for the CIT as in the past because the county now has a greater presence in Tahoe. Merchant started managing Placer’s new North Lake Tahoe CEO office in 2005, and it is now staffed by a total of four employees (although one position is currently empty). And as the Truckee North Tahoe Transportation Management Association (TNT-TMA) has taken on a more active role, many of the CIT’s functions have become redundant. The county states that moving infrastructure and transportation oversight to the county will save $300,000.

“Our role has grown as our presence has grown,” Merchant told a crowd of around 80 people at the May 3 Town Hall at Granlibakken that the NLTRA hosted to address the county’s proposed changes. “We see opportunity to take funds and invest in more capital projects.”

And with NLTRA Executive Director/CEO Sandy Evans Hall leaving at the end of June (she announced her resignation in December), Merchant says there is no better time to make changes to the organization.

NLTRA Fights Back

The NLTRA says that none of Placer County’s reasons for taking away management of transportation and infrastructure funds is justified. For one, the NLTRA says that over the last 20 years, the Board of Supervisors has only rejected one project it has brought forward. That is a 99 percent approval rate by the supervisors.

“We have a 20 year record of the community agreeing with what we have put forward and the Board of Supervisors agreeing,” said NLTRA Vice Chair Samir Tuma of Kila Tahoe, which is building the Tahoe City Lodge. “We don’t understand what’s broken.”

The NLTRA also says it is disingenuous on the part of the county to spring this proposal on it when the organization was in the midst of an 18-month review examining ways to increase efficiency. Both Merchant, who is a NLTRA board member, and Erin Casey, Placer County Senior Management Analyst for Tahoe, who is an alternate on the board, were part of these meetings. NLTRA members say neither Merchant nor Casey ever brought up the possibility of making drastic changes to the association, and in fact gave them assurances to the contrary.

“Placer County has been part of this journey for the last 18 months, they have been very engaged,” said NLTRA Chair Adam Wilson of Northstar. “Our recommendations were coming in the next 30 days, we were almost to the end of this process, which is so dumbfounding to me. The last couple of months the county was obviously thinking of this change, but they never voiced it to us.”

NLTRA Executive Director/CEO Hall agreed.

“It feels like a slight,” she said. “If we are in a strategic partnership, then they should come to us and say ‘this needs to change.’ Instead it was a total gotcha.”

The NLTRA points to a recent decision made in conjunction with the county that indicates how cooperation, rather than top-down decision-making, can improve the organization. In October, both the NLTRA and Placer agreed it would be better if the county took over administration of contracts to increase efficiency in infrastructure and transportation projects. (However, Merchant noted that contract administration “was clearly beyond the resort association’s capacity.”)

As for the audit that revealed contract issues, both Hall and Wilson point out that no audits had ever revealed financial mismanagement and that the organization was working collaboratively with the county to comply. Hall said that many of the contract infractions were things the NLTRA wasn’t even aware it was supposed to do, like when it should have completed an exemption form for the California Highway Patrol for traffic management during the Ironman event, since no other group could provide the same service and putting it out to bid wasn’t necessary.

Hall also says the county’s assertion that the NLTRA didn’t return $380,000 is not entirely accurate. That money had accrued since the resort association was created in 1996, and the county had been aware of it for years, but hadn’t required the organization to return it since there was confusion over what part of the money belonged to the county and what part belonged to the association.

“There is a total lack of trust on the part of the county, but we haven’t done anything wrong,” Hall said, “yet we still get called on the carpet for things we didn’t even know we were doing wrong.”

The resort association also disagrees that the changes would save $300,000. According to the NLTRA, the majority of that money, approximately $212,000, are fixed costs that will be shifted to the marketing fund.

The NLTRA argues that the organization is better at representing the community than the county.

“You can’t convince me that three people [in the Tahoe Placer office] know more about the people who live here and running a business here,” said Gary Davis of JK Architecture Engineering, who sat on the CIT for 15 years and has been a board member since January. “The resort association’s knowledge is not replaceable by bureaucrats … in the end, this will get directed more by the county than community voices.”

Tuma echoes Davis’ argument.

“The resort association has become the local voice,” he said. “If you take that away … it becomes even more county driven. You have someone who controls all the cards telling another person what to do.”

Tuma and Hall also point out that the makeup of the NLTRA board is spelled out in the contract with Placer, and that any board member must have a business based in Placer County. They are bewildered why the county, which has a seat on the board, never brought this up before.

“We are happy to change the representation of the seats but the county has never discussed with us broadening representation,” Hall said.

The NLTRA responded to Merchant’s March 31 letter, which requested that the organization develop a marketing-only budget and scope of work, by refusing to do just that. Instead, in an April 21 letter to Placer County CEO David Boesch, Wilson wrote that the resort association will be developing a scope of work “that reflects the authority that was intended by our partnership with Placer County … we do not believe that the [March 31] letter is in the best interest of the community, nor is it consistent with the intent of the voters who voted to increase the TOT rate.”

Hall, who noted that there has always been tension between the NLTRA and the county, said the association is finally standing up for itself.

Next Steps

Merchant hopes to bring the proposed changes to the Board of Supervisors at either its June 13 or 27 meeting. The county’s contract with the NLTRA expires on June 30. If no agreement is reached, the organization could run out of money since around 90 percent of its revenue comes from the county.

Supervisor Montgomery said that while she feels the county’s proposal is valid and some of the arguments have merit, “there is always room for negotiation.”

However, there could be far-reaching consequences if the supervisors approve the changes to the NLTRA. Many of the people Moonshine interviewed for this story said this would only further the mistrust they have for the county, which has been fueled by the supervisors’ approval last year of both the Martis Valley West and Squaw Valley Village developments despite widespread opposition from the community.

“The perception, right or wrong, is that there is a lack of trust and that the county is not listening to the community and that this is just one more situation where they want to see the resort association continue to be a conduit in collaboration with Placer County,” Wilson said. “The unfortunate result would be less community input, there would be a lack of engagement by the community.”

Tuma thinks the backlash could go even deeper, with residents refusing to approve the 2 percent TOT renewal when it comes up for a vote in 2022, or even refusing to sit on the county’s new committee. He thinks locals could possibly even taken it one step further.

“I hear people saying very loudly, ‘This is the last straw.’ There is anger and frustration and a lack of trust. It wouldn’t surprise me if there would be a strong movement toward incorporation. This could be our Kmart,” Tuma said, referring to Nevada County’s approval of a Kmart in Truckee that helped fuel the community’s push for incorporation in 1993.

 
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October 12, 2017