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School studies<br>solution to budget hit<br>

Now that Coconino County has ruled concessioner Xanterra Parks and Resorts should be taken off future tax rolls, the Grand Canyon School District is trying to figure out its next move.

Through the ruling by the county assessor’s and attorney’s offices, the school will be losing $580,000 annually. Absorbing that hit in the budget is on the mind of school superintendent Sheila Breen and the district’s governing board.

Breen said the first move will be to request an increase in impact aid from the State of Arizona. Second, Breen feels the problem should be resolved at the federal level.

“We’ll have Rep. (Rick) Renzi or someone else seek congressional legislation that would require payment of taxes in national parks where there is a school district,” Breen said. “I believe the consequences in this case were not anticipated.”

The county ruled that Xanterra does not have to pay property taxes on its assessed properties within Grand Canyon National Park. Based on a concessioner contract with the National Park Service, Xanterra does not own its South Rim buildings and lodges, but only leases them. Therefore, Xanterra is not required to pay taxes. The owner, the NPS, is tax-exempt.

“We have a current contract with Xanterra that defines lease-hold surrender interest,” said Nick Hardigg, chief of concessions for the park. “It was that contractual definition that resulted in this determination of non-taxable assets. So we would have to change those contractual terms.”

The “lease-hold surrender interest” clause in the contract is defined as a debt which the NPS would owe Xanterra if the company stopped operating in the park.

The Xanterra contract is based on regulations at the national level. Hardigg said changing those contractual terms would have to be done bi-laterally.

“I regret the difficulties to the school, but there are no options open to us at the park level,” Hardigg said.

Breen said federal law formerly allowed taxation, but that was changed.

“They changed the statute based on different kinds of situations,” she said. “I don’t think school districts in national parks were discussed ... so I think they can fix it at the federal level. I don’t think they considered this (situation).”

The decision by the county was anticipated by local school officials. Several months ago, Glen Canyon National Recreation Area concessioner Aramark was removed from the property tax rolls. The Fredonia School District was on the receiving end of that decision. And not only did Fredonia lose future income, but Aramark asked for refunds worth more than $200,000.

Grand Canyon could be looking at tax refunds to Xanterra in amounts up to $2.25 million. Xanterra could ask for tax rebates for the past four years.

“There’s no problem moving forward, that’s just less on the tax rolls so we should be getting more money from the state,” school board president Chuck Wahler said. “The issue is the claim and whether or not they will be going for prior years. Based on the discussions that have happened ... it’s our strong hope that the state will come in and retroactively give us state equalization to compensate us.”

Breen said state equalization may be the solution, but her first reaction is to send the issue to the legislature or the governor’s office.

“What we’re not inclined to do is write a check, because we can’t operate with that kind of impact,” Breen said. “We’ll talk to legislators to find a solution. I think that will happen. The state and governor’s offices are already aware of this and have ideas.”

Paul Koehler, who has been working with the governor’s office on education issues, has assured Breen that Janet Napolitano is aware of the issue.

If state-impact aid does not kick in for the school district in the future, taxpayers could be footing the bill. That’s unacceptable news to property owners in the district.

“I really hope with Sheila’s cooperation, she feels comfortable finding a way through the state for supplementing it,” said Bess Foster, school board member and Tusayan property owner. “I desperately hope it doesn’t fall on the taxpayers of Tusayan.”

If already high property taxes do go up, Foster said, “I just know we won’t take it sitting down.”

But Wahler and Breen expect state-impact aid to make up the difference.

“Once the budget is established, we get money from the state and also money based on local property tax,” Wahler said. “If there’s less on the rolls, less from taxes, then we’ll get more from the state. That’s not specifically a problem, but we’re feeling the federal government should do something about this.”

Breen said the state needs to study the situation.

“The state will have an obligation to look at state aid ... to offset the taxpayers,” Breen said. “The state could just take it out of the general fund, and that would probably be the easiest solution.”

Judi Lages, vice president of marketing with Xanterra, was out of her Aurora, Colo., office on business last week and could not be reached for comment. However, other sources say they have not yet made a decision on whether or not to seek refunds for past tax years.

Breen does not have hard feelings toward Xanterra for the unexpected situation.

“Xanterra has been a strong supporter of the school,” she said. “It was a corporate decision.”

Verkamp’s Curios, which has operated a business on the South Rim for nearly a century, will continue to pay property taxes despite the rulings.

Company president Susan Verkamp issued a press release a few months ago saying that Verkamp’s feels strongly about supporting local education. Last year, Verkamp’s paid an estimated $11,000 in taxes.

Other concessioners operating within the park do not have property tax liabilities. Hardigg said he believes Delaware North Park Services does not have any possessory interests, at least at the end of its contract.


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