Editor’s note: This article has been corrected to reflect that Ridgway Lodge LLC is the owner of MTN Lodge.

Ridgway retains attorney after MTN Lodge owners say they won’t pay taxes on long-term worker housing

The town of Ridgway has retained litigation attorneys from a Denver law firm, gearing up for a fight with the parent company of MTN Lodge.

The decision came after the town attempted to get the owners of MTN Lodge to sign a use agreement and instead received a response indicating the owners don’t intend to pay lodging or sales taxes on extended stays for construction workers living there for years to build the Four Seasons hotel in Mountain Village.

After an executive session during a special meeting Monday night, the town council voted unanimously to hire the law firm Nathan, Dumm and Mayer to represent the town.

The dispute arose months after the town first learned of a long-term lease agreement between the parent company of MTN Lodge, and Merrimac Ventures, the developer of the new Four Seasons resort, to lease all 52 units at the Ridgway hotel for lodging construction workers. The agreement lasts four years, with the option to extend.

The council’s decision to hire the firm came only days after a response from MTN Lodge’s attorney disputing the town’s claims that long-term occupancy would require the hotel to apply for a zoning change. The town also argued MTN Lodge is required to pay a 6% lodging tax and 3.6% sales tax.

The attorney representing MTN Lodge, Mike Lazar, responded that the lodge’s agreement with Merrimac Ventures, the builders of the Four Seasons project, is allowed under the town code and that “no rezoning application or other process with the town is required.”

“Likewise, the exemptions for lodging and sales taxes will also apply,” according to the Jan. 23 letter, which the Plaindealer obtained with an open records request.

This most recent letter represented a change in tone from previous correspondence – namely a Nov. 8 letter from Ridgway Suites LLC Chief Operating Officer Ben Jackson, in which he indicated the owners would pay lodging tax to maintain a good relationship with the town.

“Based on our review of applicable laws and legal guidance, we believe there is a reasonable basis to conclude that the lodging tax may not apply to our operations,” Jackson wrote. “That said, we highly value our positive relationship with the Town and our shared commitment to supporting the Ridgway community. In the spirit of partnership and good faith, Ridgway Suites will continue to pay the lodging tax to the Town of Ridgway.”

Since then, the town reinterated its position that MTN Lodge would need to apply for a zoning change to allow long-term occupancy at the hotel, and proceeding with the plan to house construction workers there full-time would violate the town’s code.

The town council decided in November to pursue a use agreement with MTN Lodge to ensure the town received lodging tax revenue. Nerlin sent a draft agreement to MTN Lodge representatives on Dec. 2, which was not accepted. The Plaindealer filed an open records request for this draft agreement, but the town declined to provide it.

Lazar’s response to the town included a citation of Ridgway’s town code, which provides certain exemptions for lodging taxes, including one for “an individual who is a permanent resident of a hotel… or other similar business, pursuant to a written agreement for a period of at least 30 consecutive days.”

He also pointed to another section of the town’s code with an exemption for sales tax for the same situation with permanent residents of hotels with written agreements, who stay at least a month.

In back-and-forth emails between the attorneys, Nerlin explained the sales tax exemption is meant to treat long-term hotel stays like a residential lease, which wouldn’t be charged sales tax. Nerlin argued if MTN Lodge continues to have occupants who stay for less than 30 consecutive days, the town sales tax would still apply.

Still, the town’s position is that the lodge isn’t allowed to have people stay more than 30 days without a zoning change.

Since learning of the agreement to lease out Ridgway’s largest hotel for at least four years, town leaders have expressed concerns about possible impacts to the town.

If MTN Lodge followed through with the town’s requirement to change the zoning with a site plan application, it would consider factors including traffic, parking, and increased burden on utilities and sewer. Town officials have also asked whether there could be impacts to emergency services and law enforcement, with possible increased calls for service.

Jackson himself estimated the full-time occupancy of the hotel would add 4% to the population of Ridgway — which is roughly 50 residents — and touted a possible economic boost from the arrangement.