Heavenly Mountain Resort is resisting annexation into South Lake Tahoe. (Image: Kathryn Reed)

South Lake Tahoe and El Dorado County officials are hashing out a tax sharing agreement so the proposed annexation of Heavenly Mountain Resort’s California side can go forward.

“The city has done everything it needs to do to submit the application to LAFCo. We haven’t yet because we need to work with the county on tax sharing,” City Manager Joe Irvin said.

He is aiming for sales and property taxes agreements to come together early this year.

Ultimately, it is up to the Local Agency Formation Commission (LAFCo), an independent arm of the county, to rule on annexation.

Once LAFCo deems the application complete, the seven-member board has 90 days to make a decision, which is followed by a 30-day objection period. If approved, it’s sent to the state Board of Equalization.

“Anyone can oppose it, but the property owners are the ones that count,” LAFCo Executive Officer Shiva Frentzen said.

Without all of the documents, she couldn’t answer if Heavenly has the power to outright kill the annexation.

“We looked at the map and unfortunately we don’t have all the necessary information to decide on the number of landowners, registered voters, and assessed land values to answer your question,” Frentzen said.

In addition to Heavenly’s California Base Lodge, the city proposes annexing about 30 parcels totaling nearly 2,800 acres. This includes Van Sickle Bi-State Park.

Heavenly owns two parcels. One brings in about $144,448 per year, the other $650 annually in property taxes for El Dorado County, according to county Auditor Joe Harn.

Per state law, sales tax numbers for companies are confidential.

Vail Resorts, which owns Heavenly, in its quarterly earnings data released in December reported, “For fiscal 2025, the company now expects $240 million to $316 million of net income attributable to Vail Resorts.”

In its annual report released last March, the Colorado-based company said, “Rental gear, ski school lessons, and dining represent 25 percent of annual resort revenue.”

The county levies the 7.25 percent state sales tax, while the city’s rate is 8.75 percent. If the annexation goes through, Heavenly guests would pay an additional $1.50 on every $100 spent.

Other than the 1.5 percent, sales tax does not go directly to the city. The bulk goes to the state.

“Of the county’s 7.25 percent, the county General Fund gets a penny, a half cent goes to South Lake Tahoe and county public safety, and a quarter cent goes to the local transportation agency; in Tahoe the TRPA,” Harn said.

Lift tickets are not taxed at Vail Resorts’ three California properties. They are at Vail and Breckenridge in Colorado.

Zimmerman did not answer: What concerns would you have if the city or county would want to implement a tax on lift tickets? 

While the city isn’t currently entertaining creating a recreation tax or the like where lift tickets would be taxed, it has discussed it in the past. Tickets are sold summer and winter at the gondola, which is in the city limits. Even if annexation fails, this is still a potential revenue stream the city could tap.

For the city, annexation is all about collecting an unknown quantity of money that would at a minimum go toward expenses related to services involving Heavenly.

“I don’t think there are cons with the city annexing the California Base Lodge,” Irvin said. “We already plow all the roads, maintain the roads in spring and summer. If there is a fire, Fire Station 1 is the first to respond. If there is police activity at California Base Lodge, we will likely be the first to respond.”

Heavenly receives city services without paying city taxes.

Cole Zimmerman, spokesperson for the resort, countered: “The city of South Lake Tahoe’s annexation proposition would add a new layer of municipal jurisdiction over Heavenly that would introduce uncertainty requiring both the resort and the city to expend substantial time and resources with no identifiable, incremental benefits to the community, the resort, our team members, or guests.”

It would be a different layer, not an additional one.

The land in question resides in El Dorado County, from which the county receives most of the property and sales tax dollars. Lake Valley, as the primary county fire department here, receives some funds.

“Heavenly Mountain Resort has shared its objections to annexation,” Zimmerman wrote more than once in an email, but did not provide details of what those are other than to say they are “reflected in publicly available records.”

“The city has yet to clearly articulate the benefits, leaving us with more questions than answers. Ski resort operations are highly complex, with a long history of land-use regulations and requirements with partners such as the U.S. Forest Service, TRPA, and El Dorado County,” Zimmerman said.

Irvin contends, “There would be no change to them with regards to environmental regulations. They would have the opportunity to have a greater relationship with the agency providing them services.”

Heavenly believes the city has soured relations with the termination of the parking agreement on Ski Run Boulevard.

Irvin doesn’t believe the issues are linked.

Both sides say they are committed to keeping the lines of communication open. After all, Heavenly still flies the city’s flag at Cal Lodge.

Peripherally impacted entities:

• Daniel Cressy, LTBMU public services staff officer: “The USDA Forest Service Lake Tahoe Basin Management Unit is not involved in the potential annexation of unincorporated lands surrounding Heavenly Mountain Resort. Regardless of the outcome, resort management and operations on national forest lands would not be affected.”
• Jeff Cowen, Tahoe Regional Planning Agency spokesperson: “The annexation would be akin to a change in ownership. The land-uses allowed are already under the Regional Plan. One caveat is if the city decides to change area plan boundaries or include the annexed area in an area plan such as the Tourist Core Area Plan, that would require TRPA review and approval.“
• Chris Carney, California Tahoe Conservancy spokesperson: “Changing the boundary of the city’s jurisdiction would not result in any changes to how the Conservancy manages the California side of Van Sickle. I’ll add that the state of California’s ownership of the California side of the Van Sickle would also not be changed by an annexation.”
• Carla Hass, county spokesperson: “Because we’re in active negotiations with the city, we’re not going to provide comment for your story. We’ve been discussing all the potential annexations in the basin for approximately six months. I cannot say when we anticipate negotiations to conclude.”

Note: A version of this story first appeared in the Tahoe Mountain News.