PARK CITY — A 3rd District judge declined to rule Wednesday on the amount of a bond Park City Mountain Resort must pay its landlord in order to continue operations through the 2014-15 ski season.
Judge Ryan Harris initially planned to issue a ruling after a three-hour hearing in Park City, but after returning from a lunch break he set an additional hearing for Sept. 3 to allow for further review of the case and continued mediation between Park City Mountain Resort and Talisker Land Holdings, which owns roughly 3,000 acres of mountain terrain where the resort operates.
"In light of a couple of things, I have reconsidered my earlier inclination to make a ruling today," he said.
During the hearing, attorneys for both Park City Mountain Resort and Talisker presented differing recommendations for a bond amount, with the resort arguing that the disputed land's isolated location calls for a one-year bond between $1 million and $6 million while Talisker countered that the land would fetch between $10 million and $20 million on the open market.
The opposing arguments were based on the way the property's value should be calculated, whether that be what a landowner earns in rent payments or what profits a tenant is able to generate through use of the property.
"We think the central question for today is the measure of rent," Alan Sullivan, an attorney representing Park City Mountain Resort, said. "What’s the appropriate methodology for the court to determine the probable amount for a monetary award to Talisker?"
In 2011, the resort failed to renew its lease of roughly 3,000 acres of mountain terrain from Talisker. It was served with an eviction notice in August, which was stayed by Harris to allow for mediation between the two parties.
Park City Mountain Resort owns the land surrounding its base, but much of its ski terrain occupies the disputed area owned by Talisker.
But as Sullivan argued on Wednesday, without the resort's base operations the Talisker land is currently inaccessible and would generate little or no revenue for another tenant if the resort's eviction is enforced.
"You couldn’t operate a ski resort on that property," Sullivan said. "Although it’s nice property, it doesn’t have any development rights. It doesn’t have any parking. It’s an isolated piece of property."
But Howard Shapiro, one of the attorneys representing Talisker, countered that fair market value is what a buyer is willing to pay a seller, and because the disputed property is most valuable when connected to the resort's base, it is likely that Park City Mountain Resort "will pay more than anyone for that property."
He also argued that even though the land is currently isolated, it is a unique asset with increased value due to its proximity to Park City, Salt Lake City International Airport and three existing ski resorts.
"The idea that 3,000 acres of prime ski terrain in Park City, contiguous to the PCMR base and contiguous to Deer Valley and to Canyons is to be valued by looking at 3,000 acres of ranch land somewhere across the state is absurd," Shapiro said.
Harris said the potential earnings of an occupying tenant are useful in determining a property's value, but those estimations should be based on what a generic tenant could earn and not the conditions of a specific lessee.
"The income approach is best used looking at a generic owner of the property rather than at one owner of the property," he said. "Any other generic user, other than (Park City Mountain Resort), is going to have substantial costs associated with making money on that land."
Sullivan also said that the resort would not be able to stay in business if forced to pay an annual rent of $14.8 million, one of the figures that has been suggested during the ongoing deliberations.
"The business will not be able to operate because the rent burden will simply be too great," he said. "PCMR will lose money every year and will not be able to pay its bills."
Talisker's legal team declined to comment following the hearing, but Sullivan said that the resort is willing to pay a reasonable bond to continue operations through the upcoming ski season.
He declined to comment on the maximum price the resort would be willing to pay.
"We are very hopeful that the ski season will go forward," he said. "We think it is in everybody’s interest for the season to be saved and we intend to do everything we can to make sure that happens."