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areas expressed as a percentage of ski area gross revenue. These 

 percentages have ranged from 2.2% to 2.5% of ski area gross revenue 

 as defined by the Graduated Rate Fee System (GRFS) . Keep in mind 

 that GRFS includes revenue attributed to the cost of free lift 

 tickets given to ski area employees as well as revenue of 

 businesses on private land not owned or operated by the ski area 

 permittee. As an example of the impact of the inclusion of these 

 items in revenue, the GAO's April 1993 report entitled " Little 

 Assurance That Fair Market Value Fees are Collected From Ski 

 Areas", estimates ski area revenue as calculated under GRFS to be 

 $737,000,000.00. GAO discounts the amount by $122,000,000.00 to 

 $615,000,000.00 in an effort to remove revenues they determined to 

 more closely reflect the actual revenue of the ski areas studied. 



Regardless of which percentage is used as an estimate of the 

 ski industries national average of Forest Service fees paid as a 

 percentage of gross revenue, the following facts should be 

 understood: 



1 . Ski areas on federal land pay more than ski areas on 

 private or state land for land rent. 



2. The Urban Land Institute index on rents for commercial 

 operations demonstrates that 1.8% of gross revenue for land rents 

 is the high end for land rents for commercial projects such as 

 regional shopping centers. 



Advantages of the New System 



The new system we are supporting in H.R. 1527 almost exactly 

 follows the Office of Management and Budget recommendations 

 contained in the GAO's 1988 report on ski area fees. It recommended 

 that a new system should be based on a percentage of gross revenues 

 and the rate should be progressive so that larger areas will pay 

 a higher relative fee. As GAO stated on page 51 of that report, the 

 advantages of a percentage of gross system are : 



".... a (flat) percentage of sales system's simplicity thus 

 reduces the administrative burden for both landlord and 

 permittee. Another advantage is that a percentage of sales 

 system is widely used by other entities. . .calculating the 

 fee using progressive rates is also simple..." 



As applied directly to ski areas using National Forest System 

 land, the new system proposed in H.R. 1527 will have the following 

 major advantages: 



l.It will greatly reduce the amount of bookkeeping, and the 

 Forest Service audits of ski area permittee books. In particular, 

 it will eliminate the concept of "gross fixed assets" (GFA) from 

 the fee calculation. As set forth in GRFS, the gross fixed assets 

 concept was in theory an inducement for ski areas to make 

 improvements to their operations by adding new lifts, restaurants, 

 snowmaking equipment, and similar investments. While the theory is 



