The Foundation has continued to own the BROADMOOR Hotel and hire management which has oriented itself to the needs of the people of Colorado Springs and Colorado in general. The trustees of the Foundation have consistently placed service to the community and the general welfare of the residents of the State of Colorado as highest on their list of priorities. The BROADMOOR Hotel is subject to the corporate income tax imposed by Section 11 of the Internal Revenue Code in the same manner as other hotel corporations,

or any tax-paying corporation for that matter.

Its founder,

There is no donor control of El Pomar Foundation. Spencer Penrose, died in 1939 and his wife in 1956. Since then there has been no member of the Penrose family associated with the Foundation or its holdings in any capacity. There have been no instances of self-dealing, and the Foundation has consistently distributed its income for charitable purposes on a current basis in compliance with prevailing law. (Appendix B) The trustees have never made any investments which were not motivated by the specific charitable purposes of the Foundation or which would in any way jeopardize the ability of the Foundation to do so. The Foundation. prints and distributes an Annual Report with financial statements, guidelines and other correspondence so that prospective grantees will know how the funds of the Foundation are available, being managed, and distributed for their benefit.

During consideration of the 1969 Tax Reform Act the Senate Finance Committee received written testimony from the trustees of El Pomar Foundation urging the Committee to delete the provision in the

House-passed Bill requiring private foundations to divest their excess business holdings. The trustees' testimonies set forth the history of the El Pomar Foundation, the charitable activities of the Foundation and the adverse effects on the Colorado Springs community if the BROADMOOR Hotel were required to be sold by the Foundation.

"Our greatest concern is the future of the BROADMOOR Hotel. If the Foundation were required to sell The BROADMOOR the only potential purchasers who could afford to purchase it would be major hotel chains or perhaps one of the large conglomerate corporations. In either event the result would be absentee ownership by an organization which had no special interest in the welfare of Colorado Springs or the inhabitants of Colorado generally. Indeed,

management of such an organization would probably not even
be aware of many of the problems of the area. Any organi-
zation which was oriented primarily towards the profit
motive rather than public service would undoubtedly
curtail many of the activities presently being conducted
by The BROADMOOR
We submit there is nothing
inherently bad in having a charitable foundation own a
controlling interest in a business enterprise. We see
nothing wrong in having the profits of an operating
business corporation inure to the benefit of the public at
large, rather than just to certain private stockholders.
We think the public welfare is better served by having the
beneficial ownership of the BROADMOOR Hotel in the

citizens of the State of Colorado rather than the

stockholders of some major hotel chain corporation

Senator Gordon Allott of Colorado testified in 1969 before the Senate Finance Committee in support of the written remarks of the trustees of the El Pomar Foundation (Senate Finance Committee Hearings, page 4357). In response to this testimony, the Senate Finance Committee provided a grandfather clause for the El Pomar Foundation. The grandfather clause, which would have allowed retention of the BROADMOOR Hotel by El Pomar Foundation, was passed by the Senate; however, was then omitted in the Conference Committee Report. The current law, Section 4943, as approved by the Conference Committee and signed into law by the President in 1969, provides that a business that is one hundred percent owned by a private foundation as of May 26, 1969, is required to accomplish a three-stage period of forced divestiture:

(1) During the twenty year period, 1969 through

1989, the private foundation may continue to own 100% of
the stock of the business.

(2) By May 26, 1989, however, the foundation must

reduce its ownership to 50%.

(3) Finally, by May 26, 2004, the foundation must

reduce its ownership by 35% where it may remain forever.

El Pomar Foundation seeks legislation which would recognize its position as a foundation established over forty-five years ago with no substantial contributors or their lineal heirs associated with its operation for the past twenty-five years.

The legislation before you today proposes the El Pomar

Foundation be exempted from the divestiture requirements under

Section 4943 of the Internal Revenue Code. The El Pomar Foundation would submit the following:

Existing law allows any and all prospective buyers of the El Pomar Foundation's interest in the BROADMOOR Hotel to take unfair advantage of the Foundation since the Foundation is under a legal mandate to sell at least fifty percent of its interest in the Hotel by 1989. The prime concern of the El Pomar Foundation trustees is to realize the top dollar value for the BROADMOOR Hotel and to continue and expand the charitable activities of the El Pomar Foundation.

The fact is The BROADMOOR is one of a kind and the type of institution which has a relatively small sale market. There is every indication there are organizations which do have an interest in purchasing the Hotel and are aware of the divestiture requirements. This has placed potential purchasers in the sound business position of waiting for the approach of 1989 so El Pomar Foundation will be forced to bargain for sale. As previously indicated, the Hotel is not a readily marketable entity. In fact, it is sui generis. This is a unique situation, for a potential purchasing entity would be not only buying the BROADMOOR Hotel, but the many surrounding improvements including the BROADMOOR World Arena, BROADMOOR ski area, three eighteen hole golf courses, and numerous other associated and related activities. In addition, the BROADMOOR Hotel has nearly 2,000 acres of land adjacent to the Hotel which,

because of development in the Colorado Springs area, are being sold to prospective developers in small parcels. The first sale of land was made in October, 1981. These sales will continue to increase the net income of BROADMOOR Hotel and the dividends received by the El Pomar Foundation, which in turn are devoted to charitable

purposes.

The management which has been hired by the Foundation to operate the BROADMOOR Hotel has certainly placed the interests of the Pikes Peak region and the State of Colorado at the forefront. The BROADMOOR Hotel has been a good citizen of the community. There are many in the community who feel the uniqueness of this situation, and local ownership, are very good reasons for continued ownership by the El Pomar Foundation.

The abusive factors that led to the foundation legislation in 1969 have been corrected. The legislation itself was a catalyst which forced many foundations to comply and to continue to strive to serve the public better. As has been previously pointed out, one of the prime reasons for the 4943 provision, the operation of business entities free from the influence of the grantors of the foundation or their lineal heirs, has been met. It should be stressed that the BROADMOOR Hotel operates under exactly the same tax burdens as a privately owned hotel, and is not placed in a posture where it is in unfair competition with other privately owned entities.

It is for the foregoing reasons the El Pomar Foundation respectfully requests your positive consideration.