Downvalley, ‘use tax’ meant new roads
VAIL ” Construction-use taxes haven’t scared away developers in Eagle and Gypsum, with those towns collecting millions while widespread building has continued.
The taxes have helped the towns redo parks and rebuild roads, including the renovations on Broadway in Eagle and a new roundabout in Gypsum.
“It’s been a significant boost for us,” said Jeff Shroll, Gypsum town manager.
Vail voters will consider a construction-use tax on Tuesday’s ballot. The tax is supposed to settle the town’s $25.8 million projected deficit over the next five years.
In 1998, voters in Eagle passed a “use tax.”
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“At the time we didn’t have many revenue sources for the capital fund,” said Willy Powell, Eagle town manager.
As of 2006, the tax was bringing in $1.2 million per year.
Last year, the money helped build new sidewalks, add crosswalks and put new lights on Broadway in Eagle. It also helped spruce up the town park beside the County Building.
The town sensed opportunity, anticipating lots of construction on its way, Powell said. Indeed, the building spurt happened, and the tax didn’t seem to slow development, he said.
“We’ve more than doubled our population since then,” Powell said.
In 1995, Gypsum voters passed a use tax that applies to homes. The town now gets more than $500,000 a year from the tax. They’ve used it to help redo streets, sidewalks and gutters downtown and to build a new roundabout, Shroll said.
Despite the additional tax, a large amount of homes have been built in the last 12 years in Gypsum.
Construction-use taxes have proven tough to pass recently in other communities. Breckenridge voters rejected a tax in 1998.
Avon voters rejected one in 2002, and the town had to cut back on bus service and leave 12 jobs unfilled, said Larry Brooks, Avon town manager.
“We ended up being hit pretty hard,” Brooks said.
The tax would have raised $500,000 a year. Builders objected to the 4 percent tax, saying it unfairly burdened developers.
There wasn’t a strong initiative from citizens supporting the tax, Brooks said.
The town itself was not permitted to push for the tax because of election laws.
If Vail’s construction tax passes, Vail could, in essence, be taking tax money from communities like Gypsum and Eagle, where there are construction-material suppliers.
If a Vail builder buys lumber or rebar in Gypsum, he would pay 4 percent “use tax” to Vail instead of 4 percent sales tax to Gypsum. However, in turn, Gypsum’s construction tax is likely already diverting taxes from other communities.
Shroll said losing sales-tax money to Vail is not a big concern, saying that builders who buy material in Gypsum can already skirt the town’s sales tax by having materials delivered to Vail.
Staff Writer Edward Stoner can be reached at 748-2929 or email@example.com.