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Let’s vote again on center

Jim Lamont

The following is the Vail Village Homeowners Association position statement on a Vail conference center. Due to its length, the Daily will run the piece over several days. This is part 1.The Vail Town Council is scheduled to consider the fate of the proposed Vail conference center during the next several weeks, and a final decision is planned for May. The Homeowners Association believes it is appropriate to state a recommendation and explain the reasons for its position on this matter. Its position is taken after spending the past two years monitoring the deliberations of the Council and of its appointed advisory committee. Recommendation: The Homeowners Association recommends that the Town Council not proceed with the conference center project now, but submit the issue of whether to proceed to a second public referendum as soon as possible. The need for and benefit to the community of the proposed Vail conference center have not been established. After nearly two years of transparent and collegial consideration of professional documentation, skepticism remains as to the value to the community and the financial viability of this project. Also, changing circumstances since the voters approved funding for the project indicate that the community is recovering from its economic malaise and need not take the risk of a potential ongoing public subsidy for a conference center. There are better development opportunities emerging for Vail which build upon the community’s well-established attributes rather than striking out in a new speculative direction with the conference center. These opportunities can spread benefits broadly throughout the community. The conference center will not. Its financial benefits will flow to a relatively narrow segment of the business community at substantial cost to other businesses and taxpayers. Additionally, industry professionals have advised that a community must have unanimity of purpose to support a major conference center. In Vail, on the study committee and among the Town Council, this unanimity of purpose does not exist. Much has changed from the time when the proposal was brought to the voters. Today, there is much better information available about the risks and benefits of the project. This is critical information that the voters should have had, but did not have to make a reasoned decision on this critical question at the time of the original vote. Finally, the town of Vail’s bond counsel in recent months has determined that the funding approved by the voters does not require the Town Council to build the project. The counsel has also recommended procedures for terminating the conference center taxes and the disbursement of residual revenues should the Town Council not proceed with the project. Examination of Issues and Detailed Support for Recommendations: The following review amplifies the recommendation and rationale. It describes issues involved with the proposed Vail conference center which raised serious and sufficient questions that the proposition should be returned to the voters for a decision as to whether to proceed. The following changing conditions head the list of reasons to reconsider the project: 1. Voters approved the center for a specific site that would not adversely affect adjacent property owners and was adjacent to a proposed hotel to be privately developed on private property. Changing to another site will result in serious impositions upon adjacent property owners and could require the investment of additional public resources to build a hotel on public property.2. Voters may not have been aware that as taxpayers they would be liable to finance any unanticipated ongoing operational deficit from town funds that could cause other public services to be curtailed or require additional tax increases. 3. Voters were unaware of industrywide conditions that could cause the center to be caught in the crossfire of a nationwide war for conference business, and to be severely underutilized. 4. Voters were not informed that the conference center would benefit relatively few businesses and that it could compete with skiing and cultural tourism and perhaps cheapen the quality of the Vail experience. Voters were also not told that there are more promising tourism markets to develop. 5. The town of Vail, at this time, given the demand for competing public improvements, cannot afford going into a new, highly competitive business.Many other aspects of the conference center proposal which are interlinked with these were considered. The following is a discussion of elements of these which contributed to the Homeowners Association’s recommendations. The Need For An Informed Electorate: In 2002, when the Vail center fund was approved by the electorate, information about the experiences of other municipalities with conference centers, the risks of the project and likely costs and consequences to the community were not fully developed. Only a brief period of review and public discussion was possible. The voting electorate was not well informed. Vail can vote now, in 2005, on a well-informed basis, and the decision can truly reflect the wishes of Vail residents. Economic Conditions Are Changing for the Better: The Vail center was conceived at a time when a path for the community’s economic revitalization was not clearly charted. Again, two years later, it is. The center is now out of step and could become more of a hindrance than an asset in the community’s economic resurgence. Public subsidies to prime the pump of economic reinvestment are no longer necessary. Several large privately financed hotels and commercial and residential projects have begun or are beginning construction this spring. The pre-sales success of the Vail Square Arrabelle project will serve as an even larger incentive to redevelop surrounding properties. Estimated Construction Costs Are Increasing: Project managers are confronting a difficult job developing an acceptable construction budget for the project as the architectural design process proceeds. If, the schedule is delayed, it is speculated by project managers that anticipated increases in interest rates and other factors could cause costs to exceed the budget. Furthermore, the change in location from its original site could result in unacceptable traffic circulation and related costs. There appear to be insufficient funds to do the project right. Although the intent is to guarantee construction costs by means of a contracted guaranteed maximum price, there is no totally secure means to prevent cost overruns. The Business Plan Appears Unrealistic: The consultant’s booking plan assumes that the center can meet its financial projections by hosting conferences throughout the non-ski season. Testimony received from independent industry sources indicates that nationwide, summer is the low season for the conference business, with spring and fall being the high seasons, and winter being in the middle. Vail’s spring, with its unpredictable weather and the near universal truancy of its local residents and business owners away on mud season vacations, will all but eliminate it from consideration by meeting planners. The growth prospect for expanding summer tourism, independent of the center, will lessen its ability to rely upon the long-term availability of low cost hotel rooms. These more persuasive realities leave fall as the only open season for the center to maximize its productivity. Alone, it appears this season is insufficient to attain the fiscal requirements of the center. Independent operators advise that the Vail project should add $1 million to its pre-opening marketing budget. Additionally, it was advised that personnel salaries and benefits were below current market rates. These sums have not been budgeted and funds are not available under the center’s current financing arrangement. There is concern that marketing funds will have to be redirected to the center and away from promoting the larger business community. The Financial Plan Implies Risk to the Taxpayers: There has been no scenario provided which does not obligate the town of Vail and its taxpayers to underwrite the center’s financial debt should its business plan fail to attain its projections. The financial plan does not show that the facility will be self-sustaining, let alone profitable without material public subsidy. What has been shown is a plan to privatize the center’s profits, while passing the building costs and shortfall in operational revenues on to the taxpayers. There has been no way found to create a “firewall” that shelters taxpayer exposure to future tax increases should the operational deficit exceed the cash flow projections upon which the center’s business plan is predicated. Jim Lamont is the executive director of the Vail Village Homeowners Association.Vail, Colorado


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