Nuts and bolts targeted in Avon
Riders of the free bus system were spared this summer from having to pay $1 fares when town officials decided they’d wait to see if a proposed 4 percent tax on all building supplies used in Avon survives Election Day.
The “use tax” could raise about half the money necessary to run the local bus routes for free, town officials say. But the tax proposal, known on the ballot as Referendum 2E, has angered contractors, developers and others who say the building industry is being unfairly singled out to pay costs the entire town should share.
“This “use tax’ will affect only a small minority of the population severely, i.e. builders, yet the proceeds will be used to benefit us all,” says builder George Plavec. “Of the approximately 5,000 residents in Avon who will enjoy these benefits, less than 50 regular and resident builders and developers will foot the bill.”
The town expects to be about $700,000 short on funds this year and Town Council is planning extensive spending cuts for 2003. If new revenues streams don’t begin flowing, town officials on both side of the issue have said, they’ll likely have to start charging for buses, raise fees at the Avon Recreation Center and perhaps taken even more drastic measures.
“We do need more revenue,” Councilman Mac McDevitt says. “In the long term, I’d like to get by without taxing or by having greater revenue to tax on.
“In the short term,” he adds. “(The use tax is) something that I think we need.”
The use tax would come into play when a builder applies for a permit. The town building official would assess the total cost of the work and assume 50 percent of that would be spent on building materials.
The builder would pay 4 percent of that 50 percent and get a receipt from the town showing he or she paid the use tax. When the builder goes to buy materials, the builder would show the receipt when paying for them and be exempt from the local sales tax, if there is one.
“This is essentially a revenue stream we’re owed but not capturing currently,” says Town Councilman Brian Sipes, who voted to put the use tax on the ballot. “It closes the circuit on having development pay for itself.”
Opponents say the use tax will cost builders’ extra money because many buy lumber and other supplies in Edwards where there is no sales tax. They will be charged a 4 percent use tax to replace a sales tax they wouldn’t have had to pay.
“I am appalled that a situation arises – such as lack of funding for bus service – and the knee-jerk reaction of the council is to impose a tax on the building industry even though we have very little to do with buses,” Plavec says.
The town is spending about $900,000 a year to operate three free bus routes in town and to Beaver Creek. The town’s decision to start charging a dollar a ride sparked a revolt by Avon hoteliers and merchants who said the fares would turn off tourists. They said visitors expect free bus rides in a ski resort.
Avon Finance Director Scott Wright projects the use tax could raise about $500,000 a year.
But what may be even more valuable, Sipes says, is that the use tax will be imposed on construction at the Village at Avon, where The Home Depot and the Wal-Mart will open next year.
The use tax revenue will go to the developer, Traer Creek, LLC, but the money will be used to pay off bonds on the project. Under an agreement, the town won’t get any sales tax from the stores at the Village until the bonds are paid off.
So the sooner the bonds are paid off –with help from the use tax – the sooner the sales tax revenue begins flowing into the town, Sipes said.
“In Avon, the builders that have said they’ve been singled out, they haven’t been because the few homes they’ll each build in next few years is nothing compared to the Village at Avon,” Sipes says.
The use tax barely survived the Town Council. Mayor Judy Yoder, who supports the tax, broke a 3-3 tie to put the controversial proposal on the ballot.
Councilman Pete Buckley says he voted against the tax because he believes it won’t bring in enough money.
“Even if it passes, I don’t think it’s going to solve the transportation problem that it’s targeted at,” Buckley says.
But Councilwoman Debbie Buckley says the town should have passed a use tax years ago. She says it could have put the money to good use.
“People in Wildridge want sidewalks and bikepaths to make it safer,” she says. “If the use tax was in place when Wildridge was built, maybe we’d have enough money to put those things in.
“I think it’s only fair that growth should pay its way,” she adds.
McDevitt says the town can’t afford to keep spending more than it earns year after year.
“The town had shortfall last year, it had a bigger one this year and there will probably be one next year,” he says. “And we need revenue to offer the services that everyone wants to see us provide,
“This is a tax on growth,” he adds. “It’s not an ideal tax, no tax is ideal but I think it’s a good tax.”
SHALL TOWN OF AVON TAXES BE INCREASED $1.6 MILLION ($1,600,000) ANNUALLY IN 2003, AND BY WHATEVER ADDITIONAL AMOUNTS ARE RAISED ANNUALLY THEREAFTER, BY THE IMPOSITION OF A FOUR PERCENT (4%) USE TAX ON THE PRIVILEGE OF USING OR CONSUMING IN THE TOWN ANY CONSTRUCTION MATERIALS, SUCH USE TAX REVENUES TO BE APPROPRIATED AND SPENT SOLELY FOR TRANSPORTATION AND RECREATION CAPITAL PROJECTS AND SERVICES AND INFRASTRUCTURE RELATED THERETO, ALL IN ACCORDANCE WITH ORDINANCE NO. 02-18 ADOPTED BY THE TOWN COUNCIL; AND SHALL THE REVENUES COLLECTED FROM SUCH TAX AND ANY EARNINGS FROM THE INVESTMENT OF SUCH REVENUES BE COLLECTED AND SPENT AS A VOTER APPROVED REVENUE CHANGE AND AN EXCEPTION TO THE LIMITS WHICH WOULD OTHERWISE APPLY UNDER ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION OR ANY OTHER LAW?
Matt Zalaznick can be reached at 949-0555, ext. 606, or via e-mail at email@example.com.