Tale of two developments
What a difference nine miles makes. That’s roughly the distance between Vail and Avon. Two very significant projects have recently been approved. One in Vail. One in Avon. But the approaches used couldn’t have been more different. While the physical distance between the two towns is only nine miles, the gap between the ways they look at development and developers is light years apart.I laughingly said at last week’s Vail Town Council meeting that if the town had its way, they would be burying one of Mr. Knobel’s male body parts in the cornerstone of the new Crossroads project.And if this is true, conversely, the town of Avon must be currently casting Mr. Frampton’s in bronze. Because the Confluence deal given to East West Partners is to be envied by all developers. Rarely will it ever be so abundantly clear what motivates elected bodies. In Vail, all development is done begrudgingly, while Avon seizes every opportunity to add to its inventory and secure whatever market share it can. But from my perspective, both have handled their choices badly. Somewhere in the universe there must be a happy medium.I’m not going into all of the details of the two developer agreements. Instead I will simply highlight a few of the more obvious differences in approach and let you decide. But be clear about this: In the case of Crossroads, the town did the squeezing. With the Confluence, it was the developer.So let’s start with the plaza areas. Crossroads pays 100 percent of development, plus all of the future up keep and turns total control of the use over to the town. The Confluence plaza is a shared development with a 79-21 split (East West Partners $2.1million; town of Avon $597,000). Avon is throwing in $40,000 a year year for operating expenses and East West maintains control.Additionally, the Confluence has a Riverfront park that is running at $923,000, of which the town of Avon is paying $609,000. In case you don’t have your calculator out, that’s 66 percent. Then there’s the gondola. Avon is stepping up to the tune of $240,000 a year for operating costs. I wonder who’s getting the revenue? I can only imagine, but a guess wouldn’t be reputable.Hurd Lane is another head-scratcher. It is currently a dirt road. It must be developed, however, because access through the railroad areas is dependent entirely on the railroad not ever using that property again. If they should decide in the future to stoke up those engines, current access will be caput and Hurd Lane will be the only way in to the Confluence. So the town of Avon is partnering up 28 percent of that development cost, also. That’s something that would NEVER happen upvalley. Of course, there’s a little more history, as well. When you weren’t paying attention, the town of Avon condemned a privately owned parking lot without ever meeting with the owner. East West Partners needed to control that property so they could pave over that lot and the railroad tracks to provide primary access to the Confluence.But there is one area where the town of Avon really held East West Partners’ feet to the fire. You know all of those expenses that they’re sharing? The developer is paying for them and the town will reimburse them as they collect taxes generated by the project. This is one really tough bunch of negotiators. (I hope you can envision my tongue in my cheek.)In Vail the developer gets to do heated sidewalks, curbs and gutters, street lighting, road reconstruction, free ice rink, $1.1 million in public art, public loading and delivery berths, bus waiting area, bowling alley, movie theaters, managed parking, public restrooms, etc. And I mean, etc.The reality is that if you’re on the inside track, things go easier than if you’ve just moved in from the East Coast. And that’s true in spades if you’re doing business in Avon. Keep that in mind the next time you’re in the mood to drop several million dollars in development in the valley.While it’s a little off the point, there is a very interesting case currently before the Supreme Court. It deals with incentives offered by governments to corporations in an attempt to influence where they locate their business activities.The case is Charlotte Cuno vs. Daimler Chrysler. In 1998, Daimler Chrysler negotiated $280 million worth of tax benefits with city and state officials to help finance a new plant near Toledo, Ohio.It’s not uncommon for companies to play states against each other and cut deals on taxes, subsidies, etc., in exchange for corporate investments in a particular area. Charlotte Cuno vs. Daimler Chrysler is threatening to upset this long-standing dance.In this case, a small group of local businesses and homeowners filed suit on the grounds that the incentives were a violation of the commerce clause of the U.S. Constitution. As it worked its way through the legal system, the district court ruled in favor of Daimler Chrysler. However, the 6th Circuit Court of Appeals unanimously reversed that decision, setting the stage for an appeal to the U.S. Supreme Court, which was held on March 1. A ruling is expected this summer and will cover Ohio, Michigan, Kentucky and Tennessee, but will have nationwide consequences as there are already cases pending in Louisiana, Nebraska, Oklahoma, Minnesota and North Carolina.Charlotte Cuno vs. Daimler Chrysler has raised the issue of the fairness of such incentives to businesses already operating. Are they being taxed at a higher rate than the newcomers? Are they actually covering for the big guys? Is it a form of coercion from one state and injury to another? Is government’s role to subsidize large corporations? Can they pick and choose to whom they give tax benefits?If the Supreme Court upholds the appellate court’s decision, it’ll open a Pandora’s box of litigation on old and proposed deals. Stay tuned.Do your part: call them and write them. To contact the Town Council, call 479-1860, ext. 8, or e-mail email@example.com. To contact Vail Resorts, call 476-5601 or e-mail firstname.lastname@example.org. For past columns, go to vaildaily.com and click on “Columnists” or search for keyword “ferry.” Kaye Ferry is a longtime observer of Vail government. She writes a weekly column for the Daily. Vail, Colorado
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