Two taxing questions in Vail
While proponents say Vail’s future depends on voters’ generosity, opponents say both proposals pose a risk to the town’s financial well-being as the economy continues to waver on the edge of recession.
First up, Referendum 2C asks voters to increase the town’s current property tax to fund capital investments, particularly in the area of fire and police protection. But most importantly, proponents say, the tax hike would be the first piece in a puzzle of public projects that are hoped to jump-start Vail’s renaissance.
After a decade of stagnating sales tax revenues, Vail Councilman Chuck Ogilby says, Vail needs to be bold to re-invigorate its economy – even if money is not plentiful.
With $750 million in private redevelopment plans on the table, Ogilby says the community needs to come up with $60 million over the next five to seven years to pay for new plazas, heated sidewalks and other public improvements to go along with private renovations in Lionshead and Vail Village.
“The ski resort that does nothing and sits back and waits for success will not find it,” he says. “The longer we wait the farther out is the payoff.”
Instead of hunkering down when times are tough, Ogilby advocates going ahead with public improvements to take full advantage of the spate of private developments breaking ground.
At the end of the road, increased revenues will stem from new hotels attracting new guests and from new shops attracting new customers. This will make Referendum 2C a solid investment for Vail, Ogilby says.
“People need to understand that this is for the benefit of the whole town,” he says. “Everyone has a different idea of what our priorities should be, but right now the do-nothing option is not an option.”
Not so, say critics of the property tax question.
The fact that Vail’s cash flow has dried to a trickle because expenditures have been going up while sales taxes have stagnated, points to this and former “councils’ inability to manage their budget,” says former Vail councilman and longtime resident Merv Lapin.
Instead of asking for more money from its property owners, he says, the town needs to hunker down and spend what it gets.
“The main reason I’m against a property tax hike is that this town has a sales-tax based budget. It has always been that way,” he says. “When the sales tax goes down, so do the expenditures.”
An increase to Vail’s sales tax rate would be counter-productive to the efforts of those who are trying to make Vail a more affordable place to live, Lapin says.
“We have consistently been against increasing property taxes because it has a negative effect on making housing affordable for locals who we are trying to attract to stay in town,” he says.
Even if Vail has the lowest property tax rate in the county that’s no argument to raise it, Lapin says.
“It should be that way,” he says. “Property tax is one of the main reasons that we have an advantage over Beaver Creek and Arrowhead, and we shouldn’t give up that advantage.”
The second question, Referendum 2D, asks voters to nearly double the town’s three-year-old lodging tax and raise the sales tax rate to 9 percent.
The resulting $2 million in extra cash would be used to pay off the construction debt on a $46 million conference center to be built on property owned by Vail Resorts at the west end of Lionshead.
Proponents, including a group of local lodge managers, say a conference center would generate an annual $10 million in salaries and benefits to workers as well as filling beds in times when Vail’s hotels are traditionally empty.
Furthermore, the center is a valuable opportunity because Vail Resorts is donating a 6-acre piece of land, worth an estimated $9 million, supporters say.
But critics say the convention center comes with too many unknowns because it banks on a risky financing plan.
Vail resident Rick Scalpello says the convention center proposal has the potential to bankrupt the town.
“If this thing does not work, the town will have to step up to (the debt). That will affect our credit rating for a long long time,” he says of the $4 million in annual debt payments that the convention center’s financial plan proposes to pay from a combination of increased lodging and sales taxes.
If guests don’t come to stay and shop, Scalpello wonders, who will pay off the debt?
Two referendums, both proposed tax increases, are on the ballot in Vail this November. Statements in support and opposition of the ballot issues will be arriving in Vail residents’ mail boxes early this week, says Vail Town Clerk Lorelei Donaldson. Thirteen summaries were incorporated into the text describing the advantages and disadvantages of the two election questions.
– Referendum 2C
A 4 mills increase in property taxes – or $40 in new taxes per $100,000 in market value on residential properties and $120 per $100,000 in market value for commercial properties – for an estimated $2.25 million in additional yearly revenues to be used for public safety expenses and capital projects. A 4 mills increase would bring Vail’s mill levy to 48.6, compared to Eagle, 51, Gypsum, 83 and Avon, 59.
– Referendum 2D:
A package of tax increases to repay bonds for a $46 million conference center in Lionshead. The package proposes a 1.5 percent increase to the 1.4 percent lodging tax and a 0.5 percent increase to the town’s 8.5 percent sales tax to raise an estimated $2 million in annual debt payments. The sales tax increase would end once the center’s debt is paid off. The lodging portion would stay in place and finance the center’s operations and maintenance.
GETTING YOUR BALLOTS
Vail’s two referendums will be decided at the polls Nov. 5, as part of a coordinated election with Eagle County. Monday is the last day to register to vote. Early ballots for absentee voting can be requested from the Eagle County Clerk and Recorder’s Office starting Oct. 21 and no early ballots will be accepted after Nov. 1.
Polls will be open from 7 a.m. to 7 p.m. on Election Day.
Geraldine Haldner covers Vail, Minturn and Red Cliff. She can be reached at 949-0555, ext. 602, or at firstname.lastname@example.org.