Vail facing "mid-life crisis’?
A new set of challenges has arisen as what worked to build Vail into a world-class resort doesn’t seem to be working anymore that the town is largely built out. As the resort town matures and more downvalley businesses erode its business base, sales-tax collections – upon which Vail depends for approximately half of its $30 million annual budget – have declined. The town’s economy has changed from skiing-based to one based on services for its masses of second-home owners, who comprise 72 percent of the its dwelling units.
Like any mid-life decision, however, new goals are accomplished with more deliberation than reaction. After all, town leaders has been engaged in this reflection for at least a year now and it seems likely to continue.
“It’s not a mid-life crisis,” explains Mayor Ludwig Kurz. “It could be a mid-term adjustment.”
Dipping for dollars
For the last two years the Town Council has dipped into its capital projects fund to pay for operations. Last year, for example, the council voted to withdraw $1.5 million to fund town services.
Other revenue sources, such as the real estate transfer tax, or RETT – which generates approximately $3 million annually – may not provide enough money to make up the difference. Currently RETT is earmarked for acquisition and maintenance of open space and parks. McLaurin says, however, he believes the town has acquired nearly as much open space and parks as it can and that there may need to be a reallocation of the tax.
McLaurin’s not alone, either. The council is, in fact, examining the use of a portion of RETT for streetscape projects linking parks.
Vail, meanwhile, is operating on a $44 million budget for 2002. McLaurin says the town is working diligently at cutting expenses, as well.
“For whatever reason, operational costs have grown faster than revenues going into the general fund,” says McLaurin.
That trend of eroding sales taxes has continued for seven years.
“We’re starting to change allocation of sales tax so more goes to operations and less into capital improvements,” says McLaurin. “Given where we are (as a mature town) that’s OK, but long-term we can’t solve the problem that way.”
In other words, it’s not a crisis but more a case of having to face the inevitable. It’s just a question of when.
In good company
Vail is not alone in this dilemma, says consultant Ford Frick of Boulder-based BBC Research and Consulting, which studies economic trends and how resort towns function.
“There are many resort towns (across the region) that are saying we need to find a better way to do it,” says Frick. “No one has figured out what the next phase is. They aren’t saying this is the end of the world. They’re all saying they need to build a better mousetrap. Most of them are tinkering here and there and stealing money from one account to pay another.”
Take Whistler/Blackcomb in British Columbia, for example. The community there is looking at a comprehensive study of what type of government funding will be sustainable, Frick says, adding that BBC did a study as part of that deliberation.
“There has to be a new revenue source,” adds McLaurin. “We need to spend more on maintenance because there now is more to maintain. More parks, more buses, more streets.”
Vail’s discussions are being reignited, too, by the supplemental budgeting the town uses to re-evaluate its budget and to make it reflect operational realities.
It’s not going to be easy
“The status quo is no longer acceptable,” McLaurin says. “What the alternatives are serves as a debate on public policy. We’re trying to do this without it affecting services that locals and second-home owners have come to expect.”
Another factor seriously impacting Vail is that it also must participate with private development, as well as some significant redevelopment. One project, the $400 million initial redevelopment of Lionshead, is expected to cost the town itself $60 million. How to pay for that is the subject of weekly meetings by the Lionshead Task Force.
Making the deliberations of the Town Council even more dodgy is a national recession and the terrorist attacks of Sept. 11, which have impacted tourism heavily. Skier numbers rebounded nationally to 54.2 million, the third-best season on record, while Vail’s Town Council has pared its sales-tax collection projections back by 10 percent while s
How Vail and Beaver Creek fared in the national skier-day contest will be released later in the summer.
“I think we’ll be asking some hard questions as to where we need to be headed,” says McLaurin.
Vail may find scant comfort in knowing it is not alone in making tough and perhaps innovative decisions. Across the region, for example, resort towns are facing the same dilemma. In the short-term, says BBC’s Frick, any tinkering may work, but not for long.
“They know it isn’t going to carry them for very long,” Frick says.
“I don’t think there’s a single silver bullet,” adds McLaurin. “It will probably be a series of decisions that incrementally change things.”
Ultimately the introspection may be good for the town, adds McLaurin.
“We try to be all thing to all people and we can’t do that,” he says. “It will really focus us on priorities.”