Vail Valley Voices: Another Vail tax on tap?
Vail, CO, Colorado
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report. We publish weekly excerpts from the association, which keeps a close eye on economic and political trends in and outside of the town. The newsletter electronic version with links to supporting documents is available at http://www.vail
A select committee has a new tax increase proposal for Vail to fund marketing and special events.
They are recommending to the Vail Town Council that the lodging tax be increased by 1.5 percent and the sales tax by 0.5 percent, which would generate $4.2 million annually.
The town currently spends $2.1 million to fund marketing and special events.
The proposition might appear on the fall election ballot.
Some are of the opinion that the current $2.1 million should be reallocated to the general fund to be used for other purposes. The $4.2 million would cover the existing $2.1 million and yield an additional $2 million to enhance marketing and special events budgets. There is yet no plan on what the additional $2 million would be spent.
A newly restructured group is proposed to be created from the two existing Town Council-appointed committees that currently recommend the allocation of marketing and special events funding.
Already, critics from the business community have said that the political climate in the electorate may not be conducive for tax increases.
The proposed tax increase would basically reinstate the same tax structure that was approved nearly 10 years ago to finance a convention center, which because of cost overrun projections was subsequently repealed by the voters.
Thinking ahead to avoid pitfalls: To fund its operations, the town is now more dependent than ever on tourism-generated sales tax revenue.
As some see it, there is a false sense of security to be had from the recent upturn in sales tax receipts.
The hypersensitivity of tourism to weather, rising fuel costs, unsettled national and international events leaves it more vulnerable to sudden economic downturns. The town could find itself in a position where it is spending down its reserves faster than sales taxes can replenish them.
The difficulty of government to recognize long-term trends and adjust their short-term policies accordingly is not solely a phenomenon that afflicts local government.
A highly respected national economic analyst lays the responsibility of the current national conditions on elected officials in federal and state governments ignoring warning signs necessitating course correction beginning early in the post World War II era.
Had the course correction been done, much of what has subsequently transpired could have been avoided, most notably in the development and construction industry.
Recovery now will be long and difficult. With the exception of investment of foreign capital, renting rather than buying may well be the dominant trend for the future.
Therein lies the difficulty for Vail’s government.
In the past, it has repeatedly changed its master plans to increase density to build bigger buildings in certain neighborhoods as an incentive to generate lucrative development fees.
The wait for the next development boom may be more long term than Town Hall can afford.
Real estate sales trends: Trends in recent months indicate that available real estate inventories are shrinking steadily and have been since 2009, as reported by Prudential Colorado Properties.
Land Title’s analyst reports that January was the biggest dollar volume month since January of 2008.
The greatest number of the highest value sales were in Vail Village and Beaver Creek. The highest value was in Vail Village at $1,384 per square foot.
Vail and Aspen were ranked by a leading national financial publication as two of the top 20 second-home markets.
The U.S. housing market showed signs of improvement because of mortgage insurance reform.
The European debt crisis has put a damper on prices, which had been on the rise last year.
The Denver Post reported that during 2011, Colorado resort home sales slowed after a strong beginning for the year.
The American economy is showing positive signs of a recovery consistent with other recessions in which assets declined in value, but recovery could be set back by global events.
The town furthered its 2010 extension for an additional five years on its pre-recession approvals for four large projects: The Cascade Residences, Cornerstone Residences, Strata and Timberline Roost Lodge.
Strata has taken steps to begin construction and is the most likely to have access to foreign investment capital.
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