Vail Valley Voices: Vail council faces changing priorities
Vail, CO Colorado
VAIL, Colorado –For as long as we can remember, employee housing and parking have been the top priorities for Vail, and indeed, they remain important long-term objectives. However, just as every business and every household in this valley has had to modify its own plans in the face of the unprecedented financial fiasco of the past two years, we urge the candidates running for Town Council to consider a shift in priorities more attuned to the financial-business challenges the town very likely will continue to face in the 2010-to-2012 period.
More specifically, we suggest the following be given careful consider-ation by all the candidates. With a majority (four out of seven) seats to be decided in November, this could be the most important council elec-tion since the “redevelopment” council elected in 2003. Priorities are not meant to be static, particu-larly in the face of a daunting environment; they are meant to be flexible and adaptable to help our community get through a severe recession.
Priorities for a recession
1. Balance the operating budget in 2010, not 2011. And while the 2009 budget was “balanced” by borrowing $800,000 from the 2008 surplus, the new council should postpone a decision on the use of the additional proposed $2.4 million until, one, a realistic capital projects budget and finan-cial plan for 2010 through 2012 have been approved and, two, a financially realistic plan for the redevelopment of Timber Ridge is under contract.
2. Propose for voter approval an increase in the lodging tax from 1.4 percent to 4.5 percent (which would increase total collections from an estimated $1.7 million in 2009 to roughly $5.5 million). The total amount of tax collected could be split 60-40 between the Vail Local Marketing District and the Vail Commission on Special Events. If this increase in the lodging tax was passed, it would simultaneously accomplish two goals: First, it would double each of these two marketing groups’ budgets and maintain the cur-rent level of town contributions to other organi-zations, and second, it would “save” roughly $1.6 million from the town’s operating budget.
3. Develop incentives to stimulate small resi-dential building projects.
4. Appoint a Health and Wellness Strategic Ini-tiative Committee to develop a definitive pro-posal for use of the $9 million-plus conference-center fund, working in coordination with the Vail Valley Medical Center and the Steadman-Hawkins Clinic.
Recession is not over for Vail
It is a gross understatement to say that “change is upon us”; it is more like a tsunami that has engulfed Vail. Unfortunately, there are not two segments of the economy that have been more negatively impacted than luxury tourism and resort real estate development – these two sectors probably account for 85 percent of our economy.
With the Dow Jones Industrial Average now above 9,000 (at least temporarily) or more than 40 percent above its March low, there is a strong sense of relief that financial disaster has been avoided and the economy is on the road to recovery. We generally agree with this conclusion with a few important qualifications: A V-shaped recovery is very unlikely, and a return to “the way things were in 2007” is a dream.
Too many things have changed in a behavioral and structural way with business and individual consumers’ psychology to return to the “age of excess and conspicuous consumption” for quite some time. Don Rogers noted in a recent edito-rial in the Vail Daily that each business cycle has unique characteristics different from the one before. We agree. It appears that the recovery at hand will very likely be slow and bumpy at best, with next winter challenging, leaving us scratch-ing our heads and wondering where the recov-ery has gone. Moreover, any recovery in demand will be at lower price points. ” Value, not luxury” will likely be a guiding principle of doing busi-ness in Vail in the 2010-to-2012 period.
Thus, while things may “feel better” in the summer of 2009, actual barometers of business in Vail are bleak.
1. Sales tax revenues (39 percent of Vail’s total budget) are down 15.9 percent for the first seven months of 2009, and July itself was down 20 percent.
2. Real estate transfer tax revenues (6 per-cent of the budget) were down 74 percent through August.
3. Construction-permit revenues (3 per-cent of the budget) were down 63 percent through August, while the actual value of construction projects was down 79 percent. 4. Unemployment in Eagle County reached 9.6 percent in May, an all-time high, and even this number understates the negative impact because so many resi-dents, particularly in the real estate and construction sectors, are “underemployed” with incomes down more than 50 percent. 5. The Vail Valley Partnership, in its July 10 summary of future booking activity, report-ed bookings are projected to be down 35.6 percent in September, down 33.3 percent in October, down 15.8 percent in November and down 19.5 percent in December. The picture for this fall and early winter is not good – remember that last year still bene-fited from some group business.
While hopefully our group’s view will prove to be overly pessimistic, it appears that tourism business in the winter of 2009-10 could be worse than last year and that there will be little rebound in the real estate-con-struction market until late 2010 at the earli-est. In fact, with the 2010 projected comple-tion of the Four Seasons, Ritz-Carlton and Solaris projects, commercial construction will come to a virtual stop next year.
The members of Vail Citizens for Action are Harry Frampton, Alan Kosloff, John Gorsuch, Johannes Faessler, Kent Logan, Rob Ford, Beth Slifer, Mark Ristow and Axel Wilhelmsen.