Vail Valley Voices: Who really runs Vail?
Vail, CO, Colorado
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report for September. 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.vailhomeowners.com
Voters should insist that Vail Town Council candidates define their constituents’ issues agenda and policy priorities during the election process.
Once elected, there will be little to no time for a passive learning curve. The newly elected are put in a pressure cooker of decision-making immediately upon taking their oath of office.
Once the polls close, the backroom drama of electing the mayor begins.
Who sets the agenda — constituents, council or administrators? In a matter of days after the election, the town Staff has a recommended issues and policy agenda formulated for the next two years, ready to lead the uninitiated through a complex labyrinth of setting priorities.
Novices are often pledged to those priorities, particularly budgetary, even before they have chance to learn their way to the wash room. One luxury of the “new normal”is that decisions need not be made so hurriedly. There is more time to contemplate cause, effect and unforeseen consequences.
Development and real estate no longer the main game: Much has changed over the last few years. Real estate development is no longer the main game in town.
Save for what the town of Vail has instigated on its own holdings, the Vail Valley Medical Center office building and Timber Ridge redevelopment, the fury of deal making has slowed to a near standstill.
There are no long lines waiting in Vail Town Hall for development review approvals.
Vail affordable-housing projects feel recession effects: The Chamonix and the partial redevelopment of Timber Ridge are two large pre-recession, town-subsidized affordable-housing projects that have been stymied by post-recession financial conditions.
Timber Ridge is a cause for concern, as it has a $22 million outstanding debt with near break-even revenues from its rental income. The town and its prospective developer have yet to come to an acceptable arrangement. A make-or-break-deal-termination deadline, which is mutually renewable, comes due after the council election.
The outcome of the near two years of negotiation turns on how much control over the intended rental to local employees the town is willing to give up to non-employee renters to get half of the outstanding debt off their books ($11 million). There are those saying that the entire property should be sold outright.
Property owners want value back in their properties: Property owners want their real estate investments protected from over development, excessive regulation and taxation.
Rolling back government intrusion and competition that frustrates job growth in the private sector economy is a persuasive economic development theme.
There appears to be conflict over whether it is appropriate to increase local government spending to stimulate marginal short-term job growth. As the recessionary climate continues in the construction industry, public support may be waning for government to impose more costs, through new regulations, onto the private sector.
Town regulations rolled back: Given a choice between creating private sector jobs or more regulations, development interests wager that the town will inevitably find itself in the position of having to roll back or curtail regulations and fees as an inducement to stimulate private sector development.
The most frequently heard plea is to repeal the town’s mandate to require affordable housing in private development projects.
Real estate sales on the rebound, prices maybe not: Vail is experiencing a shrinking inventory of unsold real estate. Nearly 50 percent of the active listed inventory sold in the last 12 months. Downvalley, high foreclosure rates caused by job losses and stagnating employment opportunities have instilled a greater sense of reality in real estate pricing. As a result, buyers are liquidating the available inventory.
Realtors note that for Vail and the upper valley the inventory numbers could be misleading. They believe there is shadow market made up of a large number of units that have been taken off the market because owners have little incentive to reduce prices. They predict that once home prices begin rising, the inventory will increase.
The shadow inventory has caused some Eagle County officials to estimate an additional 10 percent to 20 percent drop in property values in the next year.
Several large town-approved pre-recession era residential projects are still considering beginning construction once market conditions improve. Countywide, there are currently around 3,000 new residential units under discussion for future development.
Shrinking inventories arouse development desires, but … The key players in Vail’s development future are those with the financial wherewithal to incentivize financiers to invest in new development.
Vail Resorts has historically been and remains the most likely entity to lead a private sector initiative strong enough to break through the recessionary malaise constraining investment in new development.
However, since recession building costs have dropped by 15 percent, but property values have dropped on average by 30 percent, developers say that until property values in Vail increase over construction costs, profitable development is impossible.
That puts on hold any major new development.