Vail Daily column: Events a viable strategy?
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.vailhomeowners.com.
The town of Vail is modestly advancing its financial position through sales tax receipts generated, in part, by special events. These advances may not be sustainable indefinitely. In recent years, the town has not been able to rely on real estate-related taxes as it once did.
Since the beginning of the year, real estate sales have been on the rise, but some analysts say that the town’s revenue from real estate development will grow at a slower rate than during the boom years. There is a large inventory of capital improvements that need to be made to overcome congestion and pollution related issues. How the town balances its short-term priorities will in large measure determine the community’s long-term success.
The town has put great effort and funding into securing and promoting special events. The town is improving its evaluation techniques to determine the return on its investment. Over five years into its special event strategy, the resulting growth in sales tax revenues has offset the losses from real estate taxes, but just barely.
Even after two consecutive years of record-breaking sales tax generation, the town’s stream of all revenues grew in 2013 only by 0.4 percent from the prior year. As a result, the town has had to draw down its reserve accounts to finance portions of its operational costs, including the hosting of special events.
Critics are not saying whether the town special event strategy is right or wrong, but they ask the question, is it a viable strategy on which to sustain the government for the long term? It is reported that a study conducted in the 1990s concluded that the town could not survive long-term solely on sale tax revenues.
Special events attract large crowds of day visitors, which at times can be very disruptive. And, as a result, the quality of the Vail experience is suffering from the stress of overcrowding, whether it is from parking on the Frontage Road, unruly crowds or hearing the tales of near miss collisions in the villages and on the mountain. There are hidden costs for the town to hold these events that are not readily apparent in the town’s budget. At what point do certain types of special events and their frequency become more trouble and more costly than they are worth?
In the near term, Vail faces some major funding issues. Vail needs to determine what the source of that funding will be. Just to name a few, the price tag for Gore Creek pollution cleanup has yet to be tallied and it could be a large number. Vail needs some substantial infrastructure improvements, notably ground and air access to the Vail Medical Center facilities that are compatible with the surrounding residential neighborhoods. Traffic flow remains a significant problem, particularly in the Golden Peak area. And the redevelopment of the Vail municipal facilities will have a large price tag.
If sales tax growth trends remain modest, it could mean that there would be pressure to increase other types of taxes and fees. For example, funding for the expansion of service to the Eagle County Regional Airport is being proposed by some to come from increases in sales and lodging taxes. The town of Vail’s new mandatory trash recycling ordinance will most likely increase service fees for trash removal for most businesses, renters and homeowners. Rate increases have already been put in place by the Eagle River Water and Sanitation District and are scheduled to appear on ratepayers’ monthly bills in 2015.
There is concern that Vail may find itself on a path of escalating tax and rate increases. Therefore, the need to give greater public scrutiny of public spending, and of those who do the spending, becomes all the more important if Vail is to continue to create prosperity for its residents and property owners.