Vail Daily column: Rebate important part of Avon deal |

Vail Daily column: Rebate important part of Avon deal

Jennie Fancher
Valley Voices

The town of Avon is proud to announce that the retail store Sun & Ski, through a public-private partnership, is opening its first retail store in Colorado in the recently vacated Sports Authority space. A sales tax rebate for the initial five years of the 10-year lease is being provided by the town as an incentive for the business to come to Avon. I want to take this opportunity to share more detailed information to our community to fully explain why this inducement is important to the deal. The decision was one based on economic development and a desire to support the surrounding businesses.

A sales tax rebate is a common economic development tool used in communities across the state — it is not unique to Avon. Traer Creek shared with Avon, during confidential negotiations, the lease term demands by Sun & Ski, which indicated the company understood the deteriorated status of the space, saw the Office Depot empty space as a less than desirable adjacent property for generating foot traffic, and that other locations were being considered.

We were well aware that Avon’s vacant Sports Authority space was just one of an estimated 200 profitable stores available for lease renegotiations. Sun & Ski’s business model was to expand into other states — and, we were aware of that competitive advantage for Sun & Ski. During negotiations we were informed of the other Colorado store Sun & Ski would move to if negotiations were not successful with Traer Creek, Hoffmann Commercial Real Estate and the town of Avon.

Significant building improvements were required of Traer Creek, at a disclosed amount of $1 million. Our businesses were already sharing with us loss revenues after Sports Authority’s closing and we believe not filling the vacant space in a timely manner would most likely lead to the potential for other business failures. Having watched Office Depot stay vacant for years, with full knowledge the building needed significant improvements, partnering with Traer Creek and Hoffmann Commercial Real Estate to land an excellent tenant is not only about the Sports Authority space but also igniting the possibility to bring a retailer to Office Depot. Suffice it to say council rejected the request for any monies to be paid to Traer Creek, in any amount for the $1 million tenant improvements. The council was in favor of providing a sales tax rebate to Sun & Ski based upon actual collections.

The tax rebate to Sun & Ski of 45 percent of annual sales tax revenues up to an amount of $100,000 per year for five years was our part in the negotiation to incentivize Sun & Ski to come to Avon, as opposed to another Colorado location. We are fully aware that we will never know whether we gave too much but it is less than the requested amount. The negotiated amount for a 10-year lease represents 15 percent of the estimated sales tax collections over the period. We will also never know whether another “big box” type store would move in or if the spot would stay vacant for years as the Office Depot space has — but we consider that a likely outcome. We did favor Sun & Ski as a respected and financially successful business and an excellent fit for the town.

When one studies public policy and economics, it is evident that incentives exist on many levels to attract industry and business. Avon has been successful with the use of incentives, attracting the Westin the use of tax increments and supporting the gondola and plaza costs with tax contributions. The reasons this rebate made sense to council was for the following reasons:

• There are many vacant Sports Authority stores in Colorado and across the nation; we needed to be competitive.

• Business retention — not taking the risk that other businesses would go out of business or struggle financially with lower sales, including but not limited to Pier One.

• Sun & Ski can serve as a catalyst for other development and invigorate the empty Office Depot space as more attractive commercial space by the high quality of a Sun & Ski Sports store

• Continued generation of sales tax revenues from all businesses and opportunity for growth of sales.

• The “but for” — meaning that this deal was brought forth as one which would not move forward but for the incentives provided by the town of Avon.

• This is an anchor tenant not just for Chapel Square but for the town. Sports Authority brought people from all over the county to Avon.

• The importance of working together with Hoffmann Commercial Real Estate and Traer Creek to get a deal done, in partnership with the town, held value for Sun & Ski and future business deals and relationships.

• Jobs. This retailer brings jobs to Avon.

• 55 percent of sales tax on $22 million is more than 100 percent of sales on zero. Again, the town is contributing an estimated 15 percent of total sales tax to Sun & Ski over 10 years.

Again, this decision was not made lightly. In the end, council felt that getting a quality tenant in place was far better for existing businesses and the community as a whole. We are a small resort town that heavily relies on sales tax revenues, and the space might have remained vacant for the next five years, which detracts from our image as a town. A recent example of a similar instance in Silverthorne was reported in the Summit Daily in mid-August, noting Silverthorne used a sales tax rebate to a new Italian Restaurant, Sauce on the Blue.

Town Council is expected to take action on the sales tax rebate today during regular session. Public comment will be taken. Email comments are also welcome to Information on the sales tax rebate can be found in the council packet at

Jennie Fancher is the mayor of Avon.

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