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Home My WebLink AboutWarren's Comments 011211 � � � S c��se� � n a�� i . '� W�`G� ? '� �� s�� . ��e� �s°f� �'�` ��s ��s l�.�r� : ; • �2►/1��C i�� .�°��t'f� sD�� (�a,� � � � '' � r �� .�� -��.� UR� w� ll �n -��t�e r� d � ��e � n � ( /_ � � (A�1 `��r� °l�e � o� 2S°�a l i�'vt �"? ; � DRAFT Fi eport Eve r Va i I "?�.'��°r�{,rl7;�.,;�,�'�»:f";�,:�' Fiscal Impact Analysis :,,,�^��ri,,�� ` ! i i ; Prepared for: � � Town of Vail '� i ( � I i Prepared by: � Economic & Planning Systems, Inc. January 7, 2011 Ecortomic'&Ptanning Systems;7nc: 7;if1 37kh 5kr��E;Suite�i3tl Dem�er,CO 8U202-3511 sas eza.�ssi cer EPS #20812 3D�b2a 9049.faz E3erkeley i S�cramentn i Denver ' wuuw:epsys.rarn i � . i .�. INTRODUCTION I!, . , ' � � i � Purpose !, Economic& Planning Systems (EPS) was hired by the Town of Vail to conduct a fiscal and I, economic impact analysis of the proposed Ever Vail development. EPS'scope of work included � two major tasks i Fiscal Impact Analysis --The�scal impact analysis addresses the costs of providing Town �I services to the project compared to the revenues generated by the project. The �scal analysis i accounts for a range of funds including the General Fund, the Capital Fund, the RETf Fund, the Marketing Fund, and the URA Fund. i Economic Impact Analysis --The economic impact analysis addresses the ways in which the project is expected to impact other sectors of the Vail economy and how these impacts can be mitigated. One of the key issues has been cannibalization (sales erosion). To address this issue, the Economic Impact Analysis quantifies retail sales flows by base area, Vail Village, Lionshead, and West Vail.�The Economic Impact analysis also addresses other economic and policy issues (more qualitatively) such as the provision and filling of"hot beds,"the capability to attract group sales and ability of the project to fill shoulder seasons, and the economic goal of attracting and retaining jobs in more diverse economic sectors. Report Organization This report provides a comprehensive analysis of the Ever Vail projected impacts. It indudes the , foilowing chapters: � 1. Introduction - Identifies the purpose for the analysis and lists key issues to be evaluated. �D� � �'�'6�l. 2. Project Overview and Key Assumptions - Provide�'SUmmary of project, a summary of how the program has changed, and lists the key assumptions used to determine the fiscal and economic impacts. 3. Fiscal Impacts - Identifies the full range of fiscal revenues and expenditure for five different Town funds. � 4. Economic Impacts - Provides�basis for understanding sales flows into and within the Town of Vail. Estimates future sales flows and quantifies cannibalization impacts to existing retail nodes. 5. Recommendations - �ists key findings from this study and isolates key issues that warrant follow up based on this analysis. Economic&Planning Systems,Inc. 1 20812-R-01-07-2011.doc Ever Vail Fisca!Impact Analysis January 7, 2011 ' Summary of Previous Material On December 7, 2010, Economic& Planning Systems presented its analysis to the Vail Town � Council regarding the fiscal and economic impacts of the proposed Ever Vail development. (Material used in the presentation was dated November 11, 2010.) During the presentation, !, Council members asked a series of questions. In response, EPS has provided this expanded ' report to address: ��! ' i I • Follow Up Questions -This report provides a more detailed explanation of the m hods �� and assumptions used in the analysis. The report describes the projections for e h fund and �!, links the narrative to detailed tables to provide a more incremental approach and increase �(1 ; the level of understanding of the models used in the analysis. It also addresses specific �I issues such as the �ionshead retail sales levels, lift ticket revenue projections, and revenue , streams generated by the current improvements. • Revisions - A number of small revisions have been made to address comments and to correct minor errors. The changes show that the project will have a slightly better fiscal and economic impact on the Town than originally projected. None afFect the overall conclusions. These revisions are summarized below. ' 1. Fiscal Impacf Model Overview. The methodology section was revised and expanded to � describe the organization of the Fiscal Impact Model and the functions of the various tables. 2. Lionshead food and beverage sales. l.ionshead food and beverage sales are approximately $22.2 million, compared to the incorrect�gure of$2.9 million shown previously. EPS overlooked a category of sales in the previous version and the model has been corrected. A small change to the erosion and sales flows estimates was required after this change, resulting in a minor difference in the sales flow figures (1.0 percent � positive net sales flow versus 0.9 percent in this version). j 3. RElT Fund. The figure reported in Tables 6 and 7 of the previous memo reflected the �, total for RETT from initial developer sales and the recreation impact fee. These two ' �gures are now reported separately. The on-going revenues stated previously have not changed. f�tS Ci�V�� (�O�.S ��. �GG�.�S� .. . a . 4. General Fund Expenses. The General Fund expenses under the cumulative scenario declined by $149,000. EPS mistakenly included th' right-of-way maintenance cost twice in the cumulative impact. Because costs are now I wer��e fiscal benefit is higher. G 5. General Fund Revenues. Revenues declined by $44,000 in Phase I and $1$,000 in Phase II due to the elimination of the Road and Bridge Property Tax. Since the project is largely within the Lionshead URA, this revenue stream would be part of the increment captured by the URA. 6. A typographicai error in Figure 1 (the dollar bill image) was corrected. Economic&Planning Systems,Inc. 2 Draft Final Report Ever Vail Fiscal Impact Analysis January 7, 2011 Fiscal P�odel Organization The Table of Contents in the Fiscal Model shows the general organization of the model, with table � numbers and descriptions divided into major topic areas described below. Town stafF has a copy , of the full Fiscal Impact Model. The tables referenced in this section refer to the Fiscal Impact _��5 d� Model, not this report. .w� __"'_'"""' Se�T�"�� ; i � � i Project Assumptions lS � The development program and basic market assumptions are identified in this section of the t` ��d ' or da s re based on visit hrou h 8. Man costs and revenues a Y Fiscal Model, in Tables 1 t g Y • y ('�1�,`� �, generated by the project. The calculation of net new visitor days is shown in Table 5. The �'t e I project's peak population and visitors are also calculated in Table 6. The monthly occupancies � � � used for calculating skier visits are shown in Table 8. �� ry Town Demographics and Budget Analys�s C�c�'� � This section of the model calculates the cost and revenue multiplier factors used for costs and � revenues estimated with the average cost method. Table 9 estimates the total Town peak population. Table 10 is an estimate of second homes (not in the rental pool) used in Table 9. Tables il through 14 identify the various cost and revenues in the general fund, the methods used to estimate them (case studies or average cost method), and the resulting average cost and revenue multipliers. Table 15 describes the current sales tax structure in the Town. Revenue Analysis Tables 16 through 22 provide detailed case study estimates of the property tax, lodging tax, RETi", and lift tax revenues. Table 22 estimates the lift tax from only net new skier visits, calculated from net new visitor days. Table 22a provides a total estimate of skiers that would originafie in the Ever Vail portal, not including day skiers from parking. Cosfi Analysis Case studies for the major project costs are shown in Tables 23 through 28. These were developed with Town department heads and key staff. The transit impacts identified in Table 28 come from �SC Transportation Consultants. One Time Fees and Revenues Tables 29 through 32 calculate one time building and development fees from the development program. Actual fees will vary as more specific construction information becomes available. These revenues occur"one time" in that they only occur during construction. Economic&Planning Systems,Inc. 6 Draft Fina!Report I �I , � 3. FISCAL IMPACTS I � Summary of Fiscai Impacts � The following is a summary of the key costs and revenues generated by the project, and the impacts by fund. Detailed results and supporting calculations can be viewed in the Fiscal Model ; that has been provided to Town Staff. A description of the methodology used and an overview of �i the Fiscal Model is also provided at the end of this memorandum. ' ' 1. At full buildout, the Ever Vail project is estimated to generate a positive fisca/ �I impact to the Town. After accounfing for high and/ow occupancy assumptions, the i fiscal impact to tNe General Fund is estimated at$472,000 to $796,000 annua/ly at fu//project bui/dout and stabilization. The higher range of estimated fiscal impacts reflects what EPS believes are reasonable assumptions for the performance of a high quality well perForming base area resort project '' with direct lift access. It also presumes that VRDC will actively market the project to fill hotel ' beds, attract groups during the off-season, and encourage owners to participate in a rental ' i program. The lower fiscal impact estimate represents more"average" performance far Vail � properties, with no special marketing or management strategies designed to maximize'�hot � beds." The project's actual perFormance wiil likely lie somewhere between the low and high estimates. The results of the fiscal impact analysis are summarized in Tables 6 and 7 for the High and Low Scenarios, respectively. 2. The fiscal impacfs of both phases of the project are posifive, Phase I(east) generates a /arger benefit to the Town than Phase II(west) due to higher guest ! expenditure levels generated by the 102 hotel rooms, 76 branded residences, and 158 condominium units. The hotel is a key economic driver estimated to generate about 25 percent of the visifiors and spending from the project under the High Scenario. The branded residences are modeled as perForming similarly to the hotel and account for approximately 17 percent of total visitors and expenditures. As noted previously, Phase II does not include hotel rooms or branded residences. Retail sales and sales tax are derived from visitor spending, and Phase I generates more spending that Phase II. The annual net fiscal impact to the General Fund of Phase I by itself is estimated at $300 00 to $519,000. Phase II by itself has a fiscal impact of$10 ,100 to $205,200 per year. � �v�.�.d� 5 � � �°� �o� ceS �t-u �^ J �C,�,c°��t �t J � e ��.s�s�� , Economic&Planning Systems,Inc. 14 20812-R-01-07-2011.doc l ai!Fiscal Impact Analysis S�j�c�', �1 Janua 7, 2011 , �°' ��iQS�'`eoo� ('Q� S�� 4ti� The new bus route is estimated to cost $111,300 per year to operate. Annual facility `OIA �� I maintenance (wear and tear on public spaces and public facilities) is estimated to increase by �� $73,800 from the new visitor population generated by Ever Vaii. � j(lI� il Police and Fire e �rs"(�� (� im acts to Police and Fire. The Police De artment is rojected to need an � There are also p P P additional entry-level code enforcement officer after the construction of Phase I and Phase II, at ; a cost of$77,150 per year. The Fire department would require a new crew member after the �� construction of Phase I at a cost of$76,600 per year. One time training and equipment costs for � new hires are not included in fihese figures but are included in capital expenditures below. �I Table 9 High Scenario-General Fund Revenues and Expenses ' Ever Vail Fiscai Impact Analysis B Phase Cumulative Description Phase I Phase II Phase i Phase II Revenue �ocal Taxes: 4.0%Retail Sales Tax[1] $273,000 $100,000 $273,000 $372,000 4.0%a Lodging Sales Tax $627,000 $288,000 $627,000 $915,000 !, Ski LiftTax $37,100 $9,900 $37,100 $47,000 Interqovernmentai Revenue County Sales Tax $18,000 $6,000 $18,000 $25,000 ' County Road and Bridge Prop.Tax $0 $0 $0 $0 CigaretteTax $1,800 $900 $1,800 $2,600 Charges for Services Fines and Forfeitures $7,500 $3,700 $7,500 $11,200 Other Charges,Services,and Sales 7 100 $3.600 $7.100 $10.700 Totai Revenue $971,500 $412,100 $971,500 $1,383,500 Expenses Municipal Services: Administrative $33,600 $16,800 $33,600 $50,300 Community Development $33,10Q $16,500 $33,100 $49,700 Public Safety Police $0 $0 $0 $77,150 Fire $76,600 $0 $76,600 $76,600 Pubiic Works and Transportation Right of-W ay and Landscaping $149,000 $149,000 $149,000 $149,000 Transportation Operations[2] $111,300 $0 $111,300 $111,300 Facility Maintenance 49 200 $24,600 49 200 73 800 Total Expenses $452,800 $206,900 $452,800 $587,850 Net Fiscal Impact $518,700 $205,2D0 $518,700 $795,650 [1j See attached sales tax and retail sales model. [2)LSC Transportation Consultants July 23,2010 Memor�dum. Source:Economic 8 Planning Systems � . H12�12EvvVeOFls+lAntlyJdMcdels1�21Bt2-fimdmafaLxt¢GmeralFundExpm�c Economic&Planning Systems,Inc. 20 Draft Final Report �I Ever Vail Fiscal Impact Analysis I January 7, 2011 ! Net Fiscal Impact t o the General Fund What is the "bottom /ine"impacf to the 6enera/Fund? How does if change if the i project is bui/t in phases? At full buildout, the Ever Vail project is estimated to generate a positive fiscal impact to the Town. After accounting for high and low occupancy assumptions, the fiscal impact to the , General Fund is estimated at $472,000 to $796,000 annually at fuil project buildout and ' � stabilization. ', The higher range of estimated fiscal impacts reflects what EPS believes are reasonable �'I assumptions for the performance of a high quality well performing base area resort project with i direct lift access. It also presumes that VRDC will actively market the project to fiil hotel beds, i attract groups during the off-season, and encourage owners to participate in a rental program. The lower�scal impact estimate represents more"average" performance for Vail properties, with no special marketing or management strategies designed to maximize"hot beds." The project's actual performance will likely lie somewhere between the low and high estimates. The results of ' the fiscal impact analysis are summarized in Tables 6 and 7 and Tables 9 and 10 for the High and Low Scenarios, respectively. Impacts by Phase The fiscal impacts of both phases of the project are positive. Phase I (east) generates a larger c benefit to the Town than Phase II (west) due to higher guest expenditure levels generated by the t 7 102 hotel rooms, 76 branded residences, and 158 condominium units. .(� �)L The hotel is a key economic driver estimated to generate about 25 percent of the visitors and CC�11�� spending from the project under the High Scenario. The branded residences are modeled as r `� performing similarly to the hotel and account for approximately 17 percent of total visitors and ,`5 J�"t expenditures. As noted previously, Phase II does not include hotel rooms or branded residences. �0 Retail sales and sales tax are derived from visitor spending, and Phase I generates more ��ac spending that Phase II. The annual net fiscal impact to the General Fund of Phase I by itself is �` M` � estimated at $300,400 to $519,000. Phase II by itself has a fiscal impact of$100,100 to ,�� $205,200 per year. � ��'��e � General Fund Sales Tax Calculations k�� L7 ` How is sales tax accounted for--is it generated from refail space or visitor expenditures? � !� r Vail lod in and residents Sales tax is calculated from the spending by guests staying in Eve g g, ��`S and second home owners living in the project. Guests spending money in Vail businesses, /�Ip�' generating sales tax revenue to the Town. Guest spending is calculated from estimates of"net �'g new"visitors discussed previously, rather than counting all guest expenditures as generating i ,A�(�e� sales tax. �` � As will be discussed under the Retail Impacts chapter, 90% of guest spending is estimated to (A� in the Town after the buildout of both occur in Vail. This results in $16.4 million in new sales �� phases, as shown in Table 11. The remaining 10% of guest spending, or $1.7 million is � estimated to be°leakage"to other Vail Valley communities. Total new guest spending including �� I Economic&Planning Systems,Inc. 22 Draft Final Report Ever Vail Fiscal Impact Analysis January 7, 201 i Generai Fund One-Time Revenues and Costs , What ofher General Fund Revenues wilJ the project generate? �� Permit and plan check fees are estimated at $3.1 million for Phase I and $1.7 million for Phase �; ��5 �p I. Permit and plan check fees are one-time revenues that contribute to the cost of development I �a,�+�SY�evue. Since they are one-time revenues during construction, they are not counted in the `�" annual fiscal impact to the General Fund which reflects the project at buildout and stabilization. �' l!"� The one-time revenues and costs to the Generai Fund are summarized in Table 12. At buildout, �, �� the project will have generated a total of$4.8 million in permit and plan review fees. These fees � contribute to the cost of development review and other related administrative functions. It costs � ��p�S approximately $65,000 to train and equip a new police officer. A new firefighter costs Q� � approximately $7,800 to train and equip. ', 1 �0�' �e�l� These one time revenues and expenses are the same in the high and low scenarios. � '� \\ Table 12 ��p V General Fund One Time Revenues and Expenses /�D ()"' Ever Vail Fiscal Impact Analysis r��. 7 �� Totalsl � Phase 1 Phase II Buildout General Fund One-Time Revenues Buiiding Permit Fee $1,875,184 �1,047,944 $2,923,128 PlanReviewFee $1,218,870 $681,164 $1,900,034 Total $3,094,054 $1,729,108 $4,823,162 General Fund One-Time Costs Police Training&Equip. $0 $65,000 $65,000 Fire Training&Equip. 7 800 �0 �7.800 Totai $7,800 $65,000 $72,800 Source:Town of Vail;Economic�Planning Systems H12C872 EvrrVni flrsrl AnalyJstModalsl(31812{xd m�luFt2-28-2770xisj�-Ore lime�mpect Economic&Planning Systems,Inc. 24 Draft Final Report � Ever Vail Fiscal Impact Analysis I January 7, 202T Table 13 I Capital Fund Impacts— High Scenario Ever Vaii Fiscai Impact Analysis � Gosts and Revenues Phase 1 Phase II Totais/Buildout One Time Revenues Construction Use Tax $9,291,760 $5,103,520 $14,395,280 i Traffic Mitigation Fee[1] $1,251,250 $1,251,250 $2,502,500 ' i Annual Sales Tax by Phase ' 4.0%Sales Tax(Annual) $181,800 $66,464 ' 4.0%Lodging Sales Tax(Annual) $418.000 $192.000 , Total Sales Taxes $599,800 $258,464 ' Cumulative Sales Tax 4.0%Sales Tax(Annual) $181,800 $248,232 $248,232 ' 4.0%Lodging Sales Tax(Annual) 418 000 610 000 �610.000 I Total Sales Taxes $599,800 $858,232 $858,232 I i Gapital Fund Costs(3 Hybrid Buses @$600K ea.) $1,800,000 $0 $1,800,000 [1]The Fee is based on a Study completed Iry Kimiey Horn forthe Town of Vaii. Source:Economic&Plaming Systems H:12�12 Ev'rVaA FlmI AnJySsUAodois��012-flxd modaFi2-2&�10a1s]37�CapNal F�nd C , t �� .s �� r� I � . �--- 13 ,s s� �� Economic&Planning Systems,Inc. 26 Draft Fina!Report Ever Vail Fiscal ImpacY Analysis January 7, 2011 ', C,Ou� �jC.e�.aC�b ? ! Table 14 ' Capital Fund Impacts— High Scenario , Ever Vail Fiscal Impact Analysis I Costs and Revenues Phase 1 Phase II Totalsl Buildout I One Time Revenues Construction Use Tax $9,157,200 $5,103,520 $14,26Q720 � i Traffic Mitigation Fee[1] $1,251,250 $1,251,250 $2,502,500 I i Annual Sales Tax by Phase � 4.0%Sales Tax(Annual) $121,096 $45,264 ! 4.0%�odging 5aies Tax(Annual) 336 000 $143.000 �� Total Sales Taxes $457,096 $188,264 Cumulative Sales Ta�c 4.0%Sales Tax(Annual) $121,096 $166,344 $166,344 4.0% Lodging Sales Tax(Annual) $336.000 479 000 479 000 Total Sales Taxes $457,096 $645,344 $645,344 Capital Fund Costs(3 Hybrid Buses @$600K ea.) $1,800,000 $0 $1,800,000 � [1]The Fee is based on a Study completed try Kimley Horn forthe Town of Vail. Source:Economic&Plarning Systems H:120812EVaVuii FlsalAn�yislMufel,\12•28-LwA[2�81Nkc�mafoFl2-28-2010 iav�zt]37i:aptai Wnd / ,� 15 J�n"� �ns � ` � � Economic&Planning Systems,Inc. 27 Draft Final Report i 5. KEY FINDINGS AND RECOMMENDATIONS i 1. Ever Vail develo ment would expand the Town's economic base by expanding �I P visitation. The visitor and resort economy forms a substantial portion of the Town of Vail's economic i base. If successful, the hotel and overnight rental condominiums in Ever Vail project will 'i bring additional visitors to the Town, expanding the resort and visitor based economy year i round. Because a significant percentage of the users projected to occupy or visit the Ever � Vail project are estimated to be net new, (approximately half to two-thirds based on the �� occupancy rates of the various buildings within the pro�ect), there will be an overall �L" �'""� I expansion of visitation to Vail. � � • From a fiscal perspective, the Town is expected to experience a positive impact from the Ever Vail project coming from new guests (new room night sales and new expenditures). Retail sales are projected to be net positive in two of the three existing retail centers in Vail, with West Vail seeing a modest contraction. Regarding lodging, the development will introduce , new lodging competition in the Vail market and some existing hotels and condo-hotels will be ' impacted. Consideration: The hotel is an important piece of the project and thus would be most beneficial if constructed in Phase I. 2. The hotel provides the mosf fiscal and economic benefit to the Town. Hotels have a larger fiscal impact to the Town than a condominium project with a rental program due to higher annual occupancies. The Ever Vaii hotel is projected to operate at 60 percent annual occupancy compared to 40 percent annual occupancy for condominiums. The hotel is also expected to bring a larger share of net new guests. From the Fiscal Modei, EPS estimates that one hotel room has a fiscal impact of 1.3 times that of one condominium unit in a rentai program. The economic benefit to the Town in terms of spending is also larger for hotels compared to condominiums. EPS estimates that one hotel room generates 2.3 times more retail and food and beverage expenditures than a condo. Consideration: The hotel is an important piece of the project and thus would be most beneflcial if constructed in Phase I. 3. The Ever Vail Hotel could bring addifiona/summer and shoulder seasan business by marketing to groups and events. The 102 room Ever Vail hotel is proposed to include 6,291 square feet of ineeting space with a seating area of 4,951 square feet. At 20 square feet per guest, this space could accommodate groups of at least 250 people. There is an additional 3,372 square feet of meeting space proposed in the mixed use portion of the project. Groups of this size (250 or more) need a block of at least 200 rooms that can be sold together. The ofF seasons present an opportunity to expand group business, as occupancies are low and it is easier to assemble !� a large block of rooms. Because the hotel room count falls below this threshold, the i Economic&Planning Systems,Inc. 43 20812-R-02-Q7-2011.doc