HomeMy WebLinkAboutStaff Comments 122910 M�n�oRan�uun�
To: Town of Vail
' From: Andy Knudtsen and Brian Duffany, Economic & Planning
'; Systems (EPS)
Subject: Ever Vail Follow Up Questions '
Key Findings and Recommendations ,
Date: December 28, 2010
7'h.e f'con.,im.ic:.,;���L.arr.�l i:`�e
'` �'` The purpose of this memorandum is to highlight the key findings and
�,�
� � recommendations from the EPS analysis of the proposed Ever Vail
development. The information that follows provides additional depth �
and breadth of understanding of the fiscal and economic models '
presented earlier. ,
The findings presented in this memorandum are intended to be carried ,
forward through the remaining review process, complementing the '�
analysis provided by Town staff of development review criteria set forth ',
in the existing land use regulations. ',
This memorandum is organized with responses to questions asked by
Town Council durin the December 7 2010 resentation. Followin that �
9 , p 9
section, EPS has highlighted key findings and recommendations of the
project and its fiscal and economic impact on the Town.
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Ecnnomic&Planning Systems,Inc. I
730.T 7Ch Street,Suite 630 '�
Denver, CO 80202-3511 �
303 623 3557 te!
303 623 9049 fax �
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Berkeley I
Sacramento
Denver I
www,epsys.cam �
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Memorandum December 28, 2010
Ever Vail Recommendations Page 2 ;
Questions and Ciarifications
1. �/ow wi//Ever Vail impact the Town's Genera/Fund?
At full buildout and stabilized occupancy, the Ever Vail project is projected to generate a �
positive fiscal impact to the Town. The project was analyzed by Phase I and Phase II under '
high and low occupancy assumptions. The fiscal impact to the General Fund is estimated to '
be positive in all cases. Under the high scenario for Phase I (the eastern phase), the fiscal
impact to the General Fund is positive $518,700 as shown in Table 1. Phase II has a
positive impact to the General Fund of $205,200. At buildout, the cumulative fiscal impact of
both phases is $795,650.
Under the low scenario, the impact of Phase I on the General Fund is $309,400. Phase II is �
considered to have a neutral to positive impact of $108,100. Cumulatively, the impact of �
both phases at buildout under the low scenario is $489,250. '
A summary of the revenues to the Capital, RETT, Vail Marketing District, and URA funds are i
also shown in Table 1, with additional detail to follow in this memorandum. I
Table 1 I
Summary of Fiscal Impacts,— High Scenario ':
Ever Vail Fiscai Impact Analysis
B Phase-Standalone Cumulative Im act b Phase
Fund Phasel Phasell Phasei Phasesl&II '
General Fund '
Revenues $971,500 $412,100 $971,500 $1,383,500 i
Expenses[1] -$452,800 -$206,900 -$452,800 -$587,550 '�,
Net Fiscai Impact $518,700 $205,200 $518,700 $795,650 '
;
Capitai Fund �
One-Time Use Tax $9,291,760 $5,103,520 $9,291,760 $14,395,280 �
�
Annual Sales Tax $600,000 $258,000 $600,000 $858,000
RETf
One-TimeDeveloper5ales $4,261,000 $2,710,000 $4,261,000 $6,971,000
Annuai Resales $192,000 $122,000 $192,000 $314,000
Vail Marketing District
1.4%Lodging Tax(Annual) $366,000 $168,000 $366,000 $534,000
Urban Renewal Authority
General Fund PropertyTax to URA[2] $258,000 $104,000 $258,000 $362,000
Other Tawng Entities Tax increment $2,280,000 $919,000 $2,280,000 $3,199,000
Totai Property Tax increment $2,538,000 $1,023,000 $2,538,000 $3,561,000
[1]Expenses by phase do not add to the cumulative impads of the entire project. Police is not estimated to need addi6onal staif to serve individual phases,
but wouid need an estimated 1 officer to serve the project if both phases are built. Fire is estimated to need an additional staff person to serve Phase i,
which will also cover Phase II.
[2]The project Is largely within the Lionshead URA. This revenue reverts to General Fund after URA exp(res in 20(i0.
Source:Economic&Plaming Systems
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Memorandum December 28, 2010
Ever Vai!Recommendations Page 3 ,
2. Ili/hat are the major revenue sources that wi//impact the Genera/Fund? lNhat are �I
the significant expenditures thaf wi//occur? i
New development generates two types of revenue to the General Fund: annual revenue and �� ',
one-time revenue. Annual revenue includes property tax, sales tax, and lodging sales tax. �� b ''
One time revenue includes building permit and plan review fees. ,
Ongoing Revenues
The largest sources of ongoing General Fund revenues are the 4.0 percent retail sales tax
and the 4.0 percent lodging sales tax. The retail sales tax is generated through net new ;
lodging visitor expenditures in Vail retaii and food and beverage establishments. The 4.0
percent lodging sales tax is generated through the sale of net new room nights (and is i
distinct from the 1.4 percent lodging tax dedicated to marketing). The lodging sales tax is '
the largest source of revenue from the project and is estimated to be $915,000 per year �'
after buildout of phases I and II, as shown in Table 2. The cumulative retail sales tax from
es I and II is $372,000. The general fund would not receive any property tax until after
2030 ecause the project is largely within the Lionshead Urban Renewal Area which collects
the tax increment from new development as will be discussed below.
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Ongoing Expenses
The largest expenses to be generated by the Ever Vail project are expected to be in the
Public Works, Transportation, Facility Maintenance, Police, and Fire Departments. Under i
Public Works, the maintenance of new landscaped medians, a new roundabout, and a wider ,
road cross section is estimated to cost $149,000 per year. This includes snow removal, ;
seasonal planting and maintenance, and seasonal holiday decarations consistent with what
th,g�"nwn nrnvides at other major entry ways and intersections. The new bus route is
estimated to cost 00 per operate, plus the cost of three new buses addressed
� 1� under the Capital Fund impa.ts below. nnual facility maintenance (wear and tear on public �
� spaces and public facilities) i ' to increase by $73,800 from the new visitor ;
��`Q, population generated by Ever Vaii. 'T �� ��� �-7 ✓��,� � �� �
There are also impacts to Police and Fire. The Police Department is projected to need an �t�� �
additional entry-level code enforcement officer after the construction of phases I and II, at a j
cost of$77,150 per year. The Fire department would require a new crew member after the �Qr i
construction of phase I at a cost of $76,600 per year. One time training and equipment ��Q�`�� �
costs for new hires are not included in these figures but are included in capital expenditures �
below. � j� `�
It should be noted that the additional revenue from lift tax is modest, at $47,000 annually. ��f�,'t@� �
What is shown reflects net new skiers (and net new revenue) from skiers staying in Ever Vail��L i
�odging. If these estimates are included with day visitors using the Ever Vail parking t- 1 �,
structure as well as Ever Vail guests that are not new to Vail, the total skier generation is °�VI�
approximately seven percent of total annual skiers. This estimate is consistent with internal fle�
Vail Resorts estimates that the portal will accommodate approximately ten percent of total ��
annual volume. beA,,Se� !
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Memorandum December 28, 2010
Ever Uail Recommendations Page 4
Table 2
Detailed Town Revenues and Expenses- High Scenario
Ever Vaii Fiscal Impact Analysis ',
B Phase Cumulative �!
Description Phase I Phase II Phase I Phases I&II '
Revenue '
Local Taxes:
4.0%Retail Sales Tax[1] $273,000 $100,000 $273,000 $372,000 '
4.0%�odging Sales Tax $627,000 $288,000 $627,000 $915,000 '
Ski�iftTax $37,100 $9,900 $37,100 $47,000
Intemovernmental 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 $33,100 $16,500 $33,100 $49,700
Public Safety
Police $0 $0 $0 $77,150
Fire $76,600 $0 $76,600 $76,600
Public Works and Transportation
Right-of-WayandLandscaping $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 F�cpenses $452,800 $206,900 $452,800 $587,850
Net Fiscal Impact $518,700 $205,200 $518,700 $795,650 '
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[1]See attached sales tax and retail sales mociel.
[2]LSC Transportation Consuitants July 23,2010 Memorandum. �II
Source:Economic&Plaming Systems �
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Memo�andum December 28, 2010
Ever Vail Recommendations Page 5
One-Time Revenues and Costs ',
The one-time revenues and costs to the General Fund are summarized in Table 3. 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 cosfis approximately $65,000 to train and equip a new police ',
officer. A new firefighter costs approximately $7,800 to train and equip. These one time '
revenues and expenses are the same in the high and low scenarios.
Table 3
General Fund One Time Revenues and Expenses
Ever Vail Fiscal Impact Analysis
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Totals/ ',
Phase 1 Phase II Buildout '
General Fund One-Time Revenues
Building Permit Fee $1,875,184 $1,047,944 $2,923,128 '
Plan Review Fee $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 '
Total $7,800 $65,000 $72,800 ',
Source:Town of Vail;Economic&Planning Systems '
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Memorandum December 28, 2010 '
Ever Vail Recommendations Page 6 I',
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3. What are the impacts to other funds? I
The other major funds analyzed are the Capital Fund, the RETf fund, the Vail Marketing '
District, and the URA. For the Capital Fund, both revenues and expenses were analyzed.
_ Spending from the other funds, such as the URA was not analyzed because it is discretionary, i
is independent of conventional Town funds, and is structured in compliance with state II
regulations pertaining to URAs.
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Capital Fund i
Ever Vail will contribute construction use tax (one time) and sales tax (annual) to the Capital
Fund. The Town regulations mandate that all use tax be dedicated to capital projects. ,
Regarding sales tax, the Town has historically allocated 40 percent of total sales tax revenue �;
for capital projects, although this allocation has fluctuated moderately over time. /„�Q('GP,p��' �
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Construction use tax is estimated at $14.4 million at project buiidout. Annual 4.0 sales and j
lodging sales tax to the Capital Fund is projected to be $600,000 under phase I, $258,000 '!
under phase II, and $858,000 for the project at buildout. I�
The Town has historicaliy collected a traffic mitigation fee on a case-by-case negotiated '
basis. The fee is $6,500 per peak hour trip and would be approximately $2.5 million for Ever
Vail. The transit analysis completed by LSC Transportation Consultants identified a need for
three new transit buses at a cost of $1.8 million.
Tabie 4
Capital Fund Impacts— High Scenario
Ever Vaii Fiscal Impact Analysis
Costs and Revenues Phase i Phase II Totalsl Buildout
One Time Revenues
Construction Use Tax $9;291,760 $5,103,520 $14,395,280
Traffic Mitigation Fee[1] $1,251,250 $1,251,250 $2,502,500
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Annuai Sales Tax by Phase !,
4.0%Sales Tax(Annual) $182,000 $66,000 N(A
4.0°/a Lodging Sales Tax(Annuai) 418 000 192 000 N/A
Totai Sales Taxes $600,000 $258,000 N!A
Cumulative Sales Tau
4.0%Sales Tax(Annual) $182,000 $248,000 $248,000
4.0%Lodging Sales Tax(Annual) 418 000 610 000 610 000 '
Total Sales Taxes $600,000 $858,000 $858,000
Capital Fund Costs(3 Hybrid Buses @$600K ea.) $1,800,000 $0 $1,800,000
[1]The Fee is based on a Study completed Iry Kimley Horn for the Town of Vaii.
Source:Economic&Piaming Systems
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Memorandum December Z8, 2010
Ever Vail Recommendations Page 7 ,
The one time and annual revenues for the REIT, Vail Marketing District, and URA funds are
shown below in Table 5. One-time RETI- revenue comes from the initial developer sales of '
new units, estirnated at $7J5 million for both phases. The annual revenue from resales is �'
projected to be $314,000 for both phases, based on an estimate of 4.5 percent of all units '
turning over each year. The Vail Marketing District is funded by a 1.4 percent tax on lodging '
sales. Ever Vail would generate an estimated $534,000 per year in lodging tax. The URA '
revenues include both the Town's property tax as well as those of other taxing entities. In '
total, URA revenues are expected to be $3.5 million. The URA will sunset in 2030 and the '
Town's 4.69 mills will then flow back to the general fund. '
Table 5
RETT,Vail Marketing District, and URA Revenues
Ever Vail Fiscai Impact Analysis
Fund Phase I Phase II Totalsl Buildout
RETi'Fund One Time Revenue
RETT-Developer Sales $4,261,000 $2,710,000 $6,971,000
Recreation Impact Fee 468 067 315 273 783 340
Total One Time Revenue $4,729,067 $3,025,273 $7,754,340
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RETf Fund Annual Revenue i
RETT on Resales $192,000 $122,000 $314,000 �
Vail Marketing District
1.4% Lodging Tax(Annual) $366,000 $168,000 $534,000
Urban Renewai Authority Property Tax
Town Miii Levy(4.69 Milis) (Annual) [1] $258,000 $104,000 $362,000 j
OtherTaxing Entities (Annual) $2.280.000 919000 $3.199,000
Annual Property Tax Increment $2,538,000 $1,023,000 $3,561,000
[1]Reverts to Generai Fund after URA expires in 2030.
Source:Economic&Plaming Systems
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Memorandum December 28, 2010
Ever Vail Recommendations Page 8
4. How does the fiscal impact of the project compare to existing condifions on the i
site?
The Ever Vail site has a variety of existing uses and structures on it, including the 20,000 ��
square foot Vail Professional building (largely office), the 11,000 square foot Cascade
Crossing retail building, a former gas station, the 11,000 square foot Glen Lyon Office �'
Building, and the Vail Resorts Maintenance Yards. The major existing revenues from the site '
are $61,900 including $21,450 in retail sales tax to the General Fund, $14,360 in sales tax to ,
the Capital Fund, and $26,000 in property tax. These figures can be compared to the cost I
and revenue tables presented above.
Table 6
Current General Revenues from Ever Vail Site
Ever Vaii Fiscal Impact Analysis �
Revenue Existing
- 4.0%Retail Sales Tax—General Fund $21,540
4.0%Lodging Tax $0 '
Sales Tax—Capital Fund $14,360
Property Tax-General Fund(4.69 mills) $26,000
Total $61,900
Source:Town of Vail Finance Department Economic&Planning Systems
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5. P/ease c/arify the skier visit figures shown in the Fisca/Mode% It appears that i
projected revenue from lift ticket sa/es are /ow. I
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The 24,600 skier visits shown in the Fiscal Model Table 22 are net new annual skier visits and �i
are caiculated from the estimated net new visitor days that Ever Vail is projected to j
, generate. The net new skier visits from lodging are equivalent to 1.5 percent increase in
skiers on a base of 1.6 million annual skier visits. When combined with skiers that are not
considered net new as well as skier visits generated by the parking structure, the total �
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annual usage of this portal will reach approximately seven percent of the 1.6 million annuai
skier visits. While more conservative, the estimate is generally consistent with Vail Resort's
mountain planning projections of ten percent total annual skier volume generated through
this portal. (Note that no changes to the skier visit or lift tax calculations within the model
have been made.)
20812-Recommendations-12-29-ZO10
Memorandum December 28, 2010 ,
Eve�Uail Recommendations Page 9 ,
6. The faod and beverage sales in Lionshead appear to be low (Sales Tax P9odel �(� ��� II
Table A5). �t/� � (
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. � . n'�cor ect�fif uoe of�2.9 m Ilionsshown e eviousimaOne cat 20 'llof sale wase ot cahtured in �'���'
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� the base data collected by EPS and the model has now been corrected. The implication of ��
� this change is that any sales that are transferred or eroded to Ever Vail are smaller in ��� ,
/'�(f. proportion to Lionshead existing sales than reported previously. The impact of
�"��� cannibalization is less than previously calculated, given the larger base. A revised net sales �v��
� �� flow chart is shown below in Figure 1, y�� '';
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`�.�'�O The figure shows Lionshead and Vail Village receiving a net inflow of new spending. The new a�'����
spending from Ever Vail guests is estimated to be larger than any erosion from Vail Village or
��e, �ionshead to Ever Vail. West Vail is estimated to lose approximately $772,000 in sales to
�'0 Ever Vail as a result of new competition from the proposed specialty foods Market in Ever ,
O'��n�"' Vail. The $772,000 in potential erosion is compared to existing sales of$71.8 million,
�'� indicating that erosion would be 1.1 percent of sales.
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Memorandum December 28, 2010 '
Ever Vail Recommendations Page 11 t
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Key Findings and Conclusions i
1. The Ever Vai/deve%pment wou/d expand the Town's economic base by expanding I
visitation. �
The visitor and resort economy forms a substantial portion of the Town of Vail's economic
base. If successful, the hotel and overnight rental condominiums in Ever Vail project will
bring additional visitors to the Town, expanding the resort and visitor based economy year
round. Because a significant percentage of the users projected to occupy or visit the Ever
Vail projecfi are estimated to be net new, (approximately half to two-thirds based on the
occupancy rates of the various buildings within the project), there will be an overall
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.
2. The hotel provides fhe most fisca/and economic benefit to the Tawn.
Hotels have a larger fiscal impact to the Town than a condominium project with a rental
program due to higher annual occupancies. The Ever Vail 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 Model, EPS
estimates that one hotel room has a fiscal impact of 1.3 times that of one condominium unit
in a rental 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 expenditurjs than a condo.
2 �.o""��l 1 S G d� ���' i Et'�. � ���• ° i
Consideration: �J�°��'i
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3. The Ever Vai/Hote/cou/d bring additiona/summer and shou/der season business by ff�(jps�
marketing fo graups and events. � /� � � i
gt i Giae.
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 ..��te '
an opportunity to expand group business, as occupancies are low and it is easier to assemble n�f!
a large block of rooms. Because the hotel room count falls below this threshold, the f� � ;
developer and prope anagers will nee d to encourage t ha t con dominium owners
participate in a ental program leverage the economic impact of the meeting space.
Consideratian: Pursue an effe�ive�inc�ntivCe�purog�m that��otn'ivates a ade��G �����
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number of condominium owners to join a rental program. Request that VRDC demonstrate a ��p�� �I
business model for attracting groups and ofF season business. ��WJ ,
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20812-Recommendations-12-29-2010 i
Memo�andum December 28, 20i0 '
Ever Vail Recommendations Page 12 j
4. The Town and Vai/Resorts shou/d strive tv provide a consist�ent/y high qua/ity ;
visitor experience. !
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Part of Vail's success is the consistently high quality guest experience on the mountain and in '
the Town. Guests should see no difference in the quality of maintenance and services on
property maintained by Vail Resorts or the Town. The Ever Vail project should continue the
high quality of service and experience by ensuring that public spaces are maintained to the ;
same, or higher, standards as areas maintained by the Town. The operations and �
maintenance budget for the metropolitan district(s) needs to be adequately fiunded the �
segregated from debt service to ensure consistently high standards of upkeep. �
Consideration: Ensure that Ever Vail will maintain the property and public areas to
the same standard as the Town by ensuring the s ' e plan for any future metropolitan
districts include a distinct mill levy dedicated t o & M. aPe�-�e�+s'1 �' M.�.tA
�.,
5. Th 35,000 quare feet of office space wi//make a modest contribution to the
To economic diversity.
� The E �ai) project will replace the existing 31,000 square feet of office space on the site
,,,�,�,{,G wit 33,000 uare feet of new space. Currently, it is anticipated that half of the space will
1'�°�`` �
e o ied by Vail Resorts Development Company by moving their current operations fram
Avon to Vail. The remaining space would be available for lease to local professionals and
businesses. The employees in this space will add vitality to Ever Vail year round.
Consideration: Encourage office development in Phase I.
20812-Recommendations-I2-29-2010
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Memorandum December 28, 2010
Ever Vai!Recommendations Page 13
6. The fisca/and economic analysis indicates that canniba/ization of existing refail and 'i
restaurant sa/es by Fver Vai/businesses wil/be minima/. ,
The development team has reduced the amount of retail as a result of discussions with EPS, I
Town Staff, and other stakeholders to address concerns about right-sizing the retail hub.
When EPS first became involved in the project, the retail program was proposed ta include
approximately 100,000 square feet of retail and food and beverage space. Through a
collaborative process, EPS, and VRDC and its consultants agreed that the project was over- '
retailed for this location and the size of the surrounding bed base. The retail program was ;
reduced to approximately 53,000 square feet. ,
The impact of new retail space in Ever Vail will have a minimal impact on existing retailers in
Vail for two reasons. First, the amount of space is small in comparison to the current r.etail
inventory. As illustrated in Table 7, Ever Vail would add 53,000 square feet of retail and
food and beverage space to an existing inventory of 629,000 square feet, an increase of 8.5
percent. Ever Vail retail would be one half the size of Lionshead Village and one seventh the '
size of Vail Village, requiring proportionally less in sales to be successful. Second, Ever Vail ,
is also expected to generate new visitation and new expenditures, adding to the overall level '
of guest spending in Vail. The Fiscal and Economic Impact Analysis determined that any
sales erosion that occurred from �ionshead or Vail Village would be "cancelled out" by new ;
expenditures. Erosion from West Vail grocers to the proposed Market was estimated at 1.1
percent.
Table 7
Vail Retail Inventory
Ever Vail Fiscai Tmpact Analysis I
VaiiVillage �fonshead WestVail Vail Ever I
Store Category #Retailers Sq.Ft. #Retailers Sq.Ft. #Retailers Sq.Ft. Total Vail I
Food&Beverage 54 205,000 21 58,500 11 27,000 290,500 22,103
GalierylArUBooks 14 21,000 0 0 0 0 21,000 TBD
Clothing/Fur 32 48,000 8 13,000 0 0 61,000 5,559
Jewelry 12 8,500 2 3200 0 0 11700 TBD �
Skl Equipment 14 36,000 16 28,000 2 16,000 80,000 5,559 i
Grocery/Liquor 2 1,400 1 1,000 4 108,000 110,40D 14,156 �
Gift Shop 6 6,000 3 2,400 0 0 8,400 TBD
Eyewear 2 1,100 1 350 0 0 1,450 TBD i
Miscellaneous 14 10,OOD 6 10,000 11 25.000 45.000 5�881 �
Total 15D 337,000 56 116,450 28 176,000 629,45D 53,258 I
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Source:Town of Vali;Economic&Planning Systems I
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208I2-Recommendations-12-29-2010 i