HomeMy WebLinkAboutFiscal and Economic Report 011311 presented to TC 020111 Eve r Va i l
`� ' � + � Fiscal Impact Analysis
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Prepared for:
Town of Vail
Prepared by:
Economic & Planning Systems, Inc.
January 13, 2011
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Table of Contents
1. INTRODUCTION.................................................................................................... 1
Purpose ................................................................................................................... 1
ReportOrganization .................................................................................................. 1
Methodology ............................................................................................................3
Fiscal Model Organization...........................................................................................6
2. PROJECT OVERVIEW AND KEY ASSUMPTIONS.................................................................. 8
Development Program...............................................................................................8
KeyAssumptions .................................................................................................... 12
3. FISCAL IMPACTS ................................................................................................ 14
Summary of Fiscal Impacts ...................................................................................... 14
Existing Site Fiscal Conditions................................................................................... 18
General Fund Impacts ............................................................................................. 19
OtherFund Impacts ................................................................................................ 25
4. ECONOMIC IMPACTS ............................................................................................ 29
Summary of Retail Impacts...................................................................................... 29
EverVail Spending Flows ......................................................................................... 34
Retail Sales in Ever Vail Businesses........................................................................... 38
5. KEY FINDINGS AND RECOMMENDATIONS..................................................................... 42
List of Tables
Table 1 Ever Vail Proposed Development Program ...........................................................8
Table 2 Ever Vail Estimated Market Values......................................................................9
Table 3 Ever Vail Retail and Commercial Development Program ...................................... 10
Table 4 Comparison of Ever Vail Retail Programs........................................................... 11
Table 5 Occupancy Assumptions.................................................................................. 12
Table 6 High Scenario Fiscal Impacts ........................................................................... 15
Table 7 Low Scenario Fiscal Impacts............................................................................ 16
Table 8 Current General Revenues from Ever Vail Site ................................................... 18
Table 9 High Scenario - General Fund Revenues and Expenses........................................ 20
Table 10 Low Scenario - General Fund Revenues and Expenses........................................ 21
Table 11 Summary of Ever Vail Sales Tax....................................................................... 23
Table 12 General Fund One-Time Revenues and Expenses ............................................... 24
Table 13 Capital Fund Impacts - High Scenario............................................................... 26
Table 14 Capital Fund Impacts - Low Scenario ............................................................... 27
Table 15 RETT, Vail Marketing District, and URA Revenues............................................... 28
Table 16 Summary of Town Retail Sales Flows with Ever Vail............................................ 31
Table 17 Vail Retail Inventory....................................................................................... 33
Table 18 Total Ever Vail Guest Spending Regardless of Location........................................ 35
Table 19 Ever Vail Guest Spending Capture Rates ........................................................... 36
Table 20 Ever Vail Guest Spending by Location ............................................................... 37
Table 21 Potential Erosion from Existing Business Districts............................................... 39
Table 22 Projected Sources of Sales in Ever Vail Retail..................................................... 40
Table 23 Projected Net Dollar Flows by Business District .................................................. 41
List of Figures
Figure 1 Ever Vail Guest Spending Patterns ................................................................... 30
Figure 2 Net Dollar Flows vs. Existing Retail Sales .......................................................... 32
1. INTRODUCTION
Purpose
Economic & Planning Systems (EPS) was hired by the Town of Vail to conduct a fiscal and
economic impact analysis of the proposed Ever Vail development. EPS' scope of work included
two major tasks:
Fiscal Impact Analysis - The fiscal impact analysis addresses the costs of providing Town
services to the project compared to the revenues generated by the project. The fiscal analysis
accounts for a range of funds including the General Fund, the Capital Fund, the RETT Fund, the
Marketing Fund, and the URA Fund.
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, the 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 includes the
following chapters:
1. Introduction - Identifies the purpose for the analysis and lists key issues to be evaluated.
2. Project Overview and Key Assumptions - Provides a summary of the 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 a 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 - Lists key findings from this study and isolates key issues that warrant
follow up based on this analysis.
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Ever Vail Fiscal Impact Analysis
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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:
• Follow Up Questions - This report provides a more detailed explanation of the methods
and assumptions used in the analysis. The report describes the projections for each fund and
links the narrative to detailed tables to provide a more incremental approach and an increase
in the level of understanding of the models used in the analysis. It also addresses specific
issues such as the Lionshead 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 of the changes affect the
overall conclusions. These revisions are summarized below.
1. Fiscal Impact 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. Lionshead food and beverage sales are
approximately $22.2 million, compared to the incorrect figure 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).
3. RETT 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
figures are now reported separately to clarify the individual revenue sources to the RETT
fund. The ongoing revenues stated previously have not changed.
4. General Fund Expenses. The General Fund expenses under the cumulative scenario
declined by $149,000. EPS mistakenly included the right-of-way maintenance cost twice
in the cumulative impact. Because costs are now lower, the fiscal benefit is higher.
5. General Fund Revenues. Revenues declined by $44,000 in Phase I and $18,000 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 typographical error in Figure 1 (the dollar bill image) was corrected.
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Methodology
This section provides an overview of the methodology used to perform the detailed calculations
in the Fiscal Impact Model. Fiscal impact analysis (FIA) is a municipal financial planning and
community development tool used to evaluate the impacts of land use decisions. It provides
order-of-magnitude estimates of the impacts to a Town's ongoing revenues, operations and
maintenance costs, and capital expenditures. The FIA can, however, identify specific project
impacts to be addressed and mitigated such as extraordinary O&M costs or one-time capital
costs triggered by the project.
The analysis focuses on the Town's General Fund revenues and expenditures to estimate the net
fiscal impact of the project. The General Fund is the major operating fund for the Town. The
analysis also estimates the building and construction related revenues, the Real Estate Transfer
Tax (RETT), construction use tax, lodging tax, the recreation impact fee, and property tax
increment to the URA. The Town has many other smaller revenue sources. Most of these were
not analyzed because they do not have a strong nexus to growth and development. In other
words, they are determined by contractual agreements or formulas that are not directly linked to
new growth and development.
Expenditures are not estimated for the RETT, Vail Marketing District, or URA funds because
expenditures from these funds are made on a discretionary basis as funds are available, and
these expenditures may not be directly related to impacts generated by Ever Vail.
Cost and Revenue Methodology
The fiscal impact model uses the Town of Vail Budgets and Comprehensive Annual Financial
Reports (CAFR) from 2006-2009 as the basis for estimating revenue and cost factors which are
applied to estimate project specific impacts. The analysis compares annual ongoing revenues to
ongoing annual expenditures (O&M). One-time capital costs are addressed separately. Two
methods are used to estimate costs and revenues: case studies and average cost or revenue
multipliers, as described below.
Case Studies
This refers to a specific calculation of the marginal costs or revenues derived from the Project
based on available data. Case studies were developed for revenue sources when refined
calculation methods were available. For example, property taxes are calculated from expected
market values multiplied by the assessment ratio and then multiplied by the applicable mill
rates. Sales tax revenues are calculated from estimated visitor expenditures. Police and fire
impacts (calls for service) were estimated by constructing a per-unit comparison of call volume
in Lionshead Village.
Average Cost or Revenue Multipliers
These are cost or revenue measures that are ratios of budget line items to known quantities such
as population, housing units, or peak persons served. The variable "peak persons served" is
defined as population plus visitors plus one-half of non-resident employees. Half of non-resident
employees reflect the impacts of employees who are only present for a portion of a day. This
estimating technique is used when more detailed data is not available. Revenues or
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expenditures can be expressed in terms of a cost or revenue per capita, per housing unit, or per
peak person served, etc.
Some costs and revenues do not increase at the same rate as the Town's growth. For example,
general Town administration and government is a relatively fixed cost that does not increase by
a one-to-one ratio with new development. The costs to provide other services such as police and
fire are more directly tied to the increase in population and persons served generated by new
development. To account for cost variability, a percentage adjustment is applied to gross
average cost multipliers to reduce them to a net multiplier.
One-Time vs. Ongoing Revenues
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. One-time
revenue includes building permit and plan review fees. Note that other Town Funds, such as
Capital, RETT, Marketing, etc., are addressed following the General Fund discussion.
Tax Revenues
The tax revenues described below are ongoing annual revenues that will occur after the project
is constructed and occupied, and will continue for the life of the project. The major ongoing tax
revenues analyzed are described below:
• Sales and Lodging Tax — The Town allocates about 60 percent of sales tax to the General
Fund and 40 percent to the Capital Fund. Within the General Fund, sales tax accounts for 37
percent of all General Fund revenues. Sales tax includes the 4.0 percent general sales tax
and the 1.4 percent lodging tax. The 4.0 sales tax applies to both retail sales and overnight
lodging sales. The 1.4 percent lodging tax is dedicated to the Vail Marketing District and is
not used to fund Town operations.
• Property Tax — Property tax is normally a General Fund revenue. However, the Ever Vail
project lies within the Lionshead Urban Renewal Area (URA). The URA collects property tax
increment revenues in this area for 25 years after the date that the tax base for the URA was
established. The tax base for tax increment revenues was established on December 31,
2004. Any new property tax revenue in the URA, including revenues generated by the Ever
Vail project, flows to the URA rather than the General Fund until 2030 (December 31, 2029).
The URA can use these revenues to fund a variety of functions or capital projects within the
U RA.
• Ski Lift Tax — This is a 4.0 percent sales tax on lift ticket sales. Lift tax revenue contributes
to operating the Town's free bus service. Lift tax is calculated from net new skier visits,
rather than the total number of skiers originating in the Ever Vail mountain portal.
• Real Estate Transfer Tax (RETT) — This is a 1.0 percent transaction tax on the sale of real
property in the Town of Vail. RETT revenues are restricted to the RETT Fund, which is used
for parks, recreation, open space, and environmental sustainability.
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Construction Related Revenues
Ever Vail will generate several revenue streams during the course of project construction. These
are '�one-time" revenues in that they will end when the project is built out. The primary concern
in the FIA is to ensure that the ongoing revenues will cover the costs of services, as
construction-related revenues cannot be relied on if construction stops. However, construction
fees and permits are roughly 15 percent of General Fund revenues, and are an important
operating revenue source from year-to-year and should be accounted for in the analysis.
• Construction Use Tax — The Town's 4.0 percent construction use tax is applied to the cost
of materials. The construction use tax is dedicated to the Capital Fund.
• Building Permit and Plan Review Fees — The Town charges a building permit fee based
on the construction valuation and a plan review fee that is 65 percent of the building permit
fee. Permit fees go to the General Fund.
• Recreation Impact Fee — The Town charges a $1.00 per square foot recreation impact fee
which is allocated to the RETT fund for parks, recreation, open space, and environmental
sustainability.
• Traffic Impact Fee — The Town has traditionally collected a traffic impact fee that is
$6,500 per peak hour trip. It has been included in the analysis, recognizing that in previous
project approvals, the Town has accepted public road improvements as a credit against the
impact fee.
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Ever Vail Fiscal Impact Analysis
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Fiscal Model Organization
EPS has provided Town staff with a detailed Fiscal Impact Model (a spreadsheet model) that
contains all of the calculations and assumptions used in this analysis. Earlier drafts of the Model
were also provided to Town Council. This section of the report provides an overview of the
Model's organization for reference. The Table of Contents in the Fiscal Model (separate from this
report) shows the general organization of the model, with table numbers and descriptions
divided into major topic areas described below. The tables referenced in this section refer to the
Fiscal Impact Model, not this report.
Project Assumptions
The development program and basic market assumptions are identified in this section of the
Fiscal Model in Tables 1 through 8. Many costs and revenues are based on visitor days
generated by the project. The calculation of net new visitor days is shown in Table 5. The
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.
Town Demographics and Budget Analysis
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 11 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,
RETT, 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
originate in the Ever Vail portal, not including day skiers from parking.
Cost 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 LSC 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.
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Results Tables
Tables 33 through 38 combine the case study estimates and average cost/revenue estimates to
calculate the annual net fiscal impact to the General Fund, shown in detail in Table 35. Table 36
shows one-time General Fund revenues. Table 37 shows the impact to the Capital Fund.
Table 38 shows the impacts to the RETT, Vail Marketing District, and URA funds. Expenditures
are not estimated for the RETT, Vail Marketing District, or URA funds because expenditures from
these funds are made on a discretionary basis, as funds are available, and these expenditures
may not be related to impacts generated by Ever Vail.
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2. PROJECT OVERVIEW AND KEY ASSUMPTIONS
The purpose of this chapter is to summarize the proposed development program, isolate various
elements within the program by use to evaluate fiscal impact, and provide assumptions about
the functioning of the development that serve as the basis for the modeling.
Development Program
Residential
The development program as proposed is summarized in Table 1. It includes a total of 530
residential units and hotel rooms. The hotel is currently proposed to be 102 rooms. A 76-unit
°branded residence" condominium component would be associated with the hotel brand,
management, and guest services. An additional 307 market rate condominiums are proposed,
plus 26 deed restricted rental units and 19 deed restricted for-sale condominiums. The for-sale
units would be deed restricted to Eagle County residents and full-time local employees.
Compared to the earlier submittal, the residential program is largely the same; the major
difference is that the hotel has been reduced to 102 rooms from 120 rooms. The retail program
has also been scaled back significantly, as will be discussed below.
The project was analyzed as a two phase project. The fiscal impact of each phase was modeled
as if it were a single standalone project; the fiscal impacts of Phase I and Phase II are reported
separately. The cumulative impact of full buildout of both phases was also analyzed. EPS has
modeled the east phase as Phase I. Phase I includes the hotel and retail/commercial space.
Phase II, the western phase, is almost entirely residential.
Table 1
Ever Vail Proposed Development Program
Ever Vail Fiscal Impact Analysis
Description Phase I Phase II Total
East West
Development Program
Hotel 102 0 102
Branded Residences 76 0 76
Condominiums 158 149 307
Deed Restricted Rental 8 18 26
Deed Restricted For-Sale 12 7 19
Total Units 356 174 530
GRFA 468,067 315,273 783,340
Source:Vail Resorts Developmerrt Company,Economic&Planning Systems
H:\2�12EVeVail FisralAnalysis\Motlels\[2J812-fscA matlel-12-292�10x1s]i-Lt+v R']2m
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Market values for the fiscal impact analysis were determined by EPS from research on several
recently built and currently for-sale base area projects located throughout the Intermountain
West. The market rate components are modeled at an average of $1,200 per square foot, or
$1.8 million per unit, as shown in Table 2. The hotel market value is estimated to be $426,000
per room, based on 60 percent occupancy, a $350 per night average daily rate, 50 percent
operating expenses, and a 9.0 percent capitalization rate. Vail Resorts Development Company
(VRDC) staff has indicated that the deed-restricted for-sale units would be priced at
approximately $400,000 per unit.
Table 2
Ever Vail Estimated Market Values
Ever Vail Fiscal Impact Analysis
Description Phase I Phase II
Avg.Sq.Ft.
Hotel --- ---
Branded Residences 1,500 1,500
Condominiums 1,500 1,500
Deed Restricted Rental 1,200 1,200
Deed Restricted For-Sale 1,250 1,250
Market Value/Sq. Ft.
Hotel --- ---
Branded Residences $1,200 $1,200
Condominiums $1,200 $1,200
Deed Restricted Rental --- ---
Deed Restricted For-Sale $325 $325
Market Value/Unit
Hotel $426,000 $426,000
Branded Residences $1,800,000 $1,800,000
Condominiums $1,800,000 $1,800,000
Deed Restricted Rental $102,000 $102,000
Deed Restricted For-Sale $406,250 $406,250
Source:Vail Resorts Developmem Company,Economic&Planning Systems
H:\2�12 Eve Vail Fisral Analysis\Malels\[21812-fiscal modeFl2-292J10x1s]3NktAssunptbns
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Retail and Commercial
The project is also proposed to contain approximately 123,000 square feet of mixed use retail
and commercial space. However, less than half of the space or approximately 53,000 square
feet is programmed as retail and food and beverage space. There is an additional 69,500 square
feet of conference, meeting, skier services, spa, and office space, as shown in Table 3. The
program also proposes additional parking. A total of 1,464 parking spaces will be constructed,
1,025 in Phase I and 439 in Phase II. Approximately 400 of the total count will be public spaces
and are anticipated to be used by day skiers during the ski season. The balance fulfills
requirements related to retail and residential uses.
Table 3
Ever Vail Retail and Commercial Development Program
Ever Vail Fiscal Impact Analysis
Description Phase I Phase II Total
East West
Retail and F&B
Restaurant 16,090 0 16,090
Nightclub 6,013 0 6,013
Sporting/Apparel 11,118 0 11,118
Spa and Other Leaseable Retail 5,881 0 5,881
Grocer 14,156 0 14,156
Subtotal 53,258 0 53,258
Other Commercial Space
Skier Services-Ticketing 2,489 0 2,489
Ch ildren's Skier Services 0 12,114 12,114
Spa 9,870 0 9,870
Office 35,395 0 35,395
Meeting Spaces (incl. hotel) 9,663 0 9,663
Subtotal 57,417 12,114 69,531
T ota Is 110,675 12,114 122,789
Parking
Public Spaces 200 200 400
General 825 239 1,064
Total Analyzed 1,025 439 1,464
Source:Vail Resorts&BBC Research,Economic&Planning Systems
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Ever Vail Fiscal Impact Analysis
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The applicant has reduced by approximately half the amount of retail proposed in this submittal.
The applicant is currently proposing 53,000 square feet of restaurant, spa, and leasable retail
space. Earlier versions of the development program contained approximately 100,000 square
feet of retail and restaurant space. The current proposal has been downsized, as shown in
Table 4.
Previously, EPS expressed concerns that the earlier proposal had too much retail space for the
location and the size of the bed base proposed. A number of potential impacts to the Town were
identified such as vacant retail space and a lack of vitality and potential impacts to the existing
retail areas of the Town. The reduction in retail space was an outcome of several discussions
and working meetings between Vail Resorts Development Company (VRDC), EPS, BBC Research
working as VRDC's consultant, and Town of Vail Staff. A key factor used in these discussions
was the amount of retail floor area that could be supported by reasonable assumptions about the
expenditure potential from Ever Vail guests and residents. (Based on the immediate adjacency,
the °right sizing" also accounted for future expenditure from Ritz Carlton guests.) There is now
general agreement that the retail is appropriately sized, the supply reflects appropriate
assumptions about demand, and that the resulting area has sufficient ballast to provide a high
quality guest experience expected by visitors at a ski area base portal.
Table 4
Comparison of Ever Vail Retail Programs
Ever Vail Fiscal Impact Analysis
Retail Development Current Proposal Previous Proposal
Restaurant 16,090 24,000
Nightclub 6,013 6,000
Sporting/Apparel 11,118 36,000
Spa and Other Leaseable Retail 5,881 21,000
Grocer 14,156 13,000
Total 53,258 100,000
Source:Vail Resorts, Economic&Planning Systems
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Key Assumptions
EPS analyzed the project under"High" and "Low" scenarios to evaluate the project under
different performance measures. The High Scenario reflects what EPS believes to be reasonable
estimates of performance for a well located high quality base portal development with direct lift
access. It was not designed to be an "optimistic" or'�aggressive" scenario. It does, however,
assume that VRDC will actively market the project, pursue off-season business (group business,
meetings, conferences, etc.) to fill hotel rooms and rental condominiums, and motivate owners
to participate in a rental program. The °Low" scenario was designed to reflect "average" or
°business-as-usual" performance for Vail properties. Occupancy is a key economic and fiscal
driver; the occupancy assumptions are shown below in Table 5. In the High Scenario, the hotel
is assumed to operate at 60 percent annual occupancy and 50 percent annual occupancy in the
Low Scenario. Condominiums are modeled at 40 percent annual occupancy in the High Scenario
and at 30 percent in the Low Scenario.
Table 5
Occupancy Assumptions
Ever Vail Fiscal Impact Analysis
Description "High"Scenario "Low"Scenario
% In Rental Pool
Hotel 100% 100%
Branded Residences 75% 65%
Condominiums (Free Market) 50% 35%
Deed Restricted Rental 0% 0%
Deed Restricted For-Sale 0% 0%
AnnualOccupancy
Hote I 60% 50%
Branded Residences 45% 40%
Condominiums in Rental Pool 40% 30%
Second Home Condominiums 20% 20%
%of Guests Net New
Hotel 70% 60%
Branded Residences 70% 60%
Condominiums in Rental Pool 50% 40%
Second Homes 100% 100%
Source:Vail Resorts,Economic&Planning Systems
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The percent of guests that are "net new" to Vail is also estimated. The hotel is assumed to draw
60 to 70 percent net new guests, based on interviews with hospitality consultants and hotel
managers. Net new guests are lower for the condominiums, estimated at 40 to 50 percent. All
second homeowners are assumed to be new; however, second homes have a fraction of the
economic impact of hotel rooms and therefore do not have a large effect in the fiscal impact model.
Another key assumption is that costs related to infrastructure internal to the project will be borne
by Vail Resorts, not the Town of Vail. It is anticipated that Vail Resorts and the Town will
establish a Title 32 Metropolitan District (metro district) for this purpose. At the time of service
plan approval, it is recommended that a segregated revenue stream be established to cover
operations and maintenance costs (as distinct from debt service for capital improvements) and
that it be sized to ensure a level of service commensurate with Town of Vail standards.
Finally, it is important to note that the fees included in the model are the best approximation
available at this time. Actual fees and requirements applied at time of project approval or at
time of building permit may differ, based on a modified development program and/or modified
Town standards.
Economic& Planning Systems, Inc. 13
3. FISCAL IMPACTS
Summary of Fiscal 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
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 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
full project buildout 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
program. The lower fiscal 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 for
the High and Low Scenarios, respectively.
2. The fiscal impacts of both phases of the project are positive. Phase I (east)
generates a larger 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 visitors 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 $300,400 to $518,700. Phase II by itself has a fiscal impact
of $100,100 to $205,200 per year.
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Table 6
High Scenario Fiscal Impacts
Ever Vail Fiscal Impact Analysis
By Phase-Standalone Cumulative Impact by Phase
Fund Phase I Phase II Phase I Phases I&II
General Fund
Revenues $971,500 $412,100 $971,500 $1,383,500
Expenses [1] - 452 800 - 206 900 - 452 800 - 87 850
Net Fiscal Impact $518,700 $205,200 $518,700 $795,650
Capital Fund
One-Time UseTax $9,291,760 $5,103,520 $9,291,760 $14,395,280
Annual Sales Tax $599,800 $258,464 $599,800 $858,232
RETT Fund
One-Time Developer Sales $4,261,000 $2,710,000 $4,261,000 $6,971,000
Recreation Impact Fee $468.067 1 7 $468.067 $783.340
Total One-Time Revenue $4,729,067 $3,025,273 $4,729,067 $7,754,340
Annual Resales $192,000 $122,000 $192,000 $314,000
Vail Marketing District
1.4°/o Lodging Tax(Annual) $366,000 $168,000 $366,000 $534,000
Urban Renewal Authority
General Fund Property Tax to URA[2] $258,000 $104,000 $258,000 $362,000
Other Taxing Entities Tax Increment 2 280 000 919 000 280 000 3199 000
Total Properly Tan Increment $2,538,000 $1,023,000 $2,538,000 $3,561,000
[1]Expenses by phase do not add to the cumVative impacts ofthe entire project. Police is not es6mated to need ad�tirnal staff to serve irxiividual phase;
but would nced an estimated 1 officer to serve the project if both phases are built. Fire is estimated to need an addiUonal staff person to serve Phase I,
which will also cover Phase I I.
[2]The projectis largelywithin the Lionshead URA Th's revenue reverts to General Fund after URA expires in 2030.
Source:Economic&Planning Systems
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Ever Vail Fiscal Impact Analysis
January i3, 2011
Table 7
Low Scenario Fiscal Impacts
Ever Vail Fiscal Impact Analysis
B Phase-Standalone Cumulative Im act b Phase
Fund Phase I Phase II Phase I Phases I&II
General Fund
Revenues $736,000 $298,100 $736,000 $1,034,000
Expenses[1] -$435,600 -$198,000 -$435,600 -$561,750
Net Fiscal Impact $300,400 $100,100 $300,400 $472,250
Capital Fund
One-Time Use Tax $9,157,200 $5,103,520 $9,157,200 $14,260,720
Annual Sales Tax $457,096 $188,264 $457,096 $645,344
RETT Fund
One-Time Developer Sales $4,261,000 $2,710,000 $4,261,000 $6,971,000
Recreation Impact Fee 468 067 315 273 468 067 783 340
Total One-Time Revenue $4,729,067 $3,025,273 $4,729,067 $7,754,340
Annual Resales $192,000 $122,000 $192,000 $314,000
Vail Marketing District
1.4% Lodging Tax(Annual) $294,000 $126,000 $294,000 $420,000
Urban Renewal Authority
General Fund PropertyTax to URA[2] $248,000 $104,000 $248,000 $352,000
OtherTaxing Entities Tax Increment $2,193,000 919 000 $2,193,000 $3,112,000
Total Property Tax Increment $2,441,000 $7,023,000 $2,441,000 $3,464,000
[1]Expenses by phase do not add to the cumulative impacts of the entire project. Police is not estimated to need additional staff to serve individual phases,
but would need an estimated 1 officer to serve the project if both phases are built. Fire is estimat�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 expires in 2030.
Source:Economic&Planning Systems
H�\2�12EvaVail F'iscalAn�ySis\MWek\12-29-Lav\[21812-fsca muleF12-29-2p10lowxls]ES-1
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Ever Vail Fiscal Impact Analysis
January i3, 2011
3. Ever Vail is estimated to require additional staff for Police and Fire under the High
and Low Scenarios.
Police and Fire service demands were estimated by a comparative analysis of call volumes in
Lionshead Village completed by EPS and Town staff. At full buildout of both phases, Police is
forecasted to need one additional patrol officer at an annual cost of $77,150 plus a one-time
training cost of $65,000. By themselves, neither phase triggers the need for an additional
police officer. Cumulatively, however, demand for services will require a new position.
Based on the forecasted call volume, the Fire Department will need an additional staff person
to serve Phase I at an annual cost of $76,600 plus a one-time training and equipment cost of
$7,800.
4. The largest impacts on Town services are to the Town's transit system.
LSC Transportation Consultants completed a study of the impacts of Ever Vail on the Town's
transit system. LSC estimated the need for three new buses at a cost of $600,000 each.
The annual operations cost is estimated at $111,300. EPS has allocated the impacts to
Phase I, as it generates the most visitor activity.
5. The project is largely within the Lionshead URA. Therefore, the majority of the
property tax generated by the project will flow to the URA rather than the General
Fund until 2030.
At full buildout, the General Fund portion of the property tax increment generated by the
project is approximately $360,000 per year. After the URA expires on December 31, 2029,
this revenue will revert back to the General Fund, increasing the net fiscal impact by the
same amount. The total property tax increment at buildout is approximately $3.5 million per
year, based on the structure of the URA which redirects non-Town revenue streams to the
URA. These funds can be used by the URA to fund eligible projects.
6. The Ever Vail development will generate substantial one-time revenues from
construction use tax and permit fees.
The construction use tax from Phase I is estimated at $9.3 million over the course of its
construction, contributing to the Town's Capital Fund. The construction of Phase II would
produce approximately $5.1 million in use tax. The total impact to the Real Estate Transfer
Tax (RETT) fund for Phase I is $4.7 million, including $4.3 million in RETT from initial
developer sales and $468,000 from the Recreation Impact Fee. Phase II would generate
$2.7 million in RETT from initial sales and approximately $315,000 from the impact fee for a
total of $3.0 million. The REl�" fund is used for park, open space, and sustainability projects.
Permit and plan check fees are estimated at $3.1 million for Phase I and $1.7 million for
Phase II. Permit and plan check fees are one-time revenues that contribute to the cost of
development revue. 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.
Economic& Planning Systems, Inc. 17
Ever Vail Fiscal Impact Analysis
January i3, 2011
Existing Site Fiscal Conditions
How much revenue does the site generate currently?
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
$21,540 in retail sales tax to the General Fund, $14,360 in sales tax to the Capital Fund, and
$26,000 in property tax.
Table 8
Current General Revenues from Ever Vail Site
Ever Vail Fiscal Impact Analysis
Revenue F�cisting
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
T ota I $61,900
Source:Town of Vail Finance Department:Economic&Planning Systems
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Ever Vail Fiscal Impact Analysis
January i3, 2011
General Fund Impacts
What are the major revenue sources that will impact the General Fund? What are the
significant expenditures that will occur?
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 retail and food and beverage establishments. The 4.0 percent lodging
sales tax is generated through the sale of net new room nights (and is distinct from the 1.4
percent lodging tax dedicated to marketing).
Under both scenarios, lodging sales tax is the largest source of revenue from the project and is
estimated to be $915,000 per year for the high scenario after buildout of Phase I and Phase II,
as shown in Table 9. For the low scenario, this figure is estimated to be $719,000 as shown in
Table 10. The cumulative retail sales tax from buildout of both Phases ranges from $250,000 to
$372,000. Note that the general fund would not receive any property tax until 2030 (when the
URA will sunset) because the project is largely within the Lionshead Urban Renewal Area, which
collects the tax increment from new development, as will be discussed below.
It should be noted that the revenue from lift tax is modest, at $47,000 annually in the High
Scenario. Lift tax revenue shown is calculated from the estimated new skiers (and net new
revenue) generated by Ever Vail Lodging. If these skier estimates are included with day visitors
using the Ever Vail parking structure as well as Ever Vail guests that are not new to Vail, the
total skier generation is approximately 7 percent of total annual skiers. This estimate is
consistent with internal Vail Resorts estimates that the portal will accommodate approximately
10 percent of total annual volume.
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.
Public Works
Under 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 decorations consistent with what the
Town provides at other major entry ways and intersections.
Transit and Transportation
LSC Transportation Consultants completed a study of the impacts of Ever Vail on the Town's
transit system. LSC estimated the need for three new buses at a cost of $600,000 each. The
annual operations cost is estimated at $111,300. EPS has allocated the impacts to Phase I, as it
generates the most visitor activity.
Economic& Planning Systems, Inc. 19
Ever Vail Fiscal Impact Analysis
January i3, 2011
The new bus route is estimated to cost $111,300 per year to operate. Annual facility
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 Vail.
Police and Fire
There are also impacts to Police and Fire. The Police Department is projected to need an
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 these figures but are included in capital expenditures below.
Table 9
High Scenario - General Fund Revenues and Expenses
Ever Vail Fiscal Impact Analysis
B Phase Cumulative
Description Phase I Phase II Phase I Phase II
Revenue
Local Taxes:
4.0%Retail Sales Tax[1] $273,000 $100,000 $273,000 $372,000
4.0%Lodging Sales Tax $627,000 $288,000 $627,000 $915,000
Ski LiftTax $37,100 $9,900 $37,100 $47,000
Intergovernmental 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
Charqes 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
Total 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-Wayand 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 $205,200 $518,700 $795,650
[1]See attached sales tax and retail sales model.
[2)LSC Transportation Consultants July 23,2010 Memorandum.
Source:Economic&Plaming Systems
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Economic& Planning Systems, Inc. 20
Ever Vail Fiscal Impact Analysis
January i3, 2011
Table 10
Low Scenario - General Fund Revenues and Expenses
Ever Vail Fiscal Impact Analysis
B Phase Cumulative
Description Phase I Phase II Phase I Phase II
Revenue
Local Taxes:
4.0%Retail Sales Tax[1] $182,000 $68,000 $182,000 $250,000
4.0%Lodging Sales Tax $504,000 $215,000 $504,000 $719,000
Ski Lift Tax $23,000 $4,200 $23,000 $27,200
Interqovernmental Revenue
County Sales Tax $13,000 $4,000 $13,000 $17,000
County Road and Bridge Prop. Tax $0 $0 $0 $0
Cigarette Tax $1,500 $700 $1,500 $2,200
Charqes for Services
Fines and Forfeitures $6,400 $3,200 $6,400 $9,500
Other Charges,Services, and Sales 6 100 3 000 6 100 9 100
Total Revenue $736,000 $298,100 $736,000 $1,034,000
Expenses
Municipal Services:
Administrative $28,600 $14,200 $28,600 $42,800
Community Development $28,200 $14,000 $28,200 $42,200
Public Safety
Police $0 $0 $0 $77,150
Fire $76,600 $0 $76,600 $76,600
Public Works and Transportation
Right-of-Wayand Landscaping $149,000 $149,000 $149,000 $149,000
Transportation Operations [2] $111,300 $0 $111,300 $111,300
Facility Maintenance 41 900 20 800 41 900 62 700
Total Expenses $435,600 $198,000 $435,600 $561,750
Net Fiscal Impact $300,400 $100,100 $300,400 $472,250
[1]See attached sales tax and retail sales model.
[2]LSC Transportation Consultants July 23,2010 Memorandum.
Source:Economic&Planning Systems
H:\2�12 Eve Vail Fiscal Analysis\Mctle6\[�0812fisc2 metlel.xlsj3-General_Funtl_&peises
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Ever Vail Fiscal Impact Analysis
January i3, 2011
Net Fiscal Impact to the General Fund
What is the "bottom line" impact to the General Fund? How does it change if the
project is built 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 full project buildout 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 program.
The lower fiscal 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
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 visitors 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 $300,400 to $519,000. Phase II by itself has a fiscal impact of $100,100 to
$205,200 per year.
General Fund Sales Tax Calculations
How is sales tax accounted for - is it generated from retail space or visitor
expenditures?
Sales tax is calculated from the spending by guests staying in Ever Vail lodging, and residents
and second home owners living in the project. Guests spend money in Vail businesses,
generating sales tax revenue to the Town. Guest spending is calculated from estimates of"net
new" visitors discussed previously, rather than counting all guest expenditures as generating
sales tax.
As will be discussed under the Retail Impacts chapter, 90% of guest spending is estimated to
occur in Vail. This results in $16.4 million in new sales in the Town after the buildout of both
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
Economic& Planning Systems, Inc. 22
Ever Vail Fiscal Impact Analysis
January i3, 2011
leakage is projected to be $18.1 million. The $16.4 million in new sales translates to $372,000
in General Fund sales tax and $248,000 in Capital Fund sales tax. There is also a 15 percent
County sales tax, of which 15 percent is remitted back to the Town, as shown.
Table 11
Summary of Ever Vail Sales Tax
Ever Vail Fiscal Impact Analysis
Store Type Phase I Phase II
By Phase
Net New Sales
Restaurant $5,432,000 $1,195,000
Retail $4,678,000 $1,810,000
Grocer/Conv. $2,150,000 $1,149,000
Total $12,260,000 $4,154,000
Existing Sales Tax
4.0%Town Sales Tax [1]
General Fund (60%) �21,540 $272,700 $99,696
Capital Fund (40%) -$14,360 $181,800 $66,464
1.0%County Sales Tax
Sales Tax $123,000 $42,000
15%to Town $18,000 $6,000
Cumulative Phase I Phase I &II
Net New Sales
Restaurant $5,432,000 $6,627,000
Retail $4,678,000 $6,486,000
Grocer/Conv. $2,150,000 $3,299,000
Total $12,260,000 $16,412,000
Existing Sales Tax
4.0%Town Sales Tax [1]
General Fund (60%) �21,540 $272,700 $372,348
Capital Fund (40%) -$14,360 $181,800 $248,232
1.0%County Sales Tax
Sales Tax $123,000 $164,000
15%to Town $18,000 $25,000
Source:Economic&Planning Systems
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Ever Vail Fiscal Impact Analysis
January i3, 2011
General Fund One-Time Revenues and Costs
What other General Fund Revenues will the project generate?
Permit and plan check fees are estimated at $3.1 million for Phase I and $1.7 million for Phase
II. Permit and plan check fees are one-time revenues that contribute to the cost of development
revue. 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.
The one-time revenues and costs to the General 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
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 12
General Fund One-Time Revenues and Expenses
Ever Vail Fiscal Impact Analysis
Totals/
Phase I 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 � 7 800
Total $7,800 $65,000 $72,800
Source:Town of Vail;Economic&Planning Systems
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Ever Vail Fiscal Impact Analysis
January i3, 2011
Other Fund Impacts
Besides the General Fund, what are the impacts to other funds? Specifically, what are
impacts to the RETT Fund?
The other major funds analyzed include the:
• Capital Fund
• RETT fund
• Vail Marketing District
• Urban Renewal Authority (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, is independent of
conventional Town funds, and is structured in compliance with state regulations pertaining
to URAs.
Capital Fund
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. Construction use
tax is estimated at $14.4 million at project buildout, as shown in Table 13. Annual 4.0 percent
sales and 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.
The Town has historically 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.
The Low Scenario for the Capital Fund is shown in Table 14. The one-time revenues are the
same as the High Scenario. Annual sales tax is $213,000 less.
Economic& Planning Systems, Inc. 25
Ever Vail Fiscal Impact Analysis
January i3, 2011
Table 13
Capital Fund Impacts — High Scenario
Ever Vail Fiscal Impact Analysis
Costs and Revenues Phase I Phase II Totals/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
Annual Sales Tax by Phase
4.0% Sa�es 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
Total Sales Taxes $599,800 $858,232 $858,232
Capital Fund Costs(3 Hybrid Buses @$600K ea.) $1,800,000 $0 $1,800,000
[1]The Fee is based on a Study completed by Kimley Horn forthe Town of Vail.
Source:Economic&Planning Systems
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Ever Vail Fiscal Impact Analysis
January i3, 2011
Table 14
Capital Fund Impacts — Low Scenario
Ever Vail Fiscal Impact Analysis
Costs and Revenues Phase I Phase II Totals/Buildout
One Time Revenues
Construction Use Tax $9,157,200 $5,103,520 $14,260,720
Traffic Mitigation Fee[1] $1,251,250 $1,251,250 $2,502,500
Annual Sales Tax by Phase
4.0% Sales Tax (Annual) $121,096 $45,264
4.0% Lodging Sales Tax (Annual) 336 000 143 000
Total Sales Taxes $457,096 $188,264
Cumulative Sales Tax
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 by Kimley Horn forthe Town of Vail.
Source:Economic&Planning Systems
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Economic& Planning Systems, Inc. 27
Ever Vail Fiscal Impact Analysis
January i3, 2011
RETT, Marketing District, and URA Funds
The one-time and annual revenues for the RETT, Vail Marketing District, and URA funds are
shown below in Table 15. One-time RETT revenue comes from the initial developer sales of new
units, estimated at $6.97 million for both phases. The Recreation Impact Fee is estimated at
$783,000, making the total for recreation and open space purposes total $7.75 million. 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. After 2030 revenue from the Town's
4.69 mills will then flow back to the general fund.
Table 15
RETT, Vail Marketing District,and URA Revenues
Ever Vail Fiscal Impact Analysis
Fund Phase I Phase II Totals/Buildout
RETT 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
RETT Fund Annual Revenue
RETT on Resales $192,000 $122,000 $314,000
Vail Marketing District
1.4°/a Lodging Tax(Annual) $366,000 $168,000 $534,000
Urban Renewal Authority Property Tax
Town Mill Levy(4.69 Mills) (Annual) [1] $258,000 $104,000 $362,000
Other Taxing Entities (Annual) $2,280,000 919 000 $3,199,000
Annual Property Tax Increment $2,538,000 $1,023,000 $3,561,000
[1]Reverts to General Fund after URA expires in 2030.
Source:Economic&Planning Systems
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Economic& Planning Systems, Inc. 28
4. ECONOMIC IMPACTS
When new retail is introduced into a community, the new competition can cannibalize or erode
sales from existing businesses. This Chapter provides a summary of the potential impacts to
sales in existing business districts in Vail. The summary is followed by a more detailed
presentation of the methods and assumptions used to estimate these potential impacts.
Summary of Retail Impacts
1. The spending from new guests in Ever Vail is forecast to be $18.1 million per year
with 90 percent of expenditures estimated to occur in the Town of Vail and
10 percent in the Vail Valley.
The town derives most of its retail sales from visitor expenditures. Adding to the bed base
will introduce new dollars into the Vail economy, contributing to additional retail sales. Ever
Vail visitors are estimated to make 35 to 40 percent of their expenditures within Ever Vail, as
shown in Figure 1. Approximately 50 to 55 percent of Ever Vail visitors' dollars are
expected to occur within the Town of Vail in other retail locations such as Lionshead, Vail
Village, and West Vail. The remaining 10 percent of expenditures are estimated to occur
elsewhere in the Vail Valley, such as Beaver Creek, Avon, or Edwards. Similar to any guest
in Vail, Ever Vail's guests will spend money in multiple locations in the Town.
Economic& Planning Systems, Inc. 29
Ever Vail Fiscal Impact Analysis
January i3, 2011
Figure 1
Ever Vail Guest Spending Patterns
Ever Vail Fiscal Impact Analysis
Total Spending
$18.1 Million
Down
Ever Vail Vail Village, Lionshead, West
Valley
$6.8 Million Vail $9.6 Million $1.7M
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Economic& Planning Systems, Inc. 30
Ever Vail Fiscal Impact Analysis
January i3, 2011
2. The project is not expected to cannibalize (erode) a significant amount of sales
from Vail Village or Lionshead. The West Vail area is estimated to see sa/es erosion
of 1.1 percent. As new retail in Ever Vail is introduced, some sa/es from other Vail
locations will flow to Ever Vail. At the same time, Ever Vail guests will spend
money in existing retail establishments in Vail. In most cases and in total, the net
dollar flows to existing retail areas are positive.
In order for Ever Vail retailers to achieve a minimum level of viability, it is estimated that
approximately $17 million in sales would be needed within Ever Vail businesses. Based on
Ever Vail's location compared to other retail and lodging districts and the size and mix of
retail proposed in Ever Vail, it is estimated that approximately 60 percent of sales would
come from guest in the immediate area consisting of Ever Vail and the Ritz Carlton. The
balance of 40 percent would need to come from guests staying elsewhere in Vail to support
$17 million in sales in Ever Vail.
Under these assumptions, Lionshead and Vail Village would "lose" respectively $2.5 and $2.9
million in sales to Ever Vail; however, this is estimated to be replaced by $2.9 to $5.5 million
in expenditures from new Ever Vail guests spending money in Lionshead and Vail. Thus, net
sales flows are expected to be positive for Lionshead and Vail Village. Due to the competition
created by the proposed market, a 1 percent loss in sales is projected for West Vail.
The sales flows are quantified below in Table 16 and Figure 2. Vail Village currently
achieves $152.7 million in sales, while Lionshead achieves $51.9 million, and West Vail has
$71.8 million in sales. The net dollar flows shown are less than 2 percent of existing sales
and are only projected to be negative for West Vail. EPS believes that the strength of
Lionshead and Vail Village will be the main draw for all Vail guests regardless of where their
lodging is. Our opinion is that the removed location of Ever Vail is unlikely to draw significant
amounts of sales away from existing retail areas.
Table 16
Summary of Town Retail Sales Flows with Ever Vail
Ever Vail Fiscal Impact Analysis
Erosion to Ever Spending From
Potential Dollar Flows Vail Ever Vail Net Dollar Flows
Lionshead $2,510,000 $2,954,000 $444,000
Vail Village $2,994,000 $5,486,000 $2,492,000
WestVail $1,938,000 $1,166,000 - 772000
Total $7,442,000 $9,606,000 $2,164,000
Existing Sales Erosion as%of
Potential Erosion vs.Existing Sales Net Dollar Flows (2009) Sales
Lionshead $444,000 $51,953,000 0.9%
Vail Village $2,492,000 $152,700,000 1.6%
W est Vail - 772 000 $71,807,000 -1.1%
Total $2,164,000 $276,460,000 0.8%
Source:Economic&Planning Systems
H12�12EvaVail FiscalAn�ysis\M�els\[ti812-EVSalesTaxM�el12-2321�O.x5]TadeES1
Economic& Planning Systems, Inc. 31
Ever Vail Fiscal Impact Analysis
January 13, 2011
Figure 2
Net Dollar Flows vs. Existing Retail Sales
Ever Vail Fiscal Impact Analysis
$160,000,000
$140,000,000
$120,000,000
d $100,000,000
m
N
>
m $80,000,000
o�{
a
0
�°. $60,000,000
o�
.�
� $40,000,000
$20,000,000 -
$444,000 $2,492,000
$0 .. , �
Lionshead Vail Village West Vail
-$772,000
-$20,000,000
■Net Dollar Flows Existing Sales(2009)
Economic&Planning Systems, Inc. 32
Ever Vail Fiscal Impact Analysis
January i3, 2011
3. The amount of retail and restaurant space proposed in Ever Vail is small in
comparison to the Town's retail inventory and is forecasted to have a relatively
small impact on existing retailers.
VRDC and their consultants have worked closely with EPS to "right size" the amount of retail
space in the project. This work has resulted in downsizing the retail from 100,000 to
120,000 square feet in earlier development plans to approximately 53,000 square feet, as
currently proposed. This has been based on an expenditure analysis, qualitative analyses
and comparisons of other base areas, and from a determination of the minimum numbers
and types of services needed for a successful base area portal. The tenant mix is expected
to cater largely to hotel and condominium guests rather than to create a new shopping
destination in Vail. The amount of retail proposed would result in an 8 percent increase in
the amount of retail space in Vail, as shown in Table 17.
Table 17
Vail Retail Inventory
Ever Vail Fiscal Impact Analysis
Vail Village Lionshead West Vail Vail Ever
Store Category #Retailers Sq.Ft. #Retailers Sq.Ft. #Retailers Sq.Ft. Total Vail
Food&Beverage 54 205,000 21 58,500 11 27,000 290,500 22,103
Gallery/ArtBooks 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 3,200 0 0 11700 TBD
Ski Equipment 14 36,000 16 28,000 2 16,000 80,000 5,559
Grocery/Liquor 2 1,400 1 1,000 4 108,000 110,400 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
Miscellaneous 14 10,000 6 10,000 11 25,000 45,000 5,881
Total 150 337,000 58 116,450 28 176,000 629,450 53,258
Source:Town of Vail;Economic&Planning Systems
H,�zm+ze�gvau c��in�anis�oacalzoeian�anoa�;.,islvau_aaau
Economic& Planning Systems, Inc. 33
Ever Vail Fiscal Impact Analysis
January i3, 2011
Ever Vail Spending Flows
This section provides a summary of the methodology and calculations used to project guest
spending and retail sales patterns after the Ever Vail project is constructed. The estimates of
guest spending were made for two reasons:
• First, to estimate sales tax revenue for the Fiscal Impact Analysis
• Second, to project the future flow of guest spending and retail sales to estimate the potential
impacts of Ever Vail on existing business districts.
The complete set of calculations can be viewed in the Sales Tax Model. This is an abbreviated
explanation. First, total expenditure potential is calculated. This is the total spending made by
Ever Vail guests regardless of location. Next, a capture rate is applied to allocate spending to
the Town of Vail and locations outside of Vail. Only expenditures made in Vail count towards
Town sales tax and retail sales.
Expenditure Potential
Expenditure potential is estimated from net new visitor days. Net new visitor days are calculated
by multiplying the number of lodging and residential units by a person per unit factor, an annual
occupancy factor, a net new adjustment discussed previously, and by 365 days. Visitor days are
converted to expenditure potential by multiplying by a dollar per day per person spending figure
derived from research by the hospitality industry and visitor intercept surveys in Colorado
mountain resorts. The resulting expenditure potential, regardless of where expenditures are
made, is estimated at $18.1 million at buildout, as shown in Table 18.
Spending by Location
The capture rate estimates for guest and resident spending are shown in Table 19. Because
Vail has one of the largest concentrations of resort retail in North America, it is estimated to
capture the vast majority of guest expenditures (approximately 90 percent). In other words,
Vail has a large selection and critical mass of retail space that creates a competitive shopping
destination compared to other locations in the Vail Valley.
Within Vail, guests (with the exception of parking guests) are estimated to make 25 percent of
their retail purchases in Ever Vail and 65 percent in other Vail locations. The retail °capture" in
Ever Vail is estimated to be low because it will be much smaller and have a more limited
selection than Vail Village and Lionshead Village. Because Ever Vail is proposed to contain a
specialty foods market, it is estimated that it will capture 50 to 75 percent of guest spending on
Convenience Goods. The remaining spending would be made largely in West Vail grocers. For
the third (and final) category of sales, Food and Beverage (dining out), about half of guest
spending would occur in Ever Vail, as shown.
Economic& Planning Systems, Inc. 34
Ever Vail Fiscal Impact Analysis
January 13, 2011
Table 18
Total Ever Vail Guest Spending Regardless of Location
Ever Vail Fiscal Impact Analysis
Visitor $IPers.IDay Expenditure Potential by Phase Cumulative Expenditure Potential
Description Days Retail Conv. F&B Total Retail Conv. F86 Total Retail Conv. F&B Total
Phasel
Hotel 31,270 $60 $10 $100 $170 $1,876,000 $313,000 $3,127,000 $5,316,000 $1,876,000 $313,000 $3,127,000 $5,316,000
Branded Residences in Rental Pool 19,660 60 30 75 165 1,180,000 590,000 1,475,000 3,244,000 1,180,000 590,000 1,475,000 3,244,000
Condos in Rental Pool 20,180 60 30 40 130 1,211,000 605,000 807,000 2,623,000 1,211,000 605,000 807,000 2,623,000
Second Home Condos 15,000 30 30 20 80 450,000 450,000 300,000 1,200,000 450,000 450,000 300,000 1,200,000
Residents[1] --- --- --- --- -- 289,000 189,000 85,000 563,000 289,000 189,000 85,000 563,000
Parking Day Visitors[1] --- --- --- --- --- 243,500 74,875 224,625 543,000 243,500 74,875 224,625 543,000
Totals 86,110 $5,249,500 $2,221,875 $6,018,625 $13,489,000 $5,249,500 $2,221,875 $6,018,625 $13,489,000
Phase II
Hotel 0 $60 $10 $100 $170 $0 $0 $0 $0 $1,876,000 $313,000 $3,127,000 $5,316,000
Branded Residences in Rental Pool 0 60 30 75 165 0 0 0 0 1,180,000 590,000 1,475,000 3,244,000
Condos in Rental Pool 19,030 60 30 40 130 1,142,000 571,000 761,000 2,474,000 2,353,000 1,176,000 1,568,000 5,097,000
Second Home Condos 10,880 30 30 20 80 326,000 326,000 218,000 870,000 776,000 776,000 518,000 2,070,000
Residents[1] --- --- --- --- --- 377,000 247,000 111,000 735,000 666,000 436,000 196,000 1,298,000
Parking Day Visitors[1] --- --- --- --- --- 243.500 74,875 224.625 543.000 487,000 149.750 449.250 1,086.000
Totals 29,910 $2,088,500 $1,218,875 $1,314,625 $4,622,000 $7,338,000 $3,440,750 $7,333,250 $18,111,000
Source:Economic&Planning Systems
[1]See Appendi x Tabl es A1 through A3 for further detai I.
H'�20812EVaVell FlsalAneyslsVvlalels\�21812£VSgasTexMOiel12-29A1dx15]2-EVFendPOt
Economic&Planning Systems, Inc. 35
Ever Vail Fiscal Impact Analysis
January 13, 2011
Table 19
Ever Vail Guest Spending Capture Rates
Ever Vail Fiscal Impact Analysis
°/a Spent in Ever Vail %Spent Elsewhere in Vail %Spent Outside Vail(Leakage) Total
Phase Retail Conv. F&B Retail Conv. F&B Retail Conv. F&B Retail Conv. F&B
By Phase-Standalone
Phase I
Hotel 25% 75% 40% 65% 25% 50% 10% 0% 10% 100% 100% 100%
Branded Residences in Rental Pool 25% 75% 40% 65% 25% 50% 10% 0% 10% 100% 100% 100%
Condos in Rental Pool 25% 65% 35% 65% 35% 55% 10% 0% 10% 100% 100% 100%
Second Home Condos 25% 50% 35% 65% 40% 55% 10% 10% 10% 100% 100% 100%
Residents 10% 35% 10% 55% 50% 70% 35% 15% 20% 100% 100% 100%
Parking Day Visitors 50% 100% 50% 50% 0% 50% --- --- --- 100% 100% 100%
Phase II
Hotel --- --- --- ---
-- -° -- --- °- --- --- ---
Branded Residences in Rental Pool --- --- --- --- --- --- --- --- --- --- --- ---
Condos in Rental Pool 0% 0% 0% 90% 100% 90% 10% 0% 10% 100% 100% 100%
Second Home Condos 0% 0% 0% 90% 90% 90% 10% 10% 10% 100% 100% 100%
Residents 0% 0% 0% 65% 85% 80% 35% 15% 20% 100% 100% 100%
Parking Day Visitors 0% 0% 0% 100% 100% 100% --- --- --- 100% 100% 100%
Cumulative
Phase I
Hotel 25% 75% 40% 65% 25% 50% 10% 0% 10% 100% 100% 100%
Branded Residences in Rental Pool 25°/o 75% 40% 65% 25% 50% 10% 0% 10°/o 100% 100°/a 100°/a
Condos in Rental Pool 25% 65% 35% 65% 35% 55% 10% 0% 10% 100% 100% 100%
Second Home Condos 25% 50% 35% 65% 40% 55% 10% 10% 10% 100% 100% 100%
Residents 10% 35% 10% 55% 50% 70% 35% 15% 20% 100% 100% 100%
Parking Day Visitors 50% 100% 50% 50% 0% 50% --- --- --- 100% 100% 100%
Phase I&II
Hotel 25% 75% 40% 65% 25% 50% 10% 0% 10% 100% 100% 100%
Branded Residences in Rental Pool 25% 75% 40% 65% 25% 50% 10% 0% 10% 100% 100% 100%
Condos in Rental Pool 25% 65% 35% 65% 35% 55% 10% 0% 10% 100% 100% 100%
Second Home Condos 25% 50% 35% 65% 40% 55% 10% 10% 10% 100% 100% 100%
Residents 10% 35% 10% 55% 50% 70% 35% 15% 20% 100% 100% 100%
Parking Day Visitors 50% 100% 50% 50% 0% 50% --- --- --- 100% 100% 100%
Source:Economic&Plarming Systems
H:\2�12 Eve Vail Fisral Analysis\Malels\[21812-EV Saes Tax Mo]el 12-29D10 xls]3Captve Rat¢
Economic&Planning Systems, Inc. 36
Ever Vail Fiscal Impact Analysis
January i3, 201i
After applying spending capture rates to expenditure potential, dollars of spending are calculated
for Vail by locations within Vail, summarized in Table 20. Of the $18.1 million in total spending,
$16.4 million is estimated to occur in Vail, or 90 percent of total spending in all store categories.
This $16.4 million of spending in Vail generates sales tax.
Within Vail, 35 percent of spending in Vail is assumed to occur in Lionshead, or $2.95 million.
Sixty-five percent of guest spending in Vail, or $5.5 million, is assumed to occur in Vail Village
because of its larger concentration of retail and food and beverage options. There is a small
difference in total spending between Tables 17 and 19 due to spreadsheet rounding.
Table 20
Ever Vail Guest Spending by Location
Ever Vail Fiscal Impact Analysis
Expenditures and Sales Generated by Ever Vail Factors Calculations
Total Spending by Ever Vail Guests/Residents
In Ever Vail $6,806,000 38%
In Vail, Not in Ever Vail A $9,606,000 53%
Leakage/ Down Valley Spending $1,704,000 9%
Total Spending $18,116,000 100%
Estimated Spending by Location
In Ever Vail $6,806,000 38%
Lionshead A X 35% $2,954,000 16%
Vail Village AX 65% $5,486,000 30%
WestVail $1,166,000 6%
Down Valley/ Leakage $1,704,000 9%
Total Spending $18,116,000 100%
Economic& Planning Systems, Inc. 37
Ever Vail Fiscal Impact Analysis
January i3, 201i
Retail Sales in Ever Vail Businesses
If Ever Vail retail is to achieve a minimum level of viability, it would need to achieve
$18.8 million in sales. As shown above, guests are expected to spend only $6.8 million within
the project. If guests are only spending $6.8 million in the project, $12 million in sales would
need to come from other sources: either inflow from outside Vail, or by capturing sales from
existing Vail businesses by offering a competitive and attractive shopping and dining experience.
The Ritz Carlton project will add 116 lodging units and generate additional guest expenditure
potential. Since it is located immediately adjacent to Ever Vail it is therefore highly likely that
Ritz guests will make some of their expenditures in Ever Vail. It is estimated that 40 percent of
Ritz expenditures will be made in Ever Vail, or $4.6 million. The detailed calculations can be
seen in the Sales Tax Model provided to Town staff. The remaining $7.4 million in sales would
need to come either from inflow or through cannibalizing sales from existing businesses through
competition. As shown below in Tables 21 through 23, the impact of Ever Vail retail is
expected to be minor compared to the total sales levels of Vail Village, Lionshead, and West Vail.
Potential Erosion
The sales levels in Vail business districts are compared to the $7.4 million in sales that would
need to come from cannibalization, as shown in Table 21. Vail Village achieved $152.7 million
in sales in 2009, while Lionshead achieved $51.9 million. For confidentiality purposes, West Vail
is combined with Cascade Village, East Vail, and Sandstone, referred to as "West Vail" for
brevity. In total, West Vail had $71.8 million in sales. Approximations of erosion from each area
are shown in total dollars and as a percentage of existing sales.
However, as shown previously, Ever Vail guests will also spend money in these other Vail
locations, offsetting cannibalization that may occur. This net dollar flow will be estimated
separately from potential cannibalization.
The sales flows from existing retail nodes are estimated to be $2.9 million in sales come from
Vail Village, which is equivalent to 2 percent of its annual sales. For Lionshead, it is estimated to
lose $2.5 million in sales, or 5 percent of existing sales. The impact to West Vail is estimated at
roughly 5 percent of grocery and Convenience Goods sales, or $1.9 million. As shown, total
cannibalization to Ever Vail would need to be $7.4 million in order to achieve $18.8 million in sales.
The projected total sales in Ever Vail by source are summarized in Table 22. At the buildout of
Phases I and II, $6.8 million in sales would come from Ever Vail Guests. The Ritz Carlton would
generate $4.6 million in sales in Ever Vail (and additional spending elsewhere). Cannibalization
from Vail Village, Lionshead, and West Vail could contribute $7.4 million if Ever Vail offers a
competitive and attractive retail environment. Total sales from all sources are projected to be
$18.8 million under these assumptions.
Economic& Planning Systems, Inc. 38
Ever Vail Fiscal Impact Analysis
January 13, 2011
Table 21
Potential Erosion from Existing Business Districts
Ever Vail Fiscal Impact Analysis
Vail Village Lionshead Village West Vail
%of Existing %of Existing %of Existing Potential Erosion
Description 2009 Sales Sales $Erosion 2009 Sales Sales $Erosion 2009 Sales Sales $Erosion to Ever Vail
A
By Phase
Phasel
Restaurant $6Q218,000 2.0°/o $1,204,000 $22,158,000 5.0% $1,108,000 $16,243,000 0.0% $0 $2,312,000
Retail $89,484,000 2.0% $1,790,000 $28,037,000 5.0% $1,402,000 $16,798,000 0.0% $0 $3,192,000
Convenience Goods $2,998,000 0.0% �0 $1,758,000 0.0% �0 $38J66,000 5.0% $1,938,000 $1,938,000
Total $152,700,000 $2,994,000 $51,953,000 $2,510,000 $71,807,000 $1,938,000 $7,442,000
Phase II
Restaurant $60,218,000 0.0% $0 $22,158,000 0.0% $0 $16,243,000 0.0% $0 $0
Retail $89,484,000 0.0% $0 $28,037,000 0.0% $0 $16,798,000 0.0% $0 $0
Convenience Goods $2,998,000 0.0% �0 $1,758,000 0.0% �0 $38J66,000 0.0% �0 �0
Total $152,700,000 $0 $51,953,000 $0 $71,807,000 $0 $0
Cumulative
Phasel
Restaurant $60,218,000 2.0% $1,204,000 $22,158,000 5.0% $1,108,000 $16,243,000 0.0% $0 $2,312,000
Retail $89,484,000 2.0% $1,790,000 $28,037,000 5.0% $1,402,000 $16,798,000 0.0% $0 $3,192,000
Convenience Goods $2,998,000 0.0% $0 $1,758,000 0.0% $0 $38,766,000 5.0% $1,938,000 $1,938,000
Total $152,700,000 $2,994,000 $51,953,000 $2,510,000 $71,807,000 $1,938,000 $7,442,000
Phase II
Restaurant $60,218,000 2.0% $1,204,000 $22,158,000 5.0% $1,108,000 $16,243,000 0.0% $0 $2,312,000
Retail $89,484,000 2.0% $1,790,000 $28,037,000 5.0% $1,402,000 $16,798,000 0.0% $0 $3,192,000
Convenience Goods $2.998,000 0.0% �0 $1,758,000 0.0% �0 $38,766,000 5.0% $1,938,000 $1,938,000
Total $152,700,000 $2,994,000 $51,953,000 $2,510,000 $71,807,000 $1,938,000 $7,442,000
Source:Economic&Planning Systems
H:\2�12 Ever Va9 Flsral Nna'ysis\MMels\�31812-EV S�es Tax MMeI 12-242J1 dx6�i2-Erosim
Economic&Planning Systems, Inc. 39
Ever Vail Fiscal Impact Analysis
January 13, 2011
Table 22
Projected Sources of Sales in Ever Vail Retail
Ever Vail Fiscal Impact Analysis
Project Visitors/ Total Sales
Residents, and Ritr Carlton Vail Village Lionshead West Vail In Ever Vail
Description Parking Spending Spending [1] Erosion [2] Erosion [2] Erosion [2] Businesses
By Phase
Phasel
Restaurant $2,349,000 $1,586,250 $1,204,000 $1,108,000 $0 $6,247,250
Retail $1,331,000 $1,395,900 $1,790,000 $1,402,000 $0 $5,918,900
Convenience Goods/Market $1,437,000 $1,586,250 � � $1,938,000 $4,961,250
Total $5,117,000 $4,568,400 $2,994,000 $2,510,000 $1,938,000 $17,127,400
Cumulative
Phasel
Restaurant $2,349,000 $1,586,250 $1,204,000 $1,108,000 $0 $6,247,250
Retail $1,331,000 $1,395,900 $1,790,000 $1,402,000 $0 $5,918,900
Convenience Goods/Market $1,437,000 $1,586,250 � � $1,938,000 $4,961,250
Total $5,117,000 $4,568,400 $2,994,000 $2,510,000 $1,938,000 $17,127,400
Phase I &II
Restaurant $2,816,000 $1,586,250 $1,204,000 $1,108,000 $0 $6,714,250
Retail $1,857,000 $1,395,900 $1,790,000 $1,402,000 $0 $6,444,900
Convenience Goods/Market $2,133,000 $1,586,250 $0 $0 $1,938,000 $5,657,250
Total $6,806,000 $4,568,400 $2,994,000 $2,510,000 $1,938,000 $18,816,400
Percent of Ever Vail Sales
Restaurant 42% 24% 18% 17% 0% 100%
Retail 29% 22% 28% 22% 0% 100%
Convenience Goods/Market 38% 28% 0% 0% 34% 100%
Total 36% 24% 16% 13% 10% 100%
Source:Economic&Planning Systems
Economic&Planning Systems, Inc. 40
Ever Vail Fiscal Impact Analysis
January i3, 2011
Net Dollar Flows
Ever Vail guests will make expenditures within Ever Vail as well as other business districts in Vail.
By comparing guest expenditures in other locations to the potential sales cannibalization to Ever
Vail from other business districts, the net dollar flows are estimated in Table 23. The total
spending from Ever Vail Guests in other areas is estimated at $9.6 million, including $2.9 million
in Lionshead, $5.5 million in Vail Village, and $1.2 million in West Vail. Potential erosion has
been estimated at $7.4 million, resulting in a positive $2.2 million net dollar flow to existing
business districts, or $2.2 million in new sales, or a 0.8 percent increase in total sales in
these areas.
Lionshead and Vail Village are likely to experience a modest increase in sales of 1 to 2 percent
with the Ever Vail project. West Vail could lose a small amount of sales, estimated
at -1.1 percent. This is due to competition from the proposed Market, which is a store type that
does not currently exist in Vail today. It would compete with the prepared and specialty foods
sections of the grocery stores, and possibly with beer, wine and liquor stores.
Table 23
Projected Net Dollar Flows by Business District
Ever Vail Fiscal Impact Analysis
Erosion to Ever Spending From
Potential Dollar Flows Vail Ever Vail Net Dollar Flows
Lionshead $2,510,000 $2,954,000 $444,000
Vaii Village $2,994,000 $5,486,000 $2,492,000
WestVail $1,938.000 $1,166,000 - 772000
Total $7,442,000 $9,606,000 $2,164,000
Existing Sales Erosion as% of
Potential Erosion vs.Existing Sales Net Dollar Flows (2009) Sales
Lionshead $444,000 $51,953,000 0.9%
Vail Village $2,492,000 $152,700,000 1.6%
West Vail - 772 000 $71,807,000 -1.1%
Total $2,164,000 $276,460,000 0.8%
Source:Economic&Planning Systems
H:\2�12 Eva Vail Fl scal An�ysis\MNels\[31812-EV Sales Tax M�el 12-232�10 x Is]Tade ES 1
Economic& Planning Systems, Inc. 41
5. KEY FINDINGS AND RECOMMENDATIONS
1. Ever Vail development would expand the Town's economic base by expanding
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 project are estimated to be net new (approximately 50 to 70 percent 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.
Consideration: The hotel is an important part of the project and would be most beneficial
if constructed in Phase I.
2. The hotel provides the most 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 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 expenditures than a condominium.
Consideration: The hotel is an important part of the project and would be most beneficial
if constructed in Phase I.
3. The Ever Vail Hotel could bring additional summer and shou/der season 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
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Ever Vail Fiscal Impact Analysis
January i3, 2011
developer and property managers will need to encourage that condominium owners
participate in a rental program to leverage the economic impact of the meeting space.
Consideration: Pursue an effective incentive program that motivates an adequate number
of condominium owners to join a rental program. Request that VRDC demonstrate a
business model for attracting groups and off season business.
4. The Town and Vail Resorts should strive to provide a consistently high quality
visitor experience.
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 funded 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 service plan for any future metropolitan districts
include a distinct mill levy dedicated to Operations & Maintenance.
5. The 35,000 square feet of office space will make a modest contribution to the
Town's economic diversity.
The Ever Vail project will replace the existing 31,000 square feet of office space on the site
with 35,000 square feet of new space. Currently, it is anticipated that half of the space will
be occupied by Vail Resorts Development Company by moving their current operations from
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.
6. The fiscal and economic analysis indicates that cannibalization of existing retail and
restaurant sales by Ever Vail businesses will be minimal.
The development team has reduced the amount of retail as a result of discussions with EPS,
Town Staff, and other stakeholders in order to address concerns about right-sizing the retail
hub. When EPS first became involved in the project, the retail program was proposed to
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.
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 retail inventory.
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.
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Ever Vail Fiscal Impact Analysis
January i3, 2011
This study determined that any sales erosion that occurred from Lionshead or Vail Village
would be °cancelled out" by new expenditures. Erosion from West Vail grocers to the
proposed market in Ever Vail was estimated at 1.1 percent.
7. The responsibility for the cost of three transit buses shou/d be considered in
ongoing discussions and negotiations.
The transit analysis completed by LSC Transportation Consultants identified a need for three
new transit buses at a cost of $1.8 million. The responsibility for this cost will be part of
future discussions and negotiations between VRDC and the Town.
Economic& Planning Systems, Inc. 44