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Home My WebLink About2. fiscal impact report Thompson & Trautz LLC. Ever Vail Fiscal Impact Report Revised October 29, 2010 Summary Thompson & Trautz LLC has been retained as an independent consultancy to provide analysis as to lhe potential Ylnancial iinpacts, revenue and expenditures, the plamied Vail Resorts development project Ever Vail will have on the Town of Vail. Our analysis is based on information provided Yrom Vail Resorts Development Company, Town of Vail, Eagle County Assessor, and various other consultants currently engaged to work on this project. The results oP our analysis estimate that the project will generate for Che Town of Vail onetime revenue of$32.2 nzillion as well as $7 million at build out in ongoing annual revenue that includes $4.1 million from Tax Increment Financing (TIF). Annual Revenues TIP Revenue $ 4,188,041 Sales Tax - Condo Lodging 724,687 Sales Tax - Hotel Lodging 422,188 Sales Tax - Utilities 54,013 Sales Tax - Retail & F&B 846,216 Lifr Tax 299,640 RETT 513,000 $ 7,047,786 One Time Revenues RE1'T $ 10,283,724 Use Tax - I3uilding Materials 16,000,000 Permits & Fees 5,430,000 Traffic Impact Fees 500,000 $ 32,213,724 We estimate the additional operating and capital costs to the Town of Vail will be less tl�an tlie es[imated annua] and one time revenues. A detailed analysis follows with explanation as to the individual components of tl�e revenue and expenditure totals. It is eritical to note that all amounts used are in today's dollars and are NOT adjusted to reflect inflation and are pre 2007 recession. The estimated revenues are based upon the projecY being 100% built out and all commercial spaces occupied as prescnted. See the enclosed spreadsheet at the end of this document for the calculations. Unless noted occupancies and rooin rates are annual averages. This report does not attempt to address or quantify the obvious sigviticant economic benefit and spin off in the community at large resulting from Vail Resorts Development Company spending in the region of$1.2 billion on materials, labor and services, providing jobs and trade in the community, during the course of construction on the Ever Vail project. Property Tax Revcnue The Ever Vail project, upon completion, will incrcase the assessed property valuation in the impacted area by $90.7 million. Currently the assessed value of the properties occupying the impacted land is $5.5 million. The project is in the Lionshead TIF District that was formed in 2005. "l�he TIF district has a 25-year lifecycle starting in 2005 thereby having the capacity to generat�e revenue througl� 2030. Based on a TIF mill levy of 46.124 the project is estimated to generate $4.1 million in TIF revenue annually. Once the TIF district expires the incremental property tax revenue to be generated from the Town of VaiPs mill levy of 4.69 inills is $425,850. Incremental Assessed Value by Source Condominiums $ 1,028,372,400 $ 81,858,443 Deed Restricted Residential - Tor Sale 6,400,000 509,440 Deed Restricted Residential - Rental 2,550,000 202,980 Hotel (Cost is actual value) 66,000,000 5,916,000 Commercial - Office 12,606,909 3,656,004 Cominercial - Restaurant/Club 8,122,545 2,355,538 Commercial - Retail - Grocer 4,816,448 1,396,770 Commercial - Retail 1,413,333 409,867 $ 1,130,281,635 $ 96,305,042 Current Assessed Value 5.505,440 Incren�ental Assessed Value $ 90,799,602 Assessed value is thc actual value of real property determined by the county assessor multiplied by the assessment rate of 7.96% for residential property and 29% for commercial property. The actual value of the 381 condominium units is based on a sales price of$1,800 per square foot. The assessed value of the 102 hotel units is $200,000 per room which is deYermined by comparing assessed values of other comparable hotels in Vail, Beaver Creek and Bachelor Gulch. Thc County uses an income approach vcrsus a market value approach to determine the assessed value for Hotels. Tl�e cost of the proposcd hotel will be approximately $66 million but the income approach to determining assessed value is $20 million which is subst'antially less than cost or markel value. The project includes 72,570 square feet of commercial space including office, restaurant/Glub and retail that will be subject to property Yax. Tbe commercial space is valued for property taxes by dividing the projectcd lease rate per square foot by a cap rate of 8.25%. The lease rate for office, restaurant/club and grocery retail is $30 per square foot and general retail $50 a square foot. 1'he cap ratc of 8.25% is based upon discussions with the county assessor staff. The spa will not be assessed separately since it will be owned by tl�e hotel. Sales Tax 12evenue Sales tax revenue will be generated by lodging, food and beverage and retail sales. The sales tax rate on all but short term lodging sales is 4% and on shart-term lodging revenue it is 5.4%. The Town of Vail does not collect sales tax for sa]es inade on the mountain; however, a lift fax of 4% is paid t�o the Town of Vail on passes and lift tickets sales. Tota] annua] sales tax at build out is estimated to be $2 million as follows. Sales Tax by Source (thousands) Condo Lodging $ '725 Hotel Lod�ing 422 Utilities 54 Retail & F&B 846 $ 2,047 The sales tax on lodging sales is based on the short rental of condominiums and hotel rooms. We estimate that $1.] million in lodging sales tax will be generated from the proposed lodging. It is estimated that 50% of tl�e condo owners (381 total units) will rent their units at an averagc daily rate(ADR) of$550 with an estimated occupancy rate of 35%. The percent of owners renting their condos and occupancy rate for a condo in die rental pool is supported by 49 of the condos having a rental lock-ofP unit. The 102 hotel rooms will be rented 60% percent of the time at an ADR of$350. These numbers are based upon what similar properties are experiencing. At this time tltere are no lodging revenues being generated on the development site. Ever Vail's buildings could generate $54,013 in sales tax on the electric and natural gas used. Based upon other properties the anuual gas per room is $843 and electric is $1,050. The 1,478 underground parking structure stalls is estimated to cost $295 per stall for heat and electricity. We estimate the Cver Vail project will generate salcs tax revenue of approximately $846,2]6 on Retail and F&f3 sales. 'I'his estimate is based on the nuinber of people occupying thc proposed lodging. We estimate that each lodging guest spends on average year around $100 a day in retail and P&B. Condos are occupied by 4 people when either used by owners or when uscd by guests who rent them. Based on prior experience of similar properties owners who are not in the rental pool will use their wiits 25% of the time and units in the rental pool will rent them 35% of the time. The combined occupancy of the Condos in a rental pool and non-rented condo's is 30%. Hotel Lmits generate 2 guests per unit and are occupied 60%. The Town currently collects sales tax from approximately 4 businesses on the development site. The sales tax collected from these four businesses has not been subtracted from the projected revenue since that information is proprietary and was not provided to us by the Town. Real Estate Transfer Tax Revenue (RETT) The Town of Vail collects a 1% RETT on all real property sales. Onetime revenue of $10.2 inillion may be collected on the f rst sale of all 381 condo units at$1,800 a sq. ft. The resale of the units wi11 generate on average $2.7 million or $27,000 in RETT revenue annually per �mit. We project the t�irnover to be at 5% or 19 units sell a year generating $513,000 in annual revenue. Lift Tax Revcnue The Town collects a 4% admission tax on all lift Uckets and ski passes sold. We are estimating that the bed base from Ever Vail will generate 908 skier days per day during al 50 day ski season. Using the assumption that 50% of the skiers will buy a daily lift ticket at$70 and the other half will buy an annual pass the projected annual revenue is $299,640. Other One Time 12evenues Use Tax and Permit Revemies The Town collects a use tax on building materials that is anticipated to generate $16 million in revenue for the town. Pcrmits and impact iees are estimated to generate $5.9 million for the Town. The actual traffic impact fec is estimated to be $2.5 million but the developer anticipates an offset of$2 million. Town of Vail Fiscal Costs Our study projects the Ever Vail project could bring approximately 211,000 additional guests annually to the Town of VaiL These guests, as well as the resources and requirements that development adds, will require the Town to provide additional services. The additional services to be provided are relatively small when you consider the infraslructure of the Town is extensively developed and has the capacity to handle additional service pressures. Additionally, it has to be considered that the Ever Vail project is mitigating most of its impacts with the enhancement of roadways and roundabouts, the addition of sidewalks and other pedestrian ways, and the addition of bus stops and transit facilities. The project is proposed to be governed internally with a metro district with all of the internal improvements, including streets and plazas, to be owned and maintained by the district and the owners. All of these provisions act to reduce reliance on the Town for services. To attempt to quantify any potential service impacts to Yhe Town we reviewed the current bud�et as well as the projected budgets. We also have asked the Town of VaiPs staff to provide us wit'h an estimate of what the Iiscal impacts of Gver Vail will be and have not received any estimates. Greg Hall the Town's director oY public works said that the IargesY expense would be additional bus service. Other expenses could include additional snow plowing for a larger frontage road and maintenance, landscaping, lighting of inedians. Greg Hall, the Towds director of public works did not seem to think the Town's costs would exceed the projected revenues from the project. There will be 3 other major developments opening in the Town of Vail over the next 3 ycars: Solaris, Ritz, and Pour Seasons. The Towds 2010 budget and Forecast budget for 2011 — 2014 includes no increase in staffing to service these new projects coming on line. We believe from talking with staFf and reviewing the Towns 2010 budget tl�at the projected revenue from Gver Vail will cover any reasonable additional operating or capital costs to the 'I'own of Vail. Should the Town quantify the impacts to the operating and maintenance budgets, we are happy to include them in this report. Ever Vail Development Annual Property Tax Revenue Generated from Ever Vail Use of Space No.Of Value Value Actual Assessetl Units Sq FI Per Unit Per Sp Ft Value Value Resitlential 381 57�,318 S 2,699,140 $ 1,800 $ 1028,372,400 $ 81.858,443 Deed Restricled Residential-Sale 16 31,250 400,000 205 6 400,000 509 440 Deed Restricted Resitlenlial-Rental 25 30,000 102,000 N/A 2,550,000 202,980 Hotel 102 200,000 20,400000 5,916,000 Commercial-Oftice 34,669 30 364 12,606,909 3,656,004 Commercial-RestauranVClub 22,337 30 364 8,122,545 2,355,538 Commercial-Retail-Grocer 13,232 30 364 4,816,448 1,396.770 CommerciaL Retail 2,332 50 606 1 413,333 409.867 1,084,681,635 96,305,042 Minus the W frent a55eSSed value of lantl antl pfoperty thal now exists 5,505,440 Incremental increase in Assessetl Value 90.799.602 Town of Vail Property Tax Revenue(4.69 mills) 425,850 Potential Revenue TIF Revenue@ 46.�24 Mills From PropeAy Tax $ 4,186,041 Annual SalesTax and RETT Revenues Generated from Ever Vail Sales Tax Revenue Gross Sales Condo Lodging(35%Occupancy,Room Rate$550,Units Rentetl 191) 13p2q138 $ 724,687 Hotel Lodging(60%Occupancy,Room Rate$3W,Units 102) 7,818,300 422,188 Utilities 1,350,329 54,013 Relail antl Footl 8 Beverage(30%Occupancy Contlo,60%Hotel) 21,155,400 846,216 (4/ppl per Contlo,2lppl per Holel,spending$100/day in Town) 2,047.105 LiftTax Revenue $ 7,asi o00 2ss,s4o Real Estate Transfer Tax S 5i,soo,000 513,000 $ 2,859,745 One Time Revenues Generated from Ever Vail RealEStateTransferTax S 1.028,372,400 $ 10,283,724 Use Tax on building 16.000,000 Permits&Fees 5,430,000 Traffic Impact Fee 500,000 Total One Time Fees S s2,2i372a Data Assumptions for Evervail People 8 Room Nighis Generated People Per Yr People No.Of Rooms Per Room Generated Non Rental Sales Tax Condo(30%Occupancy,4 people per room) 381 438 166,878 Hotel(60%OccUpancy,2 pe0ple pef room) 102 438 44,676 People Genereted 211,554 Days Per Year Rental Sales Tax No.Of Rooms Per Room Occ Room Nights Condo(50%Rented,35%Occupancy) 191 128 24 400 Hotel(60%Occupancy) 102 219 22,338 People Nights 46,738 Data Assumptions CONOOMINIUMS #people generated per unit q Number of Condo's 381 Percent of contlos rented 50% Occupancy rate of contlos reNed 35% Contlominum nightty rental rate $ 550.00 OcCUpanCyfateo(cOntlosnotren(etl 25% HOTEL #people generated per unit 2 Number of Rooms t02 Occupancy rate 60% Hotel Rental Rate $ 350.00 Guest Spending Per Day in Vail(not on mountain) $ 100.00 /day LIFT TAX Skiers Per Day from bed base 908 Percent buying a ticket at retail 50% Percent buying a season pass 50% Pass rate per day $ 40.00 Daily ticket price $ 7a.00 Number of days in ski season 150 U[ili[ies Annual Gas per Room $ 843 Annual Electric per Room $ 1,050 Parking Stalls $ 1,478 Annual per stall Gas&Electric $ 295.00