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Home My WebLink AboutPEC Memorandum 022210MEMORANDUM TO: Planning and Environmental Commission FROM: Community Development Department DATE: February 22, 2010 SUBJECT: A request for a work session on a major exterior alterations, pursuant to Section 12-71-7, Exterior Alterations or Modifications, Vail Town Code, to allow for the redevelopment of the area known as "Ever Vail" (West Lionshead), with multiple mixed-use structures including but not limited to, multiple-family dwelling units, fractional fee units, accommodation units, employee housing units, office, and commercial/retail uses, located at 862, 923, 934, 953, and 1031 South Frontage Road West, and the South Frontage Road West right-of-way/Unplatted (a complete legal description is available for inspection at the Town of Vail Community Development Department), and setting forth details in regard thereto. (PEC080064) Applicant: Vail Resorts Development Company, represented by Thomas Miller Planner: Warren Campbell I. SUMMARY The applicant, Vail Resorts Development Company, represented by the Mauriello Planning Group, LLC, is requesting a work session with the Planning and Environmental Commission to provide a presentation on the anticipafed fiscal impacts of the Ever Vail project to the Town of Vail. Attached to this memorandum is the Ever Vail Fiscal Impact Report prepared by Thompson and Trautz, LLC (Attachment A). This is a complex topic and will take multiple meetings to understand and discuss. The Town of Vail has entered into a contract with Economic and Planning Systems, Inc. (EPS) to review the report provided by the applicant and to provide a report on their findings. As this is a work session and the Planning and Environmental Commission is not being asked to reach any conclusions, Staff has not provided any recommendations at this time. Staff and the applicant request that the Planning and Environmental Commission participates in the presentation and tables this application to the March 8, 2010, public hearing. II. ATTACHMENTS A. Ever Vail Fiscal Impact Report prepared by Thompson and Trautz, LLC dated revised February 16, 2010 E� w- _ ,� � C�� ' �� , � � � a�� '�� v� Thompson & Trautz LLC. Ever Vail Fiscal Impact Report (Revised 2/16/2010) Summary Thompson & Trautz LLC has been retained as an independent consultancy to provide analysis as to the potential financial impacts, revenue and expenditures, the planned Vail Resorts development project Ever Vail will have on the Town of Vail. Our analysis is based on information provided from Vail Resorts Development Company, Town of Vail, Eagle County Assessor, and various other consultants currently engaged to work on this project. The results of our analysis estimate that the project will generate for the Town of Vail onetime.revenue of $31.6 million as well as $7.6 million at build out in ongoing annual revenue that includes $4.7 million from Tax Increment Financing (TIF). Annual Revenues TIF Revenue $ 4,737,318 Sales Tax - Condo Lodging 679,157 Sales Tax - Hotel Lodging 496,692 Sales Tax - Utilities 54,260 Sales Tax - Retail & F&B 837,456 Lift Tax 299,640 RETT 486,000 $ 7,590,523 One Time Revenues RETT $ 9,666,000 Use Tax - Building Materials 16,000,000 Permits & Fees 5,430,000 Traffic Impact Fees 500,000 $ 31,596,000 We estimate the additional operating and capital costs to the Town of Vail will be less than the estimated annual and one time revenues. A detailed analysis follows with explanation as to the individual components.of the revenue and expenditure totals. It is critical 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 project being 100% built out and all Attachment A w r \ J � commercial spaces occupied as presented. See the enclosed spreadsheet at the end of this document for the calculations. Unless noted occupancies and room rates are annual averages. This report does not attempt to address or quantify the obvious significant 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, Iabor and services, providing jobs and trade in the community, during the course of construction on the Ever Vail project. Property Tax Revenue The Ever Vail project, upon completion, will increase the assessed property valuation in the impacted area by $102 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. T'he TIF district has a 25-year lifecycle starting in 2005 thereby having the capacity to generate revenue through 2030. Based on a TIF mill levy of 46.124 the project is estimated to generate $4.7 million in TIF revenue annually. Once the TIF district expires the incremental property tax revenue to be generated from the Town of Vail's mill levy of 4.979 mills is $511,385. Incremental Assessed Value by Source Condominiums Deed Restricted Residential Hotel (Cost is actual value) Commercial - Office Commercial - Restaurant/Clut Commercial - Retail Current Assessed Value Incremental Assessed Value Actual Value Assessed Value $ 966,600,000 $ 76,941,360 34,560,000 2,750,976 66,000,000 6,960,000 12,218,182 3,543,273 17,689,091 5,129,836 44,442,424 12, 8 8 8, 3 03 $ 1,141,509,697 $ 108,213,748 5,505,440 $ 102,708,308 Assessed value is the 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 358 condominium units is based on a sales price of $1,800 per square foot. The assessed value of the 120 hotel units is $200,000 per room which is determined by comparing assessed values of other comparable hotels in Vail, Beaver Creek and Bachelor Gulch. The County �ses an income approach versus a market value approach to determine the assessed value for Hotels. The cost of the proposed hotel will be approximately $66 million but : the income approach to determining assessed value produces $24 million which is substantially less than cost or market value. The 155,575 square feet of commercial space includes office, restaurandClub and retail. The commercial space is valued for property taxes by dividing the projected lease rate per square foot by a cap rate of 8.25%. The lease rate for office and restaurant/club is $30 per square foot and retail $50 a square foot. The cap rate of 8.25% is based upon discussions with the county assessor staff. Sales Tax Revenue 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 short-term lodging revenue it is 5.4%. The Town of Vail does not collect sales tax for sales made on the mountain; however, a lift tax of 4% is paid to the Town of Vail on passes and lift tickets sales. Total annual sales tax at build out is estimated to be $2 million as follows. Sales Tax by Source (thousands) Condo Lodging Hotel Lodging Utilities Retail & F&B $ 679 497 54 837 $ 2,068 The sales tax on lodging sales is based on the short rental of condominiums and hotel rooms. We estimate that $1.1 million in lodging sales tax will be generated from the proposed lodging. It is estimated that 50% of the condo owners (358 total units) will rent their units at an average daily rate (ADR) of $550 with an estimated occupancy rate of 35%. The 120 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 there are no lodging revenues being generated on the development site. Ever Vail's buildings could generate $54,260 in sales tax on the electric and natural gas used. Based upon other properties the annual gas per room is $843 and electric is $1,050. The 1,531 underground parking structure stalls is estimated to cost $295 per stall for heat and electricity. We estimate the Ever Vail project will generate sales tax revenue of approximately $837,456 on Retail and F&B sales. This estimate is based on the number of people occupying the proposed lodging. We estimate that each lodging guest spends on average $100 a day in retail and F&B. Condos are occupied by 4 people when either used by owners or when used by guests who rent them. Based on prior experience of similar properties owners who are not in the rental pool will use their units 25% of the time and units in the rental pool will rent them 35% of othe time. The combined occupancy of the Condos in a rental pool and non-rented condo's is 30%. Hotel units 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 $9.7 million may be collected on the first sale of a11358 condo units at $1,800 a sq. ft. The resale of the units will generate on average $2.7 million or $27,000 in RETT revenue annually per unit. We project the turnover to be at 5% or 18 units sell a year generating $486,000 in annual revenue. Lift Tax Revenue The Town collects a 4% admission tax on all lift tickets and ski passes sold. We are estimating that the bed base from Ever Vail will generate 908 skier days per day during a150 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. OOther One Time Revenues Use Tax and Permit Revenues The Town collects a use tax on building materials that is anticipated to generate $16 million in revenue for the town. Permits and impact fees are estimated to generate $5.9 million for the Town. The actual traffic impact fee is estimated to be $2.5 million but anticipates an offset of $2 million. Town of Vail Fiscal Costs Our study projects the Ever Vail project could bring approximately 209,000 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 infrastructure 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 govemed 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 the Town we reviewed the current budget as well as the projected budgets. We also have asked the Town of Vail's staff to provide us with an estimate of what the fiscal impacts of Ever Vail will be and have not received any estimates. Greg Hall the Town's director of public works said that the largest 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 Town's 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 years: Solaris, Ritz, and Four Seasons. The Town's 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 that the projected revenue from Ever Vail will cover any reasonable additional operating or capital costs to the Town of Vail. Should the Town quantify the impacts to the operating and maintenance budgets, we are happy to include them in this report. � �J Ever Vail Development Annual Property Tax Revenue Generated from Eves Vail Use of Space No. OT Value Value Actual Assessed Units Sq Ft Per Unit Per Sq Ft Value Value Residentiai 358 537,000 $ 2,700,000 $ 1,800 $ 966,600,000 S 76,941,360 Deed Restricted Residential 48 57,600 720,000 600 34,560,000 2,750,976 Hotel 120 200,000 66,000,000 6,960,000 Commercial - Office 33,600 30 364 12,218,182 3,543,273 Commercial - RestaurantlClub 48,645 30 364 17,689,091 5,129,836 Commercial - Retail 73,330 50 606 44 442 424 12 888,3D3 1 141 509 697 108 213,748 Minus the current assessed value of land and property that now exists 5,505,440 Incremental increase in Assessed Value 102 708,308 Town of Vail Property Tax Revenue (4.979 mills) 511 385 Potential Revenue TIF Revenue(d� 46.124 Milis From Property Tax $ 4 737,318 Annual SalesTax and RETT Revenues Generated from Ever Vail Sales Tax Revenue Gross Sales Condo Lodging (3596 Occupancy, Room Rate $550, Units Rented 779) 12,576,988 $ 679,157 Hotel Lodging (60 % Occupancy, Room Rate S350, Units 120) 9,198,000 496,692 Utilities 1,356,499 54,260 Retail and Food 8 Beverage (30 % Occupancy Condo, 60°� Hotel) 20,936,400 837,456 (4/ppl per Condo, Z/ppl per Hotel, spending $100/day in Town) 2,067,565 Lift Tax Revenue S 7,asl,000 zss,sao Real Estate Transfer Tax 3 48,soo,000 aes,000 S 2 B53 205 One Time Revenues from Ever Vail Real Estate Transfer Tax $ 966,600,000 $ 9,666,000 Use Tax on building 16,000,000 Permits 8 Fees 5,430,000 Traffic Impact Fee 500,000 Total One Time Fees S s1,5ss,000 ights Generated Non Rental Sales Tax Condo (30% Occupancy, 4 people per room) Hotel (60% Occupancy, 2 people per room) People Generated Rental Sales Tax Condo (50% Rented, 35% Occupancy) Hotel (60% Occupancy) People Nights CONDOMINIUMS # people generated per unit Number of Condo's Percent of condos rented Occupancy rate of condos rented Condominum nightly rental rate Occupancy rate of condos not rented Neopie rer Yr Neopie No. Of Rooms Per Room Generated 358 438 156,804 120 438 52,560 209.364 Days Per Year No. Of Rooms Per Room Occ Room Night: 179 128 22,867 1 ZO 219 26,280 $ # people generated per unit Number of Rooms Occupancy rate Hotel Rental Rate $ Guest Spending Per Day in Vail (not on mountain) $ LIFT TAX Skiers Per Day from bed base Percent buying a ticket at retail Percent buying a season pass Pass rate per day $ Daily ticket price $ Number of days in ski season Utilities Annual Gas per Room $ Annual Electric per Room $ Parking Stalls $ Annual per stall Gas & Electric $ 4 358 50% 35% 550.00 25% 2 120 60% 350.00 100.00 /day 908 50% 50% 40.00 70.00 150 843 1, 050 1,531 295.00