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2000-07-18 Support Documentation Town Council Work Session
Y VAIL TOWN COUNCIL WORK SESSION TUESDAY, July 18, 2000 2:00 P.M. AT TOV COUNCIL CHAMBERS NOTE: Time of items is approximate, subject to change, and cannot be relied upon to determine at what time Council will consider an item. 1. Hub Site -The purpose of this worksession is to begin discussing Russell Forrest a preferred site plan and next steps. (1 hr.) ACTION REQUESTED OF COUNCIL: Begin reviewing the alternative site plans and determining if Council has a preferred alternative. In addition, Council needs to determine if there will be a 2000 election issue to help pay for this project. BACKGROUND RATIONALE: If the Town Council would like to move forward with a 2000 ballot issue on the community facility project, then that decision must be made in August and two readings of an ordinance must occur on or prior to September 5, 2000. The Town Council can also choose to move a possible election into 2001 without significantly delaying the project since one year of private fund raising was planned. 2. Continued Discussion of De-Brucing Property Tax. (30 Bob McLaurin mins.) Steve Thompson Action Requested of Council: Decide if this question should be on the ballot in November. Background rationale: In 1993 the Vail voters approved lifting (or de-Brucing) the revenue limitation impacts of Amendment 1 on all revenues except for property taxes. The Town was one of the first cities in Colorado to de-Bruce. Since then the Town of Avon and Eagle County have de-Bruced all revenues, including property taxes. The Town is currently limited by how much property tax revenue the Town of Vail can collect. If our assessed valuation goes up 13%, the Town's percentage growth in revenue is limited by the Denver Boulder CPI, plus our local growth factor (the percentage of new construction). These two percentages have totaled about 5% since TABOR was enacted. The base mill levy cannot be raised without a vote; this provision cannot be de-Bruced. Assessed valuation is impacted by redevelopment or new construction and all properties are reassessed every other year. The next reassessment will occur in 2001 for property taxes collected in 2002. In 1999, the last reassessment period, the assessed value increased 13%, whereas, the Town's growth limit was 3.8%. This change would allow the Town's revenue to keep pace with increases in assessed valuation. Enclosed is an analysis to show the impact of de-brucing and a comparison of comparable mill levies for properties down valley. A property owner in Vail would pay an additional $6.11 for residential property and $18.18 for commercial and vacant land per $100,000 actual value, in 2001. This increase represents a 1.4% increase in taxes paid assuming no change in actual value from 1999 to 2000. Sample Ballot Language: SHALL THE TOWN OF VAIL BE AUTHORIZED TO COLLECT, KEEP AND EXPEND ALL REVENUES IT RECEIVES FROM ITS PROPERTY TAX LEVY IN 2000 AND EACH YEAR THEREAFTER AS A PROPERTY TAX REVENUE CHANGE PURSUANT TO ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION PROVIDED THAT NOTHING IN THIS QUESTION 'AUTHORIZES THE TOWN TO INCREASE ITS RATE OF LEVY WITHOUT PRIOR VOTER APPROVAL? Staff Recommendation: Council approval to put this question on the ballot in November. 3. Discussion of Ordinance No. 15, Series of 2000; an ordinance Brent Wilson 12-10, Vail Town Code; with specific regard to Vail's commercial core area parking maps; and setting forth details in regard thereto. (5 mins.) ACTION REQUESTED OF COUNCIL: Approve, approve with modifications, or deny Ordinance No. 15 on first reading. BACKGROUND RATIONALE: On June 6th, the Vail Town Council approved Ordinance No. 9, Series of 2000 on second reading. This ordinance provides for reductions in parking requirements for properties within Vail's commercial core areas. At that time, the Town Council requested that staff return with an ordinance amending the core area maps to include the mixed use properties between Vail Road and East Lionshead Circle in the "core area" parking zones. Ordinance No. 15, if approved, will amend the maps to include these properties. ' No other changes to the Town's parking regulations would result from the passing of this ordinance. Staff Recommendation: The Department of Community Development recommends that the Town Council approve Ordinance No. 15 on first reading. 4. Discussion of Ordinance No. 16, Series 2000 - Cable Franchise Bob McLaurin Agreement. (See Background Rational - Evening Meeting Agenda) Tom Moorhead (15 mins.) Fred Lutz 5. Council Unfinished Business. (10 mins.) • "Other Protocol" • Appeal Hearing 6. Review July 18, 2000, Evening Agenda. (5 mins.) 7. Information Update. (10 mins.) 8. Council Reports. (10 mins.) 9. Other. (30 mins.) 10. Adjournment. (4:55 P.M.) NOTE UPCOMING MEETING START TIMES BELOW: ALL TIMES ARE APPROXIMATE AND SUBJECT TO CHANGE f . THE NEXT !TAIL TOWN COUNCIL REGULAR WORK SESSION WILL BE ON TUESDAY, 7/25100, BEGINNING AT 2:00 P.M. IN TOV COUNCIL CHAMBERS. THE FOLLOWING VAIL TOWN COUNCIL REGULAR WORK SESSION WILL BE ON TUESDAY, 8/1/00, BEGINNING AT 2.00 P.M. IN TOV COUNCIL CHAMBERS. THE NEXT VAIL TOWN COUNCIL REGULAR EVENING MEETING WILL BE ON TUESDAY, 8/1/00, BEGINNING AT 7:00 P.M. IN TOV COUNCIL CHAMBERS. Sign language interpretation available upon request with 24-hour notification. Please call 479-2332 voice or 479-2356 TDD for information. Mer~® 4®a Town Council Fu%nhe: Steve Thompson Date- 07/14/00 INV. Vail Local Marketing District Collections The Vail Local Marketing District was due its first check for the lodging tax in May of 2000. To our surprise, the check was only for a third of what we expected. We contacted the Colorado Department of Revenue and was told that even though the lodging tax returns were filed and paid by April 25, 2000, if the department did not get them processed by April 30th we would have to wait another 90 days to get our money. We contacted the Colorado Municipal League to get another contact person at the department of revenue and to see if they could do something for us. We have not received a response back from anyone at the state that can answer the question as to whether we are paid interest on the money they are holding and if this is the normal way taxes collected by the state are processed. This is something the Town council may want to take up with the state legislature. 0 Page 1 To: Vail Town Council From: Russ Forrest Date: July 18, 2000 Subject Community Facilities Process Update INTRODUCTION: The purpose of this worksession is to begin discussing a preferred site plan and next steps. The following are issues for the Town Council's consideration and a summary of next steps. ISSUES FOR COUNCIL'S CONSIDERATION DOES THE COUNCIL HAVE A PREFERRED SITE PLAN? Alternatives 1&2: Both alternatives 1 and 2 use Town of Vail land only and maintain the existing footprint of the Library and Dobson ice rink. On June 14 1h the design team presented variations on alternatives 1 & 2. Variations on alternatives 1 & 2 can accommodate additional private development and a hotel. - Alternative 2, with private development, appears to be financially viable. However, with some additional work, the design team believes we could make alternative 1 financially viable as well. This may require creating additional dwelling units or timeshare units versus hotel rooms. The major difference between alternatives 1 & 2 is that alternative 2 has a modest size public plaza and alternative 2 does not significantly affect the footprint of the existing parking structure. Alternative 3: Alternative 3 creates a large public plaza. This requires reorienting the library and 12 homeowners agreeing to relocation in the development. I have met with Marilyn Dyer, President of the Lodge at Lionshead Phase III, and made it clear the Town will not consider condemnation of any property to achieve its community facilities objectives. If Phase III wants to consider working with the Town on alternative 3, 1 hope to receive some indication of that interest by July 18th. However, it will take several months to adequately determine the specific spatial or monetary needs of the homeowners to facilitate a win/win solution. Staff also believes that with regard to alternative 3, it is critical to leave Dobson in its current location to reduce the total cost. This is physically possible. Also, this maintains the focus of the community uses in the plaza and significantly reduces the costs. The major design consideration for alternative 3 is whether the Council and the community believe the public plaza is of significant enough value to justify the associated costs. 1 1 HOW DOES THE COUNCIL WANT TO MOVE FORWARD WITH AN ELECTION? The_Vail Recreation District has clarified its mission and has determined it will operate facilities but will not build facilities. Therefore, the Town of Vail will need to finance the capital costs for all the facilities and/or develop public private partnerships to develop those uses. Based on the economic analysis, it may be possible to build the public uses without public funding (aside from the value of the land which the Town will retain ownership of). The private sources of funding could include: ® Corporate/private sponsorship Public/private partnerships Sale of parking spaces m Sale of dwelling units or fractional fee units ® Revenue from.a hotel (Relatively minor contribution compared to dwelling and fractional fee units) The total cost of the public uses ranges from $63 million to $150 million (See Attachment 2). If Dobson is maintained in its current location the cost is closer to $63 million. Unless the program is altered significantly, private financing will be needed to build these uses. Creating public uses that are entirely financed by private sources would greatly simplify the process. We could take the next year to implement a fund raising campaign (after a specific site plan is chosen). Then, in 2001, determine whether and how to move forward with a public vote. It would be possible to do a non-binding referendum (at any time in the year) to determine if the public supported the final concept. If private fund raising fell short, then a binding public vote would also be possible in November of 2001. By moving the vote to 2001, we will be able to allow for adequate time to come to a decision on the site plan and the architecture and to initiate a fund-raising campaign. Right now the schedule is based on being prepared for a public vote in November of 2000. Given that one year of fund raising was anticipated, it would not drastically delay the project to look at a 2001 ballot issue (if a public vote is necessary). DOES THE COUNCIL WANT TO CONTINUE TO CONSIDER A HOTEL ON THE SITE: Although this decision is not required immediately the Council should begin considering whether a hotel should continue to be explored on this site (See Attachment 2 for market analysis summary). Pros and cons for a hotel include: Pros: ® A hotel will be successful on the site according to Economic Research Associates market analysis. ® Projections indicate that 90,000 additional room nights will be generated from the learning/meeting center and that only 39% of the room nights would be. 2 .p a absorbed by a new hotel; 61 % of the room nights would be absorbed by existing hotels, i.e. this would be a net gain of 8% for existing hotels. o A hotel will make the learning/meeting center more successful and marketable to meeting planners. A hotel will add vitality, excitement and critical mass to the site A private/public partnership could potentially be developed to finance the hotel and the learning/meeting center. A new hotel with an average daily rate of under $220 would help provide greater value to guests. Based on national polling, and VR marketing, a value oriented hotel would help increase total visitation to Vail. Cons: A hotel will not generate significant revenue for public uses. Dwelling units and/or fractional fee units will generate approximately $400/square foot net revenue that could be applied to the public uses. o Existing hotel business would increase 15.3% with the creation of a learning /meeting center without a new hotel. This compares to an 8% increase with a hotel and learning/meeting center. It has been perceived that a hotel may dilute the public purpose of the facilities. If you don't have large conferences in the winter months, the demand for a new hotel is greatly diminished. In addition, if existing hotels are willing to release rooms in the winter and in peak summer months at competitive rates the need for a new hotel is diminished. Right now our larger hotels want to retain a percentage of their rooms in the winter and peak summer times for free and independent travelers which can make meeting planning for large groups very difficult. We are determining if there is any likelihood that hotels will change this practice. Creates additional parking demand. Some say this is an inappropriate use of private land. Staff would request the opportunity to further discuss the pros and cons with the hotel community and to review the assumptions in the market analysis. There may also be some additional partnership opportunities with the existing hotel community that should be examined. ADDITIONAL INFORMATION/ARCHITECTURAL WORK We have scheduled July 18th as the date to begin narrowing in on a site plan. The scope of service for EDAW has essentially been completed. The basic purpose of the contract with EDAW was to develop alternative site plans. If Phase Ill homeowners are receptive to a win/win solution regarding alternative 3, staff believes it is critical to develop architectural renderings of a new library since this is an existing building the community is very passionate about. Also architectural renderings for any of the alternatives will be valuable in gaining support for a particular concept. Another critical question is whether the Council wants to add an additional architect to the design team. On May 23rd Council indicated that this was not necessary. As you recall, staff did 3 s'. provide portfolios on several other design firms. Specific actions that need to occur after a general site plan is chosen include: 1. Refine the ideas, particularly the learning center using focus groups. This work has already been initiated. 2. Survey and geotechnical work 3. Additional parking analysis 4. Refining the site plan based on Council direction 5. Developing an architectural sketch plan 6. Additional public meetings to seek public input on the refined site plan 7. Fund raising PROPOSED HUB SITE SCHEDULE . Action Start Finish Who Develop alternative site plans Design Charette-develop alternative ideas Mon-3/27/00 Design Team Refine and Test Ideas Test Ideas with stakeholders Mon 4/17/00 Fri 6/8/00 Staff & DT Complete cost estimates Mon 5/1/00 Fri 6/2/00 EDAW Complete Market Analysis of a hotel Wed 5/3/00 Tue 5/23/00 ERA&EDAW VRD/TOV Meeting to review alternatives Tue 5/23/00 TOV/VRD Design team prepares for public presentations Tue 5/23/00 Wed 6/14/00 Design Team Develop draft operational plan recommendations Thu 5/4/00 Thu 6/8/00 Staff & EDAW Process to choose a preferred alternative Public Presentation of alternative ideas Wed 6/14/00 Staff/Design Joint VRD and Council Meeting Tue 7/11/00 (evening) Worksession and Evening Meeting Tue 7/18/00 Final Approval of Preferred Alternative/Ballot Initiative 1 st Reading of an Ordinance Tue 8/1/00 or Tues 8/15/00 2nd Reading of an Ordinance Tue 8/15/00 or Tues 9/5/00 Public Vote for Funding Mon 11/6/00 Note: Next steps after this phase would include continued fund raising, development of the architecture, and development review. F:\cdev\COUNCIL\M EMOS\00\COM718.doc 4 D Community Facility Costs & revenue Summary Alternative Summary Alternative 1 Alternative 2 Alternative 3 Cost $85-$95 mil $75-$85 mil $110-$120 mil revenue $50-$60 mil $70-$80 mil $105-$115 mil revenue Assumptions Value Public Funding $10 mil Private Fund Raising $20-30 mil Sale of Parking Spaces $0-$9 mil Sale of Dwelling Unit or Time Share $17-$68 mil Total $47-$117 mil Costs Learning/meeting Center $35-$40 mil Ice $10-$35 mil Family Entertainment $5-$10 mil Parking $26-$38 mil Total $76-$123 mil RECD J U L 1 3 2000 Economics Research Associates Final Report Vail Conference Hotel & Fractional-Interest Market Study Prepared for The Town of Vail Submitted by Ecmornics Research Associates July 3, 2000 ERA Project No. 13622 4 GENERAL LIMITING CONDITIONS This study is based on estimates, general knowledge of the industry and consultations with the client and the client's representatives. No responsibility is assumed for inaccuracies in reporting by the client, the client's agent and representatives or any other data source used in preparing or presenting this study. Research was conducted from May, 2000 through June, 2000, and Economics Research Associates has not undertaken any update of its research effort since such date. No warranty or representation is made by Economics Research Associates that any of the projected values or results contained in this study will actually be achieved. This report is not to be used in conjunction with any public or private offering of securities or other similar purpose where it may be relied upon to any degree by any person other than the client without first obtaining the prior written consent of Economics Research Associates. This study may not be used for purposes other than that for which it is prepared. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions, and considerations. TABLE OF CONTENTS Section Paize I INTRODUCTION AND MAJOR FINDINGS I- I Market Feasibility of Proposed 200-Room Conference Hotel I- 1 Market Feasibility for Fractional Interest Properties I- 4 H VAIL VALLEY LODGING MARKET II- 1 Lodging Market Characteristics II- 1 III HOTEL MARKET ASSESSMENT III- I Vail Valley Hotels III- 1 Market Feasibility of Proposed 200-Room Conference Hotel III- I IV ANALYSIS OF FRACTIONAL INTEREST PRODUCT IV- 1 Industry Overview IV- 1 Key Trends Affecting the Vacation Ownership Industry IV- 3 Three Primary Types of Interval Products IV- 4 Analysis of Selected Timeshare Products in Vail Valley IV- 7 Market Feasibility for Fractional Interest Properties IV-10 i LIST OF FIGURES Figure II- 1 VAIL VALLEY SEASONAL RENTAL PROPERTY TRENDS IN 1999 AND AVERAGE ANNUAL-OCCUPANCY RATES AND DAILY ROOM RATES IN THE VAIL VALLEY 1994 TO 1999 LIST OF 'SABLES Table II- 1 OCCUPANCY PATTERNS IN THE VAIL VALLEY: 1998-1999 - II- 2 AVERAGE DAILY ROOM RATES IN THE VAIL VALLEY: 1998-1999 II- 3 ESTIMATED VISITOR NIGHTS IN THE VAIL VALLEY III- I VAIL VAT T FY HOTEL PROPERTIES III- 2 ESTIMATED VAIL ROOM SUPPLY<DEFICIT> III- 3 PROJECTED TOWN OF VAIL OCCUPANCY RATE III- 4 PROJECTED OCCUPANCY RATE FOR PROPOSED 200-ROOM HOTEL III- 5 PROJECTED VAIL VALLEY OCCUPANCY RATE FOR EXISTING HOTELS III- 5 PROJECTED TOWN OF VAIL OCCUPANCY RATE - ASSUMING PROPOSED HOTEL IS NOT BUILT AND SUFFICIENT NUMBER OF ROOMS COMMITTED THROUGHOUT THE YEAR III- 7 PROJECTED TOWN OF VAIL OCCUPANCY RATE - ASSUMING PROPOSED HOTEL IS NOT BUILT AND SUFFICIENT NUMBER OF ROOMS COMMITTED EXCEPT DURING PEAK SKI & SUMMER PERIODS IV- I COMPARISON OF TIMESHAREXRACTIONAL-INTEREST CONCEPTS N- 2 SELECTED VAIL VALLEY FRACTIONAL INTEREST PROPERTIES ii o , Section I INTRODUCTION & MAJOR FINDINGS The Town of Vail is considering adding a 200-room hotel and/or a fractional-interest vacation development within the proposed redevelopment of the Hub site location at Lionshead. The redevelopment plan currently includes a proposed conference center, event center, recreational facilities and other uses. The Town retained Economics Research Associates to evaluate the market feasibility of adding a hotel or vacation property to the development program. This section presents ERA's major findings and recommendations. Please refer to the body of the report for a more thorough discussion of the market context, economic issues, and forecast assumptions. MARKET FEASIBILITY OF PROPOSED 200-ROOM CONFERENCE HOTEL It appears that the Town of Vail has a surplus of rooms for the average size conference during April through June, and September through December, but a possible shortage for average size and larger conferences during the popular peak months of January through March, July, and August. ERA estimates that conferences at the proposed conference center may generate 90,400 additional room-nights per year, prior to adjusting for displacements. In addition, special events at the enhanced event center and ice rink may generate almost 8,200 more room nights'. This room-night estimate is greater than the estimate presented in the Community Facilities Market Analysis (May 2, 2000) for two reasons: 1) This study assumes that a significant percentage of conference delegates will choose to stay additional nights before or after the conference to take advantage of Vail's recreational opportunities. Therefore, this hotel market study assumes that the average number of room-nights per delegate is 4.0 instead of the 3.3 assumed in the Community Facilities Market Analysis, which estimated room-nights associated with a conference only and not ancillary demand. ' Community Facilities Market Analysis, Economics Research Associates, May 2, 2000 Economics Research Associates Vail Conference Hotel d Fractional-Interest Market Study ERA Project No. 13622 Page I-1 2) The lower room-night estimate presented in the Community Facilities Market Analysis to calculate economic impacts was net of existing demand that conference delegates would displace, due to the need for existing hotels to dedicate rooms to conferences, even during the popular ski season. The displacement factor utilized in the Community Facilities Market Analysis report was a gross assumption, while this study refined the analysis of possible displacement. The 90,400 room-night estimate from conferences, used in this study, is before deducting displaced demand. The feasibility analysis for the hotel does account for displacement. Even so, the amount of displaced demand is significantly less with the addition of the proposed hotel. The proposed hotel will increase room-supply during the popular winter and summer seasons, so that existing hotels will not :have to displace as much non-conference demand to accommodate conference delegates. The Vail hotel market currently has an annual occupancy rate of approximately 59.5 percent. Another 140-room luxury hotel is planned at the gondola site and the Vail Plaza Inn plans a 78-room expansion. It is estimated that these additions to the supply could reduce the overall occupancy level to 57.1 percent, despite some induced demand associated with the 140-room luxury hotel, if Vail room- night demand remains relatively flat as it has in recent years. Per the Town of Vail's request, three scenarios were analyzed, as follows: m The base scenario - development of a new 200-room conference hotel. m Alternative 1 - no development of a new 200-room conference hotel, and existing hotels will commit a sufficient number of rooms to accommodate conferences throughout the year. ® Alternative 2 - no development of a new 200-room conference hotel, and existing hotels will commit a sufficient number of rooms to accommodate conferences during non-peak months; only smaller conferences will be accommodated during peak winter months. The Base Scenario The projected increase in demand that the conference center may generate, compared to the projected increase in supply, results in an increase of the market occupancy rate for hotels within the Town of Vail to a projected 63.8 percent, a 7.2 percent increase over the 59.5 percent occupancy rate Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Stud), ERA Project No. 13622 Page 1-2 among existing hotels today, and an 11.7 percent increase over the potential 57.1 percent future Vail occupancy rate after the new additions at the gondola site and Vail Plaza Inn.. It is projected that the proposed 200-room conference hotel may achieve an annual occupancy rate of 78 percent. This assumes that the hotel is dedicated to the conference center and will commit all of its rooms to conferences at a competitive room rate, which may be well below Vail's market rate during the winter months. Assuming that the proposed conference hotel will be the first to be booked by convention delegates, it is estimated at the proposed hotel may capture approximately 39 percent of the projected room-night demand generated by conference delegates and special event participants. This leaves 61 percent of the delegate and special event demand available for existing Town of Vail hotels. Therefore, existing hotels may observe a projected increase of over 60,200 room-nights. From this projected increase, ERA deducted demand that may be transferred from existing hotels to the new 200-room hotel, and existing winter demand that may be displaced due to the dedication of rooms for conferences. On net, the projected average occupancy rate among existing hotels is estimated to increase from the current 59.5 percent, to a projected 62.4 percent. Therefore, it appears that the Town of Vail may support the proposed 200-room conference hotel and still generate a modest level of additional demand for existing hotels, if the conference center is successfully marketed. The estimated average daily room-rate range, for analysis purposes, is from $190 to $219 for the proposed conference hotel, with peak season winter-group rates of $299. Alternative Scenario I This alternative assumes that the proposed 200-room hotel is not built. Instead, the existing hotels are able and willing to commit enough rooms throughout the year, including the popular ski season, to conference delegates, even if they must offer a discounted room-rate during ski season and displace skiers. Under this scenario, the occupancy rate at existing hotels increases to 68.6 percent. This is a 15.3 percent increase over the existing 59.5 percent level, and a 20.1 percent increase over the potential future 57.1 percent occupancy level. While this scenario results in better performance for existing hotels, it requires them to commit enough rooms, currently an uncertain requirement. This also requires a centralized booking organization to coordinate with meeting planners. Finally, forfeiting the proposed 200-roam Economics Research Associates Vail Conference Hotel & Fractional lnterert Market Study ERA Project No. 13622 Page I-3 conference hotel means that another source of revenue needs to be determined to help fund the conference center's development. Alternative Scenario 2 This second alternative assumes that the proposed 200-room hotel is not built, and that the Conference Center intentionally books only smaller conferences during the popular winter and summer months, thereby minimizing displacement of higher paying free-independent travelers during peak seasons. Instead, the Conference Center books larger than average conferences during the non-peak months so that the annual delegate count and room-night demand from conferences remains the same. Occupancy rates among existing hotels (including the gondola site hotel and the Vail Plaza expansion) rises to 71.1 percent. This is a 19.5 percent increase above the 59.5 percent occupancy among existing hotels today, and a 24.5 percent increase above the potential future occupancy rate of 57.1 percent given planned hotel developments. Like Alternative Scenario 1, this scenario results in better performance for existing hotels. This also requires a centralized booking organization to coordinate with meeting planners, and depends on the Conference Center's ability to adjust its target market group sizes to fit within Vail's seasonality and room inventory. Also, forfeiting the proposed 200-room conference hotel means that another source of revenue needs to be determined to help fund the conference center's development. MARKET FEASIBILITY FOR FRACTIONAL INTEREST PROPER i MS. The market for fractional-interest and time-share in Vail appears positive for the following reasons: ® The aging of the "baby boom" generation nationally into those age cohorts that generate the most demand for vacation properties; ® The entry of major national hotel operators into the time-share and fractional-interest business; ® The success of recent fractional-interest properties built in Vail and Beaver Creek; ® The lack of new product offered in Vail. Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page 14 Traditional time-share, similar to the older properties in Vail Valley, that had limited amenities, basically providing pre-paid lodging for active skiers, is not recommended. There are too many of these products selling available intervals on the re-sale market. Rather, two other contemporary vacation product types, with higher amenities and services, are recommended, if the right conditions can be planned to accommodate them within the subject Hub site - the hotel affiliated timeshare/fractional concept, and the high-end fractional interest property. Hotel Affiliated Time-Share/]Fractional 1Pro®erty One opportunity is a property that is affiliated with one of the major international hotel chains that is developing time-share/fractional products. The intervals offered should include a dedicated winter week plus points for non-winter use. This product type could complement the hotel that is planned for the Hub site, if the hotel operator is the affiliated hotel chain, and could be sited near the hotel more easily than can a high-end fractional interest property. The buildings should be built in clusters of 30 to 40 units, phased in accordance with demand. Based on the experience of recent properties, a high-quality cluster of this type and size might sell its intervals over a 24-month period if priced correctly. If a dedicated winter week is offered as part of the interval, plus points for approximately 10 additional days, the intervals in a quality project may sell for approximately $65 to $70 per square foot, or $71,500 to $77,000 for an 1,100 square foot two- bedroom unit. If a winter week is not included, and the intervals are traditional one-week periods throughout the year, the average price per interval may be on the order of $20,000 to $25,000. The key issue here is the quality of the timeshare/fractional property and the conference hotel. From the timeshare/fractional perspective, an affiliated higher-end hotel operator is preferred. From the conference hotel's perspective, a more moderate priced operator may be preferred in order to offer affordable room rates to conference delegates to market the conference center. High-End }Fractional Interest Demand for a high-end fractional interest property at the Hub site appears positive, and might cw---and prices in the $165 to $185 per square foot range, or $198,000 to $222,000 per share. Economics Research Associates Vail Conference Hotel A Fractional-Interest Market Study ERA Project No. 13622 Page I-5 A high-erid fractional property, however, is more problematic regarding siting issues. The buyers of this type of product see it as a type of second home purchase, and would not assign a value to being located near a conference center and conference hotel. In fact, high-end fractional interest properties and conference hotels typically do not work well together from a marketing perspective. The high-end fractional property would have to be located within the project area, but designed in a location that is secluded from the conference center and hotel. If built, the high-end fractional property should be developed in smaller clusters of 15 to 20 units, and phased according to market demand. A successful project of this size may take 1.5 to 2.5 years to sell its initial offering of 1/9'x-ownership shares. Competition While current competition is limited primarily to the re-sale market, there are approximately 180 time-share/fractional interest units planned in the Town of Vail. These units are proposed in several projects and would likely be developed within the next three to five years. Given recent sales experience among vacation properties in Beaver Creek and Vail, these proposed units may represent four to six years of supply. Therefore, development of a time-share or fractional interest project at the Hub site may have to be phased, depending on future market conditions. Other Considerations Finally, the important aspect that distinguishes these alternative product types from the older, traditional timeshare properties in Vail is the greater emphasis on amenities and services. These property types are more affordable substitutes for a mountain resort second home, and are not simply pre-paid ski-vacation rooms. The clientele are wealthier and older than timeshare buyers in the 1970s and early 1980s, and may not ski as regularly as they did when they were younger. Consequently, it is important to plan for amenities within or available to the project, such as pools, spas, telecommunications, business centers, concierge, etc., which will add to the construction costs. And, particularly with the high-end fractional product, it is important to design for exclusivity and prestige. Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Stud}, ERA Project No. 13622 Page I-6 Section 11 VAIL VALLEY LODGING MARKET According to the Vail Valley Tourism and Convention Bureau, the Vail Valley' includes about 2,750 hotel rooms, 2,800 condominium units, and 150 rental home properties. The largest concentration of rooms is located the Town of Vail where there are approximately 1,700 hotel rooms and 1,970 condominium units. LODGING MARKET CHARACTERISTICS Occunancv Rates The average annual occupancy rate in 1998 was approximately 54 percent for Vail Valley properties as a whole, with hotel properties experiencing the highest overall occupancy rates of about 64 percent and condominium properties achieving lower annual average occupancies of about 39 percent. Occupancy rates fell in 1999, to 51 percent in Vail Valley for all properties and 60 percent for hotel properties. Condominium properties saw a slight increase to 40 percent. The decline was attributable to poor weather conditions that resulted in significantly reduced snow accumulation. Occupancy rates for all properties, hotels and condominiums, in the Town of Vail fell 8 percent, from 55 percent in 1998 to 51 percent in 1999. Beaver Creek's occupancy rose 2 percent during the same period, from 51 percent in 1998 to 52 percent in 1999. The seasonal nature of visitation to the Vail Valley is illustrated by monthly occupancy rates at overnight accommodations in the region. As shown in Table U-1, in 1999, average monthly occupancy rates at overnight accommodations in the Vail Valley ranged from a peak of 80 percent in March to a low of about 19 percent in May, back up to 64 percent in July, down to 26 percent in November. During the peak summer visitor season (June through September), average monthly occupancy rates reached the 42 percent to 64 percent range, but did not approach levels achieved during the ski season. ' Reported data defines Vail Valley as the Town of Vail and Beaver Creek Economics Research Associates Vail Conference Hotel & Fractional-Iisterest Market Study ERA Project No. 13622 Page II-1 Hotel properties perform better than lodging properties as a whole. As shown in 'T'able 11-1, Vail Valley hotels achieved healthy occupancy rates of 75 to 86 percent during the ski-season months of January to March, and 75 to 70 percent during the summer months of July and August. As with all lodging properties, May and November were very slow months, with hotel occupancy rates at 28 and 30 percent respectively. The 1999 annual occupancy rate for Vail Valley hotels was 59.5 percent. Room Rates hi addition to maintaining much higher average occupancy rtes during the ski season, average daily room-rates in the Vail Valley are strikingly higher during the ski season. As shown in 'T'able H-2, .in 1999, average daily room rates for all lodging properties in the Vail Valley ranged from a peak, of about $374 to $304 per night during the ski season to a low of $89 in May and $98 in October. During the peak summer season, average daily room-rates for all lodging properties in the region ranged from about $153 to $156. In 1999, the annual average daily room rate for all properties in the Vail Valley was $232 - up 4 percent from 1998. Between 1995 and 1999, the average daily room rate increased by a compounded growth rate of 6.8 percent per year, from $178 in 1995 to $232 in 1999, well in excess of the inflation rate during the same period. While, annual average daily room-rates have continued to rise, occupancy rates have fluctuated significantly over the past few years, primarily because of variations in annual snowfall. Annual average daily room-rates and occupancy rtes also vary considerably by location and property type. Annual average daily room-rates are higher in Beaver Creek (about $266 in 1999) and lower in the Town of Vail (about $215 in 1999). It is interesting to note that Beaver Creek saw occupancy rtes rise slightly between 1998 and 1999, while not increasing room. rates significantly, while Vail saw occupancy rates fall as room rates rose. Additionally, annual average daily room rates are much higher for the Vail Valley's condominiums (about $276 in 1999) than for its hotels (about $211 in 1999). Vail Valley's hotel room average daily room rates grew by 5.0 percent between 1998 and 1999. Average daily room rates are significantly higher during the winter. In 1999, winter rates from December through March ranged from $304 to $374 for all properties, $272 to $359 for Town of Vail properties, and $260 to $369 for Vail Valley hotels. Average daily room rates during the rest of the year for all properties ranged from $89 to $156. Among Vail Valley hotels, the peak month room-rate of $369 in February was 132 percent greater than the August rate of $159, and 329 percent greater than the slowest month - May. Economics Research Associates Vail Conference Hote! & Fracdonal-Interest Market Study ERA Project No. 13622 ]Page II-3 Table H-1 OCCUPANCY PATTERNS D4 THE VAIL VA]LL EY: 1998-1999 Vail valley Town of Beaver Vail Valley Mail Valley Vail Valley Region Vail Creek Hotelsl Condos2 Group, 1998 January 73.0% 79.0% 61.7% 76.6% 66.8% 29.0% February 81.4% 86.0% 72.5% 86.7%. 72.3% 28.9% March 80.9% 83.5% 76.1% 84.8% 74.4% 23.2% April 45.3% 48.2% 40.0% 56.1% 28.1% 16.5% May 20.3% 20.6% 19.6% 29.4% 6.9% 13.4% June 41.0% 38.2% 46.4% 54.0% 22.5% 29.1% July 64.1% 65.8% 60.6% 76.2% 48.0% 36.5% August 67.9% 70.0% 63.7% 81.9% 49.4% 42.1% September 42.4% 40.8% 45.7% 56.9% 23.2% 28.7% October 28.5% 27.5% 30.2% 41.5% 12.1% 19.7% November 27.8% 24.9% 33.0% 34.0% 20.4% 10.5% December 63.6% 67.1% 56.8% 73.2% 51.7% 15.9% Annual Average: 53.6% 55.1% 50.7% 63.7% 39.3% 24.7% 1999 January 72.3% 74.0% 69.0% 74.7% 69.3% 35.8% February 73.1% 74.4% 70.4% 79.6% 64.6% 27.1% March 79.5% 79.8% 79.1% 85.7% 71.7% 24.2% April 41.5% 44.6% 35.3% 51.9% 27.4% 17.3% May 18.6% 18.0% 19.9% 28.2% 4.9% 12.1% June 42.1% 38.8% 48.3% 53.3% 26.5% 30.2% July 64.4% 61.4% 70.2% 75.1% 50.4% 39.5% August 58.1% 57.1% 60.2% 69.5% 43.40/6 34.0% September 47.8% 47.4% 48.5% 63.3% 27.7% 31.1% October 31.3% 30.5% 32.7% 43.2% 13.2% 22.3% November 25.8% 21.0% 34.6% 30.1% 19.7% 12.4% December 54.8% 55.0% 54.3% 60.2% 47.3% 13.4% Annual Average : 51.1% 50.7% 51.9% 59.5% 39.7% 25.1% 1/ Includes hotel units only. 21 Includes condominium units only. Source: Vail Valley Tourism $ Convention Bureau; Hill and Tashiro. Table II-2 AVERAGE DAILY ROOM RATES IN THE VAIL VALLEY: 1998-99 Vail Valley Town of Seaver Vail Valley Vail Valley Vail Valley Region Vail Creels Hotels' Condos2 Group Rate 1988 January $288 $256 $366 $264 $336 $244 February $325 $288 $416 $304 $373 $310 March $332 $285 $428 $307 $379 $280 April $176 $175 $180 $149 $263 $137 May $87 $84 $93 $84 $108 $90 June $135 $127 $148 $125 $167 $141 July $143 $132 $166 $144 $141 $146 August $154 $144 $177 $157 $149 $159 September $127 $114 $149 $125 $131 $130 October $97 $95 $100 $97 $98 $99 November $135 $129 $143 $119 $166 $97 December $316 $272 $419 $261 $413 $185 Annual Average: $223 $202 $267 $201 $274 $177 1999 January $304 $279 $357 $281 $334 $267 February $374 $359 $408 $369 $383 $306 March $361 $323 $438 $332 $406 $318 April $186 $176 $210 $164 $243 $135 May $89 $82 $101 $86 $108 $89 June $133 $118 $155 $132 $133 $135 July $153 $133 $189 $156 $148 $162 August $156 $138 $193 $159 $150 $164 September $134 $123 $153 $135 $131 $139 October $98 $98 $98 $99 $95, $100 November $121 $125 $116 $111 $141 $90 December $310 $272 $387 $260 $397 $191 Annual Average: $232 $215 $266 $211 $276 $185 1/ Includes hotel units only. 2/ Includes condominium units only. Source: Vail Valley Tourism & Convention Bureau; Hill and Tashiro. Group Business Group business, which includes ski-groups and meeting groups, represents an increasingly important aspect of total occupancy in the Vail Valley. During 1998 and 1999, average annual group occupancy was approximately 25 percentage points of total occupancy. The summer season is the peak season for group bookings, with monthly occupancy levels averaging 33 percent from June through September. January through March also have significant group occupancy levels, averaging 29 percent. The remaining months, which are during the spring and fall, have significantly lower group occupancy levels primarily due to the unpredictability of weather conditions in the Vail Valley during these seasons. Group average daily room-rates are lower than the average for all Vail Valley lodging properties. The $185 annual average daily room rate for groups in 1999 was 20 percent lower than the average for all properties and 12 percent lower than the average for all hotel properties in the Vail Valley. During the.winter, group rates ranged from a low of $191 during December and a high of $318 during March, averaging $271 during the four-month period, compared to the $311 average among Vail Valley hotels during the same period, equal to a 13 percent discount. Seasonalitv and Trends Yigure 11-1 illustrates the seasonal nature of Vail Valley's lodging occupancy and room-rate patterns, and the annual trend over the last six years. While occupancy rates vary significantly, due to snow accumulation primarily, average daily room-rates have increased since the mid-1990s. Airport lEnplanements Growth in visitation to the Vail Valley has been aided by improved service to the Eagle County Regional Airport, which is located in the Town of Gypsum. There are five airlines that serve the airport during the ski season (from mid-December through March) including American, Delta, Continental, Northwest, and United. Combined, these airlines provide direct service from 12 cities across the country including key hub cities such as Chicago, New York, Atlanta, Los Angeles, Houston, and Dallas. Economics Research Associates Vad Conference Hotel & Fractional--Interest Market Study ERA Project No. 13622 Page II-5 Figure 11-1 VAIL VALLEY SEASONAL. RENTAL PROPERY TRENDS IN 1999 - ALL PROPERTY TYPES I 100.0% $400 Occupancy $350 80.0% ADR $300 60.0% $250 $200 40.0% $150 20.0% $100 $50 0.0% I $0 AVERAGE ANNUAL OCCUPANCY RATES AND DAILY ROOD RATES IN inE VAIL VALLEY 1994 TO.1999 - ALL PROPERTY TYPES 70.0% $275 65.0% Occupancy $250 --a- ADR 60.0% a $225 $200 55.0% $175 50.0% $150 45.0% $125 40.0% I I I $100 1994 1995 1996 1997 1998 1999 Source: Hill and Tashiro Marketing and Advertising, WTCB. e s Starting in 1997, the Eagle County Regional Airport added limited off-season service on United Airlines. Currently, United provides four flights a day to Eagle from Denver year-round. With the dramatic increase in service levels, total passenger emplanements have grown roughly as follows: 0 1991 - about 29,000 air passengers 0 1995 - about 85,500 air passengers 0 1998 - about 177,300 air passengers Visitor Characteristics Vail Associates commissions frequent visitor intercept surveys from RRC Associates in order to gather information on the socioeconomic characteristics of the visitors to the Vail Valley. According the results of a 1996/7 winter and summer season survey and a recent 1999 winter season survey, the following characteristics can be inferred: 0 The majority of visitors stay overnight: 0 The average-length of stay for visitors is six days during the winter season and five days during the summer season; o Visitor loyalty in the Vail Valley is high: approximately 45 percent of the visitors in both the winter and summer seasons are repeat visitors; 0 During the winter season, over 75 percent of the visitors are from out of state. An additional 15 percent of the visitors are international. In the summer, up to 45 percent of the visitors are from Colorado. 0 The majority of visitors to the Vail Valley are extremely wealthy. During the winter, over 70 percent of the visitors have annual household incomes of over $100,000 and about 40 percent have household incomes of over $200,000. In the summer, the visitors are less wealthy on average than during the winter: 47 percent have annual household incomes of over $100,000 and 25 percent have household incomes of over $200,000. A large portion of the visitors is families-with-children: about 30 percent during the winter season and 43 percent during the summer. The average number of children per family is Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page 1I-7 2.2. About 84 percent of the adult visitors with children brought their children along on the trip. According to a 1999 summer visitor study by RRC, the age distribution of visitors to Vail during the summer is as follows: Age Group Percent 0 to 17 22.5% 18 to 24 15.4% - 25 to 34 17.4% 35 to 54 29.1% { 55 to 64 8.4% 65+ ' 7.3% ® According to RRC's 1996 study, during the winter season the population is considerably older. Only 34 percent of visitors surveyed in the 1996 winter study were under the age of 30 and the average age of visitors was 45. In addition, Vail Resorts' own market research indicates that Vail is not attracting or retaining its desired share of younger-adult ski visitors that make less than $150,000 per year,. and stay for shorter periods (3-5 nights versus 6-7 nights). }Estimated Visitation O There have been no formal studies completed that atto,.,W1 to estimate total annual visitation to the Vail Valley. Consequently, ERA has compiled visitation estimates, based on room counts, reported occupancy rates, visitor profiles, and typical party size as reported by the Vail Valley Tourism and Convention Bureau. Based on these figures, it is possible to estimate monthly and annual visitor nights spent in the Vail Valley. This calculation appears on Table U-3, and is summarized in the following points: Economics Research Associates tail Conference Hotel do Fractional-Interest Market Study ERA Project No. 13622 Page U-8 Table II-3 ESTIMATED VISITOR NIGHTS IN THE VAIL VALLEY BASED ON REPORTED OCCUPANCY AND ESTIMATED NUMBER OF ROOMS / VISITORS PER ROOM' Hotel Estimated Estimated Condo Estimated Estimated Estimated Estimated Total Occupancy in Number of Average Occupancy in Number of Average Total Visitor Total Days the Vail Valley Hotel Visitors Per the Vail Valley Condo Visitors Per Nights in Hotel Visitor Per Month in 1999 Rooms Hotel Room in 1999 Units i Condo Unit & Condo Units Nights a January 31 74.7% 2,750 1.6 69.3% 2,950 2.5 260,328 356,614 February 28 79.6% 2,750 1.6 64.6% 2,950 2.5 231,466 317,077 March 31 85.7% 2,750 1.6 71.7% 2,950 2.5 280,619 384,683 April 30 51.9% 2,750 1.6 27.4% 2,950 2.5 129,131 176,891 May 31 28.2% 2,750 2.1 4.9% 2,950 3.0 63,928 87,573 June 30 53.3% 2,750 2.1 26.5% 2,950 3.0 162,700 222,876 July 31 75.1% 2,750 2.1 50.4% 2,950 3.0 272,720 373,589 August 31 69.5% 2,750 2.1 43.4% 2,950 3.0 243,490 333,548 September 30 63.3% 2,750 2.1 27.7% 2,950 3.0 183,211 250,974 October 31 43.2% 2,750 2.1 13.2% 2,950 3.0 113,553 155,552 November 30 30.1% 2,750 2.1 19.7% 2,950 3.0 104,452 143,085 December 31 60.2% 2750 1.6 47.3% 2.950 2.5 190.252 260.620 Total/Average: 365 59.5% 2,750 1.9 39.7% 2,950 2.8 2,236,050 3,063,082 1/ Occupancy rates reported to VVTCB for 1999. 2/ Includes private homes available for short-term rental. 3/ Assumes that 27% of total visitors (including second home owners) stay in non-rental units based on a visitor survey completed by RRC Associates. Source: Vail Valley Tourism and Convention Bureau; and Economics Research Associates. ® The Vail Valley Tourism and Convention Bureau estimates that, during the peak ski season, the average hotel room accommodates 1.6 people, and the average condominium or rental home property accjita,,odates 2.5 people. During the summer and shoulder seasons, due to the preponderance of family travel, the average hotel room accommodates 2.1 people and the average condominium or rental home property accommodates 3.0 people. 0 Based on these figures, ERA estimates that the Valley's hotel, condominium, and rental home properties accommodate about 2.2 million visitor-nights per year. While this estimate provides a sense of the number of visitors staying in hotel, condominium, and rental home units in the Vail Valley, it does not include the following additional visitors: (1) seasonal residents staying in second homes (single family homes, condominiums, townhomes, etc.) that are not placed in the rental pool; (2) persons staying with friends and relatives who live in the area; and (3) campers. In order to estimate visitor nights in the Vail Valley from these additional visitors, ERA relied on the results of a 1999 RRC Associates survey that provides an estimated distribution of visitors by type of accommodation during the ski season. RRC Associates' visitor surveys report that only about 73 percent of all visitor nights are spent in hotel, condominium, and rental home properties. Based on this factor, the estimated total visitor nights in the Vail Valley is about 3.1 million annually which includes: e 1.108 million visitor-nights annually in hotel properties; ® 1.128 million visitor-nights annually in condominium and rental home properties; and 0 0.827 million visitor-nights annually in second home and other properties. Trends in the Colorado Ski Industrv The information presented in this section is based on RRC Associates' 1999 study of ski ~arhics of our society, resulting from industry indicators. According to RRC, the shifting age demor the aging of the baby-boom generation has resulted in a stagnation of growth in the ski industry. Within the industry, competition for skiers has become increasingly intense. . As result, many ski resorts, both in Colorado and nationally, have been upgrading the quality of their product. At the same time, the cruise industry and warm weather resorts have captured a larger share of the winter vacation market. Within Colorado, the following ski resorts are investing in renovations and new attractions: Economics Research Associates Pail Conference Hotel & Fractional-interest Market Study ERA Project No. 13622 Page II-10 i e Telluride, Aspen, Snowmass, Steamboat, Winter Park, Crested Butte, Copper Mountain, Keystone, and Breckenridge. The Vail Valley ski resorts have enjoyed a "premier status" among other destination alpine resorts in the, past. However, this status has lessened over time because of the following issues: o The lodging inventory has aged and many properties, especially among the condominium units, are in need of renovation; o A perception of eroding service in terms of overall consistency and performance; o A general sense that the high prices do not reflect the level of quality and service that would be expected; and o Relative inflexibility, in comparison to other ski resorts, in accommodating lengths of stay that are less than one week. Economics Research Associates Vail Conference Hotel & Fractional-pert Market Study ERA Project No. 13622 Page I1-11 Section III HOTEL MARKET ASSESSMENT VAIL VALLEY HOTELS According to data provided by the Vail Valley Tourism and Convention Bureau, there are approximately 2,529 hotel rooms, and 243 suites, for rent in the Vail Valley. Many of these rooms are among a small number of rooms for rent that are located within condominium projects, as shown in Table III-1. Some are small lodges. Only a few are larger hotels of 100 rooms or more. There are only three properties with 200 rooms or more. Of the 40 properties that offer rooms for rent, thirteen have fewer than 20 hotel rooms, nine have between 20 and 50 rooms, twelve have between 50 and 100 rooms, three have between 100 and 200 rooms, and only three have more than 200 rooms. The Hyatt Regency Beaver Creek, Marriott's Mountain Resort at Vail, and the Vail Cascade Hotel & Club are the largest in the valley, the later two are located within the Town of Vail. Of the 2,529 hotel rooms, 1,704 are located within the Town of Vail, and 1,171 are located within Vail Village and Lionshead. Planned and Proposed Hotels In The 'd'own of Vail Within the Town of Vail, there are 78 new rooms planned at the Vail Plaza Inn, and 140 rooms at the proposed gondola building site, in the near future. The Chateau at Vail may be redeveloped, which may add more hotel rooms to the local supply and affect the market assessment's findings, but currently there are no plans submitted. MARKET FEASIBILITY OF PROPOSED 200-ROOM CONFERENCE HOTEL Table 111-2 presents an estimate of the Vail room supply surplus or <deficit> given the additional demand that the proposed new conference center may generate. Given the Town of Vail's existing hotel room supply and current monthly occupancy rates, ERA estimated the average occupied rooms per night for each month. The room supply count includes the 78 new rooms planned at Vail Plaza Inn and the 140 proposed at the gondola building site. It is assumed that the market will absorb Economics Research Associates Dail Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page HIA e 1, p Table III-1 VAIL VALLEY HOTEL PROPERTIES Hotel Location Rooms Suites Condos Comfort Inn Vail/Beaver Creek Avon 144 2 - Lodge at Avon Center Avon 8 - 20 Just Relax Inn Avon 3 - - Hyatt Regency Beaver Creek Beaver Creek 295 5 - The Charter at Beaver Creek Beaver Creek 65 - 115 The Pines Lodge Beaver Creek 60 - 8 The Inn at Beaver Creek Beaver Creek 45 2 1 Trapper's Cabin Beaver Creek 4 - - The Centennial Lodge Beaver Creek 3 3 23 Oxford Court Beaver Creek 3 - 17 Borders Lodge Beaver Creek 2 - 97 Rocky Mountain Vacation Rentals Beaver Creek 1 - 10 The Inn at Riverwalk Edwards 60 - - The Lodge & Spa at Cordillera Edwards 56 6 - Marriott's Mountain Resort at Vail Lionshead 349 50 - Lionshead Inn Lionshead 52 - - Vailglo Lodge Lionshead 34 - - Lion Square Lodge Lionshead 28 - 83 Westwind/Vantage Point Lionshead 28 - 14 Eagle River Run Minturn 12 - - Sandstone Creek Club Sandstone 64 - 64 Vail Cascade Hotel & Club Vail 289 27 67 Roost Lodge Vail 70 2 - The Vail Village Inn Vail Valley 77 8 24 Evergreen Lodge Vail Village 128 - 19 Holiday Inn Chateau Vail Vail Village 124 - - Lodge Tower Vail Village 80 - 20 Lodge at Vail Vail Village 72 47 - Manor Vail Lodge Vail Village 52 73 27 Tivoli Lodge Vail Village 49 - - Vail Athletic Club Vail Village 38 5 2 Sitzmark Lodge Vail Village 35 - - Gasthof Gramshammer Vail Village 21 7 4 The Plaza Lodge Vail Village 20 - 7 Destination Resorts Vail Village 19 - 97 Christiania Vail Village 16 6 44 Black Bear Inn of Vail Vail Village 12 - - Mountain Haus Vail Village 10 - 64 Game Creek Club Chalet Vail Village 4 - - West Vail Lodge West Vail 97 - 19 TOTAL - ALL AREAS 2,529 243 846 TOTAL - VAIL 1,704 225 491 TOTAL -!TAIL VILLAGEILIONSHEAD 1,171 188 381 Source: Vail Valley Tourism & Convention Bureau; and Economics Research Associates z the 140-room hotel planned at the gondola site, because of induced demand that a new operator will bring to Vail. However, it is assumed that the 78-room addition to the existing Vail Plaza Inn will not induce new demand. Without an increase in demand to absorb the 78-room addition to the Vail Plaza Inn, the Vail hotel occupancy rate may fall to 57.1 percent. These hotels will open prior to the proposed 200-room conference hotel. An additional 15 percent was added to account for rooms that hotel properties would want to keep available for free independent travelers (FIT.), who pay the highest room rates. The estimated occupied rooms, given current demand, plus the 15 percent reserve, was subtracted from the room supply to estimate the average number of rooms available to be committed to conferences by month among the existing hotel properties. This amount was compared to the estimated average number of rooms demanded by an average conference of 518 delegates, assuming 1.1 delegates per room. As shown in Table 1(1<fi-2, it appears that the Town of Vail has a surplus of rooms for the average size cont,,r,uce during April through June, and September through December, but a shortage during the popular peak months of January through March, July, and August. This conclusion is before accounting for the proposed 200-room conference hotel. While it will be the conference center's objective to generate demand during Vail's shoulder seasons and off-seasons, conference demand for Vail may be highest during Vail's winter season. Demand typically is not as high during July and August since conference planners avoid scheduling conferences during the summer vacation period. The Town of Vail, therefore, may need the proposed 200-room hotel to market the conference center successfully during the winter if existing hotels do not commit enough rooms. Also, Vail will need to utilize its condominium supply to accommodate the largest 1,000-delegate conferences, except during October and November. ERA estimates that conferences at the. proposed conference center may generate an additional 90,400 room-nights per year, assuming an average of four conferences per month, an average of 518 delegates per conference, 1.1 delegates per room; and an average stay of four nights per delegate. In addition, events at the enhanced event center and ice rink may generate almost 8,200 more room-nights, for a- total increase of almost 98,600. As shown in Table M-3, this addition would increase the Town of Vail room-night demand from 400,500 to over 495,000 room-nights per year. This room-night estimate is greater than the estimate presented in the Community Facilities Market Analysis (May 2, 2000) for two reasons: Economics Research Associates Dail Conference Hotel & Fraawnal-Interest Market Study ERA Project No. 13622 Page III-3 r Table III-2 ESTIMATED VAIL ROOM SUPPLY <DEFICIT> Vail Average Room Total Hotel Estimated F.I.T. Room Total Potential Conference Supply Days Room Occupancy Avg. Occupied Reserve Occupied & Commitable Rooms Surplus Per Month Sunniv (11 Rate Rooms (2) 15% Reserved Rooms Rooms Demanded (3) <Deficit> January 31 1,922 74.7% 1,377 207 1,584 338 471 (133) February 28 1,922 79.6% 1,468 220 1,688 234 471 (237) March 31 1,922 85.7% 1,580 237 1,817 105 471 (366) April 30 1,922 51.9% 957 144 1,101 821 471 350 May 31 1,922 28.2% 520 78 598 1,324 471 853 June 30 1,922 53.3% 983 147 1,130 792 471 321 July 31 1,922 75.1% 1,385 208 1,593 329 471 (141) August 31 1,922 69.5% 1,282 192, 1,474 448 471 (23) September 30 1,922 63.3% 1,167 175 1,342 580 471 109 October 31 1,922 43.2% 797 119 916 1,006 471 535 November 30 1,922 30.1% 555 83 638 1,284 471 813 December 31 1,922 60.2% 1,110 167 1,277 645 471 174 1) 1,704 existing Town of Vail room supply, plus 78 new rooms at Vail Plaza Inn, and 140 room luxury hotel at the proposed gondola building site. 2) Assumes hotel at gondola site is absorbed by induced demand that new operator will generate, but that supply expansion at Vail Plaza Inn will not induce new demand. 3) Based on averge of 518 delegates and average occupancy or 1.1 delegates per room. Source: Economics Research Associates. Table I11-3 PROJECTED TOWN OF VAIL OCCUPANCY RATE Vail Projected Potential Total Hotel Existing Existing Hotels Plus: New Occupied Room Supply Room-Nights Projected Days Room Occupancy Occupied Room-Night Less: Room-Nights At Including Proposed Supply Including Occupancy Per Month Sunnly (1) Rate Room-Nights (2) Demand (3)nisulacement (4) Vail Hotels 200-Room Hotel 200-Room Hotel Rate January 31 1,922 74.7% 42,702 8,215 0 50,916 2,122 65,782 77.4% February 28 1,922 79.6% 41,099 8,215 1,271 48,043 - 2,122 59,416 80.9% March 31 1,922 85.7% 48,990 8,215 3,335 53,870 2,122 65,782 81.9% April 30 1,922 51.9% 28,711 8,215 0 36,926 2,122 63,660 58.0% May 31 1,922 28.2% 16,120 8,215 0 24,335 2,122 65,782 37.0% Juste 30 1,922 53.3% 29,486 8,215 0 37,700 2,122._ 63,660 59.2% July 31 1,922 75.1% 42,930 8,215 0 51,145 2,122 65,782 77.7% August 31 1,922 69.5% 39,729 8,215 0 47,944 2,122 65,782 72.9% September 30 1,922 63.3% 35,018 8,215 0 43,232 2,122 63,660 67.9% October 31 1,922 43.2% 24,695 8,215 0 32,909 2,122 65,782 50.0% November 30 1,922 30.1% 16,651 8,215 0 24,866 2,122 63,660 39.1% December 31 1,922 60.2% 34,413 8,215 0 42,627 2,122 65,782 64.8% Annual 400,543 98,575 4,605 494,512 774,530 63.8% 1) 1,704 existing Town of Vail room supply, plus 78 new rooms at Vail Plaza Inn, and 140 room luxury hotel at the proposed gondola building site. 2) Assumes hotel at gondola site is absorbed by induced demand that new operator will generate, but that supply expansion at Vail Plaza Inn will not induce new demand. 3) Assuming four conferences at 518 average delegates, 4 nights per month, plus an average of 680 room-nights per month for performance events and ice rink tournaments. 4) Existing demand during peak seasons that are displaced by rooms committed to conference delegates. Source: Economics Research Associates. 1) This study assumes that a significant percentage of conference delegates will choose to stay additional nights before or after a conference to take advantage of Vail's recreational opportunities. Therefore, this hotel market study assumes that the average number of room-nights per delegate is 4.0 instead of the 3.3 assumed in the Community Facilities Market Analysis, which estimated room-nights associated with a conference only and not ancillary demand. 2) The lower room-night estimate presented in the Community Facilities Market Analysis to calculate economic impacts was net of existing demand that delegates would displace, due to the need for existing hotels to dedicate rooms to conferences, even during the popular ski season. The 90,400 room-night estimate from conferences, used in this study, is before deducting displaced demand. The feasibility analysis for the hotel does account for displacement. Even so, the amount of displaced demand is significantly less with the addition of the proposed hotel. The proposed hotel will increase room-supply during the popular winter and summer seasons, so that existing hotels will not have to displace as much non-conference demand to accommodate conference delegates. The room supply will increase to 2,122 with the addition of the proposed 200-room hotel, the 78 new rooms at Vail Plaza Inn, and the 140 rooms at the gondola building site, to the 1,704 existing hotel rooms. This new supply will increase the Town of Vail's potential room-night supply to 774,500. The projected increase in demand compared to the projected increase in supply results in an increase of the market occupancy rate to a projected 63.8 percent, a 7.2 percent increase over the 59.5 percent occupancy rate among existing hotels today. As mentioned earlier, future occupancy levels before accounting for conference center delegate demand may fall to 57.1 percent, after the addition of the proposed gondola site hotel and the Vail Plaza Inn expansion. In this case, the growth in hotel occupancy levels to 63.8 percent due to conference center demand would result in an 11.7 percent increase. As shown in Table MA it is projected that the proposed conference hotel may achieve an annual occupancy rate of 78 percent. This assumes that the hotel is dedicated to the conference center and will commit all of its rooms to conferences at a competitive room rate, which may be significantly below Vail's market rate during the winter months. Assuming that the proposed conference hotel will Economics Research Associates Vail Conference Hotel A Fractional-Interest Market Study ERA Project No. 13622 Page III-6 Table M-4 PROJECTED OCCUPANCY RATE FOR PROPOSED 200-ROOM HOTEL Conference New Hotel Total Market Potential Room-Night Room-Night Room-Night Total Days Room Occupancy Room-Night Demand Occupancy Demand from Room-Night Average Per Month SuDDIv Rate SuDDIy Captured (1) From Conferences Other Sources (2) Demand Occupancv January 31 200 74.7% 6,200 3,200 51.6% 2,017 5,217 84.1% February 28 200 79.6% 5,600 3,200 57.1% 1,719 4,919 87.8% March 31 200 85.7% 6,200 3,200 51.6% 2,314 5,514 88.9% April 30 200 51.9% 6,000 3,200 53.3% 1,308 4,508 75.1% May 31 200- 28.2% 6,200 3,200 51.6% 761 3,961 63.9% June 30 200 53.3% 6,000 3,200 53.3% 1,343 4,543 75.7% July 31 200 75.1% 6,200 3,200 51.6% 2,028 5,228 84.3% August 31 200 69.5% 6,200 3,200 51.6% 1,877 5,077 81.9% September 30 200 63.3% 6,000 3,200 53.3% 1,595 4,795 79.9% October 31 200 43.2% 6,200 3,200 51.6% 1,166 4,366 70.4% November 30 200 30.1% 6,000 3,200 53.3% 759 3,959 66.0% December 31 200 60.2% 6,200 3,200 51.6% 1,625 4,825 77.8% Annual 73,000 38,400 52.6% 18,512 56,912 78.0% 1) Based on 200 rooms * 4 conference * 4 nights per conference, per month. 2) Based on 90% of monthly market occupancy rates, applied to non-conference nights during the month. Source: Economics Research Associates. . be the first to be booked by convention delegates, it is estimated that the proposed hotel would capture approximately 39 percent of the projected room-night demand generated by.conference delegates and special event participants. This leaves 61 percent of the delegate and special event demand available for existing Town of Vail hotels, or a projected increase of almost 60,200 new room-nights for existing hotels. From this projected increase, ERA deducted demand that may be transferred from existing hotels to the new 200- room hotel, and existing winter demand that may be displaced due to the dedication of rooms for conferences. On net, the projected average occupancy rate among existing hotels is estimated to increase to approximately 62.4 percent, , as shown in Table M-5. This is a 4.9 percent increase over today's 59.5 percent occupancy rate, and a 9.3 percent increase over the potential future occupancy rate of 57.1 percent among existing hotels given the proposed increase in supply from the gondola site hotel and the expansion of the Vail Plaza Inn. Performance may be greater if the proposed conference center's utilization exceeds the number of conferences, average delegate count, and length-of-stay assumed in this analysis. Therefore, it appears that the Town of Vail may support the proposed -200-room conference hotel and still generate additional demand for existing hotels, if the conference center is successfully marketed. The spillover demand to existing hotels, however, would increase occupancy rates among existing hotels by a modest amount. Alternative Scenarios Two other scenarios were tested. The first alternative assumes that the proposed 200-room hotel is not built. Instead, the existing hotels are able and willing to commit enough ..,.,...s throughout the year, including the popular ski season, to conference delegates, even if they must offer a discounted room-rate during ski season and displace skiers. Under this scenario, the occupancy rate at existing hotels increases to 68.6 percent, as shown in Table Hff-6. This is a 15.3 percent increase over the existing 59.5 percent level, and a 20.1 percent increase over the potential future 57.1 percent occupancy level. The second alternative assumes that the proposed 200-room hotel is not built, and that the Conference Center intentionally books only smaller conferences during the popular winter and summer Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page II1-8 Table III-S PROJECTED VAIL VALLEY OCCUPANCY RATE FOR EXISTING HOTELS Existing Ave. Nightly New Hotel Ave. Nightly J Less: Non-Conference Total Vail Hotel Existing Hotel Conference Room-Night Demand Not Plus: New Monthly Room-Night Demand Net Potential Estimated Days Room Occupancy Occupied Room-Night Supply Met By Room-Night Demand Captured Less: Room-Night Demand Room-Night Supply Occupancy Rate Per Month Suonly (t), Rate Room-Nishts (2). Demand (3) (200 Rooms). Proposed Hotel For ExlstineHotels (4) By Pronosed Hotel Disniscement At Existing otels At Existing Hotels Exbtlna Hotels January 31 1,922 743% 42,702 471 200 271 5,015 2,017 0 45,699 59,582 76.7% February 28 1,922 79.6% 41,099 471 200 271 5,015 1,719 1,271 43,124 53,816 80.1% March 31 1,922 85.7% 48,990 471 200 271 5,015 2,314 3,335 48,356 59,582 81.2% April 30 1,922 51.9% 28,711 471 200 271 5,015 1,308 0 32,418 57,660 56.2% May 31 1,922 28.2% 16,120 471 200 271 5,015 761 0 20,373 59,582 34.2% June 30 1,922 53.3% 29,486 471 200 271 5,015 1,343 0 33,157 57,660 57.5% July 31 1,922 75.1% 42,930 471 200 271 5,015 2,028 0 45,917 59,582 771% August 31 1,922 69.5% 39,729 471 20D 271 5,015 1,877 0 42,867 59,562 71.9% September 30 1,922 63.3% 35,018 471 200 271 5,015 1,595 0 38,437 57,660 66.7% October 31 1,922 43.2% 24,695 471 200 271 5,015 1,166 0 28,543 59,582 479% November 30 1,922 30.1% 16,651 471 200 271 5,015 759 0 20,907 57,660 36.3% December 31 1,922 60.2% 34,413 471 200 271 5,015 1,625 0 37,802 59,562 63.4% Annual 400,543 5,651 60,175 18,512 4,605 437,60D 701,530 62.4% 1) 1,704 existing Town of Vail room supply, plus 78 new rooms at Vail Plaza Inn, and 140 room luxury hotel at the proposed gondola building site. 2) Assumes hotel at gondola site is absorbed by Induced demand that new operator will generate, but that supply expansion at Vail Plaza Inn will not induce new demand. 3) Based on averge of 518 delegates and average occupancy or 1.1 delegates per room. 4) Based on 271 rooms 14 conferences' 4 nights per conference, per month, plus 680 room-nights per month from event center performance events and ice rink tournaments. 5) Existing demand during peak seasons that are displaced by rooms committed to conference delegates. Source: Economics Research Associates. a Table III-6 PROJECTED TOWN OF VAIL OCCUPANCY RATE - ASSUMING PROPOSED HOTEL IS NOT BUILT & SUFFICIENT NUMBER OF ROOMS COMMITTED THROUGHOUT THE YEAR Vail Projected Potential Total Hotel Existing Existing Hotels Plus: New Occupied Room Supply Room-Nights Projected Days Room Occupancy Occupied Room-Night Less: Room-Nights At Excluding Proposed Supply Including Occupancy Per Month,, Supolv (1) Rate Room-Nights (2). Demand (31 Displacement (4)Vail Hotels 200-Room Hotel 200-Room Hotel Rate January 31 1,922 747% 42,702 8,215 2,807 48,110 1,922 59,582 80.7% February 28 1,922 79.6% 41,099 8,215 4,471 44,843 1,922 53,816 83.3% March 31 1,922 85.7% 48,990 8,215 6,535 50,670 1,922 59,582 85.0% April 30 1,922 51.9% 28,711 8,215 0 36,926 1,922 57,660 64.0% May 31 1,922 28.2% 16,120 8,215 0 24,335 1,922 59,582 40.8% June 30 1,922 53.3% 29,486 8,215 0 37,700 1,922 57,660 65.4% July 31 1,922 75.1% 42,930 8,215 2,951 48,194 1,922 59,582 80.9% August 31 1,922 69.5% 39,729 8,215 1,047 46,897 1,922 59,582 78.7% September 30 1,922 63.3% 35,018 8,215 0 43,232 1,922 57,660 75.0% October 31 1,922 43.2% 24,695 8,215 0 32,909 1,922 59,582 55.2% November 30 1,922 30.1% 16,651 8,215 0 24,866 1,922 57,660 43.1% December 31 1,922 60.2% 34,413 8,215 0 42,627 1,922 59,582 71.5% Annual 400,543 98,575 17,809 481,308 701,530 68.6% 1) 1,704 existing Town of Vail room supply, plus 78 new rooms at Vail Plaza Inn, and 140 room luxury hotel at the proposed gondola building site. 2) Assumes hotel at gondola site is absorbed by induced demand that new operator will generate, but that supply expansion at Vail Plaza Inn will not induce new demand. 3) Assuming four conferences at 518 average delegates, 4 nights per month, plus an average of 680 room-nights per month for performance events and ice rink tournaments. 4) Existing demand during peak seasons that are displaced by rooms committed to conference delegates. Source: Economics Research Associates. months, thereby minimizing displacement of higher paying free-independent travelers during peak seasons. Instead, the Conference Center books larger than average conferences during the non-peak months so that the annual delegate count and room-night demand from conferences remains the ,same. As shown in Table 111-7, occupancy rates among existing hotels (including the gondola site hotel and the Vail Plaza expansion) rises to 71.1 percent. This is a 19.5 percent increase above the 59.5 percent occupancy among existing hotels today, and a 24.5 percent increase above the potential future occupancy rate of 57.1 percent given planned hotel developments. Room Rates As mentioned' in Section 11, the average daily room-rate for groups in Vail Valley typically is 12 percent lower than the market average daily room-rate. However, given the need to attract groups that are much larger than Vail typically attracts now to utilize the proposed conference center, the existing average daily room-rates for groups during January through March ($318 in 1999) may be prohibitively high. The average daily room-rate for groups during the rest of the year appears reasonable for the high-end professional groups and organizations that the proposed conference center will target, although the summer rates may also be too high if the conference center is forced to pursue more moderate-priced groups. Despite this concern about maintaining affordable room-rates for groups. High-end conference resort properties in the western states can achieve very high rates. The following are examples of the peak season rates charged large groups in selected resort properties: ® Broadmore Hotel, Colorado Springs - $325-$375 ® Hyatt Beaver Creek, Beaver Creek - $425-$450 • Ritz-Carleton, Laguna Nigel - $295-$495 ® Hotel Del Coronado, Coronado - $250-$375 ® La Quinta, Palm Springs - $280-$315 • Wyndham Resort, Breckenridge - $195 Economics Research Associates Vail Conference Hotel & Fractional-Interest Maj*et Study Ella Project No. 13622 Page III-11 - D Table III-7 PROJECTED TOWN OF VAIL OCCUPANCY RATE - ASSUMING PROPOSED HOTEL IS NOT BUILT & SUFFICIENT NUMBER OF ROOMS COMMITTED EXCEPT DURING PEAK SKI & SUMMER PERIODS Vail - - Projected Potential - Total Hotel Existing Existing Hotels Plus: New Occupied Room Supply Room-Nights Projected Days Room Occupancy Occupied Room-Night Less: Room-Nights At Excluding Proposed Supply Including Occupancy Per Month SUDDIV (1) Rate Room-Nights (21 Demand (3) Displacement (4) Vail Hotels 200-Room Hotel 200-Room Hotel Rate January 31 1,922 74.7% 42,702 5,596 0 48,298 1,922 59,582 81.1% February 28 1,922 79.6% 41,099 4,084 0 45,183 1,922 53,816 84.0% March 31 1,922 85.7% 48,990 2,135 0 51,124 1,922 59,582 85.8% April 30 1,922 51.9% 28,711 10,585 0 39,297 1,922 57,660 68.2% May 31 1,922 28.2% 16,120 10,585 0 26,706 1,922 59,582 44.8% June 30 1,922 53.3% 29,486 10,585 0 40,071 1,922 57,660 69.5% July 31 1,922 75.1% 42,930 5,465 0 48,396 1,922 59,582 81.2% August 31 1,922 69.5% 39,729 7,196 0 46,925 1,922 59,582 78.8% September 30 1,922 63.3% 35,018 10,585 0 45,603 1,922 57,660 79.1% October ' 31 1,922 43.2°x6 24,695 10,585 0 35,280 1,922 59,582 59.2% November 30 1,922 30.1% 16,651 10,585 0 27,237 1,922 57,660 47.2% December 31 1,922 60.2% 34,413 10,585 0 44,998 1,922 59,582 75.5% Annual 400,543 98,575 0 499,117 701,530 71.1% 1) 1,704 existing Town of Vail room supply, plus 78 new rooms at Vail Plaza Inn, and 140 room luxury hotel at the proposed gondola building site. 2) Assumes hotel at gondola site is absorbed by induced demand that new operator will generate, but that supply expansion at Vail Plaza Inn will not induce new demand. 3) Assuming four conferences at 518 average delegates, 4 nights per month, plus an average of 680 room-nights per month for performance events and ice rink tournaments. 4) Existing demand during peak seasons that are displaced by rooms committed to conference delegates. Source: Economics Research Associates. Assuming that the winter average daily room-rate for groups is $299 (in year 2000 dollars) for higher-end professional groups during February and March, and that the average Vail Valley group rate is charged during the rest of the year, the annual weighted-average daily room-rate for groups may equal $176 (in year 2000 dollars). It is estimated that conference groups would comprise approximately 67 percent of the occupancy at the proposed 200-room hotel, and that the other 33 percent would be comprised of other overnight- visitors who will pay full market rates. Assuming that this 33 percent of demand supports an annual average daily room-rate that is typical for Vail Valley hotels ($217 in year 2000 dollars), the estimated weighted-average daily room-rate for the proposed hotel is $190 (in year 2000 dollars). Given that the proposed 200-room hotel will be a newer property, it may command higher than average rates, depending on its operator and the quality of the property and its operations. Assuming the $299 room rate for conferences during the winter, but a 20 percent higher than market group rate during the rest of the year, and a 20 percent higher than market rate for non-group demand, the average daily room-rate may reach as high as $219. Wherefore, the estimated average daily room-rate range, for analysis purposes, is from $190 to $219 for the proposed conference hotel. Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Stud}, ERA Project No. 13622 Page III-13 o n r Section IV ANALYSIS OF FRACTIONAL INTEREST PRODUCT POTENTIAL INDUSTRY OVERVIEW Definition of Timeshare In a report published in 1996 by the World Tourism Organization (WTO) entitled "Timeshare: The New Force in Tourism," timeshare is defined as follows: "The concept of timeshare, also known as vacation ownership or holiday ownership, offers the public the right to enjoy, for a set period or interval each year, vacation time in an apartment or other type of lodging that is part of a tourist complex, equipped with a variety of services of facilities. Timeshare is effectively the advance purchase of time in holiday accommodations. The purchaser pays a capital sum to acquire the timeshare, and then pays an annual contribution towards the maintenance of the property both interior and communal areas. The period of time sold is usually based on modules of one week." In addition, the WTO report states, "Despite its origins in the real estate sector, and the underlying physical property on which timeshare is based, timeshare or vacation ownership should be considered and positioned as a vacation / leisure concept, not a real.estate product. Timeshare purchasers are making payments for future holidays." Industrv Overview The following is a summary of key points from a recent report published by the American Resort Development Association (ARDA) entitled, State of the U.S. Vacation Ownership Industry: The 1999 Report: o In 1980, 155,000 families owned timeshare at about 500 resorts worldwide. Today, nearly 5 million families own timeshare vacation property at over 5,000 resorts, for almost a 20 percent compound annual growth rate over the last two decades. Economics Research :associates Vail Conference Hotel cE Fractional-Interest Market Study? ERA Project No. 13622 Page rV-1 A Y a There are more than 2 million owners in the United States at 1,600 resorts. Approximately 300,000 American families bought new timeshare intervals in 1998, with national sales over $3 billion. ® Vacation ownership is the fastest growing segment of the tourism industry. Between 1985 and 1998, worldwide, the number of owners grew by a c.,,,,Founded annual growth rate of 15 percent, the intervals sold grew annually by almost 9 percent per year, and sales volume annually grew by 11 percent per year. ® The typical timeshare buyer earns a higher income, attains a higher level of education, and is older than the average consumer. The typical vacation owner is an upper-middle- income, middle-aged, well-educated couple. This profile is consistent with Vail's visitor profile, and the number of people that fit this profile is growing as the "baby boom" generation ages. The average time share buyer is 49 years old. Over the next twenty years, more than 75 million Americans will turn 50. © According to KPMG Peat Marwick research, the top five reasons for purchasing a time share are - 1. Quality accommodations 2. Exchange opportunity 3. Good value 4. Resort, amenities, unit 5. Company credibility m The typical vacation ownership unit has two-bedrooms and two full baths, and can sleep six people. Full-size kitchens are common, with amenities such as washers and dryers. A majority of buyers purchase a deeded interest in the property, although points-based ownership is increasingly popular. While the fixed week ownership plan is by far the most popular, club systems, points based ownership, and floating week ownership are growing in popularity because of their flexibility.. ® The increasingly flexible and sophisticated exchange programs are one of the most ;popular features of timeshare ownership. Almost all vacation ownership resorts in the United States are affiliated with Interval International or Resort Condominium International. Economics Research Associates bail Conference Hotel & Fractional-Interest Market Studs, ERA Project No. 13622 Page IV-2 C P Between 1994 and 1998, confirmed vacation exchanges have grown by 9.6 percent per year. Other key findings from a 1999 survey that ARDA's commissioned, prepared by Steven Miner Research & Appraisal, are as follows: o An estimated 8.9 million American households, or 8.6 percent of all households, own some form of vacation ownership. The ownership rate is growing by 2.4 percent annually, with resort timeshares representing more than half of the recent increase. o While 47 percent of the households survey prefer a traditional, detached second home, interest in resort timeshares and fractional interest properties is growing the fastest, from 8 percent of respondents in 1990 to 22 percent in 1999. o Colorado was preferred by 5.4 percent of the respondents nationally. o Ocean beach properties are the most popular, desired by 44 percent of the households survey, followed by mountain resorts, at 27 percent. o There is a mismatch between what respondents are willing to spend, a median price of $47,000, and the desire for a second home property, which typically is costlier. This mismatch presents an opportunity for fractional-interest properties that provide a second- home quality product at a more affordable price. KEY TRENDS At r E CTHNO THE VACATION OWNERSHIP INDUSTRY Looking towards the fixture, changes in the demographic structure and social patterns mean that more people will have the time, inclination and income to travel. These changes include: o The aging of the population. The leading age of the "baby boom" generation is now over 50 years old and there will be a significant increase in people approaching retirement age with more leisure time available to vacation. o The increase of working women and two-income households. o The growing proportion of single adults. The trend towards later marriage and families. o The growth in the number of childless households. t Economics Research Associates Voil Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page IV-3 J ~ O O increased paid leave and more flexible working time. a Earlier retirement. a Increased awareness of travel possibilities. It should also be noted that, due primarily to some highly publicized fraud cases in the 1980s and the perception of "high pressure" sales tactics, there are still some negative associations pertaining to the timeshare industry in general. However, with the increased credibility brought to the industry by such prestigious organizations such as Marriott, Hilton, Disney, Hyatt, Westin, Embassy Suites, Four Season, and others, the long-term prospects for the industry appear strong. i ntEEE PRIMARY TYPES OF INTERVAL PRODUCTS Three major types of interval products have emerged 1) traditional timeshare; 2) contemporary timeshare; and 3) fractional products. Major differences between these three interval products are highlighted in Table IV-1. 'T'raditional 'T'imeshare Proerams Timeshare programs tend to be associated with fractional interests equal to, one week of use. Traditional programs often convey a deeded interest to a specific unit defined as a "fixed" week within a fifty-two week calendar. The buying motivation is an alternative to a week in a hotel or apartment. As mentioned, an essential ingredient of this program is the ability to exchange a week at one's owned unit with another unit in some other location. Independent developers usually develop traditional timeshare projects. The total number of lodging units within a complex averages fifty units. As will be discussed in more detail below, in the Vail area, with a few notable exceptions, most timeshare projects would be categorized as traditional timeshare. Contemoorarv Timeshare Products, The advent into timeshare of the large hotel chains (for example, Marriott, Hilton, Hyatt, Westin, Embassy Suites, Four Seasons), the change in consumers holiday habits, and an ever- increasing requirement for more consumer choice, are leading to growing demand Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page IV4 o vp Table IV-1: COMPARISON OF TIMESHARE/FRACTIONAL-INTEREST CONCEPTS Factors Traditional Timeshare Contemporary Timeshare Fractional Length of 1 week I to 2 weeks 4 to 5 weeks interval Usage Pre-scheduled fixed week of Flexible usage, can split up Flexible usage, interval can procedures use each year interval into several visits be divided throughout the year Branding None Major hotels None Image Poor to Moderate Improving Limited, Taint of Timeshare Physical Product Good to high quality High quality, similar size to High quality timeshare Larger units Product Mix Studio to 3-bedroom Studio to 3-bedroom Uniform 3- to 5-bedroom buyer Vacation package with Vacation package with Alternative to second home Motivation exchange privileges exchange privileges into hotels, RCI, etc. ]buyer Profile Middle market Upper, mid-market Up-Market Market Depth Top 45%; market area is Top 25%; market area is an Top 2%-5%;.market area area that can reach site by air area that can reach site by air largely limited to areas that cost effectively in a cost effective manner can reach site in 24 hours Control by Limited rights Limited rights Strong rights Purchaser ]Experience and Abundant experience, many Last five years but high Limited History of providers, well documented, volume of sales and well Product highly regulated researched by major hotels Sales approach Aggressive, high pressure Softened sell, medium Soft sell, low pressure pressure Marketing Cost 350/6-50% Reduced from timeshare Lowest Estimates 301/o45% Marketing Direct mail, telemarketing, Targeted to hotel guests, - Targeted to frequent visitors, Strategy to vacation packages, on-site heavy emphasis on intercept heavy emphasis on referrals Reach Prospects sales center, gifts marketing, direct mail ® program Economics Research Associates Vail Conference Hotel & Fractional-Interest Afarket Stu4j, ERA Project No. 13622 Page IV-5 p av u for contemporary timeshare products or points-based vacation clubs. With this system, instead of paying a capital sum to buy a fixed unit of timeshare, the buyer acquires a number of vacation credits or points which the user can use to take a vacation of choice from within the club's owned or controlled inventory. An ownership interest is not always conveyed. The Disney program is a notable example of a program where the user acquires a "right to use" (lease) for a limited time period (about 50 years). As mentioned, with many programs, filie purchaser buys a certain number of "points." Lodging units are available in several sizes (studio, one, two and three bedrooms). A one- week stay in a unit will require a different number of points, depending upon the time of year and the size of the unit. Therefore, a purchaser might be able to use a studio unit during high season but could alternatively use a three-bedroom unit during low season. Some plans also permit the purchaser to "borrow" points from next year's allocation or "bank" points from this year's allocation and apply them to next year. This plan provides considerable flexibility to the purchaser and has been enthusiastically received. However, it adds a considerable degree of complexity to the annual usage plan and can result in overbooking of time if not carefully balanced and managed by the operator. 't'hese plans have been embraced by the major hotel brands. The hotel programs tend to consist of a larger number of units per project, are often co-located on a hotel site, and are developed, marketed and managed by the hotel group. Fractional Ownership Fractional ownership plans refer to programs that divide available time among a relatively small number of users per unit. From a legal standpoint, there is little difference between a fractional interest and deeded timeshare interval, except with regard to the number of weeks of use per year. While timeshares are sold in one- or two-week increments, fractional ownership intervals range from 2.5 to 26 weeks per year. One-thirteenth shares that allow use for four weeks out of the year (typically one-week in each season) have proven the most popular nationally. Fractional projects guarantee the purchaser an amount of time within the complex but usually do not necessarily guarantee the same physical unit. Usage by the purchaser is frequent (often the four- to five-week annual interval is divided over 10 visits) and as a result, purchasers tend to live within reasonable driving distance of the primary residence or within one hour of a major airport. Exchange is much less common with fractional ownership than with traditional timeshare or points-based vacation clubs. The major marketing difference between the timeshare and fractional concepts is that while timeshares are Economics Research Associates Vail Conference Hotel X Fractional-Interest Market Study ERA Project No. 13622 Page IV-6 a ' s marketed as a substitute for rental accommodations, fractional products are marketed as part ownership of a second home. The fractional resort industry in the U.S. is relatively young, with the first project opening in 1984. Over 75 projects have been developed, most of which consist of 30 to 40 units. Typical fractional buyers are affluent, middle aged couples and the ownership profile is much more affluent than for timeshare. ANALYSIS OF SELECTED TIMESHARE PRODUCTS IN VAIL VALLEY As shown in Table IV-2, twelve selected time-share or fractional interest properties were reviewed in the Vail Valley. This selected sample totaled 817 condominium units, of which 373 are located in the Town of Vail. Three of the properties, all in Vail; were built in the 1970s, six were built in the 1980s, and three were built in the 1990s. Two of the properties built in the 1990s are located in Beaver Creek, and one, Austria Haus, was built in Vail. Almost all of the properties have sold out their original intervals, except for Austria Haus that has 7 of its original 162 intervals still on the market. Most of the properties are relatively small clusters of units. All but two properties have between 9 and 62 units, and the Marriott Streamside is divided into several small clusters. Nine of the twelve properties are traditional time-shares, while two are fractional-interests, and one is a combined time-share/fractional property. Resale prices range significantly, depending on the quality of the property, the location of the unit, unit size, and the season the week is available. Winter weeks command a much higher price than the rest of the year. Many of the older products are distant from ski lifts, and do not command high re-sale values. The time-share properties that were built before 1990 offer re-sales that average over $6,000 for a one-week interval. The latest phase of Marriott Streamside, built in 1991, called Evergreen, offers re-sales averaging $10,500 per week. One new time-share product, Lakeside Terrace in Avon, offers one-week intervals per year for $26,500, or one-week every other year for $13,400. ]Fractional Interest ]Properties Recently, new fractional interest properties have been developed that offer more amenities, higher quality units, closer locations to ski lifts and activity centers, and larger units. These properties sell longer intervals that range from one winter week, plus ten days during the rest of the year, to five- Economics Research Associates Viol Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page IV-7 Table IV-2 SELECTED VAIL VALLEY FRACTIONAL INTEREST PROPERTIES I Original Condo Date Price Price Intervals Intervals Proximityto Location Type Units Built Range Average Interval Available Sold Lifts Vail Properties Wren Vall Village Time-share 43 1976 $1,800-$30,000 $ 5,900 1-week 88 resales all Moderate Apollo Vail Village Time-share 33 late 1970s $800-$1,500 $ 2,150 1-week 2 resales all Moderate Austria Haus Veil Village Fractional 18 1998 $249,000-$395,000 $ 259,000 119th Interest 7 new, 1 resale 155 Near Sandstone Creek Club West Vail Time-share 62 1980+\- $1,000419,900 $ 3,500 1-week 277 resales all Distant Marriott Sireamside West Vail Time-share 150 1979-1991 $5,900-$29,900 $ 10,500 1-week 21 resales all Distant Ventage Paint West Veil Time-share 9 1972 $6,000 $ 6,000 1-week resales all Distant Veil Run Resort West Vail Time-share 58 1984 $1,500-$24,000 $ 5,500 1-week 30 resales all Distant 1 Other Area Properties Hyatt Mountain Lodge Beaver Creek Fractional 37 1998 $22,000-$339,000 $ 80,500 1-week winter + 10 days 102 resales all Near . St. James Beaver Creek Time-share\Fractional 48 1989 $11,900-$235,000 $ 41,250 1-week; some + floating week 56 resales all Near Lakeside Terrace Avon Time-share 24 1999 Annual - $18,500-36,000 $ 26,500 1-week n.a. 10 Distant Alternate Yrs. - $12,500-$14,000 $ 13,400 Falcon Point Avon Time-share 58 1984 $8,700-$17,000 $ 12,150 1-week 8 resales all Distant Christie Lodge Avon Time-share 277 1983 $4,500-$12,000 $ 7,200 1-week 9 resales all Distant Source: Selected properties and Economics Research Associates week intervals. These fractional properties appeal to buyers who are looking for a mountain-resort second home alternative. Hyatt Mountain Lodge All of the recent properties have performed well. The Hyatt Mountain Lodge in Beaver Creek, built in 1.998, sold out quickly over 18 months, but has a relatively large inventory of re-sales, averaging $80,500 per interval (one winter week plus points equal to 10 days during the rest of the year). Studios range from 450 to 600 square feet, two-bedrooms from 900-1,200 square feet, and three-bedrooms from 1,350 to 1,700 square feet. The average re-sale price for a studio is $34,900 for a single interval, or approximately $66 per square foot. The average re-sale.price for a two-bedroom is $71,800 for a single interval, or approximately $68 per square foot. The average re-sale price for a three-bedroom is $114,000 for a single-interval, or approximately $75 per square foot. Annual fees are $968 for a studio, $1,814 for a two-bedroom, and $2,632 for a three bedroom. Amenities include full concierge services, overnight ski valet, ski-way access, daily tidying service, underground parking, outdoor heated pool and three hot tubs, health club, Hyatt Regency spa privileges, whirlpool tub in master bath, washer and dryer, TV-VCR-CD, free shuttle service, media room and business center, complimentary continental breakfast, and discounted lift tickets. .St. James in Beaver Creek St. James in Beaver Creek, which some brokers interviewed felt was a good model for the Lionshead site, also sold out quickly and offers 56 re-sales at an average price of over $41,000 per interval, including multiple-week intervals. One-bedroom units average 900 square feet, two-bedroom units average 1,350 square feet, and three-bedroom units average 1,850 square feet. The winter interval re-sale price for one-bedroom intervals averages $36,100, or approximately $40 per square foot. The winter interval re-sale price for two-bedroom units average $35,800, or almost $27 per square foot. In contrast, the re-sale price for summer intervals averages $14,500 for a two-bedroom unit, or approximately $11 per square foot, nearly 60 percent less. The winter interval re-sale price for three- bedroom units averages $34,000, or over $18 per square foot. Annual dues are $762 for a two-bedroom unit and $900 for a three-bedroom unit. Amenities include full concierge services, indoor pool, indoor/outdoor hot tubs, workout facilities, sauna/steam Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page IV-9 room, underground heated parking, bellman and seasonal 24-hour front desk, full kitchens, televisions in every room, and washer/dryer in every villa. Austria d-Haus Austria Haus Club, the one recent fractional-interest property in Vail, offers its remaining 1/9`h shares (7 out of the original 162) for an average price of $259,000. It sold 155 shares over an 18- month period. Located on Gore Creek in the heart of Vail Village, the property is near ski lifts, but is not a ski-in, ski-out facility. The Sonnenalp Resort manages it. Two-bedroom units are 1,200 square feet, three-bedroom units are 1,500 square feet, and 3- be, -oom units with a penthouse are 1,550 square feet. Two-bedrooms are offered for $249,000, or equal to approximately $208 per square foot. Three bedrooms are offered at $319,000, or $213 per square foot. Three-bedrooms with a penthouse are offered at $395,000, or $255 per square foot. Annual membership assessments in 1999 were $1,389 for atwo-bedroom interval, $1,768 for a three-bedroom unit, and $1,818 for a three-bedroom with penthouse unit. Housekeeping fees range from $210 to $270 per occupancy. Amenities and services include valet parking, ski vale, ski clothing and equipment storage, fitness center, heated outdoor pool and spa, club lounge and bar, golf and tennis privileges, spa treatments, restaurants and room service, 24 hour club staff, member services office, and Sonnenalp guided programs and KidVentures. Organized as a private club, buyers purchase undivided deeded interests in the facility, and have access to any of the rooms, depending on availability. Each member can reserve up to 14 days of Planned Winter Vacations, 14 days of Planned Summer Vacations, and up to 7 days of Optional Planned Winter or Summer Vacations. They may reserve additional "time throughout the year, depending on availability,,as often as they wish. MARKET FEASIBILITY FOR FRACTIONAL INTEREST PROPERTIES, The market for fractional-interest and time-share in Vail appears positive for the following reasons: m The aging of the "baby boom" generation nationally into those age cohorts that generate the most demand for vacation properties; Economics Research Associates Vad Conference Hotel & Fractional-Interest Market Study ERA Project No. 13622 Page IV-10 a- o The entry of major national hotel operators into the time-share and fractional-interest business; o The success of recent fractional-interest properties built in Vail and Beaver Creek; o The lack of new product offered in Vail. Traditional independent time-share, similar to the older properties in Vail Valley, that had limited amenities, basically providing pre-paid lodging for active skiers, is not recommended. There are too many of these products available on the re-sale market. Rather, two other contemporary vacation product types, with higher amenities and services, are recommended, if the right conditions can be planned to accommodate them within the subject Hub site - the hotel affiliated timeshare/fractional concept, and the high-end fractional interest property. Hotel Affiliated Time-Share[Fractional ProiDerty One opportunity is a property that is affiliated with one of the major international hotel chains that is developing time-share/fractional products, such as Marriott, Four Seasons, Hyatt, Hilton, and others. The intervals offered should include a dedicated winter week plus points for non-winter use. This product type could complement the hotel that is planned for the Hub site, if the hotel operator is the affiliated hotel chain, and could be sited near the hotel more easily than can a high-end-fractional interest property. The buildings should be built in clusters of 30 to 40, phased in accordance with demand. Based on the experience of recent properties, a high-quality cluster of this type and size might sell its intervals over a 24-month period if priced correctly. If a dedicated winter week is offered as part of the interval, plus points for approximately 10 additional days, the intervals in a quality project may sell for approximately $65 to $70 per square foot, or $71,500 to $77,000 for an 1,100 square foot two- bedroom unit. If a winter week is not included, and the intervals are traditional one-week periods throughout the year, the average price per interval may be on the order of $20,000 to $25,000. The key issue here is the quality of the timeshare/fractional property and the conference hotel. From the timeshare/fractional perspective, an affiliated higher-end hotel operator is preferred. From Economics Research Associates Vail Conference Hotel & Fractional-Interest Market Stu4r ERA Project No. 13622 Page IV-11 r ? r the conference hotel's perspective, a more moderate priced operator may be preferred in order to offer affordable room rates to conference delegates to market the conference center. High-End Fractional Interest Austria Haus Club demonstrates the popularity of a high-end, private-club fractional property. The sales price per square foot for a 1/9ffi share is significant, at $200 to $220 per square foot for a 1,200 square foot two-bedroom unit. A similar property at the Hub site might achieve a somewhat lower rate due to the site's distance from the Village, perhaps in the $165 to $185 per square foot range, or $198,000 to $222,000 per share. A high-end fractional property, however, is more problematic regarding siting issues. The buyers of this type of product see it as a type of second home purchase, and would not assign a value to being located near a conference center and conference hotel. In fact, high-end fractional :interest properties and large hotels typically do not work well together from a marketing perspective. The high- end fractional property would have to be located within the project area, but designed in a location that is secluded from the conference center and hotel. If built, the high--end fractional property should be developed in smaller clusters of 15 to 20 units, and phased according to market demand. A successful project of this size may take 1.5 to 2.5 years to sell its initial offering of 1/9`h-ownership shares. Competition While current competition is limited primarily to the re-sale market, there are approximately 180 time-share/fractional interest units planned in the Town of Vail in the following projects: ® Vail Plaza Inn (50 units) ® Marriott (66 units) o Antlers (24 units) ® Gondola building site (40+ units) Economics Research Associates Vail Conference Hotel A Fractional-Interest Market Shtdy ERA Project No. 13622 Page IV-12 These units are proposed in several projects and would likely be developed within the next three to five years. Given recent sales experience among vacation properties in Beaver Creek and Vail, these proposed units may represent four to six years of supply. Therefore, development of a time-share or fractional interest project at the Hub site may have to be phased, depending on future market conditions. Other Considerations Finally, the important aspect that distinguishes these alternative product types from the older, traditional timeshare properties in Vail is the greater emphasis on amenities and services. These property types are more affordable substitutes for a mountain resort second home, and are not simply pre-paid ski-vacation rooms. The clientele are wealthier and older than timeshare buyers in the 1970s and early 1980s, and may not ski as regularly as they did when they were younger. Consequently, it is important to plan for amenities within or available to the project, such as pools, spas, business centers, concierge, etc., which will add to the construction costs. And, particularly with the high-end fractional product, it is important to design for exclusivity and prestige. Economics Research Associates Vail Conference Hotel do Fractional-Interest Market Study ERA Project No. 13622 Page IV-13 Impact of ®e-brucing Vail°s Property `fax Revenue in 2001 2000 Property 2001 Property faxes Taxes Residential Actual Value $ 100,000 $ 100,000 Assessed Value (9.74% of Actual) $ 9,740 $ 9,740 Mills Levied 43.785 44.412 'Faxes Per $100,000 $ 426.417 $ 432.57 Town of Vail°s Portion $ 39.58 $ 44.95 Percent Increase Ii.43% Amount of Increase $ 6.11 Commercial & Vacant Land Actual Value $ 100,000 $ 100,000 Assessed Value (29% of Actual) $ 29,000 $ 29,000 Mills Levied 43.785 44.412 Taxes Per $100,000 $ 1,269.77 $ 1,287.95 Town of Vail°s Portion $ 117.86 $ 133.84 Percent Increase 1.43% Amount of Increase $ 18.18 A property owner in Vail would pay an additional $6.11 for residential property and $18.18 for commercial and vacant land per $100,000 actual value, in 2001. This increase represents a 1.4% increase in taxes paid assuming no change in actual value from 1999 to 2000. Make Up of Yown of Vafl°s Mill Levy VRD Water & San Others 6% 6% 1 4% Town of Vail 9% Eagle County 16% RE-50J 51% CMC 8% i Dill Levy by Jurisdiction Town of Vaud 43.75 Eagle Vail 52.307 Avon 62.098 Berry Creek 62.270 Arrowhead 69.391 Beaver Creek 74.257 ORDINANCE NO. 15 SERIES OF 2000 AN ORDINANCE AMENDING CHAPTER 12-10, VAIL TOWN CODE; WITH SPECIFIC REGARD TO VAIL'S COMMERCIAL CORE AREA PARKING MAPS; AND SETTING FORTH DETAILS IN REGARD THERETO. WHEREAS, the Vail Town Council recognizes a need to re-evaluate parking generated by commercial properties within Vail's commercial core areas in an effort to provide accurate and practical off-street parking requirements; and WHEREAS, the Vail Town Council, the Town of Vail Planning and Environmental Commission and Town of Vail staff have worked with consulting experts at public hearings in order to examine the issue of parking in Vail's commercial core areas; and WHEREAS, the Vail Town Council considers it in the interest of the public, health, safety and welfare to amend this code section. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF VAIL, COLORADO, THAT: SECTION 1. Section 12-10-19 (Core Areas Identified) is hereby amended to adopt the attached revised maps, incorporated by reference. SECTION 2. If any part, section, subsection, sentence, clause or phrase of this ordinance is for any reason held to be invalid, such decision shall not effect the validity of the remaining portions of this ordinance; and the Town Council hereby declares it would have passed this ordinance, and each part, section, subsection, sentence, clause or phrase thereof, regardless of the fact that any one or more parts, sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 3. The Town Council hereby finds, determines and declares that this ordinance is necessary and proper for the health, safety and welfare of the Town of Vail and the inhabitants thereof. SECTION 4. The amendment of any provision of the Town Code as provided in this ordinance shall not affect any right which has accrued, any duty imposed, any violation that occurred prior to the effective date hereof, any prosecution commenced, nor any other action or proceeding as commenced under or by virtue of the provision amended. The amendment of any provision hereby shall not revive any provision or any ordinance previously repealed or superseded unless expressly stated herein. -1- SECTION 5. All bylaws, orders, resolutions and ordinances, or parts thereof, inconsistent herewith are repealed to the extent only of such inconsistency. This repealer shall not be construed to revise any bylaw, order, resolution or ordinance, or part thereof, theretofore repealed. INTRODUCED, READ ON FIRST READING, APPROVED, AND ORDERED PUBLISHED ONCE IN FULL ON FIRST READING this 18" day of July, 2000 and a public hearing for second reading of this Ordinance set for the 1 St day of August, 2000, in the Council Chambers of the Vail Municipal Building, Vail, Colorado. 4 Ludwig Kurz, Mayor Attest: Lorelei Donaldson, Town Clerk READ AND APPROVED ON SECOND READING AND ORDERED PUBLISHED this 1" day of August, 2000. Ludwig Kurz, Mayor Attest: Lorelei Donaldson, Town Clerk -2- Mcipl Urs Area , VaN V'Hflage T\ I a ~~.o m' 311 )5 TRACT C 3P CRfEKROA ~qcF PD~<E I RADDLE D R~ DWNC 5=3 TRACTA n 15 INTERSTATE 70 E I` I sconPro I 1 ( 1\ "NlV YEY NEDIDAI I ~ D.I i , . CENTER I__1j ^1 I J. 1 I81 Ogwl ,y,P CRN n0U6t ` ~ ~ I'I 11 IL L J _ _ ' WESTMEADOWDR J I - 1 - l lc I] ' 32 11 p 6 5 I / 1II .T / ~T I" ITT 313 iM 141 III n ' F I .r. cP _ _ \ IT IT -1 > - 1 / 41 n \ T\~I _t T Jl~ r)R _ I 42 rxacTe LORI NR IST 1 ) CORNICE -IT flWN" \ Al y 9 A O ~I L \ APOLLOR- m n V 153 113 T I TRACT) _ n < CHAREL f Z~` ll 23 5! i9 L _ ~`I 2 °!A 5 JYpll GE 151 15! ` E, 5 s us % s. ~ a _ ~ < KL h::? nr ~ I A I a h; s ~ ° - 1 Td5 1~ Ifi5 ID r (l .Y• 1 1<I ' EAST FOREST AO AO I t 1( uII 3 !3 E ,I[ ( 4~I~ ( pr I'1915 5l 759 9 1, 1 ALL ScA50N5 ON00 I: q5 1B5 I6B a I~-+ tl:< T~v PAM'6 ~ E 5+'~ Apt`' ` NORM lODO~ ,E 116 p~- ` ~ I I C tCN00- il< ppF I]fi 5 - JO r A I W AGi LC' 9 0 9A w 7 1 VAIL RD qL e1s i_ r 13 W i s tea"' - - TRACT a1 U nr m 1n 1sr 147 1TT w7 yr % 'A l` OR GE iRACiE 0 ( Fdx CELC ROCKLEDGE ROAD - 3A 915 35 303" 5 - 5 6 t ~ H5 yC1PEN PEAK 31] 91 B iRACiF Cemmereea[ Core Area R5 D a uD / ,D ilC l 9 / li FkGR az all l f ore Area Parking. Map H Lionshea V Lx N FRONTAGE RD WEST o eDSTONECI.R SPIRU I L~ F qa I t - Hi 2 Fs I r - r .I ..x I i I . I I ~ f i o ~x ~ L e -E MEADOW Rt w ~..xvr I I v , m I i I I , L Ia - exxx~.mu.u ~ EpDPµ~~ , v v w a 1 J I N" 1 I R4ip ' a a vo vnwnr. a , v ;v a. ~ FFP.ST[OREST FO AD a C®mmerpal Core Area a AMENDMENT TO THE CABLE TELEVISION ]FRANCHISE AGREEMENT BETWEEN THE TOWN OF VAI L AND CAB LEVISION VI, INC.,. The Town of Vail, ("Town") and Cablevision VI, Inc., locally known as AT&T Cable Services, a Colorado corporation ("AT&T Cable") are parties to a cable television franchise agreement dated January 5, 1995 ("Franchise Agreement"). Section 4.1 of the Franchise Agreement requires that AT&T Cable shall rebuild, as appropriate, the existing cable system to provide an operating frequency range of at least 54 MHz to 550 MHz so that the cable system has the ability to provide, without digital compression, up to 78 channels of video programming within 36 months of the effective date of the Franchise Agreement. The Town and AT&T Cable have determined that it is in the best interest of the parties and the subscribers to amend the Franchise Agreement subject to certain terms and conditions. The Town and AT&T Cable agree as follows: 1. Section 4.1 of the Franchise Agreement is amended to read as follows: (a) The Grantee shall upgrade the existing cable system to 450 MHz with activated two-way by December 31, 2001. Completion of construction shall be defined as the ability to pass 450 MHz through the system, with activated two-way and capable of carrying a high-speed cable Internet service. (b) The upgrade shall utilize a "fiber optics to the service area" design in which optical fiber delivers signals from a central hub to nodes. The nodes shall interface the optical fiber with coaxial cables which distribute signals to cable subscribers. 2. Notwithstanding the requirement that the cable system be upgraded to have the ability to provide 78 channels of video programming without digital compression, the cable system, currently provides 80 video programming services to all residential subscribers within the Town, with the capability to provide many more, and the cable system is in material compliance with the provisions of the Franchise Agreement. Town of Vail Franchise Amendment y 3. That AT&T Cable has provided the public connections provided in Section 4.2 and Exhibit "C" as required by amended Section 4.1(a). 4. That AT&T Cable has installed fiber optic nodes in the cable system which are available to serve as input-output points for connection to public buildings and businesses as required by amended Section 4.1(b). 5. As consideration for the amendment of the Franchise Agreement, AT&T Cable shall complete the upgrade to the Cable System as set forth in paragraph 1. above, and for its current residential customers in Vail, AT&T Cable shall provide coupons for free digital service installation, which coupons shall be valid for 90 days from the date they are mailed, which shall be a date no later than March 1, 2000. 6. As further consideration for the amendment of the Franchise Agreement, pursuant to a separate agreement, AT&T Cable shall amend its August 23, 1995 Broadband Communications Network Services Agreement with the Town. 7. Except as amended herein and except to the extent preempted, amended or modified by changes in federal and state law, the terms and conditions of the Franchise Agreement shall remain in full force and affect. 8. AT&T Cable and the Town enter into this Agreement voluntarily and without waiving any of their respective rights under federal, state, or local law. TOWN OF VAIL ATTEST: By By: Ludwig Kurz, Mayor Town Clerk Date: CABLEVISION VI, INC. By Scott E. Hiigel, Senior Vice President Date: 2 Town of Vail Franchise Amendment 0 Amendment to broadband Communications Network Services Agreement Between The 'd'own of VaH And Cablevision tiVll, inc., The Town of Vail, ("Owner") and Cablevision VI, Inc., a Colorado corporation, locally known as AT&T Cable, ("Company") are parties to a Broadband Communications Network Services agreement dated August 23, 1995 (Agreement). The Owner and Company have determined it is in the best interest of the parties to amend the Agreement subject to certain terms and conditions. The Owner and Company agree as follows: 1. Section 5 of the Agreement is amended in its entirety to read as follows: 5. OWNERSHIP OF THE NETWORK. The Company installed equipment described in Exhibit "B" shall become the property of the Owner upon execution of a Bill of Sale dated April 1, 2000. The Network shall remain the property of the Company regardless of whether installed within or upon the Building and whether installed overhead, above, or underground and shall not be considered a fixture or an addition to the land or the Building located thereon nor shall any part of the Network be used at any time by or for the benefit of any party other than the Company. The Company shall be solely responsible for any personal property taxes, which shall be assessed against or on account of all or any portion of the Company owned Network. 2. Section 11 of the Agreement is amended in its entirety to read as follows: 11. TERM The term of this Agreement shall be for a period from August 30, 1996 through January 4, 2010, renewable for an additional term of five (5) years upon mutual written agreement of the Company and Owner; provided, however, that the Company may terminate this agreement upon written notice to the Owner if the Company is unable to install or maintain the Network because of any governmental law, rules, or Regulation or due to any other cause beyond the reasonable control of the Company. Amendment to Broadband Communications Network Services Agreement Town of Vail/Cablevision VI, Inc. 1 3. Schedule I of the Agreement is amended in its entirety to read as follows: SCHEDULE I Attached to and made a part of that certain BROADBAND COMMUNCIATIONS NETWORK SERVICES AGREEMENT dated August 23, 1995, by and between Cablevision, VI, Inc., a Colorado corporation, locally known as AT&T Cable ("Company") and the Town of Vail, Colorado, a municipal corporation ("Owner") For the period from August 30, 1996 through March 31, 2000, the following shall apply: A) Proprietarv Point-to-Point Di6tal Data Service The Local Area Networks ("LAN") established by the Owner in the buildings described in Exhibit A will be configured initially, for point-to-point proprietary 10 Mbps Ethernet data connectivity utilizing a Racal Datacomm Premnet 5000 Chassis connected to each LAN at Locations 2, 3, 4, & 5. The Company shall install no less than a six-count fiber optic cable with two dedicated fibers per Locations 2, 3, 4, and 5, and shall establish connectivity to Location 1 via no less than a six-count fiber optic cable. At Location 1, the Company shall install a Racal Datacomm Premnet 5000 to act as the Hub for managing the Owner's campus Wide Area Network ("WAN"). The Hub at the Connections Point will be configured for eventual connectivity, over the Company's broadband communications trunk cable, to the Company's headend location in Avon, Colorado. The Company shall also install at the Hub, its diagnostic HP Open View Node Management System, inclusive of the Premnet Enhanced Network Management Module and Internal Diagnostic Modem, for continuous on line diagnostic monitoring (as described in Section B) below) throughout the term of this Agreement. B) Network Diagnostics and Maintenance The Company shall perform or cause to be performed, continuous network/system operation configurations checks and threshold comparisons ("Diagnostics") for the WAN. A-dial=in-telephone-connection will-be provided by the Owner, at no cost to the Company, at the Connections Point in the Town Hall Building for remote dial-in Diagnostics. The Diagnostic checks performed, will allow the Company to determine the operational state of each individual Premnet 5000 and the Premnet 5000 Hub on the WAN for equipment reliability and/or failure. In the event of WAN failure or Company fiber optic system failure, the Company Amendment to Broadband Communications Network Services Agreement Town of Vail/Cablevision VI, Inc. 2 agrees to respond to the Owner's initial call contact to the Company within four hours of trouble diagnosis, with service resolution within 36 hours of service call contact, unless service resolution is impeded by reasons beyond the control of Company. SERVICE CHARGE PER MONTH _ $2,343.10* *Fixed for the initial term for services described in A) and B) above. MAINTENANCE FEE PER MONTH _ $ 203.5' GRAND TOTAL MONTHLY CHARGES & FEES = $2,546.6' For the period from April 1, 2000 through August 29, 2001, the following shall apply: The Wide Area Network ("WAN") established by the Company connecting the Owner's five buildings described in Exhibit A will be configured for fiber connectivity to each of the sites. Each site will have two dedicated fibers from the site to the Town Hall building (Location 1). The Company will provide end-to- end fiber connectivity to each site and routine maintenance of the two fibers. The point of demarcation will be the fiber splice tray in each location. In the event of Company fiber optic system failure, the Company agrees to respond to the Owner's initial call contact to the Company within four hours of trouble diagnosis, with service resolution within 36 hours of service call contact, unless service resolution is impeded by reasons beyond the control of the Company. SERVICE CHARGE PER MONTH = $2.343.10** **Any additional sites that the Owner wishes to add will be billed at the incremental construction costs to build and activate, plus 15 percent. Each additional site increases the monthly recurring service charge by $300.00. For the period) from August 30, 2001 through January 4, 2010, the following shall apply: The Wide Area Network ("WAN") established by the Company connecting the Owner's five buildings described in Exhibit A will be configured for fiber connectivity to each of the sites. Each site will have two dedicated fibers from the site to the Town Hall building (Location 1). The Company will provide end-to- end fiber connectivity to each site and routine maintenance of the two fibers. The point of demarcation will be the fiber splice tray in each location. In the event of Company fiber optic system failure, the Company agrees to respond to the Owner's initial call contact to the Company within four hours of trouble Amendment to Broadband Communications Network Services Agreement Town of Vail/Cablevision VI. Inc. 3 i diagnosis, with service resolution within 36 hours of service call contact, unless service resolution is impeded by reasons beyond the control of the Company. SERVICE CHARGE PER MONTH = $1,500.00 Any additional sites that the Owner wishes to add will be billed at the incremental construction costs to build and activate, plus 15 percent. Each additional site increases the monthly recurring service charge by $300.00. For the five-year renewal term beyond January 4, 2010: During the five-year renewal term beyond January 4, 2010, the recurring service charge rate shall be $100 per month for the two fibers to the five sites. This recurring service charge payment will cover end-to-end fiber connectivity to each site and routine maintenance of the two fibers. Any additional sites that the Owner wishes to add will be billed at the incremental construction costs to build and activate, plus 15 percent. Each additional site increases the monthly recurring service charge rate by $50.00. In the event of a fiber optic system failure or damage to fiber, AT&T will repair and restore connectivity. The Town will be charged its pro rata share of the time and material for the restoration costs. AT&T will invoice the Town for these costs, with payment due upon receipt. 4. All other terms and conditions of the Agreement shall remain in full force and effect through the term of the agreement as amended. TOWN OF VAIL, a municipal corporation ATTEST: By: Name: Title: CABLEVISION VI, Inc. By: Scott Hiigel, Senior Vice President Amendment to Broadband Communications Network Services Agreement Town of Vail/Cablevision VI. Inc. 4 ORDINANCE NO. 1 6 SERIES OF 2000 AN ORDINANCE AMENDING THE CABLE TELEVISION FRANCHISE AGREEMENT. 1) Pursuant to Ordinance No. 25, Series of 1994, the franchise agreement between the Town of Vail, Colorado and Cablevision VI, Inc. d/b/a TCI Cablevision of the Rockies, Inc., entered into on January 5, 1995 is hereby amended by the Amendment to the Cablevision Franchise Agreement between the Town of Vail and Cablevision VI, Inc. attached hereto as exhibit A, and made a part hereof by reference, which is hereby authorized and approved, and the Town the Manger is hereby authorized and directed to execute said franchise agreement on behalf of the Town. 2) If any part, section, subsection, sentence, clause or phrase of the ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this ordinance; and the Town Council hereby declares it would have passed this ordinance, and each part, section, subsection, sentence, clause or phrase thereof, regardless of the fact that any one or more parts, sections, subsections, sentences, clauses or phrases be declared invalid. 3) The Town Council hereby finds, determines, and declares that this ordinance is necessary and proper for the health, safety, and welfare of the Town of Vail and the inhabitants thereof. 4) The repeal or the repeal and reenactment of any provision of the Municipal Code of the Town of Vail as provided in this ordinance shall not affect any right which has occurred, any duty imposed, any violation that occurred prior to the effective date hereof, any prosecution commenced, nor any other action or proceedings as commenced under or by virtue of the provision repealed or repealed and reenacted. The repeal of any provision hereby shall not revive any provision or any ordinance previously repealed or superseded unless expressly stated herein. 5) All bylaws, orders, resolutions, and ordinances, or parts thereof, inconsistent herewith are repealed to the extent only of such inconsistency. This repealer shall not be construed to revise any bylaw, order, resolution, or ordinance, or part thereof, theretofore repealed. INTRODUCED, READ, APPROVED, AND ORDERED PUBLISHED ONCE IN FULL ON FIRST READING this 18th day of July, 2000 and a public hearing for second reading of this Ordinance set for the 1St day of August, 2000, in the Council Chambers of the Vail Municipal Building, Vail, Colorado. Ludwig Kurz, Mayor Attest: Lorelei Donaldson, Town Clerk READ AND APPROVED ON SECOND READING AND ORDERED PUBLISHED this 1St day of August, 2000. Ludwig Kurz, Mayor Attest: Lorelei Donaldson, Town Clerk COUNM FOLLOW-UP [-TOPIC QUESTIONS FOLLOWUP 2000 _ _ BOB: Write a letter to the organizers to thank them for 06/06/00 - BALD MOUNTAIN creating such a lovely garden. NEIGHBORHOOD ENTRY Diana Donovan 07/11100 - RED SANSTONE CREEK NINA: It had been a problem for these homeowners to get HOUSING items on their punch lists completed. Kevin Foley 07/11/00 - BUSES AT FORD PARK MIKE ROSE/GREG HALL: Bus service "to" the park has been great; but getting visitors out of the park following Kevin Foley performances, is not optimal. 07/11/00 - BAFFLE AT THE EAST VAIL GREG HALL: Explore the possibility of building a baffle at WATER TREATMENT PLANT this site through a partnership wlthe water district, CDOT, and FHA. (or is that FHWA?) Chuck Ogilby 06/13/00 - Speed Bumps PAM B./BETH S.: Schedule discussion regarding speed Once the model traffic Code is in place we can Schedule this item to then bumps at a future council meeting. discuss the issues with a Traffic Calming solutions. There are plenty of Greg Moffet examples out there from other communities for examples to implement a program but policies must be in place prior to installation. 06/13100 THE FISH OBSERVATORY Todd 0.: Explore the idea of having the fish observatory at Todd and Brent are in contact with the appropriate resources. the expanded Ford Park Alpine Garden location. Chuck Ogilby July 14, 2000, Page 1 C~C>C>C>C~C~C~C>Q2~ p q CHU (HwGeT) -Uc-n k lF~a ~~C~C~C~C~C~C~ JC>C~ Noticial 11abTra, una Feria c.e Salud Para Los Nin- os En SAbado, Julio 29, 2000 Horas 9:00-1:00p.rn. En el parque del estacionarniento de casas rn®viles Dotsero R.evisiones medicas, y pruebas de vision y oido Es parte del Club Rotario Internacional HabrA folletos de salud para cada famiha (Notes: No habra, vacunas o pruebas de sangre en estes revisiones) Notice! Health Fair for Children Sponsored by Rotary International Saturday, July 2 9, 2000 Dotsero, 9:00- 1:00pm. Medical checkups, including hearing and vision tests, and informational materials. No immunizations or blood tests will be done at this health fair. T'MaOm Nemoa 1 -ffaNh