HomeMy WebLinkAbout2002-06-18 Support Documentation Town Council Work SessionVAIL TOWN COUNCIL
WORK SESSION
Tuesday, June 18, 2002
12:00 NOON
(LUNCH WILL BE AVAILABLE FOR COUNCILMEMBERS AT 11:30 A.M.)
NOTE: Times of items are approximate, subject to change, and cannot be relied
upon to determine at what time Council will consider an item.
1. ITEM/TOPIC: Critical Strategies: Revenue Issues (5 hours)
Bob McLaurin
Dee Wisor
2:00 P.M. TOV ANNIVERSARIES:
Steve Wright - 10 years
Mark Allen - 15 years
Charlie Turnbull - 25 years
2. Information Update. (5 min.)
3. Matters from Mayor and Council. (5 min.)
4. Executive Session -Legal Matters C.R.S.24-6-402(4)(b). (30 min.)
5. Adjournment. (5:40 P.M.)
NOTE UPCOMING MEETING START TIMES BELOW:
(ALL TIMES ARE APPROXIMATE AND SUBJECT TO CHANGE)
THE NEXT VAIL TOWN COUNCIL REGULAR WORK SESSION
WILL BE ON TUESDAY, JULY 2, 2002, BEGINNING AT 2:00 P.M. IN THE TOV
COUNCIL CHAMBERS.
THE NEXT VAIL TOWN COUNCIL REGULAR EVENING MEETING
WILL BE ON TUESDAY, July 2, 2002, BEGINNING AT 7:00 P.M. IN TOV COUNCIL
CHAMBERS
THE NEXT VAIL TOWN COUNCIL REGULAR WORK SESSION
WILL BE ON TUESDAY, JULY 16, 2002, BEGINNING AT 2:00 P.M. IN THE TOV
COUNCIL CHAMBERS.
THE NEXT VAIL TOWN COUNCIL REGULAR EVENING MEETING
WILL BE ON TUESDAY, July 16, 2002, 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.
~~~ cQU~tcr~ w~RK ~ESSror~ ~sr~s~o2~
~-genda
12:t}t3 PM Intro,. Objectives, Agenda. & Scope of Session.
Objectives:
1. Review options and alternatives to increase town revenues
2. identify specific al#ernatives for further consideration
~. Identify ne~et steps. for each of the alternatives identified
Outcome.
SF~oft list of alternatives and next steps for each
'12;"15 P~ Need for Additional Revenue Sotarces
• Overview
Assumptions
~ Evaluation Criteria
• .Revenue. Vision
'l:t~E} PNf discussEOrt-off Revenue Alternatives
• Generate Long list
~ Vote on order of discussion
• Gen'l Discussion and Pros & torts of each alternative
2: ~ PM Breal~ for Anniversary Celebrations
2:15 PM .Public Comn~tents {5 .min each)
2:3f? PRt! Continue Discussion of Revenue Alternatives
4:0~ P1VI Generate Short List Next Steps, Point- Person, Due. Dates)
5:E}El P~f Close of Work Session
`.
OrPsy Consulting.. lnc.
875 South Foothill -Drive
Lakewood, CO 80228-3044
Phone 303-985-8691
Fax 303-763-9199
pbenson @orpsy.cotn
www.orpsy.com
MEMORANDUM
TO: Vail Town Council
FROM: Bob McLaurin, Town Manager f
DATE: June 13, 2002
RE: REVENUE ISSUES
Attached to this memo is a memorandum which (hopefully) helps frame this issue
and will be assistance in your discussions on Tuesday. The document
references an Appendix A. At this time this appendix is incomplete. I will
complete it later this afternoon and will e-mail it to each of you in the morning.
If you have questions or need additional information regarding any of these
matters this weekend, please feel free to call me at home - 476-7388 or on my
cell phone - 376-3158 and I will be happy to provide additional information over
the weekend.
Attachment
MEMORANDUM
TO: Vail Town Council
FR: Bob McLaurin
DT: May 30, 2002
RE: Revenue Discussion
Introduction
We have scheduled time at the June 18th Council work session to discuss
revenue issues. At your retreat, you identified this issue as the town's highest
priority. Dee Wisor, an attorney at Sherman and Howard, will be present at the
meeting. Dee has been our bond attorney for many years and has extensive
knowledge of public finance, TABOR and other fiscal issues. Dee will be
available as a resource to answer questions about municipal finance and legal
issues regarding public finance. Pat Benedict, a local facilitator will facilitate the
discussion. Her role will be to help focus on keep us on track and moving the
Council forward.
The purpose of this memorandum is to frame the questions we will be asking and
to provide a preview of some of the options available to the Council.
Desired Meeting Outcomes
The desired outcomes of this meeting are as follows:
• To review options and alternatives to increase town revenues.
• To specifically identify alternatives for further consideration.
• To Identify new steps for each of the actions identified.
Statement of the Issue
While this issue has been discussed for the past five or six years, with numerous
memos and studies written, it is important to clearly articulate our circumstance.
The Town of Vaii has historically depended on sales tax growth to fund operating
and capital needs. For any number of reasons, the rate of sales tax growth is not
consistent and is increasingly dependent on snowfall and the success of the ski
season.
Concurrently with this situation, the cost of providing town services has continued
to increase. Personnel costs, driven largely by down valley agencies, continues
to increase at a rate faster than our principal revenue source.
Additionally, the town has continued to increase services without additional
revenues. During the 1990s we provided higher frequency bus service and built
new parks, bike paths and playgrounds. The following is partial list of new or
expanded services provided without new revenue. A complete list is attached to
this document as Appendix A.
• Free Parking (50% of total winter transactions are free)
• Expanded bus service
Expanded in 1989
Late night service (1992)
Increase outlying frequency (1994)
New Routes (Lionsridge Loop) 1995
• Built 5 new parks
• 5.6 miles new bike path
• 1.8 miles new sidewalks
• 1.5 miles new bikepaths
• Added five buildings to the towns inventory
• Increased standards for cleanliness (Disney Standards)
• Increased funding and operations support for Special Events and other
VCBA, WCTB, and VLMDAC activities
• Information Technology (computers, radios, phone system, website
development, GIS, etc)
In addition, we can expect the following issues to exacerbate the stress on the
operating (general fund) budget. These include the need to expand fire service,
maintenance and operation of the Donovan Park Pavilion, and an increasing
demand for parking hosts to deal with overflow parking, increased maintenance
costs for Meadow Drive, Lionshead and Village Streetscape areas.
In FY 2002, the budget was modified to fund the additional operating costs.
Specifically, we modified the sales tax split. The transfer to the capital projects
fund was reduced by X1.5 million. Concurrently, the transfer to the general fund
was increased by the same amount. Obviously, if we continue to increase the
transfers from the Capital Projects Fund to the General Fund, we are decreasing
' The Towr,'s dependence on tourism and skiing has increased over the years as significant down valley
migration occurred. The lack of year round population decreased on overall level of economic activity and
increased dependence on tourism. Currently 70% of sales tax revenue is generated between November
and April.
the amount available to capital and the reinvestment of the capital infrastructure
of the town.
The Rub
The result is that the town's current revenue structure will not support the town's
capital and operating needs in the long term. While it is appropriate to increase
the amount we spend on operations, and decrease the amount we spend on new
capital. we cannot continue to fund increases in operating cost from the capital
projects fund. We need to find additional revenue, or we will need to identify
specific, targeted reductions in service in order to balance the budget on a
sustaining basis.
List of Revenue Alternatives
The following is a list of possible alternatives to additional revenues. Please note
they have been categorized into those actions the Council can implement,
actions that require a public vote, and actions that require the consent of bodies
outside the TOV e.g. State Constitutional Amendments. At the meeting on
Tuesday, I will have more details about each of these alternatives.
Potential Actions by the Vail Town Council
• Increase ATT Surcharge
• Increase Holy Cross Franchise Fee
• Expand Use of RETT
• Increase Development & Permit Fees
• Increase Parking Rates
• Impose Fire Impact Fees
• Tax Increment Financing (URA)
• Implement GO debt authorized in 1988
Potential Actions That Require Approval by Vaii Voters
• Increase Property Tax
• Join Fire Protection District
• Increase Lift Tax
• Expand Use of RETT
• Increase Lodging Tax
• Increase Sales Tax
• Tax Increment Financing {DDA)
• Explore joining Library District
• Explore joining Fire District
• Explore transferring TOV transit operations to ECO
• Business Improvement District
Potential Actions That Require Approval by Others (statewide electors)
• Increase RETT Percentage
Town Manager's Recommendation
Failure to address this problem will result in our continuing to take money from
the Capital Projects Fund to pay our operating costs. The de facto decision of
doing nothing will lead to continued underfunding of the capital projects fund,
which in turn will cause the maintenance of our assets and infrastructure to
decline. Failure to act will also impede our ability to fund increased the level of
fire protection for our community (e.g. the 3rd Fire Company).
I believe it is time to hold an election in order to see if we can increase property
tax to help support municipal operations. Although we will need to develop a
plan and strategy, the general approach should be as follows. A mill levy
increase, Tax Increment Financing and Increase the lift tax. Specifically, the
three pronged approach includes the following. The note that the proposed uses
are suggestions and are not intended to be specifically earmarked.
A mill ley election in November 2002 to fund:
• Construction of New Fire Facilities (either West Vail and reconstruction of
Main Vail)
• Funding of the 3rd Fire Company
• Funding of Streetscape and Pedestrian Improvements
• Restore funding for capital projects back to 1998 levels.
Tax Increment Financing to fund
• Previously identified Lionshead Public Improvements
• Village Streetscape and Loading and Delivery Improvements
It is anticipated this election would occur in November 2003
An election to increase lift tax by 1 %to fund:
• Additional costs created by frontage road parking (including parking hosts as
well as funding parking improvement to improve the safety of the overflow-
parking situation.
It is anticipated this election would be on the November 2002 ballot.
Conclusion
I realize that each and every one of these actions will be controversial and
emotional. As we are all aware the best tax is the one that someone else pays.
However, the Council must decide the most appropriate method to fund the
services and capital expenditures necessary to ensure our economic health and
maintain the quality of life in our community. We must also be prepared to take
advantage of the significant private sector development that is expected to occur
after 2006.
If we as an organization, and/or community, cannot address this issue, we will
need to begin the process of identifying service reductions so we can operate
within our current revenue structure. This would likely be the first step in the
budget process for the fiscal period 2003-2004.
Revenue Enhancement
Position Paper
Reallocate a Portion of RETT
(Exhibit A)
Funding Idea: Reallocate a portion of the Real Estate Transfer Tax for other municipal
uses.
Revenue Generated: RETT generates 1% of real estate sales for parks,: open .space,
trails and open space maintenance. This fund generates approximately $2,000,000 a-
year.
Description of the Idea/Background: Reallocate a portion of RETT to other
community needs such as housing and other capital improvements. This would require
a modification in the RETT ordinance that would involve two readings of an ordinance.
The 1994 Comprehensive Open Lands Plan identified future uses of the RETT fund.
The town has successfully implemented 39 of the 51 high priority actions in the plan.
There is not a lot more land the town can buy. However, it should be recognized that
park redevelopment, park maintenance, trail development and maintenance would be
ongoing costs. The remaining acquisitions involve property owners where the town has
not yet reached agreement on an acquisition. As part of the Common Ground Process,
staff identified future park, open space, trail, and maintenance needs for the next 10
years.
Analysis of proposal
Based on an analysis of future needs in maintenance, acquisition, trails, park
development and assuming a constant revenue of approximately $2,000,000 per year,
there should continue to be a budget surplus in the RETT fund. Based on this surplus,
approximately 28% (i.e., $590,000) of the RETT budget could be reallocated to other
municipal uses without creating a significant impact to parks, trails, and implementation
of the Open Lands Plan.
10 Year Summary of Parks and Open S a ce Costs
Description
New Park Recomendations 2,713,356
New O en Space
Proposed Recreation ~1"rails
Park Maintenance 999,600
6,082,200
5,299,650
Grand Total 15,094,806
10 Year Revenue Projection 21,000,000
10 Year Difference of Supply vs Demand 5,905,194
1 Year Difference 590,519
Sur lus 28%
PRBC99F
Revenue Enhancement Recommendation Two
Revenue Enhancements with Non Direct Impact
Allocate Portion Sales Tax from Capital Projects Fund to
the General Fund (Exhibit B)
Political Initiatives
Increase County Sales Tax Rebate (Exhibit G)
On Mountain Sales Assessment (Exhibit H)
Revenue Enhancements with Direct Impact
Park Free After 6pm (Exhibit F)
Reduce Transfer From CPF to Parking for Deficit
Property Tax Increase-Operation & Staffing Fire Station (Exhibit E)
Funds
General Capital RETT Parking
250,000 (250,000)
~~
~~
300,000
300,000 (300,000)
250,000
500,000 50,000 - -