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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 - -