Base Village effect softens sales tax blow in Snowmass |

Base Village effect softens sales tax blow in Snowmass

Katie Redding
The Aspen Times
Aspen CO, Colorado

SNOWMASS VILLAGE ” The “Base Village effect” appears to have saved the town of Snowmass Village from a truly dismal December. But it also means December sales tax numbers might not accurately reflect the experience of individual Snowmass businesses.

The town announced Tuesday that its December sales tax was down 9.8 percent from December 2007, or about $19,000. December sales tax receipts typically account for 15 percent of the town’s annual collection.

Total Snowmass sales tax revenue in 2008 was up by almost 1 percent over 2007 ” thanks to stronger numbers at the beginning of the year. May, the town’s best month, was up by 23 percent over 2007. January, February, March and July also saw sales tax increases.

Town officials said they were pleased with those numbers, given the state of the local and national economy. The December number is better than what the town saw in October ” when sales tax returns dropped by 25 percent ” or November, which saw a 22 percent decline.

“It had the potential to be worse,” said Russ Forrest, the town manager.

The town had anticipated sales tax revenues could be down anywhere between 15 and 20 percent in December, he said.

But officials hadn’t known what effect the opening of Base Village would have on December tax revenue ” and now they’re attributing the softer-than-expected decline to the new businesses. Four new restaurants and five retail spaces opened at the base of Fanny Hill between mid-November and the end of December.

While the “Base Village effect” is good news for the town, it means existing Snowmass businesses, on average, likely saw a decline in business greater than 10 percent in December.

“There’s a lot of tax revenue coming in from those new businesses that is going to offset the decline in individual businesses,” said Reed Lewis, a member of the Snowmass Town Council and owner of the Daly Bottle Shop liquor store.

So how are Snowmass businesses weathering the recession?

No sector ” except utilities ” saw a consistent increase throughout 2008, according to sales tax data.

Lewis said the conventional wisdom that businesses like liquor or grocery stores actually do better in a recession doesn’t hold true in Snowmass Village, because of the degree to which the town relies on tourism.

“Conventional wisdom for a conventional town,” Lewis said. “We are a town where if there aren’t enough people here, no one does well.”

But Forrest said one national trend does appear to be holding true in Snowmass: Higher-end product lines have been impacted more than other types of retail, according to merchants he has consulted.

In general, however, the degree to which individual Snowmass merchants have been impacted by the recession appears to depend a great deal on the business, where it is, what it sells, and how, said Forrest.

“Some of our merchants are very acutely aware of the group that is in town and think about what to pitch to that group,” he said. “I think you see a lot of variation.”

Matt Donnelly, front desk manager at the Stonebridge Inn, agreed. He said business at the hotel was up about 10 percent in December, a trend he attributed to marketing, promotions and specials.

In December, Snowmass adopted a budget contingency plan based on a 10 percent decline in sales tax in December. In January, it adopted its 20 percent contingency plan.

The town plans to continue with a conservative 20 percent plan for the foreseeable future, according to Forrest. Town officials will continue to examine data each month, and “take stock of where we are in May,” he said.

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