Financing behind new Aspen arts facility questioned
July 13, 2009
ASPEN – The appropriateness of using tax revenue to fund a Wheeler Opera House expansion has been called into question, but city officials say they are confident that voters 30 years ago intended it to be used for a new facility.
Aspen voters in 1979 approved the Real Estate Transfer Tax (RETT), a 0.5 percent tax on real estate sales for the purposes of renovating, reconstructing and maintaining the Wheeler Opera House, according to the ballot language.
That revenue has been put into an endowment fund, which the Aspen City Council set up in 2002 with the anticipation that the RETT would expire in 2019 with no renewal by voters.
But if plans forge ahead to build a new facility next to the Wheeler on a city-owned parcel, voters will likely be asked to extend the RETT.
Current budget projections estimate that the new facility would cost $30 million, and there is about $25.8 million available in the endowment fund.
Once the construction of the facility depletes the endowment, a revenue source will have to continue subsidizing the current opera house operations.
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The RETT is expected to generate less than $3 million this year, while the Wheeler’s maintenance and operational costs are estimated to be $4.5 million. Other revenue is generated by ticket sales, concessions and rent paid by two tenants in the building.
Paul Menter, the city’s former finance director, said he questions the government’s approach on a new Wheeler facility.
“I’m afraid they’ll not only have to extend the tax but find other public dollars to subsidize the operations,” he said. “We need very clear projections based on conservative estimates.
“As a decision-maker, I would have serious concerns about moving forward on this project unless I had a detailed financing plan.”
Gram Slaton, executive director of the Wheeler Opera House, said the finances of the new facility will be a significant issue leading up to a public vote, when it will be decided whether RETT funds should be used to pay for the project.
Once it’s determined if that vote is this fall or in 2010, Slaton said he will create a formal financial proforma.
Menter said pushing a project through without solid financial information is not sound tax policy and an irresponsible way to build an endowment.
“They are putting the cart before the horse like they always do,” he said. “There’s no thorough vetting of the finances.”
Menter, the finance director when the council created the endowment fund, said the intent of elected officials was to not continue taxing people but have a projected $70 million nest egg to pay for the Wheeler’s operations well into the future.
“The council at the time made that deal with constituents,” he said.
City Councilman Steve Skadron said he won’t support a new facility unless the finances and voter intent from 1979 are clear.
“That will be discussed fully before we make any expenditures,” he said. “I certainly will not support the funds if it goes against the intent of the voters.”
Slaton has met with city attorney John Worcester to discuss the history of the RETT approval, as well as the public vote in 1982 to buy the parcel next to the Wheeler. That property was bought with RETT funds with the purpose of a new facility.
Slaton said based on the documents he’s researched, city voters passed both the RETT and the land purchase knowing that a new facility would be built at some point in the future.
“I think people thought it would be built in three years and no one would have to worry about their intent 25 years later,” he said. “I think the 1979 ordinance trumps everything else.”
Worcester said the 1979 ballot language refers to the Wheeler Facilities Master Plan, which refers to a new facility.
“This has been in the works for years, and it was always intended for expansion,” he said. “People understood what they were voting for.”
The RETT issue was raised last week during a City Council meeting and Mayor Mick Ireland said the council will seek legal advice before moving forward on a financing scheme for a new facility.