Should Vail tax steel and concrete?
October 27, 2007
VAIL ” If Vail needs money to fix bridges, it should simply ask for a property tax increase, said Vail resident Brian Gillette.
As long as the town can show it spends money responsibly and has legitimate needs, the tax would likely pass, he said.
“I’m against construction-use tax on principle,” he said. “They should be pushing for a mill levy increase and saying, ‘We’re going to spend it on fixing bridges, not skateboard parks.”
The town is proposing a 4 percent tax on building materials. Voters will decide the matter on Election Day, Nov. 6.
Gillette questioned spending choices of the Town Council, including a skateboard park, as it faces a shortfall of $25.8 million in its capital budget over the next five years. That capital budget includes money for fixing roads and bridges.
As a builder, Gillette, whose company constructs homes in Vail, would likely have to pay the tax. But that cost would simply get passed on to homebuyers, he said.
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“It is going to make housing more expensive, which is sort of contrary to what they’re trying to do,” he said.
The town has made affordable housing a priority over the last several years. In fact, some money from the capital budget is slated to go toward affordable housing.
The tax is supposed to generate $4 million in 2008. It would have collected $2 million in 2005, $4 million in 2006 and $7 million in 2007, according to estimates from the town of Vail.
Bob Armour, a Vail resident, said he supports the tax and hopes it would help fund things like roads and bridges, the proposed West Vail fire station, and even recreational facilities like the aging clubhouse at the Vail Golf Club.
“I believe it’s the way to fund Vail’s future,” Armour said.
When Vail faced financial shortfalls in the mid-’90s, the town had to resort to layoffs, Armour said.
“This is an ongoing problem that we have to address permanently,” Armour said.
A construction tax wouldn’t stifle development, Armour said. As an example, he cited Gypsum, where the town passed a construction-use tax and building has continued. Plus, he said, the town was able to build a nice, new recreation center with tax dollars.
The tax would apply to construction materials including concrete, steel, stone, stucco, roofing, plaster and glass. Construction materials that are bought outside of Vail are currently not subject to Vail’s 4 percent sales tax.
“When I go to Ace Hardware to buy paint, I pay a 4 percent sales tax,” said Mark Gordon, a Vail councilman. “It’s only fair that developers and builders pay that same sales tax.”
Under the proposal, developers would be exempt from sales tax or construction-use taxes in the communities where they buy the materials. That would avoid double taxation.
The biggest developer in town is offering no opinion on the tax. Vail Resorts Development Company, which would be subject to the tax for its $1 billion Ever Vail project in West Lionshead, has no position on the tax, said Kelly Ladyga, spokeswoman for Vail Resorts.
Mark Masinter, whose $600 million Lionshead garage proposal could be subject to the tax, said it could have a significant impact on the project, but added he doesn’t know a lot about the specifics of the proposal.
“From a general standpoint it can be very, very impactful to large projects like ours,” Masinter said. “It just makes things a lot harder to do. … We’re not talking thousands of dollars, we’re talking about millions of dollars.”
Craig Cohn, whose company is building the Solaris project in Vail Village, said he agrees with the tax on a big-picture level but has some issues with the details of its implementation.
With large projects like Solaris, the developer buys supplies well in advance of getting its building permit. Without a building permit, the developer might have problems getting exempt from paying taxes in other communities, he said.
The tax could apply to small, home-improvement projects as well, but exemptions could be made for small projects. The next council would decide on exemptions to the tax.
“I definitely want to exempt it from affordable housing,” Gordon said.