Tax on bricks, mortar? Maybe in Vail
August 22, 2007
VAIL – Bob Armour said Vail needs the money.
“The town must create a new revenue source,” said Armour, a Vail resident. “Construction should carry some of the load.”
That will happen – in the form of a tax on concrete, steel and other building materials – if enough of Armour’s fellow Vailites feel the same way at the polls in November.
The Vail Town Council voted Tuesday to ask voters in November to approve a 4 percent construction-use tax that could raise millions for the town. The construction tax would apply to construction materials used in Vail, regardless of where they are bought.
Town officials cite a predicted $25.8 million shortfall over the next five years for the town’s capital projects budget, which includes street improvements and the West Vail fire station. If Vail had passed the tax five years ago, it would be in much better shape, said Councilman Greg Moffet.
“The town would be $20 million to $30 million richer,” he said.
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Vail has seen an unprecedented amount of construction in the past few years, a spurt that’s been billed as a rebirth for the town. Large projects like the Arrabelle at Vail Square, Solaris, the Vail Front Door and the Four Seasons, each valued at more than $100 million, are now under way, with more big projects being proposed, including the $1 billion Ever Vail and the $600 million Lionshead garage redevelopment.
Groceries get taxed, but building materials don’t, Moffet said.
“All I ask you to do is ask, ‘What the hell is wrong with this picture?'” he said.
The vote came despite protests from local builders and residents. Brian Gillette, a Vail resident who works in construction, said the tax would make housing more expensive for locals who don’t live in deed-restricted homes.
“Making housing less affordable isn’t helping the issue,” he said.
Bill Jensen, who runs Vail Mountain but said he was speaking only as a Vail resident, said large developments already offer many benefits to the town, including street improvements, public art and loading docks.
The uses of Vail’s real estate transfer tax – now limited to parks, recreation, open space and environmental programs – could be expanded to help soothe Vail’s financial woes, Jensen said.
The construction-use tax would have produced $2 million in 2005, $4 million in 2006 and $7 million in 2007, according to town estimates. Proponents of the tax say it would diversify Vail’s income, which comes mostly from sales tax. Income from sales tax can be unpredictable, with bad snow years bringing in less revenue.
The vote Tuesday was 4-2, with Councilmen Kent Logan and Kevin Foley voting against putting the question on the ballot. Councilwoman Kim Newbury was not at the meeting.
If construction stalls in Vail and across the U.S. in the next few months, voters might be wary of a construction tax, Logan said. And a defeat in November could hurt the chances of bringing back the proposal in the future, he said.
“I don’t think the timing could be worse to this,” he said.
Moffet predicted a vigorous campaign against the tax over the next few months.
“I am certain there’s going to be a lot of money fighting it,” he said.
Use taxes are common across Colorado. Both Eagle and Gypsum have approved construction-use taxes. However, voters in Avon and Breckenridge shot down use taxes in 2002 and 1998, respectively.