VAIL VILLAGE HOMEOWNERS ASSOCIATION, INC.

President - Alan Kosloff     Secretary - Ellie Caulkins    Treasurer - Patrick Gramm    Executive Director  -  Jim Lamont

Directors:  Judith Berkowitz  -  Dolph Bridgewater  -  Bob Galvin  -  Ron Langley  -  Bill Morton  -  Gretta Parks  -  Richard Conn

To:               Alan Kosloff, Board of Directors, members and interested parties

From:           Jim Lamont

Date:            May 8, 2005

Re:               Proposed Vail Conference Center  

The Conference Center Committee recently concluded that the project as proposed could not be built within the financial limitations approved by the voters in 2002.  The latest construction estimate increased as a result of a 15% escalation in construction costs during the last month.  VRI has experienced a similar increase in costs on some of their projects.  Fuel and the local labor market are two factors driving up costs.  

It appears to be the Committee’s consensus that the project will have to go back to the voters for additional money.  Depending on what is included in a revised budget, the additional amount could be from $5 to $8 million or more.  

Representatives for the lodges, advocating the project, believe they can gain support to cover the additional costs through an increase in the lodging tax.  The election for additional funds would be on the November ballot.  Also, four Council seats will be up for election, with at least three incumbents seeking reelection.  Some of the Committee want the current council to sign off on the project, subject to voter approval, before the election.  They do not want to risk candidates being elected that would seek to delay the project.  Proponents want to be in the position to issue the bonds and begin construction immediately.  

Proponents believe that the voters will support a lodging tax increase, because it will not directly affect them.  However, it was said by a proponent on the Committee that some local lodges are concerned that the current tax rate is putting them at a competitive disadvantage with their down valley competitors.  

The ballot proposal is an end-of-the-line compromise, because there is a belief that a majority of the Council may vote to repeal the tax at an upcoming council meeting.  Current Council attitudes cloud the feasibility of consideration of other options.  .  The Homeowners Association publicly recommends that the matter be referred to the voters.  The following are the principle options available to the Councils, which must be decided within the next several weeks.

1.      Council approves a downsized project through a Council initiative.  

2.      Council refers repeals of tax to voters through a Council initiative.

3.      Council refers repeal of tax to voters through voter petition and ballot initiative.

4.      Council refers tax increase to voters through a Council initiative.

5.      Council refers tax increase to voters through voter petition and ballot initiative.

6.      Council continues tax through Council initiative, but withholds approval for bond sale and construction until more fortuitous circumstances exist.

In the meanwhile, the Committee will continue working to refine the project, without changing the exterior architecture or substantially reducing it in size.  It was reported that the Colorado Department of Transportation (CDOT) is comfortable with the proposal for associated roadway improvements to the Frontage Road.  Most of the primary budgetary items have now been incorporated in a final cost estimates prepared by construction managers from documentation provided by the architect, contractors and operators.

No action was taken as a result of further discussions with the two firms who are the finalists being considered to operate the Center.  It was mentioned to each, if they would be interested in signing an agreement whereby they would assume full responsibility to cover all operating losses and thereby be eligible to receive all profits in exchange for a flat fee contact multi-year contract.    

Some months back the Town's bond counsel said that Federal law may prohibit this approach.  Counsel is apparently refining his view. 

At least one of the operator candidates said they would entertain any reasonable proposal, but perceived that there maybe legal prohibitions against such an approach.  He stated that his group would be opposed to doing anything contrary to the law.  It was reported that the other candidate said they would consider any reasonable proposal. 

Both operators have pledged to have are contractual relationship with the VVTCB.   Frank Johnson, Executive Director of the VVTCB, attended and participated in the committee’s deliberation with the operator candidates.  One of the committee members recused himself from the discussion and room as he was a member of the VVTCB Board of Directors.

It is noted that both operators are relying on the facility being used for major entertainment venues during the winter months.  The question was raised, if the Center was being designed to present these venues in a quality manner.  If not it would be another second rate venue, like the Dobson Arena.  When the question was put to the Town's construction representative, the response was ineffectual.  To do entertainment venues right, it will be necessary to enhance the design and budget for the facility to include features to support complex productions and give the audience a quality experience. 

 

JFL