Despite advice from experts indicating otherwise, the Town Tourism Committee continues to maintain that you can “get there from here” via a chair lift on Reservoir Hill.
Many area residents, however, are asking, “How did we get here?”
In short, “how we got here” is the result of an often confusing and convoluted process that continued earlier this week.
On Monday afternoon, the Pagosa Springs Town Council heard a presentation by Casey Hart, Jessica Low and Tesh Parker, three recent baccalaureate graduates from the Fort Lewis College School of Business Administration, regarding research they conducted on the financial viability of proposed recreational amenities for Reservoir Hill.
Before introducing the FLC presenters, TTC President Bob Hart sang the praises of his group, saying, “I think part of the reason for our tourism growth is the fact that town council has allowed the eleven members of the Town Tourism Committee to implement their ideas and enthusiasm of our marketing of Pagosa Springs as a tourist destination.”
Stating that he believed the proposed developments on Reservoir Hill are sound business proposals and, “Not wild and crazy ideas out of nowhere,” Hart warned council that rejecting the project could be deleterious to the town’s future.
“To not do so will greatly affect the continued success of our residents, our businesses and most of all, our children and grandchildren,” Hart added, citing the possibility of jobs created through the project. “I urge you to examine all the facts and not listen to any sides saying their untruths when it comes to the amenities on Reservoir Hill.”
Beginning their presentation by claiming that the town is facing diminishing revenues, the FLC students provided their rationale for why the town should pursue development of amenities on Reservoir Hill.
However, a proposed development predicated on diminishing revenues for the town faces two problems: sales tax collections increased last year over 2010 (and are on track this year to exceed the 2008 record) and reports by the TTC that lodgers tax collections have increased significantly over the past three years (touted by Hart in his introduction), with the majority of months in 2011 setting records over previous years.
Given the assumption of diminishing revenues, the FLC graduates claimed that a solution would arise from the installation of amenities, resulting in increased overnight stays (with local lodgers, presumably), leading to “augmented revenue.”
Those amenities would be the chair lift, an alpine coaster, an amphitheater, a zipline tour, a tethered hot air balloon ride and an observation tower. The students recommended that the tower be installed last since it would not generate any revenue and would potentially draw customers from the other amenities.
According to the findings presented to council, the alpine coaster would be the biggest revenue generator, followed by the zipline tour and tethered hot air balloon.
Still, those amenities would provide scant sales tax revenue benefit for the town. Based on best-case profit scenarios presented by the FLC group, the town would see just a 0.64 percent increase in sales tax revenues (over 2011 year-end totals) from the maximum projected income of the amenities.
In fact, the students’ presentation appeared to want it both ways. Without providing any indication of methodology for the research, empirically-confirmed data or citations of previously published academic work, the presentation appeared to conform closely to a predetermined set of assumptions that had previously been asserted by the TTC in its attempt to sell its ideas to council and the public.
Those assumptions are that the proposed amenities would not only provide a financial benefit to the town, but would also increase overnight stays of visitors to the area, subsequently boosting sales tax revenues through increased demand for area goods and services.
But, as explained above, those amenities would provide little financial benefit to the town through collected sales tax. Likewise, the associated jobs created would also do little to improve the local economy.
According to the FLC students, jobs provided by the amenities would average around $10 per hour. A report released earlier this year by the Region 9 Economic Development District of Southwest Colorado stated that, in order for a single person to pay for basic necessities in Archuleta County (rent, food, clothing, transportation) but forgo health care, entertainment, savings or unforeseen catastrophe (e.g. auto repairs), that person would need to make at least $10.56 per hour — leaving almost no money for them to put back into the local economy.
A $10 per hour Reservoir Hill amenity employee would likely not be able to afford the $89 proposed ticket price for a zipline tour, much less the $15 for a tethered hot air balloon ride or $12.75 average ticket price for a ride on the alpine slide.
Furthermore, as reported in the April 19 edition of The SUN, assumptions previously made by the TTC regarding the financial benefit of increased tourism on the local economy appear to be, at a single glance, demonstrably false.
That article reported that February’s record-setting lodgers tax collections (up almost 20 percent from the previous year) did almost nothing to improve sales tax collections that month — up just 0.53 percent from the same month last year.
In fact, the Colorado Department of Revenue (CDR) reported that the Accommodation and Food Services sector in February was up just 0.96 percent compared to the same month last year. While the Accommodation and Food Services sector accounts for sales tax collections for both restaurants and lodging (which pays a lodgers tax on top of sales tax), a 19.14-percent increase in lodgers tax would suggest an almost 18-percent drop in business for area dining establishments for February 2012, compared to the same month last year.
An informal survey by SUN staff of local restaurant owners resulted in all proprietors reporting that February was “about average” and nothing close to an almost 18-percent decrease from the previous year, as suggested when looking at February numbers.
Likewise, the CDR reported that the Retail sector was down 1.1 percent in February. It appears then that, while a substantial number of visitors made their way to the area in February, for the most part they weren’t injecting additional revenue into the local economy.
While that April 19 article stated that much more analysis is necessary in order to posit a clearer effect of tourism on the local economy, February’s CDR and TTC reports suggest an inflation of claims regarding the financial benefits of increased tourism.
Those inflated claims continued on Monday. Using the example of a Duluth, Minn., mountain resort park (which includes an alpine slide), the FLC students claimed that a similar amenity on Reservoir Hill would possibly realize a return on investment with 10-24 months.
Duluth has a population of nearly 85,000 — 20,000 more than La Plata and Archuleta counties combined.
Given the sanguine projections of possible amenities on Reservoir Hill, the students recommended not only that the town invest in all amenities but that the town own all those features (and subcontract out operations to a single concessionaire), financed through a “certificate of participation” — essentially mortgaging Reservoir Hill as collateral for funding.
“We found the most appealing financing option to be the Certificate of Participation, being that it is not required to be put to vote, and the land of Reservoir Hill will suffice as collateral,” the students wrote in their findings.
“What happens if this plan fails?” asked Nicole DeMarco, a town resident who has been an outspoken opponent of the Reservoir Hill plan. “The bank takes over the hill and creates a condominium complex out of our town park in order to pay off our debt.”
DeMarco added, “Will Hart Construction recuse itself from bidding on this project should it come to fruition, acknowledging a conflict of interest in Bob Hart being the project’s driving force?”
Nearly all audience members speaking at Monday’s meeting expressed opposition to the plan, despite the supposed economic benefits claimed by the students.
Most notable was local resident Norm Vance, an early participant in the Reservoir Hill Task Force (the TTC subcommittee that developed the plans for Reservoir Hill).
“I’ve got nothing against alpine coasters and chair lifts and ziplines,” Vance said, “They’re fine. Just not on that hill.”
Stating that, if the TTC won over council and the project was built, Vance warned the board, “You’re doing something that a significant number of people in this city and people in this community don’t want to see and will hate for the rest of their lives.”
It was a sentiment echoed by DeMarco when she said, “Reservoir Hill is an authentic feature of our community, a one-hundred-ten acre park in the heart of town that should be treasured as our own, rather than siphoned off as an ill-advised money-making machine.”
With council and town residents still digesting how the TTC proposes to get there, the question remains how we got here, to the point of considering a mortgage on Reservoir Hill while supporting that notion with questionable facts and numbers and assumptions some regard as unsubstantiated.
When the TTC convinced council to purchase a chair lift in late 2010, council agreed to spend the $41,000 for that lift with the provision that the TTC develop a business plan in order to prove how the amenity would be a financially viable feature on Reservoir Hill. Given that Wolf Creek Ski Area CEO Davey Pitcher had told council (prior to the purchase) that operating and maintaining the lift would run about $150,000 annually and that, by the TTC’s own estimates at that time, another $300,000 or more would be required to re-engineer and install the lift, council wanted to know if it had a white elephant on its hands or a useful addition to the town.
Almost a year later, the TTC returned to council with a proposal for various recreational amenities to be installed on the hill, all supported by the chair lift. Presenting that plan during an October 2011 meeting, the TTC claimed that an “expected outcome” of that development would result in an additional $441,000 in annual sales tax and a $294,000 increase in lodgers tax collections due to revenues generated by the amenities and the projected 75-percent boost in overnight stays.
“How we got here,” then, is the apparent evolution of ideas from using the lift to support expanded recreational opportunities on the hill such as sledding, skiing and snowboarding to constructing an amusement area on the town’s second most prominent (and to many, beloved) feature, second only to the town’s geothermal and river water.
As reported in the April 26 edition of The SUN, that evolution of ideas has met strong opposition from many area residents, as well as the one resident who arguably knows chair lifts the best — Pitcher.
Yet, despite opposition from area residents and advice to abandon the project from a local resort owner, the TTC continues to push forward with its plans of building the amenities at an ultimate cost of almost $5 million — the total estimated expense for all aspects of the proposed project.
Local residents can mull over how the town got “here” and consider what might happen if the TTC takes them “there.” But, at the end of the day, it all comes back to the vehicle that the TTC originally proposed in late 2010 — a chair lift that has sat rusting on the property currently housing the town’s sewer lagoons.
“If we can sell this chair lift for a profit, by all means, let’s do it,” DeMarco said, offering a quick and dirty solution to how the town got here. “The town council will be responsible for netting over $50,000, and we can all walk away from this project gracefully.”