A special work session of the Pagosa Springs town council was scheduled at the last minute for noon, Wednesday, so former town council member Mark Weiler could present his latest work on financial projections for the proposed community recreation center project.
“Some of the confusion that may have occurred last time,” Weiler began, “is that what Kathie and Tom explained to you was an operations component. It was not the finance component. This is the first time you are going to see the finance component.”
At last month’s town council meeting, council member Kathie Lattin joined Parks and Recreation Director Tom Carosello in presenting a market analysis and feasibility study from Ballard*King and Associates, outlining the projected expenditures and revenues of a local rec center. According to the study, the rec center would cost $1,032,870 every year to operate, but would only bring in $541,295 worth of revenue.
Weiler spent the first 12 minutes of yesterday’s work session presenting town council with a number of charts and tables. The first showed the history of the town’s annual sales tax receipts since 1995, and while the actual numbers reflect the boom and bust cycle characteristic of a tourism-based economy that is a derivative of the national economy, the average annual increase over the 20 year period was 4.55 percent.
Weiler’s next chart was for the last 10 years, which showed an average growth of 2.42 percent in annual sales tax revenue. Weiler explained he felt more comfortable using this number as a basis for his future projections because it is more conservative.
Weiler then showed two more charts projecting where sales tax revenues would be for the next 20 years if the town passed an increase in the local sales tax of one penny per dollar — one chart showing the projection with Wal-Mart and the other without. The sales tax increase would have a sunset clause so, after 20 years, it would go back to 2 percent.
Weiler moved on to a discussion of the municipal bond. “The building itself will cost twelve million dollars, with soft costs at thirty percent and a ten percent contingency for the building, so we’re going to borrow nineteen and a half million dollars, but we are going to use eighteen million. The other million and a half will be our reserve for sales tax.”
Finally, Weiler presented two spreadsheets showing the projected rec center budget for the next 20 years — again with and without Wal-Mart revenue. The budget with Wal-Mart as a revenue source showed that, by 2033, the rec center will have generated over $7.6 million worth of reserves.
“The data says this is self-funding,” Weiler concluded, “so when Kathie and Tom tried to explain, ‘Well, we are only going to get five hundred thousand. Where does the other five hundred thousand come from?’ It comes from the sales tax.”
In trying to sell the idea to her fellow council members at the October meeting, Lattin referred to the expected increase in sales tax income from Wal-Mart and Tractor Supply Company, then added, “We will be pushing for a one-cent increase in the sales tax. We’re not asking for anyone’s approval on anything right now; we’re still out there talking to the community and seeing what the people are in favor of.”
While Lattin reiterated she was making no requests from town council at that time, only giving an update and seeing if there were any questions, she did say that at some point in the near future she would ask for $1,000 to conduct a public survey of the town’s citizens to gauge the level of public support for the idea.
Lattin assured the council the project depended on a vote of the people, who would have to agree to both the bond issue and a one cent per dollar increase in local sales tax. “If we don’t get the bond, we won’t build the building.”
Councilors Don Volger and Darrel Cotton took turns questioning the logic of saddling the town with such a large perpetual funding burden, while council member David Schanzenbaker expressed appreciation for Lattin’s efforts so far and offered encouragement for her continued efforts.
While yesterday’s meeting was only a work session, and no decisions were made, the response from Mayor Ross Aragon and most of the other councilors continued to demonstrate skepticism. The rec center issue is on the agenda for today’s regular meeting, where the discussion will continue and decisions are possible.
In addition, Weiler and Lattin plan a public input meeting for Dec. 12, and expressed hope that more people will show up to express their views.