Vail sues Vail, what does this mean for the resort and city

It is a bit ironic (and confusing) as the company Vail resorts sues the city that its name originated from.  The suit highlights a not so happy marriage or relationship or breakup of the two Vails.  In a nutshell Vail resorts and Vail are having a legal tango over the development of a site within the city of Vail.  To be honest, the lawsuit is just noise, there is a much deeper relationship issue between the two that could get very messy and ultimately impact both Vail resorts and the city of Vail.

What is the current dispute between Vail resorts and the City of Vail over?

The ski-resort company, Vail resorts,  has proposed building units for 165 workers on a property in East Vail as the town faces an affordable-housing crisis, but town officials have voted to condemn the property to preserve it for a bighorn sheep herd.

The City of Vail passed an ordinance (16) with community support to condemn the parcel in order to protect it as open space.  The City subsequently offered Vail resorts 12 million for the parcel along with alternative sites for building affordable housing which Vail resorts rejected.

The case is now in the hands of an Eagle county court to decide who ultimately will succeed in this dispute.

The case is just noise: much bigger issues

The case regarding the parcel for affordable housing is very surprising as Vail resorts is heavily dependent on the city for the functioning of its Vail ski resort.  Vail resorts employees live in the community of Vail, the resort requires city services from water, sewer, police, fire, etc…

On the flip side, Vail resorts is a huge generator of revenue for the City of Vail from both property taxes along with sales tax revenue.  Both Vail and Vail resorts are in a relationship/marriage.  Regardless of how unhappy either party is, they are dependent on each other, but this is not a marriage of equals.

City of Vail will ultimately prevail

The relationship between Vail and Vail resorts is not a marriage of equals.  The city of Vail has a much stronger hand over the long term.  A good example is the recent proposal by Vail resorts to upgrade some lifts in Park City.  This should have been a rubber stamp to spend 30 million on lift upgrades, but Park City blocked this proposal due to residents’ concerns about overcrowding.

Vail Resorts’ issues have spilled from crowding at under-staffed resorts into conflicts with communities where it operates. Which has happened before but not to this scale. Park City locals in 2016 forced Vail Resorts to abandon its plan to trademark “Park City.”

Lawsuit highlights a bigger issue in Vail and other Colorado resort towns

The issue between Vail resorts and the city of Vail is just the tip of the iceberg and highlights the bubbling conflict between residents and “Wall Street” resort operators.  These issues were here before Covid, but have since become exacerbated with many full time residents feeling overwhelmed from the record tourism that is impacting quality of life.  The full time residents are now voting for like minded city councilors, mayors, etc.. that will only escalate the tension between the town and the resort.

What does this conflict mean for Colorado ski town real estate

1. More balance between tourism and residents: We are already seeing this with the implementation of short term rental regulations to try to balance the amount of visitors.  Look for these proposals to continue to accelerate in the coming years and some property owners will likely get caught in the cross hairs by not be able to rent a property that they intended to.
2. Higher taxes/prices: Cities will also use higher taxes to help balance residents concerns.  For example Steamboat is proposing a 20% tax on nightly rental stays.  The taxation side is likely just getting started as I see more communities opting for some sort of a lift tax or other tax to offset the growing cities expenses for affordable housing and other services.

Summary

I am a bit surprised at the tact that Vail resorts took in Park city during the lift upgrades and now in Vail regarding a parcel. It clearly did not work in Park City and doesn’t appear to be working in Vail either.

In the long run, the city of Vail will ultimately prevail as residents concerns will continue to be a thorn for Vail.  Ultimately, someone is going to pay and the burden will increasing fall on tourists.  In the end, costs are going to also rise for Vail resorts as the cost of doing business in each of these cities rises and will ultimately lead to lower profits.

Additional Reading/Resources

1. https://www.bizjournals.com/denver/news/2022/09/02/colorado-vail-resorts-lawsuit-affordable-housing.html
2. https://www.vaildaily.com/news/vail-resorts-rejects-vails-12-million-offer-for-east-vail-land/
3. https://www.vaildaily.com/news/vail-resorts-files-complaint-against-vail-in-district-court-alleging-misuse-of-emergency-ordinance/
4. https://coloradosun.com/2022/06/17/park-city-planning-vail-resorts-chairlifts/

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