After hearing different financial modeling options to address the ever-ballooning Wheeler Opera House Real Estate Transfer Tax fund, the Aspen City Council, while far from coming to decision, expressed general support for a plan initially not even included in the agenda packet for Tuesday’s work session.
Option 5, as it was called, was “a late add today,” explained Pete Strecker, the city’s finance director. Staff expressed support for any of the four plans initially prepared for the presentation to councilmembers, each of which provides at least $8 million in the fund balance as the targeted reserve.
In Option 1, for instance, the first $2 million collected from the 0.5% RETT would go toward the Wheeler fund, and everything collected thereafter could be repurposed to other community needs. The guaranteed $2 million annual collection would create a slower draw down on the existing funds — currently at $32 million — so that the reserve would be at $21 million by the sixth year and $18 million in the eighth.
That $32 million reflects the volatility of the real estate market, especially in 2020. In the last 11 years, the median intake for the Wheeler from RETT collections was about $4.5 million. In 2020, however, the total collection was more than double that number, at nearly $9.5 million. If nothing changes to the spending model, the overall reserve fund is projected to continue to grow, even after operating and capital project expenses, to $36 million in six years.
Options 2 and 3 were more aggressive on the withdrawal schedule, with the second plan ensuring $1 million collected from the RETT going toward the Wheeler and everything thereafter available for repurposing; the third option presented did not keep any of the RETT funds for the Wheeler, instead withdrawing from the existing reserve.
But rather than redirecting a portion of RETT monies, Option 5 proposed repurposing earned revenue — an estimated $1 million annually from venue rentals, ticket sales and concessions — to other city uses for community benefit while maintaining the 0.5% RETT to the Wheeler fund, but with a twist: The city would then ask voters to approve an increase to the arts grants program with monies from the RETT. Such a change would require 60% voter approval.
“I think Option 5 is a different animal from the other things we’ve talked about,” Strecker said.
One thing was clear after hearing the details of each proposed financial model — council wanted more information before committing to anything. Generally, though, the final option had sufficiently piqued their interests.
“This changes a little bit of the dynamic; I’m sitting here just still chewing on it myself,” Mayor Torre said of Option 5 after Tuesday’s presentation.
Councilmembers Ward Hauenstein, Rachel Richards and Ann Mullins all echoed Torre’s desire for more in-depth information on the option that would repurpose earned income rather than what could be perceived as excess funds from the RETT collections, depending on the financial model. But they also felt there was promise to the late comer.
“I just think there’s so many needs, and there’s so much in this fund that there’s no conceivable use for entirely the Wheeler,” Hauenstein said. “If there’s a catastrophic failure, that’s why we have insurance. There’s just a lot of money sitting out there that’s not doing any good to the community. I think that mental health, child care and the arts all have valid needs and could be benefited from this.”
Richards agreed overall but noted that in addition to wanting more fleshed-out information on the Option 5 modeling — which didn’t have the reserve-fund projections as outlined in the other plans because of the time constraints that accompanied the late addition — she also would like to learn more about the community’s perceptions of its own needs and even the definition of terms surrounding some of those conversations.
For instance, she empathized with the dialogue occurring around mental health but underscored a need for specificity in the discourse in order to make it most effective.
“It’s been a broad hit of just constantly hearing the term mental health without delving more into that. At what level and what types of mental health — specific fields or areas that we’re really lacking the most or needs the most?” Richards posed. “It’s such a broad topic, and everyone defines it differently. I really need a better sense of when we talk about mental health — I’m not opposed to it, but I really want to know what are the holes out there. Depending on the funding method and potential ballot question, it would change my perception.”
City Manager Sara Ott offered that perhaps presentations detailing the scope of some of these other community needs — specifically child care and health and human services, as they were most mentioned Tuesday — could be helpful in informing council decisions moving forward.
On that, there was consensus. So, too, was there agreement on the Wheeler Opera House remaining the No. 1 priority, as intended in the original ballot language passed in 1979, for whichever plan ultimately becomes the path forward. In that spirit, it was Option 1 that elected officials also chose to receive more information about from staff, as it presented the most conservative approach toward the reserve fund.
“I think that would be a good way to move forward, is to look more closely at [Options] 1 and 5. One representing that range of one particular idea, and 5 being a very different way of looking at it. I would support a little more in-depth look at Option 1 and Option 5, but I do support 5,” Mullins said.