Tax increase needed to fund rec center |

Tax increase needed to fund rec center

Christina M. Currie

If Craig residents want a warm-water leisure pool, enlarged fitness center and additional gymnasium space, it’ll cost them. The proposed sales tax increase for a recreation center will cost Craig residents an estimated $12 a year, a price facility proponents say isn’t high compared to the amenities that those dollars will provide.

The proposed recreation center would have a six-lane lap pool, warm-water leisure pool with a slide and lazy river, fitness center with aerobic room, teen and senior rooms, a two-court gymnasium, elevated walking track, two racquetball courts, a 160-person community room with catering kitchen and six-point indoor shooting range, among other amenities.

Craig residents will be asked to decide whether to increase taxes for the construction of a recreation center at the ballot box on Nov. 4.

A half cent sales tax increase and the implementation of a 2.75 percent automobile use tax is expected to generate $1,175,000 a year. Approximately $800,000 of that will be used to repay the loan for the construction of the $11.8 million facility.

The remainder will cover ongoing operations and maintenance costs.

A half cent sales tax is estimated to cost each resident approximately $12 a year assuming a family of four spends approximately $800 a month on groceries, clothes, eating out, etc.

The sales tax will sunset once the bonds issued for the construction of a recreation center are repaid, which is projected to occur in 25 years at a total cost, with interest and bond fees, of a little more than $19 million. No more than $12 million will be spent to construct the facility, according to the ballot question.

A half cent sales tax generates approximately $522,000 a year — not enough to cover the cost of building and maintaining a recreation center, which is why proponents say an automobile use tax is needed. Currently, people who purchase a vehicle outside the city limits pay only statewide sales tax. If a use tax is implemented, residents who register their vehicles in the city of Craig will pay a rate equal to the city’s sales tax — a use tax.

The theory is that people who benefit from the roads maintained by the city don’t help pay for that maintenance. A use tax equalizes that burden among all users of local streets.

In terms of a recreation center, it is anticipated that the revenues generated from a use tax will free up some of the funds currently allocated to the recreation department and those funds will be used for other general fund expenses such as road maintenance.

The purchase of vehicles that weigh more than 26,000 pounds will be exempt from the use tax.

According to City Manager Jim Ferree, Craig is one of the few cities in the state that does not have a use tax.

A use tax would generate $653,000.

The amount of use tax will vary according to the price of a vehicle and how often a person purchases a new vehicle.

A 2.75 percent use tax on a $10,000 vehicle would cost $275. It would cost $412.50 for a $15,000 vehicle and $550 for a $20,000 vehicle.

“The use tax is a big hit if you purchase a vehicle and there is no denying this, however, how often do most people buy a vehicle? Once every five to 10 years?,” City Council Tom Gilchrist said. “This reduces the annual cost to one-fifth or one-tenth.”

A person who purchases a $15,000 vehicle every five years would pay an additional $34 a year for a recreation center. Combined with the sales tax increase, the average Craig resident would pay $46 a year to have a 57,884-square-foot multi-use facility.

The combination puts Craig at an equal sales tax rate to Grand Junction and keeps it below the rate in Steamboat Springs.

“If you consider where people shop, it won’t be any greater burden than people are used to,” Ferree said.

Once the bonds are paid for the construction of the recreation center, the use tax will be reduced to 2.25 percent, a rate that is again equal to the reduced sales tax rate.

It will continue at the reduced rate to offset the ongoing operations and maintenance costs — an estimated $253,841 a year after revenues.

The proposed recreation center is expected to recover approximately 76 percent of its operational costs in fees.

“With the size of the facility and the rate of the fees, there’s no way it can provide enough revenue to keep itself running,” Craig Parks and Recreation Director Dave Pike said.

Pike said he knows of no recreation centers in Colorado that are self-sufficient. Two have been built in the metro area that are projecting to meet their costs with fees generated, but Pike said he hasn’t heard whether those projections panned out.

“We just don’t have the volume of people to make a recreation center self-sufficient,” he said. “The ones that are have hundreds of thousands of people surrounding them.

“If rec centers could be self-sufficient local governments wouldn’t be in the business, private entities would be.”

Continuing a use tax to offset operating costs will help to keep facility use fees reasonable, he said.

Fees for using the recreation center will be fairly close to those residents are used to paying at Trapper Health Club and the wave pool.

Christina M. Currie can be reached at 824-7031, Ext. 210 or by e-mail at

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